In early 2018, the LED industry experienced a wave of instability. As companies set their goals for the year, electronic components like resistors and capacitors were among the first to trigger price hikes, signaling the beginning of a significant shift in the market.
Resistors are essential in circuits, acting as voltage dividers in series or shunts in parallel configurations. Electrolytic capacitors, on the other hand, serve critical functions such as filtering power supplies, decoupling signals, coupling, and setting time constants in low-frequency or intermediate frequency circuits. These components are vital for LED power supplies, and their cost fluctuations directly impact the overall production expenses.
Yang Dong, General Manager of Zhangfei Power, highlighted that while resistors only account for about 3% of the total power supply cost, capacitors make up around 10%. This year’s increase in capacitor prices has exceeded 100%, significantly reducing profit margins. The pressure from rising material costs is becoming increasingly challenging for manufacturers.
**Chip Resistor Manufacturers Raise Prices One After Another**
On December 26, 2017, a leading resistor manufacturer announced the suspension of orders for general thick film resistor products (RC series), including sizes from 0201, 0402, 0603, 0805, to 1206, as well as larger sizes such as 1210, 1218, 2010, and 2512. Industry observers saw this move as a step toward stabilizing production capacity, which inevitably led to higher prices.
Indeed, in 2018, several major chip resistor manufacturers, including Wang Quan, Guojuzi Guoyi, Guangyi Technology, and Lizhi Electronics, adjusted their pricing strategies. On January 2nd, Wang Quan increased the price of certain resistor series by 15%. According to the company, rising raw material and packaging costs forced them to implement the adjustment.
Similarly, Guangsheng Technology also announced a 10% price increase for some thick film resistors due to rising material costs. Lizhi Electronics followed suit, raising prices by 15% due to increased raw material expenses. Guoyi Company also adjusted its prices, increasing the cost of various resistor models by 15%-20%.
These price increases were driven by multiple factors. Since mid-2017, ceramic substrates—essential materials for resistors—faced supply shortages due to increased demand from the automotive sector. Additionally, the rising cost of palladium, a key material in ceramic substrates, contributed to higher production costs.
Environmental regulations also played a role. Many factories were forced to shut down or limit production, leading to tight supply conditions. These factors collectively pushed component prices higher.
**Aluminum Electrolytic Capacitors Also Face Price Hikes**
The price increases were not limited to resistors. Aluminum electrolytic capacitors also saw price adjustments. Nichicon, a major supplier, announced a 5% price hike for various types of aluminum electrolytic capacitors, effective February 1, 2018. Some domestic manufacturers had already started increasing prices secretly, with an average rise of around 15%.
However, not all companies had implemented price increases yet. A representative from one manufacturer stated that while they had not raised prices yet, they would consider it if material costs continued to rise.
**Impact on Power Supply Companies**
The rising costs of resistors and capacitors have had a significant impact on power supply companies, especially small and medium-sized firms. With intense competition in the LED lighting market, many power suppliers struggled to absorb the increased costs. Their gross profit margins were already thin, making it difficult to pass on the additional expenses to customers.
Some companies, like Shenzhen Dark Energy Power, managed to avoid the impact by securing long-term contracts with suppliers. However, others faced severe challenges, with some even struggling to stay afloat.
As raw material and labor costs continue to rise, the LED industry faces an uncertain future. For power supply companies, the combination of rising component prices and fierce competition presents a serious challenge. Only those who can adapt and manage costs effectively will survive in this evolving market.
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