Global capacitor market slows

Oxford, UK, Janauary 2005

Excess inventories and weaker than expected demand in the normally strong final quarter of the year has resulted in earlier forecasts being revised down, with the global capacitor market now forecast to increase by 8.6% in 2004 to US$12.4 billion, according to a recent report published by Reed Electronics Research.

With evidence of renewed pricing pressure and the impact of the inventory correction extending into the first half of 2005, growth in value terms outside of the Asia Pacific is expected to be subdued for the full year but is then expected to show further modest growth in 2006 before accelerating in 2007 and 2008. The market is forecast to slow in 2009 as part of the next cyclical downturn.

The report also finds that:

- The Rest of the World will experience the fastest growth, with China the main driver. With the influx of overseas manufacturers and a growing indigenous industry, China is one of the world’s most important countries in terms of production, in particular, for commodity products as well as being the fastest growing market. Production is also expanding for chip capacitors as manufacturers increase output to meet rising domestic demand and exports. Exports of capacitors however, are expected to remain stable in the short-term unless manufacturers significantly improve product quality to enable them to compete in the global market.

- Combined with growth in the remainder of the Asia Pacific and in other low cost regions such as Mexico , the Rest of World capacitor market is forecast to increase from US$8.0 billion in 2003 to US$11.6 billion in 2009.

- Outside of the rest of the world, the market slowed in the second half of 2004 in response to a build up in inventories and softer than expected demand in the run-up to Christmas.

- Growth in Europe is expected to increase by 5.7% in 2004 and then show relatively modest growth of 1.6% in 2005. During the period to 2009 Europe overall will benefit from the growth in manufacturing in Central and Eastern Europe . Growth in Western Europe will be lower with Germany the strongest market due to the country’s leading position in industrial and automotive electronics. As a result it is expected that Germany will gain market share throughout the forecast period.

- Like Western Europe , the capacitor market in the US will be impacted by the migration of manufacturing to lower cost locations and as a result, the region’s share of the global market will fall from 7.5% in 2003 to 6.4% in 2009. The country will also show the slowest growth of the four regions tracked.

- Although Japan has also been impacted by the loss of electronics production to lower cost locations, its leading position in the consumer electronics market, and in particular for high-end products, will result in stronger growth in 2004 than both the US and Western Europe.

- With the Rest of the World benefiting from the move by OEMs and CEMs to shift equipment production to lower cost regions, its overall share of the market is forecast to rise from 64.5% in 2003 to 68.4% in 2009.

Reed Electronics Research (RER) specialises in providing international business information sources designed to assist senior management, marketing and business development personnel, industry watchers and analysts in keeping abreast of changes, developments and other factors affecting their business. RER is part of the global Reed Electronics Group a part Reed Business Information a leading provider of critical information and marketing solutions to business professionals and a member of Reed Elsevier.