Electronic Coils, Transformers, and Other Inductors

SIC 3677

Companies in this industry

Industry report:

This industry classification includes establishments primarily engaged in manufacturing electronic coils, transformers, and inductors. Establishments primarily engaged in manufacturing electrical transformers are classified in SIC 3612: Power, Distribution, and Specialty Transformers, those manufacturing transformers and inductors for telephone and telegraph apparatus are classified in SIC 3661: Telephone and Telegraph Apparatus, and those manufacturing semiconductors and related devices are classified in SIC 3674: Semiconductors and Related Devices.

Industry Snapshot

According to the U.S. Census Bureau, shipments of electronic coils, transformers, and other inductors grew slightly from $1.21 billion in 2002 to $1.23 billion in 2003, down from $1.51 billion in 2001 and from $1.7 billion in 2000. By the mid-2000s, the industry was returning to more stable footing, although price pressures, stiff competition, and excess supply were continuing concerns. The value of shipments fluctuated during the economically uncertain late-2000s. In 2006, the industry shipped just under $1.39 billion in goods, which increased to nearly $1.8 billion the next year, but fell to $1.7 billion in 2008. Revenues fell again in 2009 to $1.33 billion, according to industry statistics, as a result of a weak economy. Slow recovery began in 2010 as sales improved from the previous year 's depressed levels.

Background and Development

The pioneering figure in the industry was English chemist and physicist Michael Faraday (1791-1867). Credited with discovering the phenomenon of electromagnetic induction in 1831, he also was the first person to use a magnetic circuit to connect two electric circuits. In his experiments with induction, Faraday developed an early version of the transformer. The earliest patent for a power transformer was granted to C. Zipernowski, O. Blathy, and M. Deri of Budapest in 1885. Deri also received the first patent for a distribution transformer in 1885.

"Inductor" is a generic term for an electronic coil, sometimes referred to as an electronic choke. Inductors either filter or select certain frequencies within AC or pulsating DC circuits. Delton T. Horn defined inductors and inductance in Basic Electricity and Electronics. He wrote, "An inductor is a device capable of storing magnetic energy in a circuit. Typically it consists of a coil of wire around some type of core, which may be magnetic or nonmagnetic. Inductance is directly proportional to the square of the number of turns (of wire). An inductor opposes changes in current. It also opposes current, and this opposition increases as the frequency of the signal increases." Coil wire must be coated with an insulating material, such as varnish, lacquer, or enamel, to prevent turns of wire from coming into electrical contact. The greater the ferrous content of the core, the greater the coil's inductance. Coils with nonferrous cores are referred to as "air core" inductors.

In Basic Concepts and Passive Components, Sy Levine defined a transformer as: "A component consisting of a group of separate and unconnected lengths of wire wound around a common core. Its purpose is to provide an efficient transfer of electrical power between circuits connected to its various sections while maintaining electrical isolation between them. This transfer of power is accomplished magnetically." Transformers serve a number of functions that define their type. Among the most important transformer types are power transformers, output transformers, radio frequency (RF) transformers, and pulse transformers. Power transformers convert distribution voltages (typically 110-220 volts AC) to other levels required by electrical and electronic devices. Output transformers function to transfer signals from an audio amplifier to a loudspeaker. RF transformers function to transfer signals between stages of radio frequency amplification circuits. Pulse transformers function to transfer signals between stages of digital electronic systems.

The primary uses for coils and transformers are in consumer electronics, such as stereos and other entertainment equipment, computers, telecommunication devices, and industrial and control instruments. As with other electronic components, the growth of the coil and transformer industry was tied to the growth of radio broadcasting after World War I. Stringent demands were made on all electronic components during World War II. This led to many technological improvements, including standardization, energy efficiency, miniaturization, ease of maintenance, and reliability, especially in the face of mechanical shocks, vibration, temperature extremes, humidity, and high altitude. During the war years, resin-encased transformers were developed, as were oil-filled transformers sealed in metal housings.

Electronic coils and transformers are part of a class of electronic components called passive components. They differ from active components, such as vacuum tubes and transistors, in that they can neither distinguish voltage polarity nor amplify a signal. In 1995, the top nine types of coils and transformers according to product share were, in descending order, pulse transformers, computer, and other (15.5 percent); plate and filament transformers (13.5 percent); toroidal windings (10.7 percent); audio transformers (9.2 percent); radio frequency coils (4.8 percent); radio frequency chokes (4.7 percent); low frequency chokes (3.9 percent); IF transformers (2.2 percent); and television transformers and reactors (2.2 percent). The "other" category accounted for 33.2 percent of product share in 1991, up from 22.9 percent in 1982.

Employment of production workers declined from 19,100 in 1988 to 16,600 in 1991, but grew to 21,300 by 1995. Falling slightly during the late 1990s, employment was just over 19,000 in 1998 before plummeting during the early 2000s, down 42 percent to 11,157 by 2002. As the industry began to rebound, employment picked up very slightly in 2003, reaching 11,487. However, the high cost of materials, an unstable economy, and increased foreign competition forced the industry to streamline, and in 2006 there were fewer than 9,500 employees.

Employment of production workers in the industry was 17,000 in 1995, continuing a declining trend from a peak of 21,200 in 1983. There were fewer production workers in 1994 than in all the years of the prior decade. Over the next decade, production numbers continued to slowly decline, falling to approximately 11,250 by 2001. Numerous factors, including a recession, led to a further drop to 8,092 production positions in 2002. As the economy improved, production numbers began to rise slightly, reaching 8,680 in 2003, yet inexpensive foreign labor forced the trimming of production workers to 6,911 in 2006. The industry was highly labor intensive, having only 20 percent as much investment per production worker as that for the manufacturing sector.

The value of shipments in the electronic coils and transformers industry declined every year from 1988 to 1991. However, this pattern appeared to change in the mid-1990s with the estimated value of shipments increasing to $1.56 billion in 1995 from $1.38 billion in 1994. Annual capital investments showed consecutive declines between 1989 and 1991. Annual capital investments exceeded $30 million in 1982 and 1983, but the trend did not continue through 1991.

In 1992, the United States had a trade surplus in electronic coils and transformers of $101 million compared to a deficit of $3.11 billion for all passive components. Exports of electronic resistors produced in the United States increased 8 percent in 1992, reaching $501 million. Mexico was by far the largest export market for electronic coils and transformers produced in the United States, accounting for 67 percent of U.S. exports in 1992. The United States ran a $140 million surplus with Mexico in electronic coils and transformers in that year. Other important export markets included Canada, Singapore, Taiwan, Hong Kong, and Japan.

Imports of electronic coils and transformers into the United States increased 23 percent in the first half of 1993. The three largest importers of electronic coils and transformers into the United States were, in descending order, Mexico, Japan, and Taiwan. In the first half of 1993, imports from Japan increased 39 percent, whereas imports from Taiwan decreased 18 percent.

The most important trends in coil and transformer production were continued miniaturization and weight reduction, as well as surface mounting. Surface-mounted devices, or SMDs, offered a number of advantages over traditional components with wire leads inserted through holes in printed circuit boards. Because SMDs could be placed on both sides of a circuit board, they optimized space and reduced cost. SMDs were lighter than components with wire leads and enabled automated assembly techniques. SMDs made shorter distances between components possible, and reduced circuit capacitance and resistance and minimized interference. As a result of size constraints, coils with high levels of inductance were very difficult to produce in integrated circuits. Integrated coils generally were produced by forming flat spirals of metal on the face of a circuit.

After declining for three consecutive years from $1.52 billion in 1997 to $1.5 billion in 1998 and to $1.4 billion in 1999, the value of industry shipments recovered in 2000, reaching $1.65 billion. The number of industry employees declined from 19,034 in 1998 to 17,283 in 2000, and as a result, costs associated with payroll dropped from $467 million to $463 million.

During the first half of the 2000s, the industry followed the overall economy in its peaks and valleys. In 2001, the value of shipments fell 11 percent to $1.51 billion. This decline prompted a drastic cut in capital expenditures, which dropped 46 percent, from $52.4 million in 2000 to $28.4 million in 2001. As the recession deepened during 2001, lack of demand and oversupply resulted in shipment values dropping nearly 25 percent to $1.15 billion in 2002. Capital expenditures, which already had been cut in half since 1998, fell slightly in 2002.

By 2003 the economy showed signs of a turn-around, and the industry responded by stopping its downward spiral. That year, shipment values increased slightly to $1.2 billion. The leading product categories within the industry were filtration devices ($596 million), electric coils/transformers ($300 million), and electric coil windings ($282 million). In the early 2000s, the industry reported consolidations, job losses, and closings. However, in the mid-2000s, growth was projected for the large companies that had weathered the storm. For example, Vishay Intertechnology, which manufactures an array of components, posted a net loss of $100 million on $1.82 billion sales in 2002. However, by 2004, the company reported a net profit of $70 million on $2.41 billion in sales, with 2006 sales increasing further to $2.6 billion, thus reflecting the return to solid footing for the industry's big players.

The industry was driven by increasing markets for handheld devices, especially cell phones, which reported robust sales during the mid-2000s, including a record high of 1.02 billion units sold in 2006. The trend was for increasing functionality but decreasing size. Although the global industry was improving, some companies curtailed business operations within U.S. borders and moved operations overseas to cut overhead. The global recession, which began in 2008, impacted this industry as well as most manufacturing segments. 2007 shipments were valued at nearly $1.8 billion while shipped goods fell to $1.7 billion the next year.

As with most manufacturing industries, the U.S. held a trade deficit in this segment with imports totaling more than $1 billion while imports accounted for $600 million in 2008.

Current Conditions

In 2009, 180 firms within this industry, or 32.8 percent, manufactured electronic filtration devices; these firms employed 3,980 and generated $525.1 million in revenues. Firms that manufactured various types of transformers (electronic, coupling, constant impedance, flyback) numbered 160, or 29.1 percent; they employed 4,051, and generated $357.3 million. Another 139 firms, or 25 percent, were categorized within the electronic coils and transformers segment. This segment employed 4,036 and generated $354.6 million in revenues. Smaller segments produced baluns, electronic coil wingdings, and electronic conductors.

The full impact of the recession hit the industry in 2009. Demand fell sharply. For example, Industry leader, Pulse Electronics Corporation (then doing business as Technitrol) experienced a decrease in sales by over 36 percent, falling from $626.3 million in 2008 to $398.8 million in 2009. The firm, which posted a net loss of $123.6 million in 2008, posted an additional net loss in 2009 of $72.9 million.

Although demand began to return to the market, particularly for wireless handsets toward the end of 2009, Pulse Electronics and other firms with in the category were adjusting to a shift in the industry. Pulse Electronic noted in its 2009 Annual Report, "A significant portion of handset antenna business currently served by our wireless group has begun a transition away from OEM [original equipment manufacturer] driven hardware development and manufacturing, a transition led by a large OEM customer seeking to purchase full handset modules from one of several contract equipment manufacturer who can each provide full handset modules."

Another issue in the electronic component industry during the late 2000s and into the 2010s was the growing concern over counterfeit components, emanating primarily from China. Not only do nonworking or subpar component infiltrate the market, U.S. buyers can search the Web and unknowingly find counterfeited components that are priced well below market price, which puts price pressure on legitimate producers.

Industry Leaders

Industry leaders included Pulse Electronics Corporation (formerly Pulse Engineering Inc., a subsidiary of Technitrol) of San Diego, California, with sales of $398.8 million and 19,400 employees (approximately 500 in the United States); American Precision Industries Inc. (API) of Buffalo, New York; and Products Unlimited Corp. of Sterling, Illinois. Numerous large companies, such as Vishay Intertechnology, of Malvern, Pennsylvania, also participate in the industry, although coils, transistors, and inductors are only a part of their portfolio.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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