This category covers establishments primarily engaged in manufacturing electronic capacitors. Establishments primarily engaged in manufacturing electrical capacitors are classified in SIC 3629: Electrical Industrial Apparatus, Not Elsewhere Classified.
334414 (Electronic Capacitor Manufacturing)
The value of shipments in the electronic capacitors industry in 2001 was $1.9 billion, down from $2.8 billion in 2000 and $2.0 billion in 1999. There were about 99 establishments in the industry in 2001, down from 128 in 1997. In recent years, about 75 percent of the industry's firms employed 20 or more workers.
Employment of production workers in the industry increased from 13,500 in 1991 to 21,200 by 1995 but dropped to 13,611 in 1997 and 12,979 in 2000. The industry was relatively labor intensive, having more than 40 percent as much investment per production worker as that for the manufacturing sector as a whole in recent years. Annual hourly wages for production workers in the industry were about 18.5 percent lower than the average manufacturing wage in 2000. That year, production workers earned an average of about $12.33 per hour, up from $11.06 per hour in 1997.
The U.S. capacitor market was dominated by foreign-owned subsidiaries in the early 2000s. For example, in 2003 Japanese firms owned two of the industry's leaders, the AVX Corporation and Murata Electronics North America, Inc.
By the late 1990s, California, New York, Massachusetts, Florida, North Carolina, and New Jersey accounted for roughly 33 percent of total industry employment, some 26 percent of total shipments, and almost half of all establishments for the industry in the United States. Two of the industry's top firms, AVX and the KEMET Corp., were based in South Carolina.
Based on quantities reported by the U.S. Census Bureau in Current Industrial Reports , the top four types of capacitors by product share in 2001 were those made from ceramic, at 98.2 percent; tantalum, at 9.5 percent; aluminum, at 3.1 percent; and paper and film, at 1.6 percent. The share of ceramic capacitors increased from 39 percent in 1983, whereas the share of paper and film and aluminum capacitors declined from 19 and 13 percent, respectively. The share of tantalum capacitors held steadily during the 1990s. Ceramic dielectric single layer chips were by far the largest single type of capacitor in 2001, representing 97.6 percent of all capacitors by reported quantity.
Among the largest of the several trade organizations serving the industry were the Electronic Industries Alliance (EIA) of Arlington, Virginia and the American Electronics Association (AEA) of Santa Clara, California. EIA was founded in 1924 and had 2,500 members in the early 2000s. The group produced a number of publications and was involved in the development of industry standards. AEA was founded in 1943 and had 3,000 member companies. In addition to organizing industry conferences and events, AEA published a variety of publications and special reports about the industry.
In his Basic Electricity and Electronics, Delton T. Horn defined capacitors and capacitance: "A capacitor is a device capable of storing charge in a circuit, and typically consists of two metal plates separated by an insulator, called a dielectric. Capacitance is directly proportional to the area of the plates and the dielectric constant of the insulator and is inversely proportional to the distance between the plates." Capacitors can store charges from voltage sources for a wide range of time, to be released as needed. The classification of capacitor types by material such as paper, ceramic, or tantalum refers to the insulating dielectric. Electronic capacitors are part of a class of electronic components called passive components. They differ from active components, such as vacuum tubes and transistors, in that they can neither distinguish voltage polarity nor amplify a signal.
The first capacitor was the Leyden jar, invented independently in the mid-1740s by both Ewald Georg von Kleist and Pieter van Musschenbroek. A glass jar acted as the insulating material. M. Bauer developed the mica capacitor in Germany in 1874. Mica had advantages over glass because it could better withstand shocks and could produce the same capacitance as a smaller capacitor. D. G. Fitzgerald was the first to patent the paper capacitor, in 1876; later, L. Lombardi produced the first ceramic capacitor, in Italy. Ceramic capacitors can withstand extreme temperatures and are highly stable. The tubular glass capacitor was produced in 1904 by I. Moscicki in the United Kingdom. It was this capacitor that Guglielmo Marconi used in his early experiments with radio communication.
World War I provided an important catalyst for technical change in electronic communications, during which new radio tubes and circuits were developed. The interwar years saw the rapid growth of radio, and, on the eve of World War II, millions of radios were in use worldwide. Paper dielectric capacitors enclosed in cardboard tubes and Bakelite-enclosed stacked mica capacitors were most commonly used during the interwar period.
During the World War II years, substantial developments were made in communications electronics, radio astronomy, xerography, and radar and computer technology, as well as in miniaturization and the improvement of the energy efficiency of components. The harsh conditions and importance of reliability imposed by the war led to the development of metal-cased and metalized paper dielectric capacitors, as well as improvements in ceramic capacitors. The tantalum capacitor was produced in 1956 by D. McLean and F. Power of the United States, after which it became among the most widely used capacitor types.
Among the most significant developments in electronic components in the postwar period were the transistor and integrated circuit. Transistors are based on solid-state technology, serving as substitutes for the older triode vacuum tube active components, developed by Lee De Forest in 1906. In 1948, Bell Laboratories developed the transistor (whose name derives from transferred resistor), which enabled electronic equipment to be produced in increasingly smaller sizes. The first integrated circuit was produced by Texas Instruments in 1959. This device made use of transistors and other components mounted on a semiconductor chip to form an entire electronic circuit. Prior to the development of integrated circuits, electronic circuits were made exclusively of discreet and separable components—combinations of vacuum tubes or transistors and passive components. Since capacitors with high capacitance values were relatively large, they were generally not produced within an integrated circuit but rather added externally.
Chip capacitors are surface-mounted to circuit boards, in contrast to traditional capacitors with wire leads. Although chip capacitors are generally higher priced than those with leads, the price gap decreased in the 1990s. Also during this time, chip capacitors came into increasing use, especially in equipment such as portable phones, video cameras, and electronic notebooks, items for which space constraints were a prime consideration. Demand for surface mounting and miniaturization continued in the late 1990s, along with higher capacitance and integrated devices.
The value of shipments in the U.S. electronic capacitor industry declined from $1.7 billion in 1988 to $1.5 billion in 1990. This pattern reversed itself in the 1990s, with $1.6 billion in shipments in 1992, nearly $1.8 billion in 1995, and slightly over $2.4 billion in 1997. Annual capital investments were $95 million in 1988, $52 million in 1990, $57 million in 1995, and $124 million in 1997.
In the late 1990s, capacitor manufacturers were faced with declining prices. According to the Paumanok Group of Apex, North Carolina, overall prices dropped almost 9 percent in 1998. Some manufacturers reported price drops of as much as 15 percent. Prices of ceramic capacitors fell by 3 to 5 percent. In response, companies were partnering with customers to develop new high-margin products. They were also establishing joint ventures overseas; Vishay Intertechnology Inc. was working with the Chinese government in the area of tantalum capacitors. KEMET established a joint venture with Tokyo-based Showa Denko KK to develop solid conductive polymer aluminum surface-mount capacitors. KEMET also had a joint venture with NEC Corp. involving tantalum capacitors.
The U.S. ceramic capacitor market was expected to grow from about $1 billion in 1998 to $1.3 billion in 2002, according to the Freedonia Group. Demand was being driven by the computer, telecommunications, consumer electronics and automotive industries. Since multilayer ceramic capacitors could be surface mounted, they came to account for 90 percent of all ceramic types. Excess ceramic capacity, especially from Japan, continued to put pressure on prices in 1999. Therefore, competition from Japanese exports to the United States was expected to continue until domestic Japanese demand improved.
Globally, the market for fixed capacitors reached $9.5 billion in 1998, a drop of 4.2 percent from the previous year. Unit shipments rose by 5.9 percent. Aluminum capacitors shared 31 percent of this market in value, followed by multilayer at 29 percent, tantalum at 18 percent, DC film at 15 percent, and single-layer capacitors at 7 percent. Tantalum capacitors were starting to compete more with aluminum types; likewise, ceramic surface-mount capacitors were positioned to take market share from tantalum ones as prices became similar.
According to U.S. Census Bureau figures, shipment values for electronic capacitors plummeted from $2.8 billion in 2000 to $1.9 billion in 2001. Total unit shipments also fell. For example, shipments of ceramic dielectric multiplayer chips, by far the industry's largest category, dropped from 60.3 billion units in 2000 to 33.7 billion units in 2001. According to the September 30, 2002 issue of EBN , iSuppli Corp. placed industry revenues for both capacitors and resistors at $15.3 billion in 2001. Overall, capacitors accounted for 90 percent of these revenues. By category, aluminum capacitors accounted for the largest share of industry sales (33 percent), followed multi-layer ceramic capacitors (25 percent), tantalum capacitors (15 percent), film capacitors (9 percent), single-layer ceramic capacitors (5 percent), and other types of capacitors (3 percent).
During the early 2000s, end-users of passive electronic components like capacitors—namely original equipment manufacturers—were applying continuous pressure on the industry to lower prices. This had a devastating impact on profitability, as many capacitor manufacturers were forced to produce components at or below the cost of production. In addition, the industry was forced to contend with a generally weak economic climate, heightened competition from the likes of Asia, and downturns in leading end markets like telecommunications equipment and computers.
Together, these negative conditions led to workforce reductions, consolidation, plant closures, and a reduction in overall capital spending and production capacity. For example, KEMET reduced its workforce by about 60 percent during 2001 and 2002 and cut its capacity by half. With manufacturers of passive components operating at anywhere from 60 to 70 percent of capacity by July of 2002, EBN reported that vendors were "swimming in excess supply and fighting for contracts." On average, capacitor prices fell from approximately 22 cents in 2000 to 16 cents by mid-2002, according to the publication.
In the February 10, 2003 issue of EBN , an analyst from iSuppli Corp. predicted that unit shipments of both capacitors and resistors would improve by about 22 percent in 2003, resulting in industry revenue growth of 7 percent. However, as worldwide capacity continued to decline in early 2003, there were concerns about manufacturers' ability to respond to a sudden uptick in demand.
Employment of production workers declined from 18,100 in 1988 to 14,200 in 1991 but rebounded to 18,770 in 1997. The peak year for employment of production workers was 1984, with 25,100 employed. Employment dropped through 2000, reaching 12,979; hourly wages were about $12.33 per hour.
In the early 2000s, the leading manufacturers of electronic capacitors were the AVX Corp. of Myrtle Beach, South Carolina; the KEMET Corp. of Simpsonville, South Carolina; and Aerovox Inc. of New Bedford, Massachusetts. Murata Electronics North America, Inc. of Smyrna, Georgia, also was an important industry player.
AVX was founded in 1972 and had roughly $1.3 billion in sales and 12,900 employees in 2002. That year, revenues fell more than 52 percent from 2001 levels, while the company's employee base declined more than 28 percent. The firm produced ceramic and tantalum capacitors. As a result of a 1990 merger, AVX became a subsidiary of Japan's Kyocera Corp., previously the Kyoto Ceramic Co. Their customers included leading original equipment manufacturers (OEMs) in the telecommunications, computer, medical device, aerospace, and consumer electronics industries. AVX acquired Thomson-CSF, a manufacturer of film and ceramic capacitors and other components and introduced a low-inductance ceramic capacitor in 1998.
KEMET Corp., a privately held firm, was founded in 1954 and had $508.6 million in sales and 6,900 employees in 2002. That year, revenues fell almost 64 percent from 2001 levels, while the company's employee base declined more than 43 percent. KEMET introduced around 80 new products in 1997 and established an agreement with NEC Corp. to develop ceramic and tantalum capacitors. The two companies were co-developing a conductive-polymer tantalum capacitor. KEMET also continued to expand in Mexico, building its eighth plant there in 1998.
Aerovox manufactured film, paper, and aluminum electrolytic capacitors for worldwide markets. The company's products were used in air conditioners, fluorescent and high-intensity discharge lighting, microwave ovens, defibrillators, lasers, phone switching systems, heat pumps, ventilator fans, garbage disposals, washing machines, dimmer controls, motors, power supplies, photocopiers, telecommunications equipment, computers, medical instrumentation, industrial electrical systems, and other appliances and electrical equipment. Aerovox sold primarily to OEMs of electrical and electronic products.
By the early 2000s, both imports and exports of electronic capacitors were down. After climbing more than 16 percent in 1999 and nearly 48 percent in 2000, exports dropped more than 47 percent in 2001, declining from about $2.5 billion to $1.3 billion. Imports, which increased 29 percent in 1999 and more than 69 percent in 2000, fell nearly 47 percent in 2001, declining from $2.8 billion to $1.5 billion.
Asian competitors continued to cut capacitor prices. Newcomers from China and South Korea have entered the market in recent years, affecting pricing significantly. According to the August 13, 2002 issue of EBN , "indigenous Chinese passives makers are looking to take a bite out of their rivals' territory in the United States, Europe, and Japan. China's passives suppliers are expected to chalk up resistor and capacitor sales of $1.6 billion in 2003, giving the country an 8.9 percent share of the global market, according to iSuppli."
Among the key technical developments in the electronic capacitor industry in the 1990s was the use of new insulating, or dielectric, materials in response to the miniaturization demand. Materials included Teflon, a combination of polyester and metal foil, other organics, and glass-based materials.
Near the end of the decade, the trend to higher capacitance and smaller devices continued. AVX expected to have reached 100 microfarads by the end of 1999. Sizes continued to drop, from formats three to four times smaller than previous models.
Increased integration and the use of alternative materials also continued. The rising cost of palladium, an electrode material, forced many ceramic capacitor manufacturers to switch to such base metals as nickel or copper. Palladium's price almost doubled during the first half of 1997 and reached $300 per troy ounce in 1998. Murata Electronics North America converted about 70 percent of its products to nickel and expected to reach approximately 90 percent by the early 2000s.
Integrated passive devices (IPDs), which contain capacitors, resistors, inductors, and other components on a printed-circuit board, were under investigation in order to reduce board size and the cost of component packaging. AVX introduced a discrete impedance-matching series resistor/capacitor chip in 1999. Avex Electronics Inc., California Micro Devices, and Flip Chip Technologies were also jointly developing a flip-chip package of integrated passive components. KEMET and Murata were also developing IPDs. By late 2002, many industry firms continued to devote research dollars to the development of integrated devices. However, these still accounted for only 3 percent of all passive device (capacitors and resistors) sales in 2002 and were expected to account for up to 5 percent of sales the following year, according to EBN . Higher prices were one factor limiting the growth of IPDs.
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