The squeeze on tantalum capacitors will continue into 2011, global distributors say, but there's no expectation that parts will be any more difficult to get next year than they are now. However, because of ongoing concerns about the availability of the raw material tantalum, buyers can expect to see prices continue to increase into the foreseeable future.
"In terms of how hard or easy it is to get [tantalum] parts, things are starting to settle down," says Michael Knight, vice president, corporate product management, for interconnect, passives, and electromechanical (IP&E) specialty distributor TTI Inc. "In the smaller case sizes, lead times are long and supply is tight -- and even in some of the large case sizes it's tight -- but you can get parts. We have plenty of inventory, and the channel is in a pretty good position. Demand and capacity have stabilized, and there will be enough to service demand."
Avnet Inc. (NYSE: AVT) electronics marketing global president Harley Feldberg voices a similar opinion. "I don't feel there's a severe shortage in tantalums," he says. "There has been talk within the channel that makes the [supply situation] seem more dire, but in the research I have done and in with talking to our [product] experts, what they tell me is lead times are still extended and continued price increases are plausible."
From the tenor in the industry, it seems that price increases are more than plausible. Tantalum is a key material to be affected by a new requirement that manufacturers declare they are not using "conflict minerals" -- materials mined in the Democratic Republic of Congo (DRC) -- in their products. Human rights violations are occurring in the DRC mining operations, and profits from the operations are believed to be fueling the ongoing conflict in the region. The DRC is one of the world's largest sources of tantalum, so the shift to conflict-free sources makes the material more scarce and therefore drives up prices.
"There have been prices increases due to raw material," says Feldberg, "but our experts believe we can cope with the supply/demand situation by increasing the [components] pipeline and by not going through an over-reactionary mode."
Knight and others put those price increases in the following perspective: Prices of tantalum capacitors are just now beginning to reach the levels they maintained in the pre-bubble period of 1999-2000. Prices have been eroding steadily for a decade, and only now are regaining lost ground. However, that 60-percent-plus price increase is significant to buyers that have become accustomed to paying much less.
"There may be a point where tantalum price points become so unattractive that it will no longer be viable, and buyers will look to other technologies," says Knight.