Buying Trends: Switches and Relays

May 19, 2016
A flat to declining market for switches and relays could be good for buyers in 2016.

As the devices that are used to make and break connections within an electric circuit, switches play an important role in the manufacture of electronic equipment, devices, and products. Within the “switch” category, relays—or, the components that open and close circuits either electrically or electromechanically—play an equally integral part in the manufacture and subsequent operation of a wide variety of products.  

As the automotive industry continues to introduce more electronic systems into modern-day vehicles, for example, both switches and relays play increasingly important roles in the production of these automobiles. According to a recent Global Automotive Relay Market report from Grand View Research, this sector of the market is expected to reach $12.58 billion by 2020.

“Electrical automotive parts have significantly diversified over the last five years, which has consequently increased the number of switching relays from 20 to approximately 30 per vehicle,” according to the report. “Variation in features required for each relay has also undergone considerable transition to address different specifications required for different applications.”

Increased interest in solar projects is also driving the relay and switch market. In recent years, the demand for solar energy has shown increasing growth globally, mainly due to the need for “green” energy like solar and wind. In addition, relays are used in solar applications to protect the circuits from damage and overload of currents.

Finally, increase in demand in smart grids is also driving the global relay market. “As the demand of electricity is increasing, smart grids are introduced to distribute the electricity to every region,” according to the Relays Market-Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2015-2021 report. “The smart grids also need relays to protect the electric circuits from overload and faults.”

Last year saw flat-to-declining sales in both the relay and switch markets, according to switch and relay analyst Michael Schwert, founder of Chicago-based Cumulus Inc. In 2015, the North American switch market posted a 1% sales increase, but bookings decreased by the same percentage (compared to 2014), Schwert reports in Year-to-Date North American Switch Market Sales Up 1% and Bookings down 1% Compared to 2014. The switch market witnessed a slight uptick in late 2015, with total sales for all switch categories increasing by 2% during the third quarter (versus the same period in 2014).

The North American relay market posted a sales decrease of 8% in 2015 (compared to 2014), and bookings were down 12% for the same period, according to Schwert. For the fourth quarter of the year, sales across all relay categories were down 15% versus the same period in 2014.

For the switch market, the product categories that saw the biggest sales drops in 2015 included push button, keylock, slide, and toggle switches. Prices were down 10% in total, with rocker, slide, and snap-action switches seeing the largest declines in pricing. For relays, electromechanical components (EMRs) saw the deepest decline in sales (down 11% for the year), followed by solid state (SSRs), which posted a 7.8 percent decline.

“The overall indexed selling prices [for relays] have generally moved higher with dips occurring in the first quarter of each year until the second half of last year when the trend reversed,” Schwert writes in North American Relay Market Sales Lower 8% and Bookings Down 12% for 2015 Compared to 2014. “Indexed booking prices have also trended upward over the period with more fluctuation. The booking price has been below the selling price for all but one quarter of the period and is at a two-year low.”

Factoring in basic supply and demand economics, electronics buyers should see favorable pricing and good availability across most switch and relay categories during the second quarter and into the rest of the year.

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