Mixed Bag for Passive Electronics in 2016

Mixed Bag for Passive Electronics in 2016

An unusual economic year proves challenging for global capacitor, resistor, and inductor markets.

The last fiscal year proved challenging for global capacitor, resistor, and inductor markets—all of which felt the impact of an unusual economic year in the history of tracking these segments. In TTI’s Shifting Market Shares in The Global Electronic Component Industry In FY 2016, Dennis M. Zogbi writes that the market environment is “succumbing to the impact of forces that are both internal and external to the supply chain and almost every company in the world selling electronic components took a beating in the markets in the last fiscal quarter, unless you were selling to specific manufacturers in China who in turn were building specific types of smartphones.”

According to Zogbi, the real “crack in the armor” came mid-March 2016 when his own nine-month, year-on-year sales cycle report on components sold into the automotive industry found that the market was growing and declining at the same time (i.e., growing in yen and declining in U.S. dollars). He credits the rapid frequency at which the yen has been weakened on a year-over-year basis with causing this “perfect storm” of sorts.

“This is having a significant impact on the year-over-year changes in market shares at each granular level of passive components,” Zogbi writes, noting that the research also pointed to two additional criteria that were market driven which were having an even greater impact on shifts in global market shares. These included issues related to market access (product line, end-market, region) and specific customer access within segments in fiscal-year 2016.

In citing the key criteria impacting market shares in the global passive component industry during the fiscal year, Zogbi points to weakened currency levels, the yen valuation to the U.S. dollar, and the won valuation to the U.S. dollar as three of the primary drivers. There were also changes in market shares due to product mix and market access. “…when measured in US dollars, all markets for passive components declined in FY 2016 on a year-over-year basis, except for high capacitance MLCC and discrete inductor chip coils,” Zogbi writes.

Other factors impacting the market during the fiscal year include access to specific end-customers (particularly those in the smartphone production business) and lower consumption of everything from “handsets to automobiles” by Chinese consumers.

Calling 2016 a “pivotal year for passive component markets,” Zogbi draws two conclusions from his latest research on the topic: 1) there is no question that one previously-unknown impact of Japanese economic policy is that its companies gained market share in international growth markets because of weak currency, and 2) the strategy of weakened currency coupled with other market accelerators (such as having the right product at the right time for the right company in the right country) accelerated market share gains of certain Japanese companies that demonstrated multiple perspectives to strategy.

“[It now] becomes even more important to forecast the future because the developments at each level of the supply chain are becoming more intense,” Zogbi concludes in his report. “Smartphone growth will slow and prior year-on-year growth rates for passives will also slow. The years of 50% unit growth in support of specific smartphones are over.”

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish