Passive Component Manufacturers and the Global Market
Passive component manufacturers emerged from the early 21st century electronics industry downturn with a renewed respect for building closer relationships with their customers. These relationships can help them respond to customer needs more quickly and effectively.
Increasing complexity in electronic devices and consumers’ desire for sleek or slim products are pushing passive components to shrink size without compromising performance. Passive component raw materials are key to production, and price fluctuations affect profitability.
Cost of Metals
Passive components require a significant amount of raw materials for their construction. Metals like palladium, nickel, and ruthenium are consumed in the production of MLCC electrodes and terminations, making up an important portion of the total cost for high-volume components. Fluctuations in the prices of these critical materials can impact production costs for passive component manufacturers.
Consumer trends in both the electronics and automotive industries are driving the need for advanced passive components that can enhance device performance. Consumers are seeking safer and faster-charging devices, as well as more lightweight and portable electronic products. This demand is likely to drive further market growth for these passive components in both the consumer and automotive industries.
Passive component manufacturers must also contend with soaring metal prices that are impacting their production costs. A recent report by Paumanok Publications noted a rise in pricing for both nickel and aluminum, which are essential raw materials for the manufacture of MLCCs and thick film chip resistors. In addition, the price of ruthenium is skyrocketing, leading designers to seek alternative component designs that use nichrome elements instead of precious metals.
Passive component companies that bring their manufacturing capabilities in-house can take control of a surge in raw material prices, helping them keep their cost of goods and profit margins stable. Manufacturers can also take advantage of flexible assembly services to scale up or down in response to changes in demand and supply.
COVID-19 Pandemic
Passive components are vital to the function of electronic devices and systems. They provide resistance and voltage regulation, and enable efficient signal transmission and energy storage. The global passive component market is growing rapidly due to the increased demand for electronic devices, technological advancements, and the trend toward miniaturization. However, the market faces challenges such as price volatility and the availability of counterfeit components.
The COVID-19 pandemic slowed production Passive component manufacturers output of many standard electronic components, leading to shortages and price increases. Some EMS companies reported that lead times were 20-30 weeks for standard passive products such as resistors and MLCCs.
A survey by the ECIA shows that electronic components manufacturers experienced mixed results during the coronavirus pandemic. Some categories were more affected than others, but overall the industry’s production, supply chain, and end-market demand remained robust.
Integrated passive devices have various applications in the aerospace, military, automotive, consumer electronics, and telecommunications industries. They are manufactured on a silicon substratum using common wafer fabrication techniques. The COVID-19 pandemic affected the supply chain of these devices as it closed manufacturing facilities and restrictions on shipping and logistics were put in place. These restrictions led to a delay in production, but the situation improved as the crisis passed. The market is expected to grow at a rapid pace due to the adoption of emerging technologies such as IoT and electric vehicles.
Complexity of Electronics and Electronic Devices
The global passive components market is fueled by the escalating demand for electronic devices, mainly smartphones and laptops. In addition, the growing adoption of cutting-edge technologies such as IoT and 5G are also contributing to the growth of the industry. The market for multilayer ceramic capacitors (MLCC), which form the bulk of the overall market, is expected to witness a steady growth in the coming years.
In order to meet the growing demand for electronics and electronic devices, the manufacturing industry needs to rely on passive component manufacturers. These components are used in various electronic devices such as digital connectivity equipment, remote work solutions, medical and healthcare devices, automotive components, and more. The growing complexity of these devices requires more advanced passive components.
Passive component manufacturers are leveraging their technological expertise to cater to the evolving demands of the industry. They are focusing on improving the quality of their products and reducing production costs by adopting smart manufacturing techniques. They are also collaborating with the electronics OEMs to understand their requirements and develop customized solutions.
Another major factor driving the passive components market is consumers’ desire for safer and faster-charging devices in consumer electronics and automotive sectors. This is fuelling ic analog the demand for power semiconductors, which are critical to enhancing device performance. Moreover, the volatile prices of metals have a significant impact on the cost of mass-produced passive components.
Automotive Industry
Passive components are used in a wide variety of electronic devices, including consumer electronics, mobile phones, and automotive devices. Raw materials make up the largest variable cost for mass-produced passive electronic components, so any price fluctuation can have a significant impact on profit margins. Metal costs are expected to rise in 2022 as demand for critical metals increase due to factors such as mine closures, labor disputes, refinery shutdowns, and speculation.
The automotive industry drives the growth of passive components, as carmakers seek to improve safety features and add more connectivity capabilities for consumers. For example, some cars now use 5G technology to communicate with traffic signals and pedestrian crossings, as well as other vehicles, to provide the contextual information necessary for safe autonomous driving. This type of connectivity requires passive components such as high-frequency MLCCs that can support fast communication speeds and help to reduce interference.
Other trends in the automotive industry include a shift toward more electric vehicle (EV) sales, which increases the demand for miniaturized passive components such as MLCCs and ferrite beads. Additionally, increasing popularity of voice-enabled smart home devices is creating a need for additional passive components such as MEMS gyroscopes, which are often utilized in digital voice assistants. As such, passive component manufacturers are increasingly focusing on building closer relationships with their customers to better understand their needs and respond accordingly.