Bishop & Associates researched industry trends, connector technology, and business forecasts to compile connector technology roadmaps through 2025.
Bishop & Associates recently released a report on connector technology roadmaps through 2025 with forecasts generated from industry input that examine trend line projections of US manufacturing data from a wide range of industries plus other industry data and forecasts.
The electronics industry and its connector content have enjoyed a mostly prosperous, sometimes volatile history with the ups and downs of the world’s economies. Connectors are faced with multiple factors that affect economic performance, which must be factored into any forecasts and roadmaps:
- The health and consolidation of customers (OEMs, EMS) and specific industries
- The shift from OEM to EMS/contract manufacturing supplier/customers
- Offshore manufacturing, dictated by where the customer is assembling systems
- Socio-political dynamics in particular regions
- Technologic threats from disruptive technologies, which will be important to the connector industry’s future
There were technology changes in the industry as well, most of which affected the customer base rather than making abrupt changes in connector technology. But there are exceptions: The industry has seen significant and costly changes that employ integrated circuits in active cable assemblies and CPU/ASIC companion chip-level transceivers at 25Gb/s per channel and higher. As circuits demand ever-higher speeds, the only way to get there is with active connectors and cable assemblies, in both the copper and optical domain.
So, in one aspect, the industry is making a significant and challenging shift from an electro-mechanical past to an active chip-level and fiber-optic future. Even the fiber-optic future may change, however, with the addition of non-fiber developments such as polymer waveguide technology embedded in organic PCBs and in future CPUs. They will have waveguide layers that will change the way data “pins” come off the chip and IC package to connect with the outside world. Few want to talk about it for fear it will reveal internal technology developments, but we see it as a ripe area for connector developments.
Lots of things are happening in the industry:
- The connector industry will become bifurcated between a datacom, high-tech segment, and those applications that forever will depend on electro-mechanical, high-voltage, ergonomic, and specific end-use industry parameters.
- Formerly electro-mechanical applications, such as in the automotive industry, will add computer and datacom requirements to an environmentally challenging application.
- As the end of Moore’s Law approaches, there will be major changes. In some applications connectors will invade the semiconductor and IC packaging industries, and in those same or similar applications, connectors and IC sockets will be eliminated due to circuit integration such as SiP and SoC.
- As things get smaller and lighter – and move toward handheld and body-worn applications – very small and low-profile connectors will be needed. Yet wireless communications such as NFC and inductive charging will strain the I/O connector world.
Also, the “in-shoring” business will pick up, bringing challenges to the connector industry’s manufacturing infrastructure, which had already flown the coop to Asia. But there will be in-shoring and new project startups for US manufacturing in the electronics industry. Some may be very large, but may depend heavily on IC content. Bishop & Associates identified major challenges in order to accomplish that:
- Manufacturing in China is still greater than two-to-one over the US in total cost.
- Chinese ODMs really want the business and there are hundreds of ODMs in China.
- China is automating, which may increase its competitive advantage.
- American companies make decisions based on cost and the bottom line.
- Investment costs are lower in China and southeast Asia and may be borne by the ODM.
- Billions parked in offshore locations would be taxed again if repatriated to the US, although perhaps that will change and become a staple to support future US manufacturing.
On the other side there are a number of reasons to shift manufacturing to North America:
- Lower logistics and transportation costs
- Quality control
- Linkage between manufacturing control and engineering presence
- Eliminating exposure to socio-political unrest and anti-US military threats
- The benefits of energy independence and lower costs
Long-term growth has been in the mid single digits with recessionary swings of +/- 15-20% in the connector market, whipsawing the industry, amplified by inventory swings, and almost always making up lost ground in one-and-a-half to two years. There are no indications that will change, unless the US politicians and the Fed learn from past mistakes, including preventing energy independence in the US via regulatory issues and a deeply troubling national debt.
Electronic equipment and connectors do tend to be evolutionary markets, now in their maturing phase. There are more changes happening now than at any time in the past, mainly due to advances in silicon technology. Examples include CRT to LCD, film to digital, wired to wireless, PCs to tablets, servers and storage to the Cloud, parallel to serial, custom to standard, and mm to um sizes. Industry drivers include the following:
- Economic health, which for the past decade has been up and down with two major recessions
- Globalization, with high-volume manufacturing moving to Asia and perhaps a hoped-for in-sourcing trend ahead
- Semiconductor technology, which will approach the end of conventional scaling circa 2025
What then? Equipment technology, a very broad, diverse subject, is trending toward lower power; smaller, more compact systems; wireless communications; and Internet-ready products. Specific technologic drivers include, but are not limited to:
- Si ICs and the shift from planar to 3D chip technology
- System-in-Package and true System-on-Chip
- Internet II + of Things
- Expanding wireless telecom/datacom technologies
- Ubiquitous mobile computing and communications
- Trends in electronic packaging – smaller, thinner, lighter, SiP, SoC, TSV interconnect
- Global environmental issues and resultant environmental regulations
- New technology breakthroughs in materials, conductors, optics, and whatever may come next
Taken together, the electronics and associated electrical equipment industries represent a market exceeding $1 trillion globally. That number is very large – and is part of the reason there is a $55-billion connector industry: Connector applications are found whever there is electrical current and a need to make separable connections.
Below are US shipment charts for electronic components, motor vehicles, and photographic equipment, which show past globalization and future trend line analysis to 2025.
Roadmap: US Shipments of Electronic Components, 1995 – 2023
Electronic Components Shipments
Long-term CAGR 1995-2013: -2.23%/year
Trend-line CAGR 1995-2023: -1.98%/year
The domestic electronic component industry (resistors, capacitors, relays, connectors, etc.) shows a decline since 2000 caused by several factors:
- Death of the former telecom and proprietary computer markets
- A much higher degree of standardization, with lower prices
- Maturity and decline in some areas
- Offshore manufacturing/assembly
- Technology shift to chip packages
The domestic connector industry has generally remained healthy, having successfully weathered the move of much of its high-volume/low-cost product manufacturing to Asia, where OEMs and EMS firms are now operating in large manufacturing campuses.
- Global numbers are cyclical.
- Unit volume growth is in Asia.
- Domestic manufacturing supports high-performance and niche markets, including those previously ignored by major players.
- Successful companies are in protected niches or global in scope, with economies of scale reaped from massive M&A activities.
- Business is generally more focused on short-term revenue, leaner, with low investments in basic R&D unless an application is involved.
- The result is a dichotomy between lean suppliers, globalization of engineering resources, reductions in OEM technology resources, and even less with thin-margined EMS firms.
Roadmap: US Shipments of Motor Vehicles and Parts, 1995 – 2023
Transportation equipment, particularly automobiles, may experience a domestic manufacturing renaissance. Highly efficient turbo-charged, small ICEs are needed to meet 35-40 mpg CAFÉ standards, achieve robotic automation, and lower energy costs. Hybrid vehicles will continue to expand as costs come down. Plug-in hybrids appear to be the best interim solution for urban/commuter transit, while all-electric vehicles’ success will depend on battery technology. If Elon Musk’s massive Tesla battery manufacturing plan is successful, EV costs will come down to rival hybrids. EVs will have the additional electronic parts content of a major infrastructure build of charging stations, both private and public. Thus, the automotive sector’s recent domestic volatility may be replaced by a new wave of high-tech manufacturing.
Roadmap: US Shipments of Photographic Equipment 1995 – 2023
Long-term CAGR 1995-2013: -5.80%/year
Trend-line CAGR 1995-2023: -7.47%/year
Film cameras have experienced one of the most dramatic declines in history. Digital cameras based on CMOS and other image sensors were the disruptive technologies. One of the most successful companies in the US, Eastman Kodak, has ceased production except for commercial applications. Now the leaders are all Japanese: Canon, Epson, Nikon, Sony, Pentax, etc. But the same disruption that ensnared film cameras has also impacted digital cameras: Image sensors in smartphones. This leaves an enthusiast market. The future is positive for the market, if not for US manufacturing’s role in it. Photography and video will remain compelling applications, as will the micro interconnects and FPCs used in them.
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