Introduction

The first three quarters of this year finished with switch sales dollars down 2%, sales units down 4%, and ASPs up 2% compared to 2006. Calculated average selling prices are up over 3% in seven of eight switch types. For the same period, relays were down 5% in sales dollars, 4% lower in units, with selling prices 1% below last year.

The following summarizes the North American switch and relays markets 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

In 2006 the best performance was registered in the first two quarters then measures moved lower through Q3 and Q4. Q1 2007 made a strong recovery from Q4 of last year, in Q2 results dipped lower, and Q3 has been the best sales and weakest booking period this year. The graph below shows the sales and booking indexes for the total switch market for Q3 2005 through 2007.

Overall Switch Market Price Trends

For the chartered 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. But this is secondary to a mix shift where unit sales of lower priced switches fell at a higher rate than more costly switches. This shift in mix was a quarterly event and a correction occurred in the first quarter of this year. Selling prices and booking prices for the first half of this year are above last year’s level and trending higher. This changed in Q3 as prices fell to their lowest level in two years.

Performance by Switch Type

The third quarter versus the second showed total sales dollar increases of 3% driven gains in five of eight switch types. Units increased 15% in total and for all types other than push buttons. ASPs declined for all eight types with an overall 10% slide. Q3 compared to a year ago shows declines across almost all switch types in dollars, mixed results for units, and decreases in ASPs, except for snap action switches. Year-to-date growth shows dollars are down 2% with losses in all types except slide and tact. Units for the first three quarters are down across all types and ASPs have seen increases for all but toggles compared to 2006.

When compared to the last quarter, total booking dollars were 5% lower as five of eight groups decreased. Units increased almost 7% with half the categories higher and tact switches most significantly. The ABP decreased across the board compared to Q2. Booked dollars and units in Q3 versus a year ago were down in all types except slide switches. Booked prices fell for six of eight groups and in total. The YTD bookings performed much like Q3 2007 compared to Q3 2006. Dollars are down for all but slide switches while units are down with exception of slide and toggle. Booked priced improved overall on strength of DIP, keylock and push button increases. The table below shows the growth rates for bookings dollars, units, and average prices over the previous, same quarter and over the first half of last year.

Overall Relay Sales and Booking Trends

In 2005 each quarter saw a step up for sales dollars and units. With the start of 2006 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 seemed to reverse as sales increased; however, sales dollars quickly fell in Q2 and held near steady in Q3 at the lowest levels in two years. The graph below shows the sales and booking indexes for the total relay market for Q3 2005 through Q3 2007.

Relay booking dollars and units ran above sales from Q4 of 2005 through Q2 of 2006. Since then they have been below sales and most significantly during this year.

Overall Relay Market Price Trends

As relay sales dollars grew in 2005 units increased at a higher rate because 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. Q2 of this year saw another 5% drop in ASP followed by a smaller decrease in Q3. The ABP for relays was far more erratic than sales. It ranged from 12% 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. This jump was corrected some in Q2. The trend lines for the selling and booking prices appear divergent with ASP declining and ABP increasing.

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.

The third quarter of this year was weaker in total sales dollars and ASP compared to Q2. Unit sales increases and weaker dollars pushed ASPs lower for electromechanical relays (EMR). For solid state relays (SSR) where unit sales decreases outpaced dollars declines lifting the ASP higher. Compared to same quarter of last year and year to date, sales dollars, units, and ASP are all down for EMRs. SSRs have seen a much more significant drop in dollars while units haven fallen even harder. This has led to a significant increase in SSR ASP. In total the market is down in all sales measures versus last year.

Reported booking dollars increased faster than units forcing an increase in ABP for EMRs when compared to the previous quarter. SSRs experienced a large booked dollar decline and a less significant unit down turn resulting in an 11% slip in ABP. Compared to the same quarter of last year and year to date totals, booking results for both types were down in dollars and to a greater extent in units with higher prices. The year-to-date comparison has dollars down almost 12%, units off about 28% lower and ABP up just over 22%.