Semiconductor price wars are over, and connector suppliers will try to recoup higher materials costs.
By James Carbone -- Purchasing, 8/14/2008
Buyers can expect to see an attitude adjustment on the part of semiconductor suppliers. In fact, if they look closely, they'll see it now in suppliers' decisions to cut back on capacity expansion despite growing demand.
The lack of investment is indicative of changing priorities by chip suppliers about their business. "It is an indication that profitability comes first as opposed to gaining a few points of market share," says Bill McClean, president of IC Insights in Scottsdale, Ariz. "They feel they need to get higher prices and more revenue per wafer and they don't want to see this continual slide in prices. It is a major shift in attitude," he says.
Some connector prices will rise
By Gina Roos -- Purchasing, 8/14/2008
Continued increases in costs for metals and resins are impacting the connector industry and will result in price hikes for some interconnect products.
"Raw materials cost is the biggest issue," says Mike O'Connell, director of product management for Molex in Lisle, Ill. While the biggest materials price increases impacting connectors in the past year continue to be copper and gold, plastic resins are quickly catching up, O'Connell points out.
Molex recently announced 4–10% price increases for some products, effective July 1. The connector maker is also looking at additional price increases as customers' contracts expire. The company is also, in some cases, implementing copper or gold adders with OEM customers so as prices increase there will be a price change directly associated with it...
Shari Kolker, director of commodity management at EMS firm Celestica in Toronto expects to see price hikes of 5–40% for specialized connectors that have low demand and higher material cost content...
According to Kolker, standard commodity connectors are the least likely to be affected by commodity price increases because competition will keep prices in check. But unique connectors or highly customized products with a higher content of copper or gold are the most likely to see price increases.
Despite the rising materials costs, the connector supply base is still on track for growth.
The global connector industry is expected to grow 7.3%, reaching $45.9 billion in 2008, according to Bishop & Associates of St. Charles, Ill...
One notable trend in the connector industry is increased dual-source activity. Though it's nothing new in the industry, O'Connell believes it probably has been accelerated by the increase in materials costs to ensure dual suppliers to help combat raw material increases. For example, Molex and Amphenol TCS (ATCS) have signed a cross license/second-source licensing agreement that gives ATCS the right to manufacture and sell the I-Trac backplane connector system worldwide. In addition, Molex's recently developed high-speed, high-density Impact backplane connector system is now available from Tyco Electronics as a second source supplier...
Molex is now offering services to help OEMs design printed circuit boards (PCBs). By helping OEMs apply their connectors more cost efficiently, supplier help drive costs down on their entire application, O'Connell says. For example, with high-speed products, Molex is working with OEMs to reduce layer count, which significantly reduces the cost of boards. Molex is working on the weight and size of the power traces, which results in less copper on the board and thus lower cost.
Purchasers are involved so they understand the total cost of the application, and they should be involved to help drive the overall cost of the applied system, O'Connell adds.
Poort agrees there has been an increased focus on higher levels of service. FCI Electronics has responded with its Basics+ service program that includes readily available stock on standard products. In addition, to make it easier for buyers to find product information, the company has recently launched a number of micro web sites including one for power and mezzanine connectors that also includes its MezzSelect product selector guide.
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