Tyyo Yuden, a Japanese maker of smartphone ceramic capacitors, expects demand for its components to increase next year as China boosts demand for 5G technology and 5G smartphones. “We have received orders for 5G base stations (capacitors),” Shoichi Tosaka, chief executive of Sun-Stoic, said in an interview on Thursday local time. Early next year, we should start seeing orders for 5G smartphones. ”
Mr Tosaka said Huawei and ZTE had the largest orders for 5G base station capacitors, mainly from Chinese operators. He expects Huawei to sell 100m 5G-enabled smartphones in China alone next year.
This should have been a bad year for Tyyo Yuden, as smartphone shipments stagnated. However, the company stuck to its May earnings outlook, saying revenue and profits would be record.
The demand for Tyyo Yuden capacitors has proved resilient, in large part because capacitors are heavily used in a variety of electronic devices, from smartphones to electric vehicles. Tyyo Yuden’s share price has more than doubled this year.
Tyyo Yuden says about 1,000 capacitors are used for each 5G smartphone, about 30 per cent more than a 4G phone. The new wireless standard consumes more power and requires a larger battery, which reduces the space required by other components. This supports the need for high-end capacitors, which can store more energy in smaller spaces.
Mr Tosaka pointed out that Huawei might be the first to launch a 5G handset, followed by Samsung. If Apple launches its first 5G-enabled models in September 2020, parts orders could arrive in June. He said the company had enough capacity to meet demand.
The Tyyo Yuden plant is currently running at about 85% of its maximum capacity, but supply is likely to tighten for the remainder of the fiscal year ending in March 2020.
Mr. Wade Bush recently predicted that the first 5G-enabled iPhones would “open the floodgates” to device upgrades whenever they go on sale. About 350 million of Apple’s 900 million users are now in the window for upgrades, analyst Dan Ives wrote in a note to clients.
Multi-layer ceramic capacitors made by Tyyo Yuden are tiny components made of metal plates used in electronic circuits to stabilize voltage and power flow. Invented by German and Dutch scientists in the 18th century, capacitors are now used in a variety of products, including smartphones, televisions, refrigerators and cars. Deng predicts that demand for MLCC will continue to grow over the next five to 10 years.
While many investors still see Tyyo Yuden as a mobile device parts company, it has managed to reduce its reliance on smartphone parts over the past three years. The company’s orders typically surge around July and August, as Apple releases new phones in the fall.
Now, automotive and industrial applications account for nearly 40 per cent of Tyyo Yuden’s revenues, which Mr Tosaka hopes to increase to 50 per cent within five years. “The risk in the past was that we sold a lot of products to a small number of customers, ” he says. But now, it’s become a long-tailed business. “