Resistor tags to fall despite healthy demand
By Staff -- Purchasing, 5/20/1999
Declining prices will result in modest growth in the resistor market despite healthy unit demand from the computer and communication industries.The North American resistor market will grow from about $1.51 billion in 1998 to $1.54 billion this year, according to Electronic Outlook Corp. Resistor demand is on the upswing, according to manufacturers, but buyers can expect price declines of 3%-5% because of excess capacity.
Over the past 12 months, prices for some resistors have fallen dramatically for large original equipment manufacturers and contract manufacturers buying very large quantities. One resistor manufacturer reports that pricing for a 0603 chip resistor fell from $1.50 per thousand to $1.00 to $1.10 for customers who buy 50 million parts or more per year.
Besides overall overcapacity in the industry, prices also are falling because volumes are increasing and contract manufacturers are shopping large volumes around the world to get the best price. Manufacturers say two years ago an OEM or CM may have bought 5 million chip arrays per year. Now customers are purchasing 100 million chip arrays per year. CMs are also not content to use two or three manufacturers, but will get bids from numerous suppliers to get the best price.
Demand is picking up
Manufacturers say they are seeing a recovery in resistor demand.
"Distributors are restocking, but there is also an increased confidence in Europe, where we are seeing some major customers starting to produce large quantities again," says Adrian O'Connor, product manager for resistors and resistor arrays for Bournes Inc.
O'Connor says that while chip resistor shipments dwarf sales of arrays, demand for arrays is growing rapidly. The good news for buyers is that despite growth in demand, array prices are declining because of stiff competition. There is a migration from chip resistors to arrays. "With an array, you get higher integration and you need less pick-and-place operation," says O'Connor.
In some cases equipment makers are using arrays rather than resistor networks. "Using an array over a network is a production issue," says O'Connor. "People who use the conformal through-hole resistor don't mind having a wave soldering process in their production operation. Companies looking to arrays have a lot of surface-mount equipment in house and are looking for one type of technology to produce with and that would be surface mount.
"It's a balance between the price of the array and the individual resistor versus the cost placement saving. An array can replace a number of individual chip resistors," says O'Connor.
While demand for arrays is growing, resistor networks will see growth too. Networks cut down component count and reduce insertion cost while increasing functionality. They also have tighter tolerances than discrete resistors.
Buyers also can expect resistors to be used in more integrated passives with capacitors and diodes which also lowers placement costs. Integrated passives also improve frequency response as bus speeds move up past 100 megahertz.
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