Price Increase of Passive Components: Driven by Cost Pressure or a Signal of a New Industry Cycle?

    Recently, the passive components market has been hit by a wave of price increases, signaling the emergence of a new industry cycle. Domestic major manufacturer Fenghua Advanced Technology was the first to issue a price increase notice, raising prices by 5%-30% for products such as inductors, ferrite beads, varistors, and ceramic capacitors starting November 17; Sunlord Electronics followed with ferrite bead price hikes. Previously, Taiwanese giant Yageo had already raised prices for tantalum capacitors by more than 30%.

    On the surface, the surge in costs of metal materials like silver, copper, and tin, as well as packaging materials such as frameworks and absorbent materials (with increases of 25%-45%), is the direct factor forcing manufacturers to raise prices — coupled with the fact that some packaging factories already operate with thin profit margins, price hikes have become a necessary choice for survival. However, behind this phenomenon, the more fundamental driving force comes from a structural change in supply and demand.

    The explosive growth of the AI industry has become a key variable: the upgrading of server power supply architectures and the widespread adoption of edge-side applications have sharply increased demand for high-end capacitors and inductors, directly pushing up factory capacity utilization. Currently, passive component prices are still at historically low levels. With both demand recovery and cost support, manufacturers have ample motivation for subsequent price increases, and for some categories with low inventories and tight supply-demand balance, there is a solid foundation for sustained price growth.

    It is worth noting that this round of price hikes may accelerate the reshaping of the domestic packaging industry. Although China’s domestic packaging and testing capacity remains among the highest globally, it is trapped in a 'sandwich dilemma' of being constrained by high-end technologies, relying on imported key equipment and materials, while facing intense homogenized competition in the mid- and low-end market. Cost pressures are forcing the industry to accelerate consolidation and technological breakthroughs, meaning this price increase could become an important opportunity for re-evaluating the value across the industrial chain.

    In summary, this wave of price increases is not merely a result of cost pass-through, but rather the outcome of the combined effect of explosive AI demand and shifts in industry structure. As the supply-demand structure continues to improve and costs remain high, passive components are poised to officially enter a new cycle of prosperity.