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Buyers Can Expect Stable Pricing and Leadtimes for Sealed Switches

What a difference a year makes.

In 2011, buyers faced 5 to 10 percent price increases for sealed switches because of rising materials costs. In addition, leadtimes stretched because of the earthquake and tsunami in Japan that crippled the electronics supply chain.

This year is a different story. Sealed switch tags and leadtimes are stable and will remain steady through at least the rest of the year. The bad news is prices could increase in 2013 if there is an increase in prices for metal and resins, according to suppliers.

"We've held pricing where it is, but under current market conditions we still haven't seen commodity pricing come down much," said Robert Seubert, product marketing specialist, for Omron Electronic Components LLC, based in Scarborough, Ontario, Canada.

Omron has raised prices by about 5 percent over the past few years but "there hasn't been a price increase directly related to commodities,” said Seubert. “We’ve been increasing prices, but nowhere near where we should have been increasing them."

Still, Seubert does not anticipate price hikes for the rest of the year. Neither does NKK Switches. Tom Hamblin, business development and strategic planning, at NKK Switches, based in Scottsdale, Ariz., doesn't "see anything negatively impacting pricing" this year. Precious metals, rubber components, chemicals and chloride "are always materials that we are sensitive to as far as pricing goes."

Like Omron, NKK increased prices in 2011 in the 6 to 10 percent range, although it was not across the board price hikes. "We hadn't had a major price increase in the 18 years preceding 2011," said Hamblin.

TE Connectivity also had to increase prices about 6 to 8 percent last year. Pricing is flat in 2012, although there is some downward pressure on tactile switch pricing, primarily due to the emergence of many Chinese switch manufacturers that offer sealed versions, said Harald Kautz, global product manager for switches and connectors CIS, for TE Connectivity.

However, there is typically less price pressure on sealed switches because customers know they have to pay a little more to get the right environmentally selected switch, according to Hamblin.

Healthy growth expected

"We hadn't had a major price increase in the 18 years preceding 2011, so we've been pretty good on managing our costs," said Tom Hamblin, NKK Switches, business development and strategic planning.
Sealed switches come in a variety of flavors including pushbutton, toggle, rocker, tactile, rotary and DIP. They typically have an IP rating, including IP60, IP64, IP65, IP67, and IP68, that specifies specific degrees of protection from dust and water.

Despite a weak economy, the sealed switch market will post healthy growth this year driven in part by automotive and transportation sectors. Those customer segments demand higher reliability switches that are both dust- and water-proof. Some suppliers expect about 5 to 10 percent growth in revenue for these high reliability switches.

Suppliers also noted increased inquiries from security and appliance sectors looking for better sealability. Emerging markets looking for sealed switches include charging stations for electric vehicles.

NKK's growth projection for 2012 compared to 2011 is about a 10 to 11 percent increase. "Sealed switches are doing well and that includes pushbuttons, rockers, toggles and everything we consider in the category of sealed," said Hamblin. Medical, dental, industrial automation, motion control and pro audio are strong markets for NKK.

Although Kautz sees strong demand for sealed tactile, toggle and rocker switches, particularly for industrial control panels, he expects a decline in growth this year due to market conditions.

"Nevertheless, inquiries for sealed switches have increased and we have been awarded some projects that will result in a significant upturn for sealed switches in 2013," Kautz said.

Another growth driver is the need for higher quality manufacturing in Asia. "Applications in Asia are becoming better and better from a quality point of view," said Kautz.

Because of greater demand for sealed switches, leadtimes tend to fluctuate, and sometimes get pushed out to 12 to 14 weeks, Seubert noted. This primarily occurs during high demand periods for seasonal products such as air conditioning units.

Leadtimes for sealed switches generally range between 8 to 10 weeks. Both Omron and NKK manufacture the bulk of their sealed switches in Japan, although they also manufacture some sealed lines in China. TE manufactures its sealed switches in Mexico, Singapore, and China.

Cost-saving strategies

"We've held pricing where it is, but under current market conditions, we still haven't seen commodity pricing come down much," said Robert Seubert, product marketing specialist, Omron Electronic Components.
A portion of new product development is devoted to driving down the cost of sealed switches by eliminating the use of some materials or offering lower cost alternatives.

"We're looking at different strategies to meet our customers' needs," said Seubert. In some cases, the company is reducing the amount of material by making the switches smaller.

In some instances, customers can replace their sealed snap-action switches with slide switches to reduce costs. Seubert said slide switches use less material. However, he noted that slide switches do not have the same operating characteristics. They can be used as long as customers do not need tight operating characteristics or have high current requirements.

NKK offers some lower cost alternatives to achieve IP ratings if pricing is an issue. These include accessory options such as boots and seals that can sometimes keep the price of the switch down.

TE Connectivity tries to offset costs or low margins by using different materials, different platings, newer platings, and new contact systems, said Kautz.

In some cases, providing a subassembly may be an option. "For example, on a control board that uses a variety of sealed and non-sealed switches, we can provide all the switches and value add," Kautz added.

Switch manufacturers also are focusing a lot of new product development on sealed tactile switches.

There have been some hurdles to overcome for tactile switches, such as finding the right rubber material to provide long life cycles, but these have been resolved, according to Kautz. "We're at 10 million cycles now."

TE Connectivity also is developing smaller tactile switches. Other new product developments include a sealed, 1.27 mm, half-pitch DIP switch with space-saving J-leads.

Omron is working on tactile switches with better sealing so they can be used in dusty environments such as vehicles and vacuum cleaners. One example is Omron's B3WM sealed tactile switch, which meets IP67 for dusty or humid environments.

Omron also has upgraded its D2F switch by making it more reliable in dusty locations. The dust proof, ultra-miniature D2FD basic switch "is a happy medium between a regular switch and one that is fully sealed," said Seubert.

NKK has seen high demand for its SmartSwitch line in audio and broadcast markets. One of the newest additions to the family is the IP64-rated OLED rocker switch with a built-in programmable OLED display. The IP64 rating for dust and water protection allows the switch to be used in industrial and medical applications where wipe downs are required.