Advanced Ceramics Market Overview

Today's advanced ceramics industry can be summed up in two words: unlimited potential. In fields ranging from military and security to automotive, aerospace, biomedical, industrial, energy, electronics and a host of others, high-tech ceramics are advancing capabilities and enabling the development of new technologies. As a result, some ceramic manufacturers serving these sectors are seeing unprecedented growth.

For example, Corning Inc., based in Corning, N.Y., reported that sales of its ceramic substrates and filters for diesel engines topped $20 million in the first three months of 2005, compared to total sales of just $12 million in 2001.¹ The company believes that the global diesel products market will be approximately $250 million in 2005 and could grow into a $1 billion market opportunity by 2008 as new U.S. and European clean-air standards take effect.

Dyson Group plc, based on London, UK, is seeing significant growth in its

Saffil® fiber and Ecoflex® catalytic converter components, as well as its microporous ceramic technology for the industrial catalyst industry. With energy-related issues becoming increasingly important, the company expects to see rapid growth in microporous ceramics for the industrial catalyst industry over the next few years.

AVX Corp., based in Myrtle Beach, S.C., is seeing strong demand for products used in automotive electronics, such as advanced sensors, engine management systems, "intelligent" dashboard and diagnostic units, entertainment centers, and high-energy varistors; as well as in medical, communications and entertainment devices. While growth in these markets is occurring globally, the potential in China is particularly high. "The segment of the Chinese population that has the potential to acquire electronics, such as cell phones and computers, is eight times larger than today's developed market. Only about 20% of China's population has telephones or cell phones, compared with more than 60% of the developed world. Today in China, it is estimated that 6% of the population is accessing the Internet, vs. ranges of 40 to 55% in Western Europe and the U.S.," the company noted in its fiscal 2005 report.

According to a recent study by The Freedonia Group, Inc., worldwide demand for automotive electronics for original equipment manufacturer (OEM) use is forecast to rise 7% annually to $117 billion in 2009, much more rapidly than vehicle production itself.² Some electronics systems (such as electronic engine controls, transmissions and fuel injection systems) are maturing in North America, Western Europe and Japan, and the industry is entering the next phase of evolution, characterized by strong demand for safety, entertainment and communication systems.

Without a doubt, however, the biggest success story continues to be ceramic armor. Costa Mesa, Calif.-based Ceradyne saw its 2004 revenues increase 112.5% to a record $215.6 million, and it posted another three-digit gain in the first six months of 2005 to $159.7 million, largely due to continued orders for armor products. In addition to Ceradyne, companies such as CoorsTek, Cercom, Armor Holdings/Simula and ArmorWorks delivered armor worth more than $200 million to the U.S. military in 2004, and more than half a billion dollars worth of orders were pending, subject to the allocation of funds by the military, in the first half of 2005. Business Communications Co. (BCC) forecasts that the structural ceramics market will double in size from $650 million in 2004 to $1.3 billion by 2009, largely due to the continued boom in armor demand.3 New capabilities such as transparency, enhanced durability and lighter weight are expected to add to ceramic armor's appeal.

As a variety of industries seek ways to improve their products and capture new market share, they are increasingly turning to advanced ceramics to provide new solutions. John K. Coors, president, chairman and chief executive officer of CoorsTek, Inc., based in Golden, Colo., sums it up nicely: "The advanced ceramics industry is uniquely situated to be at the leading edge of development in many different industry segments. It's a very exciting place to be."

Editor's note: The foregoing information (except where noted) was compiled from publicly available information in annual reports and news releases, as well as personal interviews.

References

1. Grahl, Christine L., "A Clean Air Initiative," Ceramic Industry, Vol. 155, No. 6, June 2005, pp. 16-18, online at www.ceramicindustry.com.

2. World OEM Automotive Electronics (published 06/2005, $5200), The Freedonia Group, Inc., 767 Beta Dr., Cleveland, OH 44143-2326; (440) 684-9600; fax (440) 646-0484; e-mail pr@freedoniagroup.com; www.freedoniagroup.com.

3. Abraham, Thomas, "New Opportunities for Advanced Ceramics,"

Ceramic Industry, Vol. 155, No. 6, June 2005, pp. 13-15, online at www.ceramicindustry.com.