Active Components – Procurement Best Practices & Sourcing Strategies

DESCRIPTION

Active Components Market     

Global Market Overview:

In the rapidly evolving technology domain, the global active components market is growing at a higher rate, thanks to the rising demand for semiconductors across the globe. As per the latest research of ELINT Market Research, the global market for semiconductors hit a staggering $575 billion in 2022. In addition, the research anticipates the global market to register stable growth with 7-8% from 2021 to 2025. The growth is primarily attributed to the rise in infrastructure expansions and technological innovations, further boosting the market growth.

A factor that emerged as the primary contributor to the substantial growth of the active components market is capacity increase by leading players from the industry. For instance, United Microelectronics Corporation (UMC) plans to inject $1.5 billion in new equipment development. It will mark a 50% rise compared to the prior year and indicates a strategic move to enhance capacity and manage the growing demand for active components.

Market Definition

Active components are a diverse group of semiconductor devices that actively manage the flow of electrical signals. The group includes transistors, diodes, and integrated circuits, which play vital roles in the electronic systems used in diverse industries. The role of active components in actively participating in functioning related to signal processing and control indicates the significance. Integrated circuits, transistors, and operational amplifiers are examples of such components. Such elements display a versatile nature by playing a vital part in electronic circuits by enabling functions like signal conditioning, amplification, and oscillation.

Market Drivers:

• Smart Technology Integration: The active components market is witnessing a high growth trajectory due to the widespread integration of innovative smart technologies. These components are the force behind devices that boost connectivity and advance intelligence in our daily lives, from smart homes to wearable.

• Adoption of IoT Devices: The rising number of IoT devices is a key factor, and active components are crucial for enabling smooth communication among these interconnected devices. This growing trend significantly contributes to the surge in demand for such components.

• High-Performance Computing Expansion: The continuous expansion of high-performance computing, witnessed across data centers and personal computers, propelling the requirement for advanced active components. The increasing adoption of AI applications further adds to this demand.

• Transformation in the Automotive Sector: Electronic components, including active ones, play a significant role in the rapid evolution of the automotive industry. The need for such components is continuously growing every year. The key drivers for this include the rising adoption of electric vehicles and advanced driver assistance systems.

Market Challenges:

• Semiconductor Shortfall: One major obstacle witnessed in the active components market is the continual shortfall of semiconductors. This scarcity has widespread consequences, influencing various sectors and causing disruptions in supply chains. Handling the right balance between supply and demand chains becomes vital in managing this challenge.

• Supply Chain Turbulence: Another prevailing challenge is the vulnerability of the global semiconductor supply chain to disorder. Factors like geopolitical conflicts, natural disasters, and unanticipated events can complexly disrupt the supply network. It indicates the vitality of implementing resilient strategies to lessen the effect of supply chain disruptions.

• Geopolitical Instabilities: The global market dynamics are further complex by geopolitical instabilities, including export restrictions, trade tensions, and swings in geopolitical landscapes. Organizations operating in the active components industry must be adaptable to continuously changing global scenarios, demanding strategic scheming to deal with geopolitical uncertainties.

Market Opportunities:

• Integration of ML and AI: Complimenting artificial intelligence (AI) and machine learning (ML) with diverse applications creates lucrative prospects for semiconductor technologies. Active components are at the front of the way in this technological progress, fortifying AI-driven and edge-computing devices.

• Renewable Energy Industry: The Shift towards sustainable energy solutions provides new opportunities in the active components market. Components are crucial in the advanced integration of renewable energy systems.

• Healthcare Technologies: The digital transition of the healthcare sector and rapid advancements in medical devices are opening up untapped possibilities. Active components are vital for wearable health monitoring devices, diagnostic equipment, and other advanced healthcare technologies.

Active Components Market: An In-Depth Segmentation

Understanding the active components needs an in-depth dive into their varied application scopes and a broad understanding of the global market segmentation. This insight is crucial for stakeholders dealing with the complex landscape. The detailed segmentation not only organizes the market based on product types and end-uses but also lights up regions with different levels of market maturity, providing a vital perspective on the market dynamics.

End-Use Segmentation:

1. Communication (33%):

The communication industry retains a substantial share of 33% in the active components market. This segment extends a wide range of devices, smartphones, networking equipment, satellite communication systems, etc. The constant advancement of communication technologies, especially with the introduction of 5G networks, noticeably boosts the demand for active components in this domain.

2. Computers (31%):

The computer segment accounts for 31% of the market share and comprises desktops, servers, laptops, and data centers. The continuous rise in the need for high-performance computing and the increasing popularity of AI applications are primary drivers for the demand for advanced active components in this segment.

3. Consumer Electronics (12.3%):

The consumer electronics segment seizes a 12.3% share, which covers different devices such as audio systems, gaming consoles, televisions, and smart home appliances. The fusion of active components in these products boosts overall performance, performance, and connectivity, contributing to significant industry growth.

4. Automotive (11%):

With a transitory shift, the automotive industry accounts for an 11% share, driven by the rising integration of electronic components. These components play a role in advanced driver assistance systems, electric vehicle technologies, etc., surging demand in this segment.

5. Industrial/Medical (10%):

The global industrial and medical industry captures a notable 10% share, relying heavily on active components for medical imaging devices and diagnostic equipment. The accuracy and reliability offered by these components make them essential in critical applications within these target sectors.

Product Type Segmentation

• Semiconductor Devices:

Semiconductor devices are fundamentally electronic components composed of materials such as silicon. Their functionality is to magnify and direct electrical signals. Transistors and diodes represent typical examples of such devices.

• Vacuum Tubes:

Vacuum tubes comprise a vacuum and are mostly usable for controlling electrical signals. Although semiconductors have a leading share, vacuum tubes still find a range of application scopes in specific scenarios, such as in audio amplifiers and specific high-frequency devices.

• Display Devices:

This category covers components responsible for providing visual presentation of information. Examples of such devices include LED displays, LCD screens, and other emerging technologies that enable the promising presentation of information across various electronic devices.

Active Components Market Regions:

High Market Maturity Regions:

• Taiwan: Taiwan has gained a high market maturity in the active components market due to its global recognition as a technology powerhouse. Its well-developed semiconductor sectors place the country at the pinnacle of technological innovation, contributing significantly to global progress.
• Japan: Japan continues to maintain its lead in the active components sector owing to its renowned history of technological leadership. The country’s zeal for R&D and the industrial ecosystem indicates its high industry maturity.

• South Korea: South Korea has a mature and highly competitive active components market as it is a hub for semiconductor leaders. With the rise in R&D investments and increasing collaborations, South Korea’s position is a key player.

• United States: The United States enjoys a mature market with its leadership role as a global hub for technology and other advanced innovation. In particular, Silicon Valley has emerged as a popular place for semiconductor R&D.

Medium Market Maturity Regions:

• China: China is rapidly advancing towards a higher maturity market, thanks to rising investments from giant players in semiconductor manufacturing. The country’s aspirational technological endeavors and robust manufacturing ecosystem boost the active components market.

• India: India is growing at a higher speed by making a mark on the global technology stage and has a moderate level of industry maturity. Innovations in technology infrastructure and a rapidly increasing consumer base drive the growth.

• Germany: Germany, a technological hub in Europe, has moderate industry maturity. The country’s increasing focus on Industry 4.0 and modern manufacturing technologies imparts to its position in the global market.

• United Kingdom: The United Kingdom, with a strong technology industry, presents moderate industry maturity. The continuous R&D investments and advanced tech domain foster the region’s high potential for growth.

Cost Structure:

Stakeholders need to take an in-depth outlook of how costs break down in the global active components market. Raw material costs and capital investments drive around 70% of the aggregate semiconductor expenses. This factor highlights the importance of effective financial planning and efficient resource allocation for organizations competing in this dynamic industry.

Key Players in Active Components Market:

The active components market has a presence of leading players who significantly set its direction. Among the leading players are:

• Qualcomm
• AMD
• Intel
• Samsung
• Micron
• ST Microelectronics
• Broadcom
• Infineon
• NXP
• TSMC
• SK Hynix