MarketEye: Circuit Protection Components: Global Market Outlook for 2009

03.09.2009 // Posted by: Dennis Zogbi // Posted in: Articles, Passives

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Circuit protection component manufacturers supplying overvoltage and overcurrent protection solutions for applications in digital electronics, power, automotive, and specialty end-use segments of the global high-tech market have been hit particularly hard by the global economic downturn in 2009. Specific circuit protection components that have been more negatively affected by the global economic downturn than other circuit protection components include the chip varistor, the surface mount TVS diode, the blade fuse and the NTC thermistor.

Circuit protection components are designed to protect semiconductors and other integrated circuits from the damaging effects of electrical transients on power and signal lines. These electrical transients are largely the result of electrostatic discharge (ESD), line switching, or lightning. The market is based upon redundant placement of components at the point of demarcation (entrances) within the power and communication grids, and right down into the digital electronic and line voltage devices they are designed to protect.

In the market research report titled “Circuit Protection Components: World Market Outlook: 2009-2014," Paumanok Publications, Inc. looks at the exposure levels of circuit protection components by type to specific end-use market segments. The company forecasts their value, volume, and pricing growth to 2014 based upon anticipated changes in global demand for electrical and electronic devices worldwide.

In 2009, components with exposure to automotive electronic subassemblies will experience the greatest downturn and have the longest road to recovery. Circuit protection components that are manufactured to specific automotive requirements include the blade fuse, the automotive grade metal oxide varistor, the NTC thermistor (for HVAC), and the TVS diode (cars use both back-to-back zener diodes and silicon avalanche diode TVS technology).

In portable digital electronics, the market hardest hit by the economic downturn was the wireless handset business, which consumes large quantities of both chip varistors and surface mount TVS diodes for ESD protection in handsets. Other markets adversely affected by the economic downturn in digital electronics include notebook computers and flat panel television sets. These products consume chip varistors, SMD polymer PTC thermistors, surface mount TVS diodes, and various types of solid matrix chip fuses.

Recovery in the digital electronics markets will be faster than other markets (such as automotive and home appliances) and led by demand from notebook and netbook computers; flat panel display television sets with high definition tuners and advanced wireless handsets. Massive desktop computer markets and the CRT TV set markets will recover slower, if they ever recover at all.

In line voltage and power related markets demand is mixed in 2009. Demand for products consumed at the point of demarcation for power transmission and distribution markets is steady to up in the United States, Europe, and China because of the relationship of these markets as the primary beneficiary of economic stimulus packages in each respective region (incidentally we note similar activity in large can power capacitors, where demand is stable to up year-over-year). This should have a positive effect on demand for specific types of circuit protection components - the power thyristor, the AC line gas discharge tube, the industrial grade fuse, the film snubber capacitor, the disc varistor, and valve block arrester.

In customer premises equipment markets demand will be off by 25% in 2009, and this will have a negative effect on disc varistors, glass cartridge fuses, and ceramic PTC thermistor probe assemblies. The primary applications in customer premises equipment is for large and small home appliances, lighting ballast and smoke detector protection. Each of these market sets have experienced a severe downturn due to the depressed housing markets in the United States and Western Europe.

In the specialty markets, which include defense electronics, medical electronics, mining electronics, oilwell electronics, laboratory test equipment and semiconductor manufacturing equipment, increased demand for circuit protection devices in the defense and medical sectors, is being offset by declining demand in the mining and oilwell sectors (in accordance with the decline in commodities pricing); as well as declining demand from the semiconductor manufacturing equipment segment as well.

The following chart illustrates the global value of consumption for circuit protection components (as described in this report) by the end-markets into which they are sold. The purpose of this report is to determine which components will grow or decline over the next five years based upon their varying rates of exposure to specific segments of the global high-tech economy. The following chart makes forecasts for the decline in revenue for sales of circuit protection components within each specific market segment for the calendar year 2009 as compared to the same period one-year earlier (2008 CY). Each segment shows overall sales revenues for both overvoltage protection and overcurrent protection components. Also in this following chart, we are segmenting down the Digital Electronics Segment into additional sub-categories that include Consumer Audio and Video imaging (TV Set and Home Theatre); Wireless handsets, Telecom Infrastructure; Computers and Peripherals. Additionally, we segment out the Line Voltage and Power Segment to include customer premises equipment (such as line voltage devices, surge protectors, large and small home appliances, lighting ballasts, smoke detectors and other hardwired equipment), and AC Electronics at the Point of Demarcation, which segments out the infrastructure portion of the market segment, which will receive the greatest amount of boost in 2009-2014 from economic stimulus packages. The Automotive Segment is inclusive and implies passenger comfort, entertainment and information electronics or Infotainment followed by Safety; and finally Powertrain Electronics. The first two auto electronics segments are saturated markets for circuit protection component manufacturers, however, the electrification of the powertrain is considered new platform, stimulus package protected and guaranteed for growth to 2014. Specialty, Medical and Defense is a segment of the market that is most lucrative, with the largest margins, but with the greatest requirements for quality and reliability. Defense electronics are the largest portion of the specialty segment, followed by medical implants; medical test and scan equipment; oilwell and mining electronics and test and measurement and laboratory electronics.

Source: “Circuit Protection Components: World Market Outlook: 2009-2014” Paumanok Publications, Inc. Chart Notes: Market growth is forecasted in the following specialty markets only- Implantable medical devices; defense electronics with emphasis upon missile subassemblies, also expect revivals in oilwell and mining electronics to coincide with gradual high end electronic market recovery beginning in 2Q 2009. Other markets, such as measurement test and scan equipment for Academic research and for manufacturers will be hit hard by the downturn unless more spending is put in research and development as opposed to marketable securities. Other high end markets such as exotic equipment manufacturers producing high frequency semiconductor manufacturing equipment, there will be a downturn as well. So certain key markets in circuit protection remain viable, but other segments of the specialty circuit protection markets remain weak. The common theme among components sold in this space is that they all are in high voltage >500 Vdc or high frequency >1 Ghz applications.

The AC Demarcation Equipment Market for circuit protection components is predicted by Paumanok to remain stable in 2009. The market showed tremendous signs of resilience in 2008 even through the fourth quarter. However, first quarter indications indicate a first quarter year over year drop n this vital sector of 10%; but we believe this is short-lived. This segment, which excludes an additional $250 million in global lightning arrester sales forecasted by Paumanok for 2009, has a good chance of receiving good financing through the stimulus packages proposed for the United States, China and Western Europe. The common theme among the more than 1 trillion in global infrastructure investment is that from an electrical point of view it has the greatest potential impact on line voltage equipment and circuit protection components destined for the global power infrastructure in 2009, and for the integration of alternative power sources into the existing grids. Windmills get struck by lightning, obviously; and need arrester level protection, and advanced IGBT semiconductor protection for the critical relays, sensors, and battery circuits.

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