Overview

The North American switch market improved 7% in sales dollars, and the relay market improved 6% in Q1 2007 compared to Q4 of 2006. When compared to the same quarter a year ago, prices increased. Relay and switch average selling prices (ASP) were up 5%. Q1 bookings for switches and relays were well off the levels of Q1 2006. The following summarizes each market and is based on data collected from manufacturers participating in Switch Tracks and the Relay Report market information services.  

Overall Switch Sales and Booking Trends

Sales for the total North American switch market ended a seasonal pattern established in 2003 and 2004 where the best performance is registered in the first quarter then drop through Q3 and improve in Q4. In 2005 and 2006 there was no improvement in Q4. Last year strong capital spending in the first half of 2006 increased switch sales by almost 20% over the fourth quarter of 2005. The graph below shows the sales and booking indexes for the total switch market for Q4 2005 through 2006.       The third and fourth quarters saw sales descend and more so for bookings. In Q1 of this year sales and booking units recovered from Q4’s losses, but booking dollars and units remain lower than sales. This is fourth consecutive quarter that bookings were below sales.

Overall Switch Market Price Trends

For the charted period below, the average selling price (ASP) and average booking price (ABP) were fairly stable from the end of 2005 through Q3 of 2006. During this period the overall ASP gained slightly and ABP was above the ASP but declining. Then Q4 saw a significant jump in prices that was caused by two factors. First, manufacturers appear to be raising their prices. This is secondary to a mix shift where unit sales of lower-priced switches fell at a slower rate than more costly switches. This shift in mix is most likely a quarterly event and will probably correct itself. It did in the first quarter of 2007 as lower-priced switches sold stronger and overall prices moved lower.

Performance by Switch Type

The first quarter showed sales dollar increased in all switch types except toggle switches. Units increased for all types other than DIP and toggle. The overall ASP went down 4% despite ASP increases in five of eight categories. Q1 compared to a year ago shows a slight dollar growth on mixed categories results. Units performed in more uniform fashion with declines in seven of eight categories and rocker switches nearly unchanged to the positive. This led to overall unit decrease of 3%. With higher sales dollars and lower units compared to a year ago the ASPs rose in all but the toggle type with an overall increase of 5%. The table below shows the growth rates for sales dollars, units, and average prices over the previous and same quarter of last year.

Sales Growth By Switch Type

When compared to the last quarter, booking dollars were higher in six of eight groups and units increased in all but DIP, keylock, and push button switches. Dollars finished about 8% better and units, driven by rocker, snap action and tact switches, jumped a dramatic 16% in total. The total ABP versus Q4 was lower on mixed category results but driven down by rocker and tact switches. Booked dollars in Q1 compared to a year ago show losses in all types other than rockers, with the total down 6%. Contrasted with the same quarter of last year, booked units, like dollars were down in almost each category. However, the unit losses were much more significant, 11% overall, than the dollar losses. This pushed the ABP higher in six of eight types and a 6% increase in total.

Bookings Growth by Switch Type

Overall Relay Sales and Booking Trends

Two different years yielded two different trends for North American relay sales. In 2005 each quarter saw a step up for sales dollars and units. With the start of a new year that trend sharply reversed as sales dropped in Q1 and Q2. Q3 inched up before another drop in Q4 of 2006, finishing at the lowest level for the two-year period. In Q1 of this year the trend reversed as sales increased. The graph below shows the sales and booking indexes for the total relay market for Q1 2005 through Q1 2007.     Relay booking had a similar and dissimilar trend in relation to sales. During 2005 booking units generally rose as dollars fell in Q2 anQ3. In Q4 booked dollars jumped to a high for the two-year period. Booked units continued to run significantly higher than sales in the first half of 2006. Bookings bottomed in Q3 and recovered in Q4. Booked dollars rose in Q1 of this year as units fell to a two-year low.

Overall Relay Market Price Trends

As relay sales dollars grew in 2005, units increased at a higher rate as the ASP fell 5% for the year. At the start of 2006 another quick 5% drop ended the downward  trend and prices moved up for the balance of 2006 and Q1 of 2007. The ABP for relays was far more erratic than sales. It ranged from few percent up to more than 20% down compared to a level set in Q1 of 2005. In the first quarter of this year, higher priced relays out booked lower priced models sending the ABP sharply higher. The trend lines for the selling and booking prices have a similar form to each other with bookings exceeding sales in the past two quarters. Both trends appear to have bottomed in 2006 and now head north.

Performance by Relay Type

The Relay Report separates relays into two types; electromechanical and solid state. The table below shows year over year growth rates for sales and booking dollars, units, and average prices by relay type.

Sales and Booking Growth By Switch Type

The first quarter of this year was stronger in total sales dollars, units, and ASP compared to Q4. Sales unit increases were less than dollars pushing ASPs up for electromechanical relays (EMR). The opposite happened for solid state relays (SSR) where sales unit decreases were greater than dollars pushing the ASP higher. EMR sales dollars were even with a year ago while units fell forcing the ASP up nearly 6%. SSRs dropped significantly in sales dollars and more so for units causing a significant jump in ASP compared to last years Q1. Total year-over-year sales were nearly unchanged in dollars and down just over 5% in units with a 5% higher ASP.

Sales	Q1 2007 Versus Q4 2006			Q1 2007 Versus Q1 2006
Relay Type	Booking $’s	Booking Units	ABP	Booking $’s	Booking Units	ABP
Electro-mechanical	3.9%	-20.3%	30.4%	-10.9%	-35.9%	39.1%
Solid State	-25.3%	-53.9%	61.9%	-28.1%	-53.9%	55.9%
Total	3.5%	-20.3%	29.9%	-11.1%	-36.0%	38.8%

Relay booking dollars increased and units fell quickly forcing a significant increase in ABP for EMRs when compared to the previous quarter. SSRs experienced large booked unit decrease and a less significant dollar decline resulting in a 62% jump in ABP. Compared to the same quarter of last year, booking results were down in dollars and to a greater extent in units with higher prices.