Weak demand means lower prices and short leadtimes for resistors
Sluggish demand means the resistor market will post two consecutive years of revenue decline
By James Carbone -- Purchasing, 10/15/2009 2:00:00 AM
The resistor market has been hard hit by the economic downturn, resulting in falling prices and declining revenue.
The worldwide resistor market will post two consecutive years of revenue decline as the market falls 9.6% in 2009 and 1.1% in 2010, demand is slow to recover and prices stay depressed, according to researcher DECISION, based in Paris.
Business has declined across the board in every end user segment, says DECISION.
"Overall we think business has bottomed out," says Kory Schroeder, vice president of marketing for Stackpole Electronics in Raleigh, N.C. "We expect to see some improvement later in the year, but I don't expect to see any significant growth until the end of 2010 at the earliest."
He says there have been price declines because of weak demand, "but not as much as you may think." Prices for some parts have declined 3–5% depending on the type of resistor. Prices will be soft through the rest of the year and buyers can expect tags to be stable next year.
Leadtimes are short, in the six- to eight-week range. "Leadtimes are the shortest that they have been in several years," says Schroeder. Leadtimes are low although suppliers have consolidated product lines and reduced production capacity.
While demand is expected to be weak, some segments may have greater resistor demand than others in 2010. Demand from the automotive industry is expected to increase next year, according to DECISION. Vehicles use a lot of resistors and resistor networks for their various electronics systems.
In fact, automotive will be the only segment that will demand more resistors in 2010 than in 2009. Automotive segment resistor demand will grow from $512 million in 2009 to $544 million in 2010. The increase is due in part to the growth in the number of electronics systems in vehicles. In addition, more vehicles are expected to ship in 2010 as the economy recovers.
For resistor manufacturers, the automotive industry can be very challenging. Buyers demand low prices and high quality from their suppliers. Design cycles are long, so it could be several years before component demand ramps up once a resistor or network is designed into a new model.
"But once you are in a program, if you can wait long enough, you will enjoy that business for an extended period of time," says Mike Torres, product manager for thick-film resistors at BI Technologies in Fullerton, Calif. "Once you are designed in and the engineers go to work on something else, you keep the business unless you have a severe quality or delivery issue," he says.
During the downturn, demand has been greater for discrete resistors rather than resistor networks because discrete resistors have lower price tags. Moreover, discrete resistors provide some flexibility in design.
"If you use a discrete resistor in your prototype, you can swap in and swap out and make some changes on the fly," Schroeder says. A resistor network is more limiting.
"You can't easily change from one resistor value to another. You can't swap out this resistor value for that resistor value," he adds.
Some oems are short sighted, according to Schroeder, when it comes to the price of a network or an array compared to the price of discrete resistors. "A resistor network will cost more than four resistors on a board," says Schroeder. The network will have four resistors, but the network or any array will actually cost less when placement costs on the board are factored in, he says.
"Each resistor placement can cost you a penny so a chip array is much more cost effective because there is only one placement cost rather than four," he says.
However, more resistor arrays will be used because of the trend toward miniaturization, according to Schroeder. He explains that arrays can be handled by current pick and placement equipment in small sizes.
He says Stackpole expects the 0201 x 4 chip array to be a higher runner because it can be used easily with pick and place machines.
"The 0201 discrete resistor is unbelievably difficult to pick and place, but the equipment has no problem handling the 0201 x 4 array" because it is in larger form factor, says Schroeder.
He says some manufacturers in Asia are using an 0201 x 2 chip array and using only one resistor in the array because they could use their standard pick and place equipment.
"That tells you how difficult the 0201 discrete resistor is to pick and place," says Schroeder.
Networks are often used by OEMs when they need accuracy between resistors, says Torres of BI Technologies. "If they are looking for a way they can divide down a voltage or attenuation or gain setting, they want a network. To get the same performance with discretes you have to divide tolerance in half at a minimum," he says.
See also: Prices for components will decline in the third quarter
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