Japan-based aluminum electrolytic capacitor supplier Nichicon will reportedly expand its production facilities in Wuxi, China with new capacity to come online by the end of the company's fiscal year ended March 31, 2012. Overall capacity at its China plants will be scaled up by about 30% from the current level.

Nichicon's reported expansion plan could be aimed at boosting its output to meet anticipated strong demand for energy-saving air conditioners and high-performance electrical home appliances in China, according to sources at Taiwan-based aluminum capacitor companies. They expect the impact of the decision to be limited.

The sources indicated that high-voltage aluminum capacitors, which are commonly used in electrical appliances for the home, are already in tight supply due to a shortage of aluminum foil.

Limited capacity ramps from suppliers are also another contributing factor to the tight market, the sources said, adding that additional output from a single supplier should not cause an oversupply in the market under current circumstances.

In addition, Taiwan's aluminum capacitor makers are more focused on consumer electronics applications, while Japan's players mainly provide higher-end products for the home appliance sector, the sources indicated. Impact from Japan's output expansion should be minimal for the moment, the sources added.

Major Taiwan-based aluminum capacitor suppliers include Kaimei Electronic, Lelon Electronics, Taiwan Chinsan Electronic Industrial and Teapo Electronic.