Chip resistor prices to stabilize
Electronics buyers can expect plenty of chip resistor supply and stable chip resistor pricing this year.

Purchasing, 5/8/2008

Electronics buyers can expect plenty of chip resistor supply and stable chip resistor pricing this year. While some suppliers reported severe price erosion in 2007, pricing is expected to stabilize this year.

“The pricing trend is flat because of materials costs,” says Jeff Rice, vice president of sales and marketing at KOA Speer Electronics in Bradford, Pa. “I don't see that changing very soon primarily because of ruthenium costs which have gone up dramatically from last year, together with all raw material costs of terminations including silver and palladium,” says Rice.

Ruthenium is the biggest material cost driver in for thick film chip resistors.

There is also concern for palladium, in terms of increasing materials costs, says Kory Schroeder, director of marketing, Stackpole Electronics in Raleigh, N.C. “Palladium is a big component of our inner terminations for standard surface-mount resistor chips and that has gotten prohibitively high over the past few years. It came down a bit last year but not enough to allow us to see any major savings.”

Leaded resistors have also been impacted by rising materials costs particularly for copper.

Copper prices began to cause some serious issues especially with the lowest-cost carbon film resistors that were normally very inexpensive, says Schroeder. “With the price of copper quadrupling it really caused a big problem because there isn't much margin left in those products,” he adds.

As a result, KOA Speer along with others in the industry, shifted to using copper-plated steel as the base metal, a trend already seen in the capacitor industry over the past several years. For those customers that still demand copper as the base metal, pricing doubled for those components, says Schroeder.

All makers agree pricing must stabilize but whether that will happen is not completely certain, says Jim Wright, vice president of technology and marketing at NIC Components Corp. in Melville, N.Y. “I expect less price erosion over the next 12 months than over the past year.”

With stable pricing coupled with good unit growth coming from portable device and HDTV markets, suppliers expect about 5% growth in 2008. Increased usage of higher priced thin-film resistors is also driving growth.

With plenty of capacity, resistor chip suppliers don't expect any availability issues this year. Average lead times for chip resistors are stable between six to eight weeks.

Currently, the most popular case size for chip resistors is the 0402 as the industry continues to downsize. Due to a growing trend toward integration, suppliers are also reporting an increased interest in both 0201 devices and chip arrays.

In addition to increased interest in smaller devices, on the other end of the spectrum, they also see power as a growing market particularly for current sense resistors.

Buyers purchasing larger case sizes can expect less supply as resistor manufacturers discontinue the larger case sizes in favor of smaller parts. As applications shift over to smaller case sizes, an equal amount of suppliers are discontinuing the larger cases, says Schroeder.