SUPPLY

Factory Utilization & Supply Chain Trends:

• Most supplier factories are operating at 80% capacity utilization.
• Key suppliers' book-to-bill ratio remains strong, primarily driven by global AI technology demand.
• The average book-to-bill ratio ranges between 1.0 and 1.16. Inventory levels are declining, with stock depleting across supply chain channels.
• Suppliers continue producing to fulfill customer orders while replenishing distribution stocks.

Supply Constraints:

• High-speed connectors used in data center infrastructure for AI applications are experiencing supply constraints.
• Connector lead times currently range between 12 and 20 weeks.

Global Demand & AI Adoption:

• AI-driven demand is improving across multiple market segments.
• Growth is robust in AI-powered hardware for network management systems and in AI platform adoption by cloud and hyperscale customers.
• Defense and aerospace sectors are also contributing to AI-driven demand growth.

MARKET DYNAMICS

• The supplier landscape remains stable, with no signs of major exits from the market. Instead, key players are expanding through strategic acquisitions to strengthen their industry positioning across aerospace, defense, medical, and communications segments.
• Market Implications & Strategic Growth Areas:
• Molex is expanding into Aerospace & Defense through its AirBorn acquisition, solidifying its position in rugged connectivity solutions.
• Medical technology remains a key growth driver, as seen in Molex’s acquisition of Vectura and Amphenol’s acquisition of Lifesync, both enhancing medtech product portfolios.
• Telecommunications infrastructure remains critical, with Amphenol integrating CommScope’s Outdoor Wireless & DAS into its Communications Solutions Segment to capitalize on 5G and network expansions.
• With AI, defense, and medical technology driving interconnect demand, further consolidation and investment in these areas are expected.

RECENT DEVELOPMENTS

Company	Acquisition	Focus Area	Integration & Impact
Molex	AirBorn (December 2024)	Aerospace & Defense – rugged connectors & power solutions	Forms the foundation for Molex's Aerospace & Defense Division. Brings 1,600+ employees across U.S., Canada, and UK.
Molex	Vectura Group Ltd. (January 2025)	Medical – drug delivery, in vitro diagnostics, medtech	Strengthens Phillips Medisize division with expanded pharmaceutical and inhalation product capabilities.
Amphenol	CommScope’s OWN & DAS (February 2025)	Telecommunications – outdoor wireless & distributed antenna systems	Expected to generate $1.3 billion in 2025 sales. Integrated into Amphenol’s Communications Solutions Segment.
Amphenol	Lifesync Corporation (February 2025)	Medical – interconnect solutions for healthcare	Generates $100 million in annual sales. Integrated into Amphenol’s Harsh Environment Solutions Segment.

 

MARKET OVERVIEW

• Market Outlook:
• Automotive: The market remains soft overall, but growth continues in Asia, particularly in China, where electronics content in vehicles is increasing, along with AI adoption in autonomous driving and smart infotainment.
• Consumer: Demand is weak, but AI integration in mobile devices and notebooks is helping boost demand in this segment.
• Industrial: Recovery is beginning, with demand picking up in Power and Energy markets.
• Medical: Demand remains stable, with no significant fluctuations.
• AI-Driven Demand for Connectors:
• AI adoption across market segments is driving strong demand for connector suppliers.
• Most manufacturers are operating at 80% capacity utilization, with a book-to-bill ratio ranging from 1.0 to 1.16.
• AI-related applications continue to be the primary factor behind the strong book-to-bill ratio.
• Tariff Pressure & Supply Chain Adjustments:
• New U.S. tariff policies under the new administration are increasing costs on China-made goods entering the U.S..
• Connector suppliers are closely monitoring the impact of tariffs and are shifting or considering manufacturing sites outside of China to adapt to the evolving trade landscape.

PRICE

PCB Connector Pricing Trends:

• Pricing for PCB connector types—widely used across various market segments—continues to decline due to competitive market dynamics.
• Despite pricing pressure, gold and copper costs remain high, significantly impacting connector suppliers.

Cost Pressures & Supplier Responses:

• Rising raw material costs, particularly for gold, increase overall connector production costs.
• Wages, inflation, and overhead manufacturing expenses continue to put upward pressure on pricing.
• Suppliers remain open to price negotiations for new business opportunities and to gain market share in existing accounts.

Legacy Product Pricing & EOL Notices:

• Price increases and end-of-life (EOL) notifications are emerging for low-margin and legacy products, helping suppliers sustain production and cover operational overhead.
• Connector types impacted include:
  • Headers & Receptacles
  • D-Sub connectors
  • Non-High-Speed I/O connectors (USB 2.0)
  • Labor-intensive RJ45 Magjacks

Price Trends (Month vs Annual)

SUPPLY

Book-to-Bill & Capacity Utilization:

• The book-to-bill ratio for relays is stable at 1:1, with overall capacity utilization between 70% and 80%.
• Some specialized product lines, particularly low-voltage and general application relays, may experience capacity constraints.
• Relay manufacturers typically do not maintain inventory, leading to potential availability challenges.

Market Performance by Key Sectors:

• Home appliances are gradually recovering due to low inventory levels and are expected to return to 2018 demand levels.
• Automotive, industrial, and energy sectors remain underperforming, contributing to weaker demand for relays.

Lead Time & Inventory Management:

• Average lead times are decreasing, except for specialized automotive and high-voltage relays, which remain under allocation.
• Adjusting production capacity for standard relay lines and achieving stable output typically takes six months to a year.
• Relay manufacturers such as Omron and HongFa are attempting to build a two-month inventory for common relay types.

Customer Demand & Market Outlook:

• A significant amount of customer pull-in is expected, as most end customers remain cautious, while relay capacity remains relatively rigid.

 

MARKET DYNAMICS

Raw Material Price Trends:

• Gold, silver, and copper prices have surged, driven by geopolitical tensions in the Middle East, uncertainty around the new U.S. administration, and global central bank easing measures.
• Analysts expect further upward momentum for gold prices, which could impact connector, relay, and semiconductor component costs.

HongFa’s European Expansion:

• HongFa's new European manufacturing facility in Germany began construction in September 2024.
• The facility will focus on automotive relay production, backed by a contractual agreement with a major German automotive company.

Sanyou’s Pricing Strategy Shift:

• Sanyou’s aggressive low-price penetration strategy may have strained its profit margins.
• Due to shareholder pressure, the company may be forced to increase prices shortly.

 

PRICE

Cost & Pricing Trends in the Relay Market:

• Relay manufacturers focus on cost control, but raw material, labor, energy, and transportation costs fluctuate.
• Silver and gold prices are nearing their peak, while copper has slightly declined but remains elevated.

Manufacturer-Specific Pricing Updates:

• HongFa, Omron, and FCL (Fujitsu) maintain stable pricing despite cost pressures.
• Panasonic has already announced price increases for certain relay series.
• TE relay prices are expected to remain stable, with a slight increase of less than 1% on a small number of low-usage relays.

Price Increases in Industrial & Specialized Relays:

• Industrial relays, including contractors and safety relays, from manufacturers such as Eaton, ABB, and Schneider, are expected to see cost increases of 5% to 7%.
• Specialized reed relays, produced by Coto and SanYu Switch, are also susceptible to similar price increases.

 

SUPPLY

Lead Time & Capacity Trends:

• Lead times remain stable, with no significant capacity constraints or raw material shortages, though copper availability remains a potential risk.

Production Expansion & Inventory Management:

• Switch manufacturers require approximately 6 to 9 months to expand production capacity by adding new lines.
• Due to the nature of switch products, manufacturers typically do not maintain extensive inventories.
• Conservative demand forecasts from end customers often lead to sudden demand spikes, which may exceed supplier capacity.

Market Growth in AI & Computing:

• C&K and CTS are experiencing significant volume growth, particularly in the computing sector.
• AI-driven applications are fueling substantial business expansion for these manufacturers.

 

MARKET DYNAMICS

• Market Evolution & Technology Shift:
• The switch market is evolving, with touch panels and pressure-sensitive components gradually replacing traditional switches in various applications.
• Demand Trends by Sector:
• Consumer markets are gradually recovering, though AI has only driven demand growth for select switch manufacturers.
• Diptronics’ India Expansion Delay:
• Diptronics’ expansion in India is temporarily on hold due to issues with its local partner, leading to a contract termination.
• The company may reconsider its India strategy, especially amid uncertainty regarding U.S. trade policy.
• Raw Material Price & Supply Challenges:
• Copper, gold, and silver prices continue to rise, posing new challenges for pricing and potential supply disruptions.

PRICE

• Pricing Stability & Cost Pressures:
• Despite ongoing industry challenges, most manufacturers have maintained stable pricing.
• However, rising raw material costs (copper, silver, gold), increasing labor expenses, and inflation are beginning to apply upward pricing pressure.
• Expected Price Increases in Industrial Switches:
• Specialized industrial switches, produced by Eaton, ABB, and Schneider, are expected to see price increases of 5% to 7%.
• This trend may be further impacted by rising copper, gold, and silver prices, which continue to drive up manufacturing costs.
• E-Switch Pricing Adjustment:
• E-Switch has announced a 5% price increase across all product lines, excluding Tact Switches.

COPPER vs GOLD vs SILVER PRICE TRENDS (5 Years)