Rising Metals Prices Are Impacting Passive Component Production Costs in 2019, Reports TTI MarketEye
Originally posted on TTI MarketEye Blog
MLCC and thick film chip resistor manufacturers are experiencing price increases in feedstock metals as they enter the fourth quarter of CY 2019. This MarketEYE article uses an economic model to discuss the potential impact that higher metals prices will have on mass-produced electronic components consumed in handsets, computers, TV sets and all other consumer and professional electronics.
Massive Quantities of Feedstock Metals Are Being Consumed
Labor disputes, mine closings, refinery closings and speculation have created unexpected price increases for key metals consumed in the mass production of passive components – in this instance, the mass-produced MLCCs and thick film chip resistors.
The key scientific principle surrounding passive component technology is that functionality is equivalent to the physical size or available surface area of the finished component. This in turn makes the volume of raw materials consumed in the production of passive components significant, especially for dielectric materials such as ceramic; however, a considerable volume of metal is consumed for electrodes, terminations and active layers of passive components. What’s more, the metals are far more expensive per gram when compared to the dielectrics, and therefore account for one of the most expensive portions of Cost of Goods Sold. Feedstock metals are the area where manufacturers of passive components have the greatest risk due to the variable nature of the passive component raw material supply chain – especially when it comes to feedstock pricing, which for these mass-produced components is outside the control of the high-tech economy, especially when it comes to nickel, palladium and ruthenium.