Market Cost Drivers 2019

Overall, there has been a 3.8% increase in base metal costs in 2018 and these increases may continue in 2019, particularly if a positive change in the tariff situation results in increased automotive production. Increases in cost of base metals are most likely to impact capacitor costs. For 2018 cost increases by commodity were:

    • Ceramic Substrate 30% increase
    • Palladium 20% increase
    • Ruthenium 275% increase
    • Tantalite (Tantalum Capacitors) – Steady increases throughout 2018.
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Component Lead-Time Updates 12/2018

Constraints relative to Multi-Layer Ceramic Capacitors (MLCCs) have subsided a littlDSC05362e, however it is still believed that there will be lead-time concerns and some allocation issues on some MLCC package sizes and values throughout 2019.

A major factor contributing to MLCC constraints was strong growth across automotive, industrial and telecom markets simultaneously. This increased consumption beyond manufacturers’ expectations. Additionally, there has been consolidation in the fabrication market and a relatively flat revenue trend. As a result, there was less incentive or return on investment for continuing commodity lines near end-of-life (EOL) or adding capacity.

The MLCC packages in North America that have the highest EOL risk are large case sizes above 0402 packages with low CV (below 1uf).

The team at Burton recommends that design teams consider what is “acceptable” when looking at alternate parts. For example, could higher voltage, tighter tolerance parts be used? Are analog electronic circuits an option? Where possible also consider smaller packages such as 0402, 0603 and 0201.

Resistor lead-times are reducing and stabilizing from 40-50 weeks to 12-20 weeks.  The worse constraints seem to be behind us.  The one exception is the Current Sense Metal Strip where market leaders are still at 50+ weeks.  This will subside through 2019 as Mexico factories are brought on line.  The difference between the capacitors and resistor shortage is that resistor companies did not consolidate or choose to EOL commodity lines the way capacitor manufacturers did.

 

The Tariff Situation and PCB Sourcing

DSC05355As we write this, the tariff situation seems to be improving. The 25% jump in tariffs planned for January has been postponed 90 days, pending the result of ongoing negotiations with China. That said, there is a 10% tariff on printed circuit boards (PCBs) fabricated in China. Even with the 10% tariff, in many cases, China remains the most competitive option. Should the tariffs jump to 25%, that would no longer be the case. The team at Burton Industries is in the process of qualifying Taiwanese PCB options to ensure our customers have a range of cost competitive options.

Burton Industries Q4 2018 Newsletter

Our latest newsletter looks at equipment additions, migration to the ISO 9001:2015 quality standard, our 40th anniversary open house and our annual food drive. View Burton Industries Q4 2018 Newsletter here.

Burton Newsletter Q4 2018