Soft Ferrite Industry Challenge
(1) Industry competition and production capacity are concentrated on low-end and mid-end products
At present, there are a large number of small and medium-sized manufacturers with small production capacity and low product quality in my country’s soft ferrite industry. Small-scale manufacturers have backward production technology, low production automation, and extensive management models. The market competition means mainly rely on low-price strategies. Therefore, my country’s soft ferrite industry is currently showing a “big but not strong” situation. Industry competition and production capacity are concentrated in low-end products, which is not conducive to the construction of a healthy market competition order in the industry and the transformation and upgrading of product structure.
(2) Weak technical level and independent innovation ability
Compared with Japanese manufacturers represented by TDK and FDK, domestic manufacturers still have a certain gap in the R&D and innovation of high-performance products, the maturity of production technology and the control accuracy of production equipment. At present, major domestic manufacturers still use the product grades produced by TDK as benchmarking standards, and major product innovations in the industry are still dominated by foreign companies such as TDK. The production technology and independent innovation capabilities of the domestic soft ferrite industry still need to be improved, so as to enhance the influence and voice in the international market.
(3) Fluctuations in raw material prices squeeze industry profits
Since 2021, the prices of iron oxide and manganese oxide, the raw materials required for magnetic powder production, have fluctuated sharply upwards, resulting in a tight supply of magnetic powder and a significant increase in purchase prices this year. However, the competition pattern of the magnetic core industry is relatively scattered, the adjustment of sales pricing is lagging, and the fluctuation of raw material prices has caused the profit of the magnetic core industry to be significantly squeezed in the short term.
Industry entry barriers
(1) Technical and technological barriers
The electromagnetic properties and consistency of soft ferrite materials are the key evaluation indicators for downstream electronic magnetic components customers’ products, and product performance is determined by raw material formula, production equipment, preparation process, production process control and other factors. Therefore, to achieve large-scale production of high-performance magnetic material products, not only does the company need to continuously improve the raw material formula at the level of technology research and development, and develop new brand products; it also requires a professional and experienced production management team to continuously debug production equipment, Improve the parameter settings of the production process to achieve ideal production process control and fully ensure the plasticity and consistency of the product. The above practical experience cannot be replicated in a short period of time. Taking the sintering process as an example, only by adjusting the specific atmosphere and temperature curve, and properly controlling the oxygen partial pressure and temperature during the sintering and cooling process, can the sintered soft ferrite be magnetic core to achieve proper performance. Under the background of accelerated upgrading of downstream electronic products and increasing demand for high-performance electronic magnetic components in emerging industries, soft ferrite manufacturers’ mastery of raw material formulas, advanced process routes, and experience in quality control of the production process will become The core barrier to the large-scale supply of high-performance soft ferrite materials, new entrants cannot master the optimal production technology and process in a short period of time, and produce products with high electromagnetic performance and consistency in batches.
(2) Funding and scale barriers
Although the current soft ferrite material market competition pattern is relatively fragmented, large-scale supply of magnetic core materials with excellent performance and stable quality still requires high initial fixed assets and R&D investment. Through economies of scale, product production costs can be reduced and product categories can be enriched. Spend. Small manufacturers have obvious competitive disadvantages in terms of product added value, production capacity scale and technical reserves. At the same time, since the upstream of soft ferrite magnetic powder is purchased from manufacturers in the steel industry and chemical material industry, its price is easily affected by fluctuations in the macroeconomic cycle. Taking iron oxide as an example, the number of high-purity iron oxide suppliers in China is limited, and the supply quantity, price, delivery date, and quality of high-quality iron oxide are easily disturbed by various factors such as industrial policies, supply and demand structure, and trading behavior of market players. Enterprises with capital and scale advantages can enjoy higher bargaining power when purchasing upstream, resist liquidity risks in the production and operation process, and ensure the stability of the supply chain.
(3) Barriers to customer authentication
Soft ferrite is the basic electronic material that constitutes downstream electronic magnetic components, and its electromagnetic properties and stability will greatly affect the performance of end products. Therefore, manufacturers of electronic magnetic components will establish a stricter certification system for supplier selection, and downstream customers will comprehensively consider the supplier’s supply scale, delivery date, product quality, sales price, after-sales service and other factors for evaluation. To establish a strategic cooperative relationship, it needs to go through multiple certification procedures such as on-site factory inspection, sample testing, small-scale trial production, and batch supply. The certification period for magnetic core suppliers by electronic magnetic component manufacturers in the industry is generally half a year or more. Some well-known terminals Customers may even directly designate magnetic core suppliers, making the overall certification process more complicated. Therefore, once downstream customers select a supplier, they generally will not change easily, and new entrants in the industry will face high customer certification barriers.
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