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JANUARY 2019 I PCB007 MAGAZINE 13 of what's going to happen. All the projections that we get from the manufacturers and the distribution channel tell us that the market will not see a relief until mid-2019 at the earliest, and several of them say it will be towards the end of 2019 for MLCCS in particular. A number of things are going to happen. The Chinese are bringing up some new fabrications. Several manufacturers are pulling some of their fabrication back in-house, particularly in the U.S. Some third-tier suppliers are coming in and starting up, particularly in Asia. There are a lot of things happening, but it will take a while for the market to level out. Dan Feinberg: I have to agree with you on the supercycle. It's the largest I've seen since 1960–1962 when we switched from point-to- point wiring to circuit boards. The industry was much smaller, and the demands were much smaller and less widespread. Some of the things that I'm seeing, and hearing, is that this supercycle may last considerably longer than 2019 because it's a supply and demand thing. With such long lead times, and you've answered part of this, are you planning or expecting new facilities to come on board throughout the supply chain, and where? With the tariff issues coming on, it looks like this is going to be more serious than people had thought or hoped, at least in this industry. While the overall U.S. economy will probably benefit from it, this industry may or may not. These could be significant tariffs and could last for quite some time. Has that switched or changed where the expansions that have been planned may happen? Martin: Let me answer that in two parts. The tariff issue is a whole different issue that we can discuss. When I've met with several manufacturers, I've visited the Vishay and Agile factories and several others in China and met with the Murata reps directly, so I've had quite a few conversations. The general feeling that I get or what I understand is that the parts that are in the greatest demand are what we would have called popcorn parts— the really low-cost penny parts. Over time since the dot-com crash in 2000, the prices have been depressed to the point where they're very low margins for the manufacturers, making their average selling price not profitable for them. Feinberg: It's not attractive for expansion. Martin: Yes, not attractive. So, it's unlikely that manufacturers will come in unless they're third tier, which would likely be in China. We're seeing a few third tier pop up in China, although they will not quote us. They said they're already at capacity. None of the main manufacturers that I've talked to are expanding in the larger case sizes. They are expanding in the 0201 and the 1005 case sizes, but they are not expanding in the 0402 and above. That's where most of the industrial sector is still located—in the larger case sizes. I think the only real relief that's going to come for those part sizes is when the OEMs decide to do a redesign into the smaller sizes. Now, from what I also understand, these larger case sizes probably have no more than 0603 and up. They probably have no more than a three- to five-year lifecycle. When the automotive industry phases them out, I believe most of them will be gone, so that's what's going to drive it. We've been told that a current automobile has about 3,000 MLCCs in it, and an electric vehicle has 30,000 MLCCs. When they go through with this tight market designed to the smaller 0201 and below, then I

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