Passive Components
Market, Supplier, Risk and
Competitive Intelligence

Industry Outlook & Drivers

Passive Components Global Market Outlook:

Market Overview
Passive Components : $30.5 billion (2020E), expected to grow at a CAGR of 6 percent CAGR from 2019 to 2023.

Global Market Outlook

• Global Maturity: High
• Global Capacity: Sufficient Supply (2020–2023)

Porter's Analysis on Passive Components (Electronics)

Supplier Power

• Component providers have medium to low power, based on the industry they cater to
• For fragmented market in the consumer and devices segment, component suppliers have lower power
• For consolidated, industrial/automotive segments, component suppliers have medium power
  Competition
• The market is surrounded by a large number of suppliers, still it is dominated by a small number of key players. This results in gaining supplier
  power

Barriers to New Entrants

• Infrastructure
• The foremost barrier for a new entrant is resources and capital cost required to start a plant. It is in addition to labor, transportation, and warehousing
  Brand Differentiation
• Though there is a potential for a new entrant to compete head-to-head with key players, brand differentiation strengthens the new entrant only to a limited extent, especially for semi conductors
  Switching Cost
• Customers find it challenging to switch from one supplier to a new entrant by changing the entire design

Intensity of Rivalry

• Product Differentiation and Contractual Terms
• Intense competition in the industry, with few differentiated service offerings are the main factors for high industry rivalry
• Flexible contractual terms are being used to attract customers
• The pressure remains with all the tier-2 players in the industry
• Exit barriers for big players are also high, due to high cost of entry into the market

Threat of Substitutes

           Switching Cost

• For semi-conductors, high switching cost is involved that makes it difficult for substitutes to draw customers away from key players
• For passives and interconnects, the switching cost is low, as there could be very similar passive
  component or interconnect that can substitute the existing product
  Performance to Price Ratio
• The switching cost differs for different electronic components, the low performance to price ratio of substitutes exerts a weak force in the industry environment

Buyer Power

• Total Spend
• With the ever-increasing buyer spend on electronic components, the buyer’s ability to bargain and obtain value-added services is high Contracts
• For semi-conductors, supplier alliances are formed in a long-term basis, so buyer power is generally high during long-term over short-term
• There is a mild backward integration risk, due to large entry barriers. For passives & interconnects, they generally focus on procurement from distributors rather than suppliers for commoditized products