Connector Industry Searches 2nd Feb 06-dhj

electrical connector An electrical connector is a device for joining electrical circuits together. In computing it can also be known as a physical interface. Usually made up of a plug (male) and a socket (female), although hermaphroditic connectors exist, such as the original IBM Token Ring LAN connector.

European Connector Market 10 Selected Member States 6 Selected Member States Of The European Union Of The European Union Using The Euro Currency Not Using The Euro Currency

2 Selected Country’s Not Part Of The European Union

Austria Belgium Finland France Germany Ireland Italy Netherlands Portugal Spain

Norway Switzerland

Czech Republic Denmark Hungary Poland Sweden United Kingdom

These 18 countries make up the bulk of the European Connector Market. European Union members Greece, Luxembourg, Cyprus, Estonia, Latvia, Lithuania, Malta, Slovenia and Slovakia are not included in our statistics. The 2000 and 2001 recession had a significant downward impact on the connector’s industry’s Compound Annual Growth Rate (CAGR). The five-year (1999/2004) CAGR is only +2.5%, compared to the ten-year (1994/2004) CAGR of +5.0%. The connector industry had previously recorded a historical CAGR of +7.0%.

The European market represents almost 26% of the world connector market. This share has hardly changed the last 10 years. This can be explained by the fact that in the past 10 years, the European CAGR has been +5.5%, almost equal to the world wide CAGR of +5.6%. The 2000 and 2001 recession also had a significant downward impact on the European connector industry CAGR. The five-year CAGR (1999-2004) was only +2.7%, only slightly above the industry’s average. Partly due to exchange rate effects, the European connector market recorded excellent growth in 2003 and 2004. In 2004, the European connector market recorded its second highest growth rate in the past 20 years. Only 1995 achieved higher growth rate (+24.4%).

The four largest economies, which dominating Europe, are Germany, the United Kingdom, France and Italy. Except for the British economy, the other three economies have not performed well in recent years, slowing economic growth in the entire region.

In the 1900s, Ireland has achieved the fastest grow in Western Europe, still continues good growth today. This has resulted in Ireland becoming the fifth largest connector market in Europe, behind Germany, the United Kingdom, France and Italy. Central and Eastern European countries are now appearing on the horizon and will become more important connector markets in the future

The World Security Market For Connectors This new report provides the essential information needed to access opportunities in the world security electronics sector, including the following: The value and growth rate for each category of equipment are forecast for the years 2003, 2004, 2005 and 2008.

The values and growth rates of connectors are identified by equipment type for the years 2003, 2004, 2005 and 2008. The primary objective of this report is to create a single, comprehensive and authoritative analysis of the security electronics industry sector. Specifically, the objectives are: To provide an independent basis for assessing market share and competitive advantage. Identify the dollar value of each category of security equipment included in the report, with the Connector market size organized by equipment type, connector family and by geographic region. To provide connector sales by connector product type and security equipment type for 2003, 2004, 2005 and 2008. Connector Market Size The value of connector shipments to the security electronics sector in 2004 was $434.4 million, an increase of +12.2% over the 2003 market of $387.2 million. The 2005 connector market is forecasted at $485.7 million, representing an Increase of +11.8%. The five-year forecast of connector shipments is $665.1 million in 2008, representing a compound annual growth rate of +11.4%. World Security Market For Connectors

Connector market report

Actual results are provided for the years 1999, 2000, 2001, 2002, and 2003. Forecasts include the years 2004, 2005, 2006, 2007, and 2008. Five-year CAGRs (2003-2008) are also included. Worldwide and regional forecasts include: Computers & Peripherals Mobile Computers Desktops Servers Storage Equipment Input/Output Equipment Communication LAN Devices Other Computer Equipment Business/Office Equipment Retail/POS Equipment Imaging Systems Other Business/Office Equipment Instrumentation Automatic Test Equipment Analytical/Scientific Instruments Other Instrumentation Medical Equipment Diagnostic & Imaging Equipment Therapeutic Equipment Other Medical Equipment Industrial Industrial Controls Production Equipment

Automotive Body Wiring & Power Distribution Powertrain Comfort, Convenience & Entertainment Navigation & Instrumentation Safety & Security Transportation (non-auto) Medium & Heavy Trucks & Busses Motorcycles/Off-Road/Recreational Vehicles Aviation, Rail & Marine Electronics Military/Aerospace Telecom/Datacom Carrier Network Enterprise Network Wireless Infrastructure Subscriber Equipment Other Telecommunications Consumer Personal/Portable Consumer Home Video Equipment Home Audio Equipment Consumer White Goods Other Consumer Other Equipment

All Equipment Sectors Showing Growth All end-use equipment sectors are recording growth, and forecast to improve further in 2004. The following provides some highlights: Computer and Peripheral equipment sales have returned to double-digit growth after declining for the first time ever in 2002. Unit sales were up +11.0% in 2003, and the 2004 forecast is for another +11.0% rate.

We project connector sales to grow +9.1% in the computers and peripherals sector in 2004. Automotive has continued to achieve low single digit growth driven by customer promotion programs. Increased electronic content in each vehicle has been a market driver for connectors. We project a +5.2% connector growth in automotive in 2004. Military/Aerospace has enjoyed the best sales growth in years. Growth has been driven by the “War on Terrorism” and the military build-up prior to the wars in Afghanistan and Iraq. Connectors will grow +6.6% in 2004. Telecom wireless equipment sales are accelerating and enterprise network equipment is achieving growth, Carrier equipment is the laggard, but this sector has bottomed and sales are improving modestly. We project telecom connectors to grow +4.5% in 2004, after declines of –35.7% and – 29.5% in 2001 and 2002 respectively. Further, we believe connectors will achieve growth in all end-use equipment sectors in 2004. The following table provides our current 2004 end-use equipment forecast for connectors. This forecast assumes stable currency exchange rates. Market Growth For Connectors in 2004

2003 Forecast We believe full year 2003 will result in Connector sales up +9.7% in U.S. dollars. Our

outlook by geographic region is shown below in U.S. dollars and local currencies by region of the world. 2003 – 2004 Connector Sales Forecast

Five-Year Connector Forecast The world connector market will increase in volume by $11.4 billion in the next five-years. This represents a compound average growth rate of 8.3%. Five-Year Connector Market Forecast by Region

The World Military Connector Market With a military budget that is approximately equal to the sum of all the rest on the nations in the world, the U.S. is by far the largest single market for military connectors. However, the fastest growing defense budget is that of China. With economic growth bolstering the overall economy, China is busy adding to its military capabilities. The world military market for connectors continues to grow, and totaled $2.329 billion in 2004. The most significant change comes from the growing use of non-mil spec connectors in a market that was once virtually off limits to commercial suppliers. Today,

mil spec connectors can no longer meet the technology requirements of the military. It is the consensus of the military, major platform integrators and weapon system OEMs, that no new mil spec connectors will be developed. The military is now forced to look to the commercial connector sector to meet all new military connector needs. World Military Connector Market by Region

U.S. budgets for each branch of military service are reviewed, and major weapons platforms such as the F-22 aircraft, the Bradley Fighting Vehicle, Abrams Tank, etc. are identified. For each platform, the major electronic systems are identified along with the OEM responsible for the electronic system development. For other countries, military budgets are reviewed and major platforms are also delineated. OEMs of major weapons systems are identified and ranked. There is a complete ranking of the OEMs based on the level of business they do with the government. The major OEMs are displayed relative to their market share and the products they produce. The value of contracts to the top 5 defense contractors equals the value of contracts to all other defense contractors combined. This report examines the military hardware development process and the new initiatives that will help the military to regain the ability to produce state of the art equipment. The military has seen its position of technology leadership deteriorate to one of trailing the commercial industry by a decade or more in some areas. The requirement to use mil standard technology components has been a major contributor to the performance gap. While the commercial industry transfers data over buses that operate at Gigabit speeds, the military was forced to use standards like Mil-Std-1553 operating at only 1 megabit. New directives have resulted in military platforms abandoning the old mil spec technology for commercial technology in order to be able to perform at the desired level in the future.

However, when it comes to interconnecting systems, the application of mil-spec connectors still dominates, because conditioning of the environment is less possible. Circular connectors still do a significant business as cables are routed through bulkheads and connected to the system I/O. Some benign environments have allowed the use of commercial connectors, but in the field, the mil spec connector is still required. Circular Military Connector Market

In facilitating the use of commercial connectors, it has required system designers to condition the environment in which these components operate. This report provides insight into the required level of ruggedness and how Commercial Off the Shelf (COTS) parts are being utilized, either directly or modified to meet requirements. The report also addresses the challenges that the military face as it moves to incorporate state-of-the-art technology into its future products. The short life cycles of commercial designs places additional constraints on the military and the supply chain. While a move to COTS based systems for new designs is a reality, it is also true that full mil spec connectors still make up the bulk of the present military market and the venerable circular connectors, such as the Mil-C-38999, continue to be major players. This report gives a detailed breakout of the major mil-spec connector product revenue by region of the world for each of the major connector types.

The World Connector Market for Consumer Electronics This report provides a comprehensive analysis of connector usage in the appliance, HVAC security, imaging systems, TV/video, audio systems, video games/toys, consumer automotive, and other segments of the world consumer electronics market. Statistics are presented showing historical and forecast connector shipments to the consumer market for the years 2002 through 2009. Driven by strong demand for digital audio, video and home information products, consumer electrical and electronics equipment, sales in 2004 grew to an

all time high of $143 billion in the US, and $286 billion worldwide. This total includes both consumer electronics and consumer electrical equipment, (home appliances & HVAC) which have increasing electronic content. Recent developments have been significant, with both heightened global competition and new opportunities. A market that had lost its luster for many manufacturers is now a rising star for others.

The following industry segments are being transformed by a number of powerful forces: • • • • • •

Digital convergence and its attendant technical challenges. New products & applications, including luxury goods. Product miniaturization, mobility and wireless technology. Crossbreeding with other industry segments (computers, telecom, etc). Globalization of manufacturing with significant industry consolidation. Globalization of demand with emerging 3rd world.

Convergence - This means the convergence of digital silicon technology (and firmware) with consumer products, resulting in many new products and features not possible with traditional analog circuitry. Examples: PDAs, Smart Phones, HDTV, Satellite Radio, and the iPod. New Products - Partly resulting from the computer revolution, but also from government dual use and massive innovation made possible by digital circuitry. The list of new products is staggering and increases daily. Miniaturization - Much of the growth in consumer electronics is in handheld devices, enabled through years of perfecting small form factor packaging and system-in-package techniques. Cross-Breeding with Other Industries - Convergence with Computer & Peripherals spawned Ink Jet Printers, Wireless LANs and Digital Cameras; Telecom developed Mobile Phones; the military GPS technology. Large segments of Computer/Peripheral and Telecom are now Consumer. Globalization of Manufacturing - Outsourcing and the emergence of China as a manufacturing powerhouse has accelerated the development of low cost

production in a wide range of products. This has helped increase demand for consumer electronics products. At the same time, there is significant industry consolidation on one side, and numerous startups in high growth areas on the other. Globalization of Demand - Western countries are still the largest markets, particularly for upscale consumer products. However, other areas are beginning to grow at a rapid pace, and do most of the manufacturing (e.g. China, India and Eastern Europe). Major Growth Areas The following list represents some of the applications driving market expansion: • • • • • • • • • • • • • • • •

Handheld Communicators (smart phones) Wireless Technologies: GPRS/Edge, WiFi, Bluetooth, UWB Home Networking: WiFi, 10B1000, other Consumer Laptops & other PC products High Definition TV Home Theatre & Media Centers (Audio, Media Server, Other) Flat Panel Display Technologies (LCD, Plasma, DLP) Satellite TV (DirecTV, EchoStar, Voom) Video Recording (TiVo, DVRs, DVD+, Set Top Boxes) Digital Photography and Printing (Cameras, Camcorder Flash Memory Storage Devices (SD, MiniSD, XD, Mem. Stick) Satellite Radio (XM, Sirius) Digital Audio & MP3 Players (iPod, Digital Stereo, Digital Radio) Satellite Navigation (GPS) Video Games (Xbox, Playstation, PSP1, GameBoy, etc) Digital Radio

Implications For Connectors Historical Perspective - Many connector manufacturers downgraded the consumer electronics market long ago because they generally couldn’t produce acceptable returns. Suppliers focused on other markets where the financial demographics were more attractive, consumer automotive and home appliances being two major examples. At the same time, the computer and telecom markets were growing, and used more sophisticated designs with higher ASPs. The downgrading of consumer electronics market resulted from early waves of offshore radio and TV assembly, coupled with low cost foreign competition and the rise of an Asian manufacturing infrastructure in consumer products. Some

companies who had a major Asian presence also shunned the consumer market due to the pullback of their western parent companies. Others, particularly in Japan and later in the Asia Pacific region, jumped in with both feet. These Asia sources learned and eventually prospered, becoming low cost producers with varying degrees of diversification in this highly competitive arena. This is an interesting dynamic for the connector industry, because in retrospect, being able to succeed from a low cost/high volume base in consumer produced an economy of scale that allowed the extension of this capability into the automotive, computer and telecom markets as they too developed consumer characteristics. Present and Future - Many companies, recognizing the link between consumer, computer-peripheral and telecom, have merged marketing and engineering activities and undergone significant restructuring which will enhance their ability to compete in the consumer electronics market. This includes segment headquarters in Taiwan, Singapore, or Japan, with extensive manufacturing facilities and outsourcing in China, and strong relationships with Asian ODM and CEM customers. At the same time, many consumer electronics products, notably LCD and Plasma TVs, set-top boxes, DVRs and other products have developed characteristics that are more compelling for connector suppliers. Such as: Higher ticket items • • • • • • • • • • •

Higher design complexity than historically true in CE. Rapid growth scenarios in applications such as flat panel displays. Somewhat less standardization, more mass-customization to achieve ‘engineered’ cost targets. Thus a greater ability to succeed with new product designs and ‘designsfor-assembly’. Leveraging existing and developing relationships in the global supply chain. Cross-selling standards – typically IO connectors (USB, IEEE-1394, Pin Headers). Cross-selling special-application connectors (appliance wire-to-board, FEC, Ribbon). Cross-linkage between electronic and electrical connector designs & opportunities. As Asian footprints expand, regional market potentials also open up for the future. Ability to compete ‘where the action is’ in Taipei, Shenzhen, Qingdao or Shanghai. Leverage other capabilities in Sockets, PCB, FEC, Stacking, Wire-to-Board and IO

Connector Imperatives to Support Next Generation Electronic Equipment In order to support an explosion of new products and capabilities coming into the market, electronic system design has experienced radical change over the past 10 years. The forces of higher speed circuits, miniaturization, and lower product cost are causing designers to rethink every aspect of their new product designs. As more functionality is crammed into smaller spaces, issues such as electromagnetic compatibility (EMC), power distribution and resulting thermal management become critical design considerations. Failure to anticipate the challenge these issues present can quickly become showstoppers that can delay or shut down a new product development. Market share drives the computer, telecom and automotive markets and failure of a new product introduction target may cause a company to miss their window of opportunity. The interconnect system plays a role in each of these areas which has generated demand for greater innovation in connector design. The basics of connector technology have not changed dramatically over the same period that electronic systems have evolved from vacuum tube to solid-state devices. The laws of contact physics were developed over many years and created a set of design criteria that defined a reliable separable interconnect. Many different contact configurations including pin and socket, beam on blade, shepherds crook, bifurcated bellows, and tuning forks were all designed to achieve the minimum normal force between the contacts necessary to establish a reliable interface. Originally the entire contact was often plated with a noble metal such as gold which offered very low contact resistance, as well as resistance to corrosion. As the price of gold reached historic highs in the 1970s, plating processes were refined to permit selective gold plating only in the mating area thus reducing cost. Tin plated contacts were substituted in many applications, but users quickly discovered that tin required much higher normal forces as tin oxide and the phenomenon of fretting corrosion caused interfaces to fail.

Tin whiskers that caused adjacent contacts to short posed additional problems to designers. Increasing the normal forces of tin contacts resulted in greater mating and unmating forces which were unacceptable as the number of circuits per connector increased. Additional plating materials such as palladium over flash gold found applications in specific applications.

Modern connector design has refined the contact physics as well as plating metallurgy to a point where basic electrical and mechanical performance can be predicted with confidence. The latest challenge has been in determining the effect a connector has on the signal integrity in a high-speed transmission line. Systems designed in the past addressed the need for increasing bandwidth by widening the parallel bus and increasing signal clock rates. This seemed to be satisfactory until performance demands pushed the bandwidth requirements to about 650 Mb/s and beyond. The loading of the bus along with problems with skew forced the development of high-speed serial buses. Wide parallel buses were quickly replaced with a single differential pair. Serial buses exhibited their own set of design challenges including reflections due to impedance mismatches, signal attenuation, and noise from cross talk and Intersymbol interference (ISI). The introduction of circuits that operate at gigahertz speed has introduced fundamental changes in the way connectors are characterized and selected. Accurate Performance Data And Models Accurate prediction, measurement and documentation of connector performance in high-speed/current applications has become a critical task as system demands put more pressure on the interface. High-speed connectors retain the need for basic parameters such as DC resistance, resistance to shock and vibration, but add specific criteria such as crosstalk, propagation delay, and characteristic impedance to verify the ability to efficiently conduct high-speed signals. Power connectors must conduct increasing current loads without exceeding temperature limits. As design margins are reduced, the ability to accurately predict the performance of the selected interconnect system becomes absolutely essential. Many of the larger users interviewed for this report indicated that they use vendorsupplied data to do an initial analysis of the suitability of a product for their application. If the data looks promising, they will request a test board from the vendor or build one internally to verify actual performance in their environment. Smaller companies who do not have the considerable equipment and experienced personnel resources to do this level of analysis will utilize the data supplied and try to leverage off the experience and choices of larger companies. Suppliers of multi-gigabit connectors today are expected to provide generic data that will be used to do the initial screening. Simulation and physical verification will confirm actual system performance. Computer / Peripheral Connector Market by Region

Automotive Connector Market by Region

World Telecom Market For Connectors – 2005 Recent and ongoing impacts to this key end-use industry for connectors, including the following: • • • •

Changes in the end-use industry market structure. Accelerated shift of equipment manufacturing to the Far East, in particular, the Peoples' Republic of China, and Malaysia. Shift to EMS manufacturing services. Efficiencies of electronic packaging and interconnection technology.

The combined impact of these developments has produced a structural change to the telecom market rather than a cyclical one. To illustrate the above, charts depicting historical and forecast connector shipments to the telecom industry are provided for the years 1999 through 2009.

Because of its rapidly increasing role in the production of telecom equipment, the Peoples' Republic of China has been broken-out separately from the Asia-Pacific Region. Values and growth rates of connector consumption are identified for 80 types of connectors for each category of equipment for the years 2003, 2004, 2005 and 2009. The objective of this report is to create a single, comprehensive and authoritative analysis of connector consumption for rapidly changing telecom end-use equipment industry. Specifically, the objectives are to: • • • •

Put the post bubble telecom business trends into perspective. Establish a new baseline for monitoring and forecasting future connector consumption and growth in the telecom market. Provide new forecast of connector factory shipments and growth rates for each category of telecom equipment for the years 2004, 2005 and 2009. Examine trends and developments within each segment that impact growth opportunities for connectors.

Market Size After soaring to over $7 billion of connector factory shipments in 2000, Bishop and Associates forecasted that the telecom market for connectors would loose nearly 60 percent of it's value by the end of 2003. Fortunately, the industry turned the corner in 2004 driven by increased demand for cell phones, favorable shifts in cell phone features, increased demand for broadband access and voice over IP. 1999 - 2009 World Telecom Equipment Market for Connectors

Market size by major equipment category: The value of connector shipments to the telecom industry in 2004 was $4,062 million up 37 percent in U.S. dollars compared to the previous year. Wireless network equipment accounted for $2,268 million in connector factory shipments in 2004, up 112 percent compared to the previous year. The forecast value of factory shipments for 2009 is $3,555 million, representing an average annual growth rate of 9.4 percent. The wireline carrier market segment was valued at $530.6 million in connector factory shipments in 2004. The market is currently forecast to grow at an annual rate of 6.9 percent, reaching $742 million in 2009. Enterprise network equipment was valued at $997.8 million in 2004. A 5.5 percent average annual growth rate for this segment places the value of factory shipments at $1.03 billion in 2009. In the year 2009, the total telecom market for connectors is forecast at $5.936 billion, representing a five-year, compound average annual growth rate of 7.9 percent. The World Security Market For Connectors Connector Market Size The value of connector shipments to the security electronics sector in 2004 was $434.4 million, an increase of +12.2% over the 2003 market of $387.2 million. The 2005 connector market is forecasted at $485.7 million, representing an Increase of +11.8%. The five-year forecast of connector shipments is $665.1 million in 2008, representing a compound annual growth rate of +11.4%. World Security Market For Connectors

Connectors For Data Storage - Technology & Market The Market

The Storage Market continues to heat up in terms of activity. IBM just announced a major new initiative that seeks to establish them as the number 1 supplier of external storage resources. IBM is now third with the number one position currently held by EMC with HP in the number two slot. IBM's latest products cut the price of storage by as much as half. IBM is also driving down the size of the units as well. The chart below illustrates the importance of storage in the IT environment. Where in the past server costs have dominated, in 1999 the cost of storage reached parity with server costs and today represent a major cost item for IT organizations.

In many respects, the storage industry is following the path of the server industry. Once, mainframes and expensive servers dominated servers with proprietary operating systems from IBM, Sun, HP and others. Today, entry-level

servers running Windows or Linux make up the bulk of the volume and PC OEMs like Dell, Gateway, and HP play a major role. In today's low cost server, the cost of the host bus adapter (HBA) to interface the server to the storage area network (SAN) is often as expensive as the server. That is changing with Dell and other PC OEMs providing low cost storage devices using Windows or Linux. The trend is identical to servers, with low cost storage systems poised to take the bulk of the business. Storage Needs Grow The market for storage continues to expand in the enterprise because so much of the mission critical data is stored electronically; backups are essential to organizations of any size. Not only is there a requirement to back up information onto corporate servers; but also onto a remote, off site location in case of fire or other disaster. Laptops are a source of concern and another area of need for back up, as they are subject to loss or theft. Massive amounts of data on laptops are not backed up. One would assume start-ups and small businesses would be most at risk but large companies have experienced similar disruptions. New Technologies Offer Alternatives Fibre Channel based SANs (Storage Area Networks) were once projected to permeate the storage landscapes of all businesses; but, because of cost, have remained a technology mostly relegated to large companies. The emergence of iSCSI, a SAN technology using low cost Ethernet components, holds the possibility of delivering on the promise of SANs for small and midsize companies in the future. The ramification of the shift to iSCSI is that the unique I/O connectors for FC will give way to the commodity Ethernet connectors. Many analysts and observers are saying that most large companies now have SANs in place and that the market for growth in SANs is with the SMB. The large storage OEMs like EMC and HP are each fielding low cost storage platforms to address the SMB market, spurred along by Dell's entry into that space. The emergence of Serial ATA (the I/O connecting technology for low cost PC drives) promises to have impact on the enterprise in the coming years, with most analysts showing all growth going to that technology. Of course, for the storage on the PC, SATA has already begun to capture that market and will have done so by 2007.

Connector Industry Realities The storage market expansion will result in increased hardware unit numbers, but not in direct proportion to the increase in "number of bytes" of storage. Disk drives and most low cost systems will be made in Asia Pacific. The move to SATA and SAS as well as the emergence of iSCSI will concentrate much of the storage connector opportunity in the low end, commodity arena. Standards will continue to play a major role in the storage industry connector market. The transition from ATA to SATA and from SCSI to SAS will occur quickly, requiring the companies providing those connectors to the market to move to the new serial offerings or exit the business. Opportunities to sell backplane connectors into the storage market will expand as blade servers become dominant in the enterprise market. 2005 Connector Market Handbook

World Connector Statistics Regions - Products - Markets 1999 - 2009 This comprehensive seven-chapter report analyzes all aspects of the world electronic connector market, providing detailed connector statistics by equipment sector and product category for North America, Europe, Japan, China, Asia Pacific, and the ROW region. Included is a complete chapter on worldwide connector industry results by region, equipment sector and product category. Data is provided for the years 19992004, and projections for 2009 (including five-year CAGRs). This report also includes 2003/2004 results by country for the European and Asia Pacific regions, as well as a 2008 forecast. Overview Of The World Electronic Connector Market The connector industry achieved sales of $33.4 billion in 2004, growing +17.9%. These results make 2004 the second best year in industry history. In 2000, sales increased +18.1%, the industry's best year. All geographic regions achieved double-digit growth with China up an incredible +34.8%.

World Connector Market by Region

The U.S. dollar continued to decline versus major currencies throughout 2004. Real growth, measured in local currencies, was +13.4%. The following chart shows the percent change in world connector sales by year beginning in 1981. There have been only four (4) sales declines in the past twenty-four (24) years, two of the declines occurring most recently in 2001 and 2002.

North American sales increased +10.3% in 2004. Over the past twenty-four years (19812004), the North American region has had just seven years of sales decline, 1985, 1990, 1991, 1998, 2001, 2002, and 2003. Over the same twenty-four-year period, the North American region has achieved a compound average growth rate of +3.6%.

Europe is the second largest connector region of the world, with connector sales of $8.680 billion in 2004. Europe recorded a year-to-year increase of +19.9% in U.S. dollars, and +9.0% in local currencies in 2004. In the past twenty-four-years, the European region has displayed six years of sales decline, 1985, 1989, 1992, 1993, 2001, and 2002. Over the same twenty-four-year period, the European region has attained a compound average growth rate of +5.4%.

Regional Summary The 2001 and 2002 recession had a significant downward impact on the connector industry's compound annual growth rate (CAGR). The current five-year CAGR is only +2.5%, and the twenty-year CAGR is +5.0%. Previously, the connector industry had a historical CAGR of +7.0%.

Regional Growth Rate Summary

End-Use

Equipment

Sectors

Automotive is the largest market for electronic connector products with 2004 shipments of $8.538 billion. Connectors utilized in the automotive sector account for 25.5% of all connectors manufactured. Ranking second is computers and peripherals, with 24.3% of the total market. World Connector Market by End-Use Equipment Sector

World Connector Market - Top 5 Equipment Sectors - 2004

Major New Connector Initiatives - Technologies Changing The Industry Many of these technologies were originally developed for the computer industry, but they also impact both the consumer and telecom market. The long awaited convergence has begun and developments in one part of the marketplace can permeate others.

Technologies included in this report:

The connector industry has changed. The time when OEMs designed unique systems and selected peculiar hardware has almost come to an end. Custom connectors were a part of this uniqueness. Companies in response to requirements from the OEMs designed connectors from scratch. Today, the system design effort takes place at the integrated semiconductor designers workstations, creating standardized building blocks which OEMs will connect together to build their almost identical hardware systems: systems that will utilize standard interconnects. The reality is that the role of the connector is significantly changed from what it was just a few short years ago. The connector was mainly a mechanical device that was needed to provide a separable interface. The requirement for a new connector was most often driven by a form factor change, and electrical performance was almost a secondary consideration. With the increase in the speed of today’s technology, that is no longer the case. The electrical performance of the connector is primary in the design of a connector and the design process reflects that for current connectors. No longer is a connector designed and then tested for electrical performance. Design begins with electrical modeling of the connector to ensure that the performance of the connector will not negatively affect the performance of the circuitry into which it will be inserted. The evaluation of the electrical performance of a connector is the responsibility of the Signal Integrity (SI) engineer whose importance to the connector industry has soared in recent years. Once a minor responsibility, SI is now a separate department at the larger connector manufacturers and is vital to the design process. USB Becoming The Universal Serial Bus The USB connector is an example of one of the technologies covered in this report. With PC systems numbering around 150 million a year, the decision by Intel to natively support 6 to 8 USB 2.0 ports in its latest chipsets immediately creates a market for over 1

billion connectors a year for just the computer side of the interface. The viability of USB increased when the data rate of the connector went from 12 Mbits per second to 480 Mbits per second. Meanwhile IEEE 1394, another serial technology, has increased its speed to 800 Mbits per second with the release of the IEEE-1394b specification. Its impact is explored as well as that of the proposed addition of a 1394 wireless specification and the possible adoption of a “wireless USB” as the UWB standard. Worldwide USB Connector Market

Title: Computer Equipment - Markets & Connector Use Publication Date: October 2003

a detailed view of computer system hardware and connector content. Hardware is defined as: palmtops, notebooks, desktop PCs, motherboards, workstations, servers, (PC servers, proprietary/RISC servers) mainframes and super computers. Details are also provided by region of the world (North America, Europe, Japan, China, Asia Pacific, ROW). Computer usage and connector content became increasingly volatile during the recent precedent-shattering business climate. The sheer dynamics of this industry, with its worst downturn ever, the HPQ merger, outsourcing, and a massive shift in manufacturing operations, all added to this uncertainty. Multiple industry forces have been responding to these pressures: price erosion, new equipment configurations, desktop replacement, SATA, WiFi, PC server-blades, accelerated outsourcing, and changes in connector content and supply chain. Component manufacturers with a stake in the computer market must react quickly to these dynamics. One effect is an increased migration of facilitation, engineering and manufacturing to Asia. Affected by these changes are facilities in North America including Mexico, Europe, Japan and even Taiwan and South Korea. A typical setup is to have product engineering and product management in Japan, Taiwan, or Singapore, with manufacturing resources in China – either direct, joint venture or subcontract.

Mainland China has quickly emerged as the destination of choice for high volume assembly, with some predicting over 50% of world electronics manufacturing there by 2010. Intel, Microsoft and most computer hardware OEMs are leveraging low cost manufacturing in the region – directly and via industry-standards and reference designs. Against this backdrop of industry forces, we observe that: 85-90% of the unit volume in computers is in the ‘PC’ category, with almost two-thirds in desktops. These high volume segments are under significant pressure, both cost and product substitution as they become more ‘consumerized products’. A conservative view of desktops is that they will grow in the mid-to-high single digits in units but will be flat to down in dollars. Increasing ASPs will require adding in newer technologies such as flat panel displays, DVD-RAM or shifting to notebooks. Business and consumer markets are both significant in the PC segment. Business systems [e.g., servers] command higher prices, but growth in the Wintel/Lintel category vs. RISC/Unix is increasing price pressure and stressing non-Wintel OEMs such as Sun Microsystems. The consumer market appears to be growing fastest as Chinese and other Asia Pacific demand gears up and new applications emerge, such as the home entertainment center. Currently – and in the future, A-P demand is one of the important factors in the computer industry’s recovery. Assembly is now often accomplished through a global supply chain including tiers of subcontractors. Most high volume assembly appears headed to China from the US, Taiwan and other regions. This ranges from turnkey design-build operations [ODMs] to traditional full-service EMS firms to bare bones motherboard manufacturers. One connector manufacturer, Foxconn, is becoming a significant player in the contract manufacturing area. OEMs are transferring procurement responsibilities to these subcontractors, although many OEMs still control bills-of-materials [BOM]. But this transfer of procurement will inevitably put pressure on OEM design-in positions and QPLs because both OEM and EMS firms can increase their bottom lines by ‘shopping’ the BOM. Connector ‘Customers’ are now Acer/Wistron, Celestica, Flextronics, Sanmina-SCI, or ODMs such as Quanta, First International Computer, Compal, Asus and others. Many suppliers still view the OEM as the customer, with the subcontractor at the head of the OEM supply chain. More accurately, one must now look at the total supply chain for each OEM application and their individual needs. Thus the market and customer base for electronic component producers serving large segments of the computer industry is changing. It is increasingly in Asia, with a regional shift to Mainland China, and with the emergence of local connector competition. Business decisions are being weighed in some quarters as to the attractiveness of this market model going forward: [Profitability, ROI, RD&E and IP issues]. Others are ‘in’ the computer business for the long haul – global enterprises with strong OEM positions, engineering strength, quality product and offshore manufacturing.

The following table provides our outlook for computer equipment units for the years 2002 - 2008. Worldwide Computer Equipment Market in Units - 2002/2008

Mobile = Palmtops & Notebooks Desktop = PCs + PC Workstations Servers = Entry-Level, Blade, Midrange, Enterprise Mainframe = Mainframe, Scientific, other Super Computers Industrial PCs = Single Board Industrial PCs Motherboards – Misc. = Other Computers, Internal Subsystems, Cable Assemblies, Discrete Motherboards, Kits, Other Computer Boards & Assemblies Computer hardware is one of the highest volume segments of the industry. As such its future direction will have a profound impact on connectors and other components – where it may represent 20-25% of total volume. Connectors--not just your typical interconnect anymore: far from a simple cable interconnect, connectors are reaching a level of technology that rivals other 21st century components.(Technology Focus: Passive Components)

Wireless Design & Development; 3/1/2005; Worthman, Ernest

Connectors have never been one of the more glamorous components of the wireless infrastructure, but they have always been one of the most critical. In transmission paths, connectors can make or break the system. Connectors are critical to VSWR in transmission lines. Connectors also often bear the brunt of environmental extremes. Of late, the technological revolution has produced a dizzying array of miniature and subminiature devices and end products that have created a demand for connectors far removed from the standard cable connectors. Connectors have evolved to connect flat

cables, fiber cable, all types of computer and communications multiple element cables, and a myriad of others. They mate disparaging lines and technologies and today require careful engineering to address the issues that come with the upwards scaling of frequencies and bit rates. High-speed Serial Interconnect As speeds reach the multi-Gb/s range as the norm, HSSI will be a significant interface in many arenas such as computers, telecom, and storage deployments of 10 Gb/s Ethernet, PCI Express, SATA, and other serial interfaces. Near the 10 Gb/s mark, connectors require more complex electrical testing, and repeat modeling--a real testing challenge. Issues for HSSI include the lack of 10 Gb/s cables. Although 5 Gb/s cables are in development, cable specs are really only fully developed at 3 Gb/s. Such cables can't be used for validating a 10 Gb/s connector, which has to be verified for performance hits such as rise/fall times, frequency return loss, insertion loss, and varying frequency--and time-dependent crosstalk. Technology Marches On The evolution in technology, applications, and subsystems has significantly impacted the development of connector design. Before the technological revolution of the 1980's, discrete semiconductors and basic integrated circuits were the dominating factor in circuit design. The technological revolution of the past 20+ years has evolved the largescale format of PGAs, BGAs, and LGAs on smaller centers and significantly higher pin counts. High-density connectors have evolved from 1.27 mm pitch through 1.0, 0.8, 0.635, 0.5, 0.4, and 0.3 mm. In some cases even as low as 0.05 mm. As well, the electronics industry has proliferated in many typically non-miniaturized and segmented areas of specialized devices and technologies. Some of these areas include telecom, personal computers, and wireless data devices. The automotive industry has also seen a boom in miniaturization (such as wireless tire pressure sensors that require miniature and custom interfaces). Other areas that are prime markets for custom and specialized connectors, wireless and otherwise, are process control, banking/ financial, and medical (wireless sensors). This evolution has shrunk the application of general-purpose connectors while developing applicationspecific designs and concepts. This has taken the industry from designing connectors that have to meet a standard set of requirements and environmentals, to developing technology-specific segments that each have their own significant requirements and environmentals unique to their applications. Challenges to Test & Measurement

A result of the proliferation of electronics into so many different markets with so many varying and often harsh environments has the designer at a disadvantage. The disadvantage is that there aren't a lot of predicators to use to evaluate and assess connector performance. This has opened a new market for the test and measurement designer where engineers are actively developing new evaluation techniques and test environments. This in sharp contrast to past environments where short environmental durations, benign (single sine) vibration, and small samples were often sufficient for lot qualification. Very few harsh environment and/or thermal conditions were considered. Today, tests have expanded to longer duration exposures, increased use of dry thermal cycling, continuous resistance monitoring, random vibration, anomaly detection, and use of mixed flowing gas. All of this is integrated with the development of high-density, low-force systems in conjunction with severity levels that differ depending upon the application. This increases the complexity of testing to the point where a minimum of 100 to 200 variable data points are required. Improved testing is a very positive movement, resulting in the development of new connector families, and it should continue as new markets evolve. It can be expected that the trend to improve reliability, increase resilience to harsh environments, reduce footprints, increase pin count and density, and find new ways to reduce contact resistance will not soon abate. And, as emerging technologies such as SoC, SiGe, and others mature and push the bandwidth even higher, it is reasonable to assume that development in connector technology will continue, unabated, for the foreseeable future.