Tantalum Capacitor Producers: Industrial Overview

By Dave Brown – Exclusive to Tantalum Investing News

The largest application for tantalum is in the electronics capacitor industry, totaling approximately 68 percent of global demand, as its high melting point, strength, ductility, reliability, resistance to corrosion and thermal conductivity make the metal an efficient, reliable and environmentally versatile component for capacitors. These tantalum capacitors are commonly found in such products as wireless devices, LCD monitors, DVD players, cell phones, personal computers, digital cameras, gaming platforms, telephone switch boards and computer networks because of unequaled capacity to store and release electrical charges.

Tantalum consumption in the United States in 2009 was estimated to decrease by about 5 percent from the previous year. The United States Geological Survey attributes this decrease primarily to financial market problems and the subsequent economic slowdown, which was expected to result in reduced tantalum material consumption and production.

The US Major Manufacturers

AVX (NYSE:AVX) is a worldwide manufacturer and supplier of a broad line of passive electronic components and connectors located in Myrtle Beach, South Carolina. The company also maintains research, manufacturing, and customer support facilities in 15 other countries around the world. It has been organized into three geographic regions: the Americas, Asia and Europe. The company has 3 segmented revenue streams: Passive Components, which includes the tantalum capacitor division; KED Resale division, consisting of ceramic capacitors and other electronic devices manufactured by Kyocera; and the Connectors segment consisting of automotive, telecom and memory connectors. The customers for AVX are multinational original equipment manufacturers and independent component distributors and electronic manufacturing service providers.

KEMET Corporation (OTC:KEME) is a Greenville, South Carolina based company with manufacturing facilities located in the southeastern United States, China, Mexico and Portugal, and global distribution centers located in the United States, Europe, Hong Kong, Singapore and Mexico. The company does not segment revenue streams, however it produces capacitor technologies across tantalum, ceramic, aluminum (organic and electrolytic), film, and paper dielectrics. The company increased tantalum production and distribution in April of 2006 through the acquisition of the tantalum business of European manufacturer EPCOS AG.

Vishay (NYSE: VSH) is a large manufacturer of passive electronic components and discrete semiconductors based in Malvern, Pennsylvania. Vishay’s global footprint includes manufacturing plants in China and five other Asian countries, Europe, and the Americas, as well as sales offices worldwide. The components are used in virtually all types of electronic devices and equipment, in the automotive, industrial, computing, consumer, aerospace, telecommunications, military and medical markets. The company reports segmented revenue attributed to semiconductor or passive components, including the tantalum capacitor business. On September 15, 2008, Vishay acquired the wet tantalum capacitor business of KEMET Corporation. As a major global consumer of tantalum, the company reported a physical asset inventory of tantalum powder for 2009 with a book value of $32.6 M.

During a conference call earlier in February, Chief Executive Officer Dr. Gerald Paul offered support for tantalum producers, “We currently see a very strong demand for tantalum caps in general, but in particular for the tantalum net capacitor and also here for tantalum net capacitor we increased capacity.”

Vishay recently reported first quarter earnings, with Dr. Paul elaborating on results, “In the first quarter 2010, demand for both passive components and discrete semiconductors increased again substantially compared to the previous quarter. The order levels now exceed pre-crisis levels. Inventories in the supply chain are extremely low as manufacturing capacities have not yet caught up with demand. Our distributors reduced their inventories of our products by 6 percent quarter over quarter; the inventory turns at distribution were 5 percent for the first quarter. The sales increase quarter over quarter was limited by our constrained manufacturing capacities, especially for our discrete semiconductors.”