Taiwan's chip resistor manufacturers are preparing for a new round of price increases, a significant move for the global electronics supply chain.
This development was triggered almost immediately after major Chinese passive component makers announced price hikes of 20-30%. This action by Chinese firms narrowed the price gap between them and their Taiwanese rivals, creating an opening for Taiwanese companies to raise their own prices without losing competitiveness. But this is just the immediate trigger; the underlying reasons are a combination of cost, supply, and demand pressures.
First, there's a severe cost shock from raw materials. Chip resistors, particularly the common thick-film type, use a special paste containing silver. Over the past year, the price of silver has surged by a staggering 80%. This directly inflates production costs, making it unsustainable for manufacturers to sell at old prices. Calculations show this silver price hike alone could increase the unit cost of a resistor by 8% to 22%.
Second, the supply side is incredibly tight. Key Taiwanese manufacturers like Walsin have reported their resistor production lines are running at 85-90% utilization. When factories operate this close to their maximum capacity, they can't easily accept all incoming orders. This leads to a situation called 'selective order taking,' where they prioritize customers willing to pay more. The high bill-to-book ratio of around 1.3 to 1.4 further confirms that demand is significantly outpacing supply.
Finally, demand is being supercharged by the AI server boom. TrendForce projects that AI server shipments will grow by about 28% this year. These powerful servers require vast quantities of high-quality, reliable passive components, including resistors. This sustained demand from the AI sector is absorbing available supply and extending lead times for all types of electronic components. This trend, combined with earlier price adjustments by industry giant Murata, has lifted the entire market's reference price, making it easier for all suppliers to pass on their increased costs.
- Passive Components: Electronic components like resistors, capacitors, and inductors that do not produce energy but can store or dissipate it. They are fundamental building blocks of all electronic circuits.
- Chip Resistor: A tiny, rectangular component used to control the flow of electricity in a circuit. They are one of the most common passive components in modern electronics.
- Bill-to-Book (B/B) Ratio: A ratio of orders received (bookings) to units shipped and billed for a specific period. A ratio above 1 indicates that demand is stronger than supply.