In a year-end interview with Samtec, Bishop & Associates shared its 2024 connector market overview and 2025 outlook.
2024 is turning out to be a good year for the connector industry with an optimistic look into 2025 according to Bishop & Associates.
As forecasted in early spring, the industry is anticipated to grow approximately 5.8%. Where we were off is in the performance of individual regions. We initially anticipated North America to be the best-performing region, growing 7.8% year-over-year, followed by Asia Pacific with year-over-year growth of 7.1%, and that all other regions would show low single-digit growth.
It appears that North America will show high-single-digit to low double-digit growth, but it will not be the region showing the most significant growth in 2024. Instead, North America will be outperformed by Asia Pacific with double-digit growth, as will the Chinese region. Even more surprising is that Europe, Japan, and the ROW region will all show negative growth.
it appears overall that the industry is performing as we predicted, not all end-use equipment sectors align with previous years. We had forecasted that the automotive industry would show strong growth, driving growth in the industrial market. Unfortunately, this is not occurring. Even with the drive towards level five autonomous vehicles and electric vehicles continuing to be key growth drivers, increased interest rates, continued issues with lithium batteries, lack of significant infrastructure, and inflation have caused automotive production rates, particularly in developed economies like Europe to remain stagnant.
In fact, the automotive end-use equipment sector and, by osmosis, the industrial end-use equipment sector are among the key reasons the European region is doing so poorly. According to the European Automotive Manufacturers Association (ACEA), over 13 million Europeans work in the automotive sector, accounting for over 10% of all manufacturing jobs. Importing Chinese vehicles is another factor affecting European automotive growth, particularly in electric vehicles. The ability to sell cars at a lower price due to subsidies, the market share of Chinese electric vehicles in Europe has grown steadily. In fact, the European Union began imposing tariffs ranging from 8% to 35% on Chinese EVs late this year to slow down this growth.
Driven by continued worldwide conflict and increased defense budgets, the military/aerospace end-use equipment sector is performing especially well in 2024. This growth, driven by weapon stock replenishment and protection from emerging threats, including cyber-attacks, has allowed the military equipment sector to grow in all regions.
Growth in 2024 in the computer and telecom/datacom sectors reflects the strong demand for products used in AI applications and machine learning, data center expansion, and the drive towards 6G.
Terchnology Trends
Several technology trends will shape the connector industry going forward. These trends, not listed in any order, include artificial intelligence (AI) growth, which will spur growth in active optical and copper cables and high-speed connectors. AI will drive growth in the computer and telecom/datacom markets, in particular, because of the demand for increased processing power, data centers, and data storage.
Continued development in the science of robotics, also driven by AI and machine learning (ML), is another trend worth pointing out. It is anticipated that over the next decade, robots will not only become more autonomous, but you will see an increased demand for cobots and soft robotics. Cobots, industrial robots designed to work alongside individuals, are programmed to perform various industrial tasks like assembly, packaging, quality inspection, painting, and welding.
Another area of robotics where growth is anticipated is the development of soft robotics. Soft robotics use flexible materials like elastomers, fluids, and gels rather than rigid materials like metals and hard plastics, so soft robotics are designed to engage in human interaction with minimal risk or damage. These variations of robots, as well as traditional robots, will drive growth in coax connectors, circular connectors, including metric type M12, M8 types, push-pull versions, RJ45 industrial ethernet, and standard rectangular connectors.
Other technology trends include the increased use of co-packaged and linear optics. Co-packaged optics refer to the integration of optical transceivers directly into the ASIC package of the host chip. Co-packaged optics (CPO) is an approach that aims to address growing challenges around high interconnection speed, improved bandwidth density, and low power consumption, all important aspects in today’s data-hungry networks. CPO brings together the key elements required for communications — optics and electronics.
Linear optics, often called the long-distance cousin of CPO, has the switch ASIC’s SerDes directly drive the module optics. This removes the need for the module’s DSP chip, cutting the module’s power consumption by half.
Another area to watch out for is a growing interest in wireless power transfer. Although desired for its convenience, safety, aesthetics, and flexibility in design, the technology is not yet practical due to its limited range, lower efficiency, slower charging time, and higher cost. Limited compatibility and lack of standardization are also hindering aspects.
Liquid cooling is another area of interest, as is the increased development of user-recognition mating systems and the use of predictive engineering for product design.
Connector Leadtime and Pricing
In general, connector prices have not increased over the last year, nor are they anticipated to increase in the first half of 2025. The same can be said about lead times, which are based on product type (circular, fiber, rectangular, etc.), averaging between eight and 12 weeks. According to our recent evaluation of the primary materials that makeup connectors; gold, brass/copper, thermoplastic, and steel, raw material prices increased year-over-year 7.6% in the third quarter of 2024.
Sequentially from the second quarter, prices were flat. What has the potential to create problems down the road is trade restrictions on specific raw materials, such as antimony, magnesium, cobalt, germanium, gallium lithium, and graphite. Although not generally used specifically in connectors, these elements are key ingredients in glass, lights, magnets, batteries, catalytic converters, and used in just about everything from smartphones to automobiles.
2025 Connector Market Outlook
Overall, like 2024, Bishop anticipates 2025 as a year of positive mid-single-digit growth. We forecast connector sales to grow 4.5% with the greatest growth in China, followed by the ROW region. Because the year-over-year comparisons will not be difficult, growth will also be good in Europe and Japan.
Read the full paper: 2024 Connector Industry Year End Review: A Discussion With Bishop and Associates