Passive Electronic Components Procurement Intelligence Report, 2024 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Passive Electronic Components Category Overview

The passive electronic components category is anticipated to grow at a CAGR of 5.4% from 2024 to 2030. The increasing adoption of IoT devices, expanding automotive electronics, and the proliferation of consumer electronics drive demand for passive electronic components such as resistors, capacitors, and inductors. Global demand for resistors is anticipated to grow over the forecast period due to a rise in medical equipment, automotive, and consumer electronics production. Demand for capacitors is also expected to increase, driven by a surge in renewable energy production.

Electronic components are continuously becoming smaller in size day by day. This trend is attributed to end-product manufacturers like smartphones, laptops, and various other electronic devices striving to make their products smaller while enhancing their features and capabilities. Consequently, component manufacturers are advancing their technologies to accommodate these reduced spaces, which is achieved through component miniaturization. One such instance is of Yageo Corporation, that is developing multilayer ceramic capacitors (MLCC) to meet all requirements in electronic devices. This series features a compact yet highly dependable electrode design. It is ideal for a wide range of general-purpose applications where reducing size is a constant consideration such as in smartphones, laptops, and televisions. Miniaturizing components can shrink component sizes while improving device performance.

The adoption of Internet of Things (IoT) is expected to be expedited by the rise of 5G and IoT technology. The interconnectedness within the 5G networks requires a significant number of passive components to ensure efficient communication and the capability to handle higher frequencies. In November 2023, ROHM created the latest “BTD1RVFL series” of silicon capacitors, which are being used in smartphones and wearable gadgets. The size of the component is 0.1 inch x 0.05 inch. The capacitors are developed with the company's own "RASMID miniaturization technology" that exhibits excellent reliability and temperature stability. In this way, adjacent components can be mounted with a smaller gap between them.

The automotive industry is also one of the major contributors to the growth of the category. Passive component manufacturers are witnessing demand from automakers as components are used in various automotive applications, such as advanced driver assistance systems (ADAS), infotainment systems, and electric vehicles. ADAS systems heavily rely on components such as inductors, resistors, and capacitors. In October 2023, Abracon introduced a new series of 3.0V & 2.7V EDLC radial supercapacitors. These supercapacitors are also recognized as ultracapacitors within the industry. These EDLC supercapacitors offer remarkable energy density, presenting an effective and space-saving solution for energy storage needs. These components excel in applications that require quick power bursts owing to their ultra-fast charging capabilities.

The category is fragmented in nature. Passive electronic components are specialty parts considered as high-cost, low-volume items where quality takes precedence over pricing. These components boast the highest operating margins and find application across a wide array of end-use sectors, spanning diverse and segmented markets including automotive under-the-hood electronics, defense electronics, medical electronics, aerospace electronics, and more. Most of the suppliers are increasing their manufacturing and technical capabilities and strengthening their long-term relationships with clients. Buyers such as electronic device manufacturers may have substantial power if they purchase in large volumes or if the components are standardized and are readily available from multiple suppliers. However, if the components are customized or specialized, it can limit the buyer’s power.

Regionally, Asia Pacific is considered to be the largest consumer of passive electronic components, followed by Europe and North America. China is the largest consumer of the category, with India and Japan also witnessing strong demand. China, Japan, South Korea, Singapore, Taiwan, and Thailand are home to various electronic device markets, such as wireless handsets, computers, and TV sets, driving the demand for the category. In 2023, Southeast Asia accounted for around 55% of the total consumption globally for all passive components.

Raw materials (nickel, copper, aluminum, zinc, palladium), labor, machinery, facility, packaging and shipping, are some of the key costs incurred in manufacturing. Other costs include office supplies, IT costs, repairs & maintenance, and utilities. Passive electronic components require a significant amount of raw materials. The mass production of surface mount electronic components typically relies on engineered powder and pastes. Engineered powder and pastes constitute the primary variable cost in capacitor and resistor production.
The primary variable cost in production of the category is raw materials. These variable expenses, including raw materials and labor, make up 40% to 50% of the total cost structure. Fixed costs range from 15% to 20%. Any fluctuation in prices and availability of raw materials can have a negative impact on the profit margins of the manufacturers. For instance, the prices of aluminum in January 2024 were around USD 2,192.8 per metric ton, which was 0.47% increase as compared to December 2023 which was USD 2,182.4 per metric ton. Such increase in raw material price can result in rising prices of components where aluminum is utilized.

Under sourcing intelligence, end-use companies, or clients of components such as smartphones, laptops, and other electronic device manufacturers fully outsource their component manufacturing as a form of engagement model. Electronic device manufacturers focus on assembling and developing the final product and they outsource components manufacturing. For instance, in addition to Nvidia, Dell, IBM, Toshiba, YAGEO Corporation manufactures components for various other companies. Many electronics manufacturing companies such as Foxconn, Compal, and Pegatron outsource their services to YAGEO corporation. By outsourcing passive component manufacturing, device manufacturers can streamline their supply chains and potentially reduce production costs. 

Passive Electronic Components Procurement Intelligence Report Scope