Evaluating the End Markets for Passive Electronic Components: June 2023

Dennis Zogbi, Paumanok Inc. publishes on TTI Market Eye June 2023 outlook on end markets for passive electronic components such as capacitorsresistors and inductors.

When we embarked on our research of passive components in the late 1980s, the computer industry emerged as a formidable competitor to the well-established consumer audio and video imaging markets. Since then, over the past 35 years, the dominance of mobile handsets has surpassed all other sectors in the high-tech economy. This has significantly influenced the design and trajectory of the capacitor, resistor and inductor industries, and it is expected to continue shaping their course for the next five years.

Moreover, the dynamic landscape of technology has witnessed various notable shifts. For instance, the transition from cathode ray tube to flat panel displays has revolutionized the visual experience. Furthermore, the ongoing “electronification” of automobiles has opened new avenues for development. Alongside these advancements, breakthroughs in medical implant technology, oil and gas electronics, renewable energy systems, data storage and munitions have presented valuable opportunities for component vendors who are keen on keeping up with market research reports.

By staying attuned to these market trends and embracing the potential offered by emerging technologies, component vendors can position themselves advantageously to capitalize on these opportunities.

The traditional product-based end markets into which components are sold include:

Within each category, specific products stand out:

The industrial market segment can be further broken down into:

Specialty markets can be further broken down into defense and aerospace, medical electronics, undersea cable, mining electronics, railroad electronics, instrumentation and control equipment, ocean electronics and oil and gas services electronics (downhole pump and data logging tools).

Products that we have studied over the past 35 years that lead the field in complexity and require the greatest commitment from capacitors, resistors and inductors include these products:

Based upon world region, the Asia-Pacific region accounts for between 70 percent and 80 percent of all components consumed, with China and Japan the two largest consuming countries, but Korea, Singapore, Philippines, Thailand, Malaysia and Indonesia are also key countries that build larger assemblies that require passive components to operate. The Americas and Europe account for between 10 percent and 15 percent of consumption of components each, and key consuming countries are Germany, the U.S., Mexico, Brazil, the Czech Republic, Hungary, UK, France and Italy.

(See MarketEYE TTI Article MAY 2023 – MARKETS BY REGION)

Figure 1. Vertical End Markets for Passive Electronic Components: 2023; Source: Paumanok IMR “Passive Electronic Components: World Market Outlook: 2023-2028”

Key Growth Product Markets for Passive Components: 2023-2028

The following chart illustrates high growth end-use markets within each end-use market segment we study.  All these products are passive electronic component intensive.

Figure 2. End-Use Product Markets for Passive Components: 2023-2028; Source: Paumanok IMR “Passive Electronic Components: World Market Outlook: 2023-2028”

Telecommunications Equipment and the Passive Component Markets: FY 2023

The telecom sector is dominated by demand from the wireless handset business, with the movement from conventional cellular phones to smart phones a major driving force in the constant increase in unit shipments of MLCC, thick film chip resistors, SMD chip inductors and ultra-small tantalum chip capacitors. The smart phone has a considerably higher passive component content when compared to traditional legacy handsets.

Other products included in the telecom sector are wireless base stations; landline and cordless phones; GPS devices; telecommunications infrastructure equipment such as switches, routers and repeaters; PBX equipment; other base stations; cable modems and various forms of commercial satellites and related communication equipment.

Five-Year Outlook in the Telecommunications End-Use Market Segment

The global telecommunications market sector includes a wide range of products and services, such as mobile handsets, base stations, telecom infrastructure, broadband services and more. The demand for telecommunications products and services has been steadily increasing over the past few years, driven by factors such as the growth of mobile data usage, the expansion of broadband networks and the increasing adoption of new technologies such as 5G.

The telecommunications industry is continuously evolving with the introduction of new technologies such as 5G, the Internet of Things (IoT), artificial intelligence (AI) and cloud computing. These technologies are expected to continue driving the growth of the telecommunications industry in the coming years.

One of the most significant developments in the telecommunications industry is the ongoing deployment of 5G networks. 5G networks promise faster speeds, lower latency and higher capacity than previous generations of wireless networks. The widespread deployment of 5G networks is expected to drive the growth of IoT, autonomous vehicles, smart cities and other applications that require high-speed connectivity.

Another significant development in the telecommunications industry is the growing adoption of cloud computing. Many enterprises are migrating their data and applications to the cloud to take advantage of its flexibility, scalability and cost-efficiency. This shift towards cloud computing is expected to continue in the coming years, driving the growth of cloud-based services and solutions.

The COVID-19 pandemic has also had a significant impact on the telecommunications industry, with an increased demand for digital services and remote working driving growth in some areas of the market. However, the pandemic has also caused some disruptions to supply chains and delays in the deployment of new technologies, which may continue to affect the industry in the coming years.

Overall, the telecommunications industry is expected to continue growing in the next five years, driven by factors such as the widespread deployment of 5G networks, the growing adoption of cloud computing and the increasing demand for digital services. However, the industry is also likely to face challenges such as competition, regulatory issues and cybersecurity threats.

The World’s Top Consumers of Electronic Components in the Global Telecommunications Markets

The world’s top manufacturers of telecommunications equipment consuming capacitors, resistors and inductors include:

Other key players in the global telecommunications market, such as smartphone manufacturers and other electronic device makers, are also major consumers of electronic components.

Computer Markets for Passive Components: FY 2023

The computer and business machine segment, which includes motherboards, power supplies, monitors, hard disc drives, video graphics cards, modem cards and semiconductor chipset boards; as well as scanners, printers, fax machines, point of sale machines and photocopiers. Computers consume large volumes of higher priced capacitors, resistors and inductors and demand for high capacitance MLCC, tantalum chips and aluminum chip capacitors are dependent upon the computer market as a large percentage of total consumption as do chip resistors, resistor networks and ferrite beads.

The computer end-use market segment encompasses a wide range of products, including desktops, laptops, tablets and other computing devices. The market is driven by a variety of factors, including technological advancements, changing consumer preferences and economic conditions.

One of the most significant developments in the computer end-use market segment is the ongoing shift towards mobile computing devices, such as smartphones and tablets. These devices offer greater convenience and portability than traditional desktops and laptops and are increasingly being used for both personal and professional purposes.

Another significant development in the computer end-use market segment is the growing demand for high-performance computing (HPC) solutions. HPC solutions are used in a variety of industries, including healthcare, finance and scientific research, and are essential for processing large amounts of data and running complex simulations.

The COVID-19 pandemic has also had a significant impact on the computer end-use market segment, with an increased demand for digital devices and services driving growth in some areas of the market. However, the pandemic has also caused disruptions to supply chains and shortages of critical components, which may continue to affect the industry in the coming years.

Overall, the computer end-use market segment is expected to continue growing in the next five years, driven by factors such as the shift towards mobile computing devices, the growing demand for HPC solutions, and the increasing demand for digital devices and services. However, the industry is also likely to face challenges such as competition, economic uncertainty, and technological disruptions.

The World’s Top Consumers of Electronic Components in the Global Computer Markets

The world’s top manufacturers of computer equipment consuming capacitors, resistors and inductors include:

Other notable computer manufacturers include Asus, Huawei, Toshiba, Fujitsu and MSI. The computer manufacturing industry is highly competitive and companies must continue to innovate and adapt to changing consumer preferences and technological advancements to maintain their market share.

Five-Year Outlook in the Computer End-Use Market Segment

The computer industry has been evolving rapidly, with the market shifting towards mobile devices such as smart phones and tablets. However, traditional computing devices such as desktops and laptops are still widely used, especially in the business and education sectors.

The COVID-19 pandemic has accelerated the adoption of remote work and learning, which has increased the demand for personal computers and laptops. This trend is expected to continue in the next few years, with many organizations investing in remote work infrastructure and upgrading their computer systems to support this new way of working.

Another significant trend in the computer industry is the growing demand for high-performance computing (HPC) solutions, driven by the increasing use of artificial intelligence (AI) and machine learning (ML) in various applications. HPC solutions are used in a variety of industries, including healthcare, finance and scientific research and are essential for processing large amounts of data and running complex simulations.

In the next five years, the computer industry is expected to continue evolving, with a continued shift towards mobile devices and the increasing adoption of new technologies such as AI and ML. The demand for HPC solutions is also expected to continue growing, driven by the increasing use of these technologies in various industries.

However, the computer industry may also face challenges such as supply chain disruptions, shortages of critical components and regulatory issues, which may affect the availability and cost of computing devices. Overall, the computer industry is expected to continue growing, driven by technological advancements, changing consumer preferences and the increasing demand for digital devices and services.

Consumer Audio and Video Imaging Markets for Passive Components: FY 2023

Consumer electronics is a broad category and many of the top Japanese vendors of passive electronic components to the segment further dichotomize the market into consumer audio and video imaging equipment. The other popular term is home theatre electronics, which is even more encompassing and is an entrée into smart home electronic technology of the future. Consumer audio and video imaging equipment had been the largest segment for consumption for all passive components in dollar value, however, it has been eclipsed by both the telecom and computer market segments over the past three years, and now even the automotive segment and the industrial segment will surpass it in overall value.

It is still a valuable segment (what Paumanok Japan customers would describe as “the segment on which all the other segments were founded upon”) and the large volume of demand is from the television set, game console, MP3 player, digital video camera, digital still camera and stereo market segments. Many of the peripheral markets, such as portable game consoles, MP3 players, digital cameras and portable GPS devices have declined due to the success of the smartphone, which offers the consumer the functionality of these devices in the “converged” smart phone.

Five-Year Outlook in the TV Set and Home Theatre End-Use Market Segment

The TV set and home theater market segment have been evolving rapidly with the emergence of new technologies such as 4K and 8K displays, HDR and smart TV features. The COVID-19 pandemic has also influenced this market segment, with more people staying at home and spending time watching TV shows and movies.

In the next five years, the TV set and home theater market segment are expected to continue growing, driven by technological advancements, changing consumer preferences and the increasing demand for digital entertainment. Some of the key trends and forecasts for this market segment include:

Overall, the TV set and home theater market segment is expected to continue growing, driven by the increasing demand for digital entertainment and the emergence of new technologies. However, the market may also face challenges such as supply chain disruptions, shortages of critical components and changing consumer preferences, which may affect the availability and cost of TV sets and home theater systems.

The World’s Top Consumers of Electronic Components in the Consumer Audio and Visual End Markets

Some of the top manufacturers of TV sets and home theatre electronics in the world include:

Automotive Markets for Passive Components: FY 2023

Automotive electronics include engine control units, anti-lock braking system (ABS) cards, supplemental restraint system (SRS) electronics, car stereos, HVAC systems, driver information and diagnostic systems, powertrain electronics, HEV integration, door locks, seat motors, interior and exterior lighting, instrument clusters and related electronics.

There are two key trends: The first is electric vehicle propulsion and the second is connected, autonomous, shared and electric (CASE) in (internal combustion engine) ICE fossil fuel electronics for ADAS (advanced driver assistance systems). The extension of this is the supporting power infrastructure for charging stations and offshore wind projects.

A solid embracing of carbon emission guidelines and a clear movement away from fossil fuel electronics in favor of electric transport technologies in accordance with the Paris Accords, Tokyo Agreement and with an eye on Green Bond Investing.

The increase in demand for high voltage MLCC with soft polymer terminations, tantalum and aluminum electrolytic and plastic film capacitors as well as for industrial grade resistors and inductors is the direct result of this transition. The reader should also remember for forecasting that we are using the strong U.S. dollar. These markets have incredible upside potential in value between 2024 and 2028 because automotive converters, inverters, chargers and battery systems are net new opportunities that do not cannibalize existing ecosystems because of the high voltage nature of electric vehicle propulsion which is alien to fossil fuel vehicle electronics.

Five-Year Outlook in the Automotive End-Use Market Segment

The automotive industry is currently undergoing significant changes driven by technological advancements, changing consumer preferences and increasing environmental regulations. In the next five years, the automotive end-use market segment is expected to continue evolving, with a focus on electric and autonomous vehicles, connectivity and new business models.

Some of the key trends and forecasts for the automotive end-use market segment over the next five years include:

Overall, the automotive end-use market segment is expected to continue evolving rapidly in the next five years, with a focus on electric and autonomous vehicles, connectivity, and new business models. However, the industry may also face challenges such as supply chain disruptions, changing consumer preferences and regulatory uncertainties, which could impact the pace and direction of innovation.

The World’s Top Consumers of Electronic Components in the Global Automotive Markets

Electronic components have become an integral part of modern automobiles, helping to improve safety, efficiency and comfort. The use of electronic components in automobiles is expected to continue growing, driven by increasing consumer demand for features such as infotainment systems, driver assistance technologies and connected services.

Some of the key trends shaping the automotive industry and driving the demand for electronic components include:

The automotive electronic sub-assembly market is highly competitive, with many companies offering a wide range of products and services. Here are some of the top manufacturers of automotive electronic sub-assemblies in the world:

These companies are among the top players in the automotive electronic sub-assembly market, but there are many other companies that also offer a wide range of products and services. The automotive electronics market is expected to continue growing in the coming years, driven by increasing demand for connected, autonomous and electric vehicles, as well as advanced safety features and infotainment systems.

Electric vehicle propulsion represents a net new market opportunity for vendors of high voltage passive electronic components, especially those that employ polymer cathodes (Al203, Ta205) or polymer terminations (HV MLCC) or PP dielectrics (X&Y and Snubber) and there is a clear trend to consume more polymers in EVx because of the “self-healing” aspect of the part when subjected to high voltages.

Industrial and Power Markets for Passive Components: FY 2023

This segment experienced a dramatic upswing in value due to consumption of large can capacitors for applications in electric vehicle charging and offshore wind power generation, transmission and distribution. This basket category of “industrial” products also includes (primarily) power transmission and distribution capacitors, power supplies, large home appliances, renewable energy systems, switchgear and switchboard apparatus and motor controllers. Power film capacitors, screw terminal aluminum electrolytic capacitors, high voltage ceramic capacitors, wirewound and nichrome resistors and power inductors are consumed in this segment of the market.

This market had experienced significant activity related to power efficiency and for DC link circuits for renewable energy systems in wind and solar farms.

This had a positive market effect on polypropylene film capacitors and large can aluminum electrolytic capacitors and the market received a boost due to demand for upgrades of industrial automation equipment, edge to cloud industrial automation, which requires new machines that meet targeted efficiency requirements.

Five-Year Outlook in the Industrial End-Use Market Segment

The industrial sector encompasses a wide range of industries, including manufacturing, construction, energy and transportation. The use of advanced technologies and automation is transforming the industrial sector, leading to increased efficiency, productivity and safety.

Some of the key trends shaping the industrial sector and driving growth in the use of electronic components and automation technologies include:

Overall, the industrial sector is expected to continue evolving rapidly in the coming years, driven by the adoption of advanced technologies and the increasing demand for efficiency, productivity and sustainability.

The World’s Top Consumers of Electronic Components in the Global Industrial End-Use Markets

The industrial sector is a major consumer of electronic components, which are used in a wide range of applications such as factory automation, process control, robotics and energy management. Some of the most used electronic components in the industrial sector include

The top consumers of electronic components in the industrial sector are likely to be companies that specialize in industrial automation, process control, robotics and energy management. These companies are likely to require a wide range of electronic components for their products and services, including microcontrollers, sensors, power electronics, communication components and memory devices.

The industrial equipment market is highly diverse, with numerous companies operating across a wide range of sectors, including manufacturing, construction, energy and transportation. Some of the top manufacturers of industrial equipment include

These are just a few of the top manufacturers of industrial equipment in the world, and there are many other companies that also play a significant role in this market.

Specialty Electronics Segment (Defense, Medical, Oil & Gas, Mining and Other): FY 2023

The specialty electronics market segment includes five discernible sub-segments: medical electronics, oil well electronics, mining electronics and defense electronics (we include a fifth category to include all other unique segments that require unusual voltages or operate at unusual frequencies or at different levels of chemical, gas or radiation exposure or at elevated temperatures to 350° C). Defense is by far the largest segment, accounting for the majority of the specialty electronics markets worldwide. The medical and spacecraft segments are the most demanding, but also the most profitable. Oil and gas electronics are also quite demanding and very profitable passive component market segments as well.

The specialty electronics market segment includes several discernible end-market segments:

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