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Components technology buildup eyes emerging applications

Makers of electronic components are bolstering technology base to support upmarket shift.

The electronic components industry in China is strengthening technology advantage as it shifts emphasis from price-driven competitiveness in a bid to move upmarket. This is on the back of recovering demand and emerging applications such as touch panels, e-papers, LED displays and OLEDs. Intelligent terminals, diodes, other displays, and power uses are expected to sustain growth.

Chip capacitor
Makers such as Shenzhen Sunlord have started manufacturing high-end solid tantalum chip capacitors.

For resistors, there has been a marked increase in requirements. The miniaturization trend continues to drive interest in the 0402 chip variant. The type is widely adopted in mobile phones, MP3/MP4 players, digital cameras, portable GPS devices and notebook PCs.

Aside from overseas destinations, suppliers are eyeing the flourishing domestic market. Last year, local demand reached $110 billion, driven by the portable medical and automotive electronics, LED backlight and “green” energy sectors, according to the China Semiconductor Industry Association.

Projections for the first two are upbeat. Medical electronics are expected to maintain 15 percent annual growth in coming years.

China’s automotive industry, meanwhile, will keep expanding with the popularity of hybrid and electric vehicles. In 2010, the country produced more than 15 million cars.

There is also the solar panel segment, which has a 30 percent share of worldwide market.

Makers are therefore boosting investment to enhance their lines. Shenzhen Sunlord Electronic Co. Ltd, for instance, has ventured into the manufacture of high-end solid tantalum chip capacitors. The enterprise hopes the bid will advance its goal to become a specialist in passive components and a known global brand. In addition, Shenzhen Sunlord is keeping prices stable despite rising material outlay. The supplier leverages mass production to gain an advantage.

Passive components
Passive components

China’s passive components industry continues to gather more steam, fueled by broad use in smartphones, tablet PCs and new energy applications. The sector is forecast to grow by 15 to 20 percent this year as global sales of smartphones and tablet PCs hit 330 million and 42 million units, respectively. Demand is spurred by stiff requirements in consumer electronics products, entailing more components. A smartphone, for instance, incorporates 510 MLCCs and 250 chip resistors. About 350 capacitors and 150 resistors are employed in a typical mobile phone.

Reflecting the growth is the surge in exports last year. Shipments of inductors climbed by 59 percent, while capacitor deliveries increased 50 percent. Brisk orders from makers of semiconductors, TFT LCDs, ICs and medical equipment will likewise drive expansion. Demand from PCs, laptops and DVD players, however, will drop.

Aluminum electrolytic capacitors will remain a major growth booster as the component gains wide utilization in solar and wind power systems and energy-saving technologies. The variant boasts greater capacitance than other types and is less expensive to produce given the low cost of key input aluminum.

The major suppliers are Changzhou Huawei Electronics Co. Ltd and Nantong Jianghai Capacitor Co. Ltd. The first offers high-power supercapacitors, V-chip, and miniature and large can aluminum electrolytic types. Aluminum solid capacitors with conductive polymer are also included.

Nantong Jianghai has embarked on a project with Japan’s ELNA and plans to set up a new facility for research and production of aluminum capacitors with conductive polymer. Targeting a monthly capacity of 4 million units, operations are slated to begin in 1H11.

Brisk demand for capacitors might result in elevated prices and a supply shortage.

As production is ramped up to accommodate orders, suppliers, meanwhile, can face the challenge of high raw material and labor expenses. To offset this, some enterprises will raise quotes by 50 percent. Changzhou Huawei, for instance, plans to increase rates of low-quantity orders by 5 percent.

Related articles:
Chip inductors: Chip inductors rise but power variants secure foothold
Resistors: Lead resistors retain niche despite chip variant’s dominance

Note:This article was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through our e-magazines, trade shows and industry research.

All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.

Disclaimer: All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. We, our affiliates, and our affiliates' respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof) which infringe on any intellectual property or other rights of a third party.

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