Commodity costs drive some connector tags up

James Carbone -- Purchasing, 4/20/2006

The bad news for buyers is many connector manufacturers have increased prices 3-7% for select products this year because of increasing costs for copper, gold and polymers. The good news for buyers is prices have not increased for all connectors and suppliers are not sure if there will be further increases later in the year.

The price increases have been limited mostly to products that have large amounts of gold, copper or plastic polymer in them.

"Right now we don't see more increases, but we have to see where materials prices go," says Joe Nelligan, vice president of sales and marketing at connector maker Molex in Lisle, Ill.

Higher prices for some products will help drive the connector industry as revenue grows from about $35.4 billion in 2005 to $38.1 billion in 2006, according to researcher Bishop & Associates in St. Charles, Ill. Many connector manufacturers attribute growth to strong demand from mobile communications equipment manufacturers and server and storage companies.

"We see a lot of growth in mobile communications," says Nelligan. He says demand is strong for micro-miniature board-to-board and I/O connectors and for backplane and power connectors. He adds there has been good broad-based growth with exceptionally strong demand in the first half in the distribution channel.

For buyers, the uptick in demand has translated into longer leadtimes. Molex's board-to-board interconnects are stretching beyond eight weeks. Tyco has also experienced extended leadtimes. Deliveries for its backplane connectors are running about eight to 12 weeks, though Tyco is adding capacity to shorten leadtimes.

Besides significant demand, the only other factor that may impact supply in 2006, is the upcoming July 1, 2006 deadline to meet the European Union's Restriction of Hazardous Substances (RoHS) directive that bans six substances, including lead.

There could be supply problems because the rate at which customers will transition their products over to RoHS-compliant versions is unknown, says Jeff Brown, product director for connectors at a unit of Tyco Electronics in Harrisburg, Pa.

Connector manufacturers say one of the biggest challenges is fielding requests for RoHS and bill-of-substance reporting. Nelligan says connector makers need a system capable of capturing the data and the resources to input the detailed product information into a database, and the capability to provide the information in a format customers require.

There are also the challenges of managing the plating processes for both tin and tin/lead, and getting the supply base in line with RoHS.

The challenge is managing this load shift and transitioning the plating capacity over to satisfy the market, Brown adds. "What we've seen is a real sporadic changeover by customers. European customers started as far back as 18 months ago. Some customers in Asia are just starting to shift, and customers in the Americas are taking a longer time to make the transition," he says.

RoHS exemptions are also causing headaches for connector suppliers. Although compliant-pin or press-fit connectors are exempt under the RoHS directive, some buyers still want RoHS-compliant versions because they expect that these connectors will eventually have to be compliant. This requires suppliers to manufacture both noncompliant and RoHS-compliant parts.

There also have been some technical challenges in converting legacy military connectors to RoHS-compliant versions because many of them use cadmium as a final finish for their conductivity and resistance to corrosion qualities. Cadmium is one of the banned substances.

In addition, the finish is typically covered with a chemical film—hexavalent chromate—another banned substance, says Peter Hyzin, director of advanced technology for ITT Industries in Santa Ana, Calif.

ITT now offers several new optional finishes including zinc cobalt, zinc nickel, black zinc and other proprietary finishes. However, these choices have tradeoffs. Some of these options may not be as good in conductivity or corrosion so selection of the RoHS-compliant finish depends on the product family, Hyzin says.

Besides RoHS, another challenge for connector manufacturers is developing new designs that incorporate customer requirements for small size, high-density, high-speed, improved electrical performance and lower cost.

One design change has been the elimination of shields in connectors. FCI Communications' shieldless AirMax VS connector system, introduced a few years ago, reduces weight and cost while offering greater design flexibility.

Continued expansion of this product line will be key to growth this year, says Rob Poort, global communications market manager at FCI in the Netherlands.

Molex also expects its new iPass interconnect system to open up a lot of opportunities in storage and server applications. This connector was chosen for the PCI Express standard. The company also plans to launch a new family of high-pincount, high-density multistack mezzanine connectors with pin counts of 200-400 pins, 8-40 mm stack heights.

There are also growth opportunities for smaller and higher frequency RF and wireless interconnects in mobile communications, storage, medical, test and measurement and military applications, says Ted Worroll, product manager for RF/wireless products at ITT Cannon in Watertown, Conn.

ITT plans to launch a new 1.0/3.5 RF 75-ohm connector that will operate up to 3 GHz, and expand its universal contact line with a 1.3 mm freestanding height. Also on the drawing board is a nonmagnetic range of SMA, SMB and MCX connectors for MRI equipment applications.

With new industry-standard platforms coming into play this year, Tyco expects to see increased demand for its products including the HM-Zd connector for ATCA and MULTIGIG for VITA 46.

Other areas of growth, connector manufacturers say, are micro-miniature connectors with smaller pitch and higher density for mobile and military applications, and sealed IP65 and IP67 connectors for military, industrial and automotive transportation applications.

There is also a resurgence in fiber-optic connectors and assemblies for military/aerospace applications. The military is looking at fiber-optic termini instead of copper, which had been used for weight, bandwidth and wire management reasons as well as easier routing, says Nelligan.

Hyzin says the military has embraced fiber-optic technology for data transmission in airborne networking systems. There are also two military standards in the works for fiber-optic connectors in shipboard and ground-based systems. He also reports significant growth for fiber optics in both military and commercial aircraft.

In general, there has been an increase in demand for military interconnects particularly for handheld radios, says Hyzin, which has resulted in the development of connectors that utilize spring probe contact technology. ITT also developed the Chip on Flex filter technology that is said to virtually eliminate all stress from thermal shock and vibration.

Hyzin expects that these two technologies will significantly drive growth over the next five years.