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Business trends

The bifurcating market for smartphone parts

Capacitor prices surge while those for crystal components tumble

Dual-lens cameras are now standard features on high-end smartphones like the iPhone X.   © Reuters

TOKYO -- There are now essentially two markets for smartphone components. At one, robust demand holds sway. At the other, prices are falling. Both markets are taking shape as the growth of smartphone shipments slows. The difference is that smartphones need more of some components than others.

U.S. research company IDC estimates global smartphone shipments in 2017 increased 1.2%, to 1.49 billion units. The market had enjoyed double-digit growth, but now that China, the world's largest market, is saturated, growth is flattening.

Still, certain components are trading at high prices.

Demand for multilayered ceramic capacitors, or MLCCs, has become "ever so tight," according to Kyoto-based Kyocera, one of the industry's big players.

The number of capacitors -- a device that stores and delivers an electrical charge -- in each smartphone is growing. Apple's latest models are said to be furnished with upward of 1,000 MLCCs, a 10%-plus increase over previous-generation iPhones.

In October, the average shipping price of an MLCC surged to its highest point in 31 months, at around 0.49 yen (0.44 cents).

Meanwhile, demand for NAND flash and DRAM memory chips remains buoyant, supported by greater memory requirements for each new generation of smartphones. Large-lot prices for DRAM and NAND memory in December were 30% higher than they were a year earlier.

Orders are also rising for complementary metal-oxide semiconductor, or CMOS, image sensors provided by SonySamsung Electronics and other makers.

The trend in smartphone cameras is for two lenses, which allow the photographer to magnify distant objects, take better pictures in lowlight conditions and to blur the background in portrait and other shots.

China's Huawei Technologies recently rolled out a handset that comes with four built-in lenses -- two in the front and two in the back.

Prices for one-third-inch, 16-megapixel image sensors hovered around $3 during the October-December period.

In the other market, prices for crystal components, essential for telecommunication and GPS navigation, have been directly hit by the near-flat demand for smartphones.

A representative of Seiko Epson, which makes the part, blamed "the Chinese market remaining in an adjustment phase."

During the eight months through November, the average price of temperature compensated crystal oscillators, or TCXOs, fell to around 18 yen, according to the Quartz Crystal Industry Association of Japan. The average price was down more than 10% from where it was during the year through March -- when Chinese were still snapping up smartphones at a fast pace.

Shipments of high-frequency filters, another communication component, were also lower than in the previous year.

Growing demand from the automotive sector is partly responsible for increased scarcities of MLCCs and image sensors. For crystal components, bike-sharing services in China, which need GPS ability, and other new applications could help reinvigorate the market.

For component makers, the search for uses in the post-smartphone-boom era is on.

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