Writing for MarketEye, TTI’s online vehicle for providing accurate and up-to-date market information in the IP&E industry, Dennis Zogbi, president and owner of the Paumanok Group which specializes in providing market analysis on the passive components market, comments that for the year ending March 2009, the global market for passive electronic components, including fixed capacitors, linear resistors and discrete inductors, was worth approximately $19.6 billion representing an 18 percent year on year decline.
The forecast for the year ending March 2010 is for the global market to have declined by a further 13 percent to $17.1 billion. Although the June 2009 quarter was up by 20 percent over the previous quarter, it was still down by 25-30 percent year-on-year and full market recovery is not expected until 2014.
At TTI we are definitely seeing a market upturn. In Asia, this began in April and is now spreading to the USA and Europe. Whilst this is very welcome, it does bring its own challenges. The main problem is one of over-correction. When the market slumped, some manufacturers cut production too hard, to below market demand. Where lines have been mothballed it can take three to six months to ramp up production: if new facilities are required, ramp up time is closer to 12 months.
There is an understandable lack of willingness on the part of manufacturers to invest in additional capacity until they can identify a solid underlying demand, and here the picture is very cloudy.
Obtaining any clear vision of industry’s real requirements is a challenge, and although suppliers are hopeful of business upturns, they are also wary of over-capacity, resulting in stock that can’t be shifted and subsequent price erosion. Therefore, customers must accept the very real responsibility of providing an accurate forecast of their requirements, to avoid chaos in the market caused as we swing between under- and over-capacity.
At TTI, our philosophy is always to have a broad and deep inventory that is readily available for sale. So when we saw the beginnings of an upturn last May, we placed scheduled orders with our key suppliers through to the first quarter of 2010, to enable us to allow for changing market conditions and have stocks when our customers needed parts. Specifically, lines such as the high capacitance multi-layer ceramic capacitors from suppliers such as AVX, Kemet, Murata, TDK and Yageo are in great demand at the moment.
We see designs transitioning from tantalum product to high-cap MLCCs for reasons of stability over temperature, reduced ESR and increased robustness. New markets that are contributing to the increase in demand for passive components include the power and industrial sectors, where renewable energy and power-efficient projects are enabled by capacitor, resistor and inductor technology innovations.