Apple supplier Murata expects half billion 5G phones in New Year

Murata Manufacturing Co., the world’s biggest maker of ceramic capacitors for Apple Inc. and other smartphone brands, expects demand for fifth-generation wireless devices to surpass 500 million handsets in the coming fiscal year, building on a rush to replace Huawei Technologies Co. in the global consumer arena.

Apple, Samsung Electronics Co. and Chinese rivals Xiaomi Corp., Oppo and Vivo are vying to secure components for their devices, hoping to fill a void as Huawei’s mobile business shrinks under the weight of U.S. sanctions. President Norio Nakajima said in a December interview that Murata’s factories won’t be taking a holiday break as they work to catch up with mounting orders, adding “the situation is most severe with our cutting-edge capacitors for smartphone use.”

“These handset makers are competing to grab our supply capacity once taken by Huawei, and I am not sure how much of it is backed up by their actual production forecast,” Nakajima said. “I feel like the move is overheated, and thus expect their orders would drop in February and March.”

“The industry had 300 million units of 5G smartphones during the current fiscal year, and I expect that to increase to at least 500 million in the next fiscal year,” the president of the Kyoto-based company said. “We will continue making capital expenditure to keep up with the growing demand.”

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Analysts deem the Murata chief’s stance too conservative. Ace Research Institute’s Hideki Yasuda doesn’t expect demand from Apple and its ilk to drop at any point in this calendar year, fueled by stronger-than-anticipated consumer appetite for 5G phones. Handsets set to be released this year are also going to be compatible with a wider set of frequencies, expanding the need for Murata-made components to adjust electricity flow.

Yasuda said Murata’s production hiccups are representative of severe shortages across the electronics supply chain, affecting the assembly of many products, including video game consoles. Sony Corp.’s PlayStation 5 and Microsoft Corp.’s Xbox Series X both remain limited in supply, nearly two months after their initial release.

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Murata’s Nakajima doesn’t dispute that demand for its MLCC would remain strong throughout this year, though he said he expected a brief respite after China’s Lunar New Year holiday. He said the company’s MLCC sales would increase by 10% in its next fiscal year starting in April due largely to 5G phones.

By Takashi Mochizuki and Yuki Furukawa