Resistor chip array leadtimes stretch to 16 weeks

Leadtimes remain long because of flooding in Thailand that shut down factories

By Gina Roos

01/30/2012

The October flooding in Thailand continues to impact the passive components industry, causing spotty supply issues for resistor chip arrays primarily used in automotive applications. In some cases, suppliers say leadtimes have stretched to 16 weeks.

The good news is that leadtimes will shrink as flooding has receded and some facilities have reopened. For instance, ROHM Semiconductor reported that production at its plant in Thailand resumed ahead of schedule in January. The factory produces resistors, tantalum capacitors, diodes, transistors, and other ICs.

Many resistor array suppliers including Panasonic, TT Electronics and Vishay continue to see an uptick in business since the Thailand floods. "In particular, ROHM has been hit by the Thailand flood and its supply interruption has resulted in increased demand for other suppliers in the market," according to Jerry Deng, product manager, passive & electromechanical, Panasonic Electronic Components in Secaucus, N.J.

Barry Peters, global product line director, TT Electronics Passive Components Business Unit, based in the UK, agrees. "The floods in Thailand have closed a couple of plants for big players, which have caused a huge increase in demand and opportunities,” he said.

"It was a tough 2011 for us. We not only had the Thailand floods but also the tsunami and earthquake in Japan as well,” said Travis Moench, senior director of sales & marketing for the Americas at ROHM Semiconductor.David J. Valletta, executive vice president worldwide sales, Vishay Intertechnology, Malvern, Pa., indicated the increase in orders is primarily for chip arrays used in automotive applications. Prior to the flood, lead times for these devices were about six to eight weeks, and now have extended to 16 weeks in some cases.

David Winkler, global product line director, TT Electronics Passive Components Business Unit, based in the U.S., also reported increased demand for thick-film networks, particularly for the four-resistor concave device, which is primarily used in automotive applications.

Winkler said the feedback in the industry is that the suppliers impacted by the flood will be back online in six to eight months.

Although lead times have extended for some product lines, deliveries, on average, are holding steady at about six to ten weeks, according to suppliers. Buyers also should not worry about supply in the long term.

Travis Moench, senior director of sales & marketing for the Americas at ROHM Semiconductor, San Diego, Calif., said the Thailand facility is "back to a reasonable capacity in January." However, he noted that it will take about one to two months before the company gets caught up with its backlog and can resume normal leadtimes of about six to eight weeks for all of its resistive products.

ROHM's Thailand facility manufactures thick-film resistor networks in 0402, 0603 and 1206 package sizes in combinations of two, four, six or eight resistors, depending on the size.

Prior to the flood, the ROHM Thailand facility manufactured about 80 percent of its resistor chip and resistor network production with a total capacity of 10 billion pieces per month. The remainder was manufactured in the Philippines or outsourced.

Moench said the company is trying to get a more balanced production rate of 50 percent at the Thailand facility and is planning to increase its outsourced production for greater flexibility.

TT Electronics' BCN family of thick-film chip resistors is available in convex and concave styles, with 2, 4 or 8 resistors."It was a tough 2011 for us. We not only had the Thailand floods but also the tsunami and earthquake in Japan as well. We didn't seem to be quite as impacted by that as we were with the Thailand floods," noted Moench. "After seeing both of those events impact us this year, we've decided to do whatever we can to keep at least enough of a balance where we can switch production over quick enough to keep things up and running for customers."

In addition, several resistor array manufacturers said they have plenty of production capacity to meet demand. Vishay is bringing on extra shifts as needed, and both Panasonic and TT Electronics have increased their utilization rates.

"Our utilization rate has increased after the Thailand flood, due to supply issues at our competitors, but we are maintaining our capacity utilization in a healthy position," said Deng. "The Thailand flood impact should be gradually subsiding now after the affected manufacturers take action to recover capacity. All general types of resistor network/array parts are affected; their typical applications include mobile communication and audio-visual.”

Keep an eye on materials costs

It is hard to gauge the impact the flooding will have on prices in 2012. The general consensus among suppliers is that overall pricing is expected to remain stable this year. Prices for some products lines will increase slightly, while others will drop.

However, several factors including materials costs and labor rates in China could impact resistor array pricing. "In addition to disasters that could impact pricing this year, materials costs have been brutal over the past couple of years," said Valletta. "Everything has gone through the roof. Even ceramic has gone up in price. That obviously impacted the cost of networks, arrays and other products. We don't see it continuing to increase but we don't see it going down.”

Peters said that the cost for ruthenium oxide also has not dropped, although copper and aluminum prices have fallen over the past year.

In addition, labor rates in Asia have increased about 15 percent last year along with electricity costs, driving TT Electronics to find efficiencies to offset those increased costs, according to Winkler. Those efficiencies, called profit improvement programs or PIPS by TT Electronics, are “all about improving yields."

Other suppliers may not be able to offset rising manufacturing costs. For some Japanese suppliers, they may be forced to hike tags this year depending on the dollar/yen exchange rate.

The ACAS series of precision thin-film chip resistor arrays from Vishay Intertechnology targets high-reliability applications including automotive requirements."If the yen continues its strength for an extended period of time, adjustments in supplier pricing may still take place in 2012," Deng noted. Buyers should not expect broad-based price cuts this year.

The challenge is dealing with customers who "assume that resistor pricing across the board will come down five to seven percent every time they ask for a quote," said Kory Schroeder, director of marketing, Stackpole Electronics Inc., in Raleigh, N.C.

"I don't think you'll see that as much as you've seen in the past, so the challenge for us to maintain pricing where we can be competitive and be profitable," he added.

On the new product development front, suppliers are placing more focus on thin-film networks as demand rises for these devices.

In the area of resistor networks, Valletta said the most growth potential for Vishay's ACAS series of thin-film networks, which offer superior moisture resistance, a key benefit in automotive applications.

Similarly, Schroeder noted that Stackpole's main direction for development is in the area of thin-film chip arrays, which are becoming more attractive to customers as they downsize.

Deng said that Panasonic is developing thin-film resistor arrays with tight tolerance in the 0201 and smaller case sizes, in 4-in-1 and 2-in-1 packages.