Passive Components: Small Screws with Great Significance in the Electronic World

---

In the realm of electronics, unlike the heated competition in the chip sector, passive components often go unnoticed. In reality, these fundamental components are essential, often referred to as the “industrial rice” of the industry. Especially now, as we stand at the intersection of energy and computing revolutions, the role of passive components in strengthening domestic electronic products cannot be overlooked.

A Billion-Dollar “Big Cake”

Currently, the global market for passive components is steadily growing, particularly in Asia, where the rapid development of the electronics manufacturing industry has increased demand for these components. Despite facing challenges such as the pressure of technological innovation and intense market competition, these “unsung heroes” continue to hold their ground, contributing to our daily lives.

Passive components, as vital parts of electronic devices, have a stable and continuously growing market demand. According to statistics, the global market for passive components reached approximately $34.24 billion in 2022, and is projected to reach $43.03 billion by 2025. Capacitors, resistors, and inductors are the three largest categories of passive components by market share.

In terms of market structure, the global market for passive components is primarily concentrated in the Asian market, with China showing significant growth. As the world’s largest manufacturer of electronic products, China has a huge demand for passive components, driving the industry’s development.

Despite its large market size, the passive component industry faces some challenges. Firstly, the fluctuation of raw material prices, such as copper and aluminum, directly affects the production costs of passive components. Secondly, the rapid pace of technological change requires continuous investment in research and development to maintain competitiveness. Additionally, increasingly stringent environmental regulations present new challenges for the industry.

High-End Competition

While the passive component industry is an old trade, it is not easy to navigate. High-quality materials, customized equipment, and fine craftsmanship are required to create premium products and gain a foothold in the market.

In recent years, with the rapid development of domestic electronics manufacturing, the production capacity of domestic passive components has significantly improved. It is estimated that the Chinese market for passive components will reach $17.33 billion in 2023, with a compound annual growth rate of 8.96% over the next five years, higher than the global growth rate.

However, the high-end segment of the passive component market is still dominated by Japanese manufacturers. In particular, in the field of materials and processes, Japanese companies have a first-mover advantage, leading in high-capacity products, ceramic powder technology (with a market share of 65%), and production scale. In the specific areas of capacitors, Japanese companies such as Murata and TAIYO Yuden, along with Korean company Samsung Electro-Mechanics, are in the lead. Chinese companies like Fenghua Advanced Technology are approaching the level of foreign leaders in ceramic capacitors. In the case of inductors, Japanese manufacturers lead, with Chinese companies like Sunlord Electronics ranking among the top globally in the shipment of 0201 inductors. For resistors, although the market size is smaller compared to capacitors and inductors, larger domestic players include Fenghua Advanced Technology for civilian use and Zhenhua Technology for military applications.

In terms of technology, domestic passive components can now produce high-performance products that meet international standards. For example, Chinese ceramic capacitor manufacturers can produce high-frequency ceramic capacitors that meet automotive electronics requirements. Domestically, companies are also actively importing and developing advanced production equipment to improve production efficiency and product quality.

However, there are still some issues in the process of localization. Firstly, due to gaps in technology and production processes compared to international standards, the performance and quality of some domestic components cannot fully meet the demands of the high-end market. Secondly, domestic companies are still in the early stages of brand building, and their recognition in the international market needs to be improved.

A Huge Market in the Automotive Sector

Although passive components are ordinary, their applications are everywhere. They have extensive applications in various fields, such as automobiles, household appliances, telecommunications, computers, and medical devices. Based on analysis, the following industries have significant potential and opportunities:

• Automotive Electronics: With the development of electric vehicles and autonomous driving technology, the demand for automotive electronics is rapidly growing. It is predicted that by 2025, the global market for automotive electronics will reach approximately $57 billion, providing a massive market space for capacitors, resistors, and inductors.
• 5G Communication: The promotion of 5G technology will drive a new round of telecommunications infrastructure construction, boosting the demand for capacitors, resistors, and inductors. It is forecasted that by 2025, the global 5G communication market will reach approximately $1.3 trillion.
• Renewable Energy: With increased environmental awareness and technological advancements, the renewable energy industry is rapidly developing. The widespread application of wind and solar energy equipment will drive the demand for capacitors, resistors, and inductors. It is predicted that by 2025, the global renewable energy market will reach approximately $2.6 trillion.

In the automotive industry, with the development of electric vehicles and autonomous driving technology, the demand for passive components is increasing. Passive components used in the automotive industry include capacitors, inductors, and resistors.

For example, MLCCs (Multilayer Ceramic Capacitors) are one of the largest passive components, characterized by small size, high capacity, high reliability, and ease of mounting. They can maintain stable performance in harsh environments, meeting the requirements for electrical and electronic circuits in the confined and demanding environment of automobiles.

With the increasing electrification of automobiles, the adoption of advanced driver assistance systems (ADAS) and the shift to new energy vehicles, the usage of MLCCs is growing exponentially. According to data from TAIYO Yuden, the average usage per mid-range car is about 6,300 units, and for high-end cars, it is about 8,200 units. For pure electric vehicles, the average usage increases to around 14,000 units.

In summary, passive components have broad application prospects in various fields. They are not only the “foundational builders” of electronic devices but also a driving force behind technological progress. Although their role is often overlooked, their contribution is irreplaceable. Therefore, the localization of “small screw” passive components is imperative.

In terms of technology, domestic companies are actively conducting research and application of new materials to improve product performance and reliability. These technological advancements will help enhance the competitiveness of domestically produced passive components.

In terms of market demand, especially in the fields of new energy vehicles and smart homes, the demand for high-performance, high-quality passive components will become stronger, presenting more market opportunities for domestic companies.

In terms of policy support, the government has implemented a series of measures to support local companies in research and production. At the same time, the government encourages companies to strengthen technological innovation and talent cultivation to improve their core competitiveness.

The future for domestically produced passive components in China will see a broader market prospect.