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Cost-Cutting Measures Shield Circuit Protection Devices from Price Hikes

Buyers can expect stable prices for circuit protection, through at least the first quarter of 2013, because raw materials prices are expected to remain steady.

Circuit protection devices include glass fuses, resettable fuses, circuit breakers, varistors, and TVS diodes.

"In the short term, we're not expecting any dramatic changes, and some materials like copper have stabilized over the past 12 months," said Bob Hilty, senior director of engineering, TE Circuit Protection, a business unit of TE Connectivity, based in Menlo Park, Calif.

"We have done a good job maintaining prices and reducing them in some cases as we continue to tweak designs and pull a little bit of cost out of the product," Hilty added.

Pricing for PPTC fuses remains stable, with some downward price pressure on a quarterly basis, suppliers reported. Tags for surface-mount fuses and circuit breakers also remain stable.

Prices also remain stable for varistors despite their gold and silver content, particularly for terminations and electrodes. Bharat Shenoy, director of technical marketing, Electronics Business Unit, Littelfuse Inc., in Chicago, Ill., does not expect any operational or materials issues to dramatically impact pricing in the first quarter of 2013 for either ceramic or polymer-based products.

Pricing is a little different for silicon devices such as TVS diodes and diode arrays. The cost of silicon fluctuates year to year, sometimes rising dramatically or falling, depending on demand, according to Chad Marak, director of technical marketing and TVS diode array product line, for Littelfuse's Semiconductor Business Unit, based in Chicago, Ill.

Despite fluctuating commodity prices, tags for TVS diodes and diode arrays remain mostly stable to decreasing year over year. Prices for some parts have declined between 3 and 5 percent.

Cost-cutting measures

"Miniaturization is always a fantastic cost reduction strategy," said Bob Hilty, senior director of engineering, for TE Circuit Protection, a business unit of TE Connectivity.
Rising labor rates in China could impact circuit protection prices, but suppliers are taking cost-cutting measures to limit increases, from using less expensive materials to miniaturizing products.

"Anytime you make a product smaller, you use less raw material, it generally leads to a cost reduction," said Hilty. In addition, the manufacturer also tries to buy materials where it manufactures to save on transportation costs.

Littelfuse has developed different materials options to try to reduce cost. One example is shifting customers from gold- to silver-plated terminations for the varistor lines. The company is also developing some lower cost varistors that do not use a silver electrode case.

Gold costs also impact diode array pricing because the devices use pure gold bond wires. Littelfuse has mitigated some of that cost by migrating to a copper bond wire, which has allowed the company to either maintain or reduce pricing.

Marak said the copper bond wire does not impact performance because it provides the same resistance or conductivity of gold.

The only difference with copper is that it's slightly more rigid than gold, said Marak. "This gives a perception that it can break, but it's a perfect metal to replace gold bond wire from a performance and cost standpoint," he said. "Reliability testing performed in-house shows copper is as good as gold in terms of the bond wire."

Littelfuse also has mitigated some of the raw silicon and silver cost increases by consolidating all of its plants into one location in China where it fabricates the wafers and packages the devices.

Plenty of supply

Manufacturers said supply is rarely an issue with circuit protection devices and they can respond quickly to any uptick in demand.

In general, buyers can expect leadtimes to remain stable into the first quarter of 2013. Currently, leadtimes average about two to three weeks for surface-mount fuses, six to eight weeks for traditional glass fuses, and about four to eight weeks for circuit breakers.

Deliveries for polymeric positive temperature coefficient (PPTC) resettable fuses range about eight to ten weeks. TE Connectivity said the most popular PPTC devices are still in the 0402 size, although there has been a significant ramp in 0201 adoption in mobile/portable applications. Most Tier 1 mobile OEMs today will commonly use 0201 passives including 0201 ESD devices, according to TE.

For silicon products, deliveries range between six to seven weeks for TVS diodes and ten to twelve for TVS diode arrays.

One challenge circuit protection manufacturers face is speedier time-to-market demands as design cycles become shorter. Circuit protection manufacturers are taking a platform approach to component design, leveraging their product technologies to develop new and custom devices.

Shorter design cycles are especially a challenge in the consumer electronics industry. To meet the challenge, TE Circuit Protection uses a mass customized solution where it has a number of product technologies readily available to apply to a customer's specific problem. The company has several product technologies such as reflowable thermal protection (RTP), metal hybrid PPTC (MHP) for thermal cutoff, traditional carbon-based PPTC platforms, and nickel-based low rho (low resistance) platforms.

"These are sort of the recipes that we can pull off the shelf," said Hilty. "Customers will ask for minor modifications, whether it's for current hold or time to trip, and we can tweak the formulation to meet the customer's requirement."

Where’s the growth?

“There aren't any operational or materials issues to dramatically impact pricing in the first quarter of 2013 for ceramic or polymer platform products,” said Bharat Shenoy, director of technical marketing, Electronics Business Unit, Littelfuse Inc.
Another challenge for manufacturers is increasing revenue. With flat prices, revenue growth in 2012 will also be flat compared to 2011.

While consumer electronics products and rechargeable battery packs are two of the biggest growth markets for circuit protection, LED lighting is becoming a big growth sector. "It's a huge growth opportunity for us and it's going to be a growth driver over the next few years," said Shenoy.

The biggest requirements for LED lighting are improved performance, reduced size and lower cost, according to Shenoy. One of Littelfuse's most popular lines for these applications is its NANO fuses because of their high-voltage and high-current ratings. It is also a low-cost fuse line.

Littelfuse also offers a series of thermally protected MOV (TMOV) devices with UL1449 recognition to meet higher voltage ranges from 115 VAC to 750 VAC to protect devices from overvoltage conditions.

Although telecommunications is the main growth driver for TVS diodes and TVS diode arrays, Marak said there are opportunities for highly reliable devices that are needed in applications such as aerospace, military, and automotive. That will be a growth initiative carrying over into 2013, he said.

Other companies such as Schurter Inc. that focus on non-consumer-based equipment manufacturers see major growth for fuses and circuit breakers from medical, machinery, and other types of industrial applications.

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