Market Trends of Active and Passive Electronic Components Industry
This section covers the major market trends shaping the Active & Passive Electronic Components Market according to our research experts:
Increasing Adoption of 5G Technology is Driving the Market
- 5G has been a groundbreaking innovation not just for the communication industry but is expected to significantly impact the growth of various industries, including consumer electronics, automotive, industrial, etc., as the fast and low latency connectivity offered by 5G will significantly expand use cases across these industries.
- According to Ericsson, the global number 5G subscriptions are expected to expand rapidly, growing up from a mere 12.69 million in 2019 to 4,372.73 million by 2027. Furthermore, Northeast Asia is expected to hold the largest number of 5G subscribers, reaching 1,705.6 million subscribers by 2027.
- Such trends are expected to open up a new world of possibilities for every tech industry as the low-latency and fast speed offered by 5G is what is needed for further advances in intelligent automation, Artificial Intelligence (AI), the Internet of Things (IoT), autonomous cars, extended reality, blockchain, and several other technologies yet to be explored.
- According to a study by Qualcomm, 5G will generate more than USD 2.4 trillion across the automotive industry by 2035. As millions of vehicles leverage mobile technology for real-time navigation, emergency services, connected infotainment, etc., the advent of 5G will spawn a new range of applications such as Vehicle-2-Vehicle, Vehicle-2-Network (V2N), Vehicle-2-Infrastructure (V2I), and Vehicle-2-Pedestrian (V2P) communications.
- Furthermore, 5G is also expected to have a similar impact on the growth of the consumer electronics industry. The demand for IoT-connected consumer devices will grow due to the availability of low latency and fast connectivity networks. Such trends combinedly will support the growth of the studied market during the forecast period.
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Asia Pacific is Expected to Witness Significant Growth
- The growing electronics industry is attracting several MNCs to set up manufacturing plants in Asian countries either independently or through a joint venture with different regional companies. This includes large global organizations such as Tyco Electronics, FCI OEN, Molex, Vishay, and EPCOS. This is further anticipated to boost the local manufacturing activity of resistors in the Asia Pacific region.
- In China, the growth of the studied market can also be attributed to the booming electronics industry. Electronics is one of the largest industries in China and is a significant contributor to the country's overall economic growth. For instance, as per the State Council of the People's Republic of China, during the two months from January to February 2022, the added value of major electronics manufacturers rose 12.7% year-on-year, compared with the 7.5% growth seen in the overall industrial sector in the country. China is the world's leading producer of electronic devices such as TVs, smartphones, laptops and PCs, refrigerators, and air conditioners.
- Japan's electronic products industry, which is one of the largest in the world, is the most significant factor driving demand for sales of semiconductors in the country. As per the Japan Electronics and Information Technology Industries Association (JEITA), in 2021, the production value of electronic devices in Japan grew by 10.6% compared to the previous year, reaching a value of about JPY 3.94 trillion in 2021. The rising disposable income of the people and their preferences for smart homes and smart business environments are important drivers for the growth of consumer electronics in Japan.
- Korea acquired a prominent position in the global semiconductor memory market. The data center market in Korea is one of the fastest growing and is attracting increasing investments from many foreign players. For instance, in April 2022, Digital Edge (Singapore) Holdings Pte. Ltd planned to develop a data center in Incheon, South Korea, through a partnership with the SK eco plant. The companies will jointly build and promote a 120MW hyper-scale data center development project in the National Industrial Complex in Bupyeong-gu, Incheon.
- Electronics manufacturing is a significant contributor to Taiwan's total Gross domestic product (GDP). Taiwan Semiconductor Manufacturing Company (TSMC) is the most important semiconductor manufacturer in the region. Recently TSMC reported its Q2 2022 earnings results, presenting a strong revenue growth of 36.6% year over year. As per the company, one of the most important reasons for this remarkable growth was the rapid expansion of its customers in the high-performance computing (HPC) industry. These include artificial intelligence researchers, data centers for cloud providers like Amazon's Amazon Web Services, and edge computing networks. HPC revenue grew 14% quarter over quarter in Q2 and now makes up 43% of TSMC's overall revenue.
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