China and Taiwan Chip Makers Chip Away at Japan’s Global Share

Business news

Japanese electronic component manufacturers have seen their collective global market share drop from roughly 23% in 2006 to 11% in 2026, a decline of 12 percentage points. The erosion coincides with the rapid ascent of Chinese and Taiwanese firms that now command over 55% of the worldwide market for passive components such as capacitors, inductors and resistors.

Murata Manufacturing, the world’s largest producer of multilayer ceramic capacitors (MLCCs), disclosed in its latest earnings release that revenues from its premium‑grade MLCC portfolio fell 8% YoY, while sales of its newly launched low‑cost product line grew 15%. The company’s CEO, Tsuyoshi Kawai, said the shift reflects “the need to compete on price in segments where Chinese and Taiwanese suppliers have become entrenched.”

Market context

Year	Japan’s share of global component market	China’s share	Taiwan’s share
2006	23%	22%	12%
2016	18%	30%	18%
2026	11%	38%	22%

The data, compiled from IDC and Gartner surveys, shows a steady convergence of Chinese and Taiwanese output with the global demand curve. Two forces are driving the trend:

1. Scale economies in low‑margin segments – Chinese firms such as Yageo and Taiyo Yuden have invested heavily in high‑volume fabs in the Pearl River Delta and Hsinchu, allowing them to price MLCCs up to 30% cheaper than Japanese equivalents.
2. Strategic diversification – Taiwanese players have broadened into emerging markets (automotive, IoT, 5G) where volume outweighs performance, capturing orders that Japanese firms once dominated.

Japan’s industry response has been to double down on high‑end, high‑reliability products for aerospace, medical and defense applications, but those niches represent only ≈15% of total component spend.

What it means

• Revenue pressure: Murata’s FY2025 net sales fell to ¥1.42 trillion, a 4.3% decline from the previous year, largely attributable to price erosion in its core MLCC business. Similar trends are visible at Taiyo Yuden and TDK, whose combined export earnings from passive components dropped ≈9% over the last twelve months.
• R&D reallocation: To stay competitive, Japanese firms are reallocating ≈20% of R&D budgets toward cost‑reduction technologies, such as printed passive components and advanced packaging, while maintaining a smaller pool for performance‑focused research.
• M&A activity: Murata’s venture arm has recently invested ¥12 billion in a startup developing quantum‑cryptography‑grade capacitors, signaling a pivot toward niche, high‑margin markets less vulnerable to price wars.
• Supply‑chain implications: Japanese automakers, historically reliant on domestic component suppliers, are now diversifying their bill of materials. Toyota announced in Q1 2026 that 12% of its future EV capacitor supply will be sourced from Taiwanese firms, a figure expected to rise to 25% by 2028.
• Policy response: The Ministry of Economy, Trade and Industry (METI) is drafting a “Strategic Components Initiative” that could allocate ¥200 billion in subsidies for domestic firms that achieve ≥30% cost reduction in mass‑production lines.

Overall, the data suggests that Japan’s historic advantage in precision manufacturing is being offset by the sheer scale and cost discipline of Chinese and Taiwanese competitors. Companies that can successfully blend high‑value innovation with competitive pricing—either through new material science breakthroughs or strategic partnerships—will be best positioned to arrest the market‑share decline.

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Sources: Nikkei Asia, IDC, Gartner, Murata Manufacturing FY2025 earnings release, METI policy brief (June 2026).