Dylan McGrath EE Times (11/10/2009 7:01 PM EST)

SAN FRANCISCO—Prices for most categories of electronics parts rose in the third quarter compared to the second, according to market research firm iSuppli Corp. But because of uncertainty regarding fourth-quarter demand levels, component makers are reluctant to expand capacity or build inventories, placing strains on the global electronics supply chain, according to the firm.

"For component suppliers, these strains have resulted in increased utilization rates and improved bottom lines," said Eric Pratt, vice president for pricing and competitive analysis at iSuppli (El Segundo, Calif.), in a statement.

But Pratt warned that component suppliers are wary of replacing the staff, capacity and inventory that they cut during the first half of the year in anticipation of further sales gains. He said the companies worry that the underlying economic forces that caused the downturn have still not been fully corrected.

In addition to better prices, component lead times also increased in the third quarter compared to the second quarter, or were on an upward trend, according to iSuppli's component price tracker service.

With economic uncertainty lingering for 2010, most suppliers are likely to continue to hold off on significant capacity increases until their outlook improves, according to iSuppli.

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