Passive Component Lead-Time Analysis: September 2009-

Survey results are only as good as the information that goes into them. For this survey we sent emails to 14,007 contacts, of which 372 responded (2.7%). Each question in the survey allowed for respondents to make detailed comments regarding their answers, and these were most revealing. Also, the survey was prompted by one of the large wireless handset manufacturers contacting us and asking for feedback as to why they were experiencing extended lead-times for specific types of passive components. Subsequent research revealed that lead times for passive components had begun to increase in June 2009 and remained elevated until the survey was launched in September 2009. At this time lead-times remain elevated. Even though only 372 respondents contributed to the survey, they represented the majority of the major distributors of passive components, and a substantial number of the larger OEMs and CEMs in Asia, Europe and the United States who buy passive components. We also had a significant response rate among passive component vendors who gave us insight into the reasoning as to why lead times were extending.

Component Lead-Times: Survey Conclusions:

Certainly the consistent reply among respondents was that component lead-times for high capacitance MLCC between 2.2 and 100 microfarad were extending at a rate that exceeded other parts. The reader must remember that MLCC is used in almost every printed circuit board in the world. The extension rates differed among respondents from 9 weeks to as long as 20 weeks, and this we learned from respondents’ comments was the result of extended lead times from specific vendors. Chinese vendors of high capacitance MLCC were quick to point out that lead-times from Japan were greater then those from China. The other consistency was for surface mount V-chip aluminum electrolytic capacitors in the 4x5mm, 5x2mm, 5x11mm and 6.3x11mm case sizes, and for both conductive polymer type, and manganese type chip tantalum capacitors. In the resistor commodity, the results were not as uniform, although the majority of respondents reported extended leadtimes for traditional resistor networks and integrated passive devices; and in the inductor commodity, the clear component with the greatest leadtimes was the SMD wirewound inductor and the ferrite core. One common thread among all of these parts is that they are consumed in notebook and netbook computers, which seem to be somewhat insulated from the global economic downturn as demand for both product lines continues to grow worldwide. Lead-times for circuit protection components remained uncertain, although the clear response from multiple survey participants was that thyristor lead times were increasing at a rate that exceeded other overvoltage and overcurrent protection components. However, it should be noted that at Paumanok Publications, Inc. the demand for research related to chip varistor and TVS diode for ESD protection in portable electronics is at an all time high. The reason for this is the proliferation of advanced touchscreens throughout portable digital electronics markets.

Reasons for Extended Lead-Times:

In the survey results we expected more raw material shortages to have had an impact on the ability for manufacturers to produce, although this was not the case, except for tantalum, which is not yet in short supply, but there is anticipation that there will be a tantalum ore shortage in the coming months. The common thread was poor visibility and the reluctance for many component manufacturers to expend resources on fixed assets without fully knowing what the future holds in store for the supply chain. The majority of respondents noted that there was not enough personnel in place to meet demand, and that this was a result of poor visibility, which in turn was the result of the predominant “just-in-time” delivery model that has effused itself in the industry during the global economic downturn. The result therefore is extended lead-times. An interesting addendum to this came from China, where more then one respondent noted that it was getting more difficult for manufacturer’s to attract workers to locations outside their home towns. Finally, it was noted more than once among OEM and CEM respondents to the survey that they believed that by extending leadtimes, component manufacturers were in fact “artificially” attempting to raise prices.

Outlook:

The survey results regarding the outlook for leadtimes is mixed. The majority of respondents believe leadtimes will either remain extended or increase even further, which is a logical conclusion since the majority of respondents also believe that the extension of leadtimes is a result of poor visibility and that the market is in “just-in-time” delivery mode. Therefore, it is likely that October will see an increase in component lead- times, especially for high cap MLCC, tantalum chips, SMD wirewound inductors, resistor networks and vertical chip aluminum electrolytic capacitors.

Additional Resources For This Story: (1) Passive Electronic Components: World Market Outlook: 2010-2015 ISBN # 1-893211-99-1 (2010).