Japan's Murata Manufacturing Co., Ltd. announced on the 7th that it has begun to build a new production plant for electronic components and laminated ceramic capacitors in the factory area of Jiangsu Province, China. The move is in response to increased demand for electric vehicles (EVs) and smartphones, among others. The investment amount is about 44.5 billion yen (about 2.2 billion yuan), which is the largest amount of investment in a single equipment of the company so far.
Construction of the new plant started on November 1 and is expected to be completed by April 2024. The total construction area is about 51,000 square meters. With the electrification of automobiles and the spread of fifth-generation (5G) mobile communication systems, sales of multilayer ceramic capacitors are expected to increase.
Japan's Murata Manufacturing Co. will build a new production facility at its plant in Jiangsu Province, China. Invested approximately 45 billion yen to increase the production of components for multilayer ceramic capacitors (MLCCs), the main electronic components that occupy the world's largest share. The largest investment in Murata's history as a single investment in equipment. Currently, MLCC demand from smartphones is slowing, but the company believes that in the medium to long term, demand is expected to grow as pure electric vehicles (EVs) and 5G mobile phones become more popular. Investment will be initiated to increase production capacity by about 10% per year.
MLCCs are components that keep the internal current of electronic products stable. The small one is less than 1 mm, and one smartphone uses about 1,000. Murata Manufacturing holds a 40% global share. The company's fiscal 2021 (ending March 2022) operating income is about 1.8 trillion yen, of which about 40% comes from MLCCs.
MLCCs are made by stacking charge-storing ceramic dielectric diaphragms between electrodes. The investment is in Wuxi Murata Electronics, a Chinese subsidiary that produces MLCCs. A new plant will be built within the company to increase the production of diaphragms. The specific production capacity has not been disclosed, but three buildings will be constructed, including production plants, warehouses, and energy management plants, with a total construction area of about 51,000 square meters. Construction started in early November and is scheduled to be completed in April 2024.
In its three-year mid-term management plan ending in fiscal 2024 (ending March 2025), Murata plans to invest 640 billion yen in equipment, the same level as the previous mid-term management plan. Equipment investment in fiscal 2022 is expected to be 210 billion yen. In terms of amount, the investment in production increase of about 45 billion yen this time accounts for about 20% of the annual equipment investment plan, which is the largest single investment in history.
Wuxi Murata Electronics has more than 10,000 employees and is the main factory supplying MLCCs to the communications and automotive industries in China. In the past 10 years, Murata's operating income has nearly tripled. The operating income ratio of mainland China and Taiwan has always accounted for 50%.
Currently, demand in mainland China is slowing down rapidly. When Murata released its earnings report at the end of October, it lowered its forecast for fiscal 2022. The main reason is the slowdown in global smartphone demand, mainly due to sluggish sales of smartphone companies in mainland China. The company's chairman, Tsuneo Murata, said at the earnings conference that "the sales slump will continue for some time."
Behind the largest investment in the history of this launch, there is a mid- to long-term growth in demand, such as for automobiles. Previous cars used about 3,000 MLCCs each. For pure electric vehicles that support "level 3 (L3)" autonomous driving, more than 10,000 MLCCs are required with the advancement of electronic vehicles.
