Termination Metal Volatility Is Reshaping Passive Component Economics

There is a concept in the passive electronic component supply chain that rarely makes headlines but quietly determines the profitability of every manufacturer in the space: termination metals.

Specifically, the silver-based and copper-based pastes fired onto the external ends of passive components – multilayer ceramic chip capacitors, thick film chip resistors, ferrite beads, chip varistors, chip thermistors and virtually every other mass-produced passive sold into the global electronics marketplace today. These materials are the focus here, with particular emphasis on the highest-volume configurations: ceramic chip capacitors, thick film chip resistors and ferrite beads.

Under normal market conditions, termination metal pricing is a manageable variable – and historically, both silver and copper have demonstrated remarkably stable cost profiles, as the tables below illustrate. Trillions of parts are made and shipped against that backdrop every year.

But 2026 is not a normal market environment.

Graph 1: The Rising Price of Termination Metals Consumed in Mass Produced Electronic Components

Source: Paumanok Monthly Index on Passive Components: Metals: Electrodes and Terminations Research

As of this writing, the passive electronic component industry faces a condition I have not seen in decades of tracking this supply chain: both primary termination metals – silver and copper – are under severe simultaneous upward price pressure, with no commercially viable alternative chemistry waiting in the wings to absorb the cost differential. This is, in the most precise meaning of the phrase, a perfect storm.

Silver: From Industrial Metal to Investment Phenomenon

Let us begin with silver, because the silver story in 2026 is the more dramatic of the two and the one that is forcing component manufacturers to publicly announce price adjustments in real time.

As of late March 2026, silver is trading near $72 per troy ounce – after having spiked to more than $100 an ounce – a significant gain per ounce compared with one year ago and a surge of more than 150% from its lows in early 2025 (see graph 2 below). Silver, long the overlooked second cousin of gold in the precious metals hierarchy, has moved into what analysts are calling a new bull cycle, one driven not by speculation alone but by the convergence of its dual identity: safe-haven monetary asset and critical industrial feedstock for photovoltaics and passive component terminations.

The reader should note that it is the long-term stability of the pricing and availability of silver that made it an attractive choice for matching with precious metal electrode, resistive element or magnetic structure to connect the component function to the printed circuit board. Many component manufacturers who were wary about all precious metal solutions in their components sought out base metal alternatives in an effort of responsible materials management. However, in this instance, the alternative metal (copper) is also undergoing similar price volatility.

Graph 2: Average Price Per Troy Ounce for Silver by Month: April 2012 to March 2026 (166 Months)

Source: Paumanok Monthly Index on Passive Components: Metals: Electrodes and Terminations Research

Silver's industrial demand story is now well-documented. It is consumed in solar panel photovoltaic cells, in electric vehicle battery contacts, in semiconductor packaging and – critically for our purposes – in the termination pastes of passive electronic components produced in the hundreds of billions annually. Demand has structurally outpaced mine supply for multiple consecutive years, and even with a modest increase in global silver supply in 2026, the market will still experience another deficit year.

What does this mean for passive component manufacturers? It means that every PGM MLCC (hundreds of billions of pieces) and every thick film chip resistor produced today – whether a 0402, 0201 or 01005 case size (trillions of pieces) – is being terminated with a silver-bearing paste at a cost point that has essentially doubled in 18 months. Also, every ferrite bead. Every multilayered chip varistor. Every NTC and PTC thermistor. Every ceramic chip inductor employs silver terminations. These components are experiencing structural cost responses to a raw material environment that has moved outside historical norms.

Copper: Record Highs on Multiple Fronts

If silver's price escalation were occurring in isolation, component manufacturers with the flexibility to migrate toward base metal termination systems could at least contemplate a path forward. But copper – the termination metal of choice for base metal electrode (BME) MLCC, the highest-volume segment of the entire passive component industry (trillions of pieces) – is simultaneously trading at or near all-time record levels.

Copper is trading at a 30% increase in 12 months (see graph 3 below).

The copper price surge is being driven by a set of structural forces that will not resolve quickly. Demand for the metal from electrification of the global transportation fleet, grid modernization and the broader energy transition add additional layers of inelastic industrial demand.

For passive component manufacturers, the copper impact is concentrated in the BME MLCC segment. Base metal electrode MLCCs – those employing nickel internal electrodes – use copper termination paste because copper is non-magnetic and compatible with nickel in the co-firing process.

This is not a small segment. BME MLCC is the dominant MLCC chemistry globally, consumed in enormous quantities in smartphones (more than 1,000 MLCCs per device), laptop computers, tablets, automotive electronics and AI server boards. A single AI server board consumes ten to twenty times the MLCC count of a smartphone. The volumes are staggering: the global MLCC market produces and ships trillions of units per year, and the vast majority of those units require copper termination.

Graph 3: Average Price Per Troy Ounce for Copper by Month: April 2012 to March 2026 (166 Months)

Source: Paumanok Monthly Index on Passive Components: Metals: Electrodes and Terminations Research

The 17% Problem: Why Termination Metal Weight Fraction Matters So Much

We estimate termination materials represent approximately 17% of the finished weight of a passive electronic component and varies based upon configuration and case size with larger constructions, such as networks and arrays, and large case size chips feeling the costs first. That is not a trivial fraction of a part that is already small enough to require microscopy for visual inspection.

In a component whose entire physical existence is measured in fractions of a millimeter, 17% of finished weight devoted to termination metal means that the variable cost of the termination paste is among the two or three most significant line items in the bill of materials for that component.

Our research has consistently demonstrated that raw materials – dielectric nanopowders, electrode pastes and termination metals – collectively represent the single most expensive variable cost category in the production of passive electronic components. And within that category, termination metals are the most immediately and transparently exposed to commodity price volatility, because they are applied at the surface of the finished part and cannot be reformulated without qualification cycles that take months to years.

No Exit: The Absence of Alternative Termination Chemistries

This is the structural constraint that defines the perfect storm and elevates this situation beyond a simple commodity price event. In the semiconductor world, designers facing cost pressure on one node migrate to another. In the battery world, manufacturers swap cathode chemistries in response to cobalt or lithium price spikes. In the passive electronic component world, there are no commercially deployed alternative termination chemistries at mass production scale (we note that flexible terminations based upon polymer doped chemistries are a viable alternative but their capacity to produce is limited).

Silver termination paste has been the industry standard for precious metal electrode MLCC, thick film chip resistors and virtually all silver-bearing passive component terminations for decades. The chemistry is optimized, the qualification database is vast and the reliability record is documented across every major end-use market. There is no tin-based alternative that fires at the same temperature profile. There is no conductive polymer that achieves the same solderability characteristics at the interface between component and PCB pad. There is no nickel or palladium termination chemistry that has been adopted at anything approaching commercial volume for the product lines most affected.

Similarly, copper termination paste for BME MLCC was adopted by the industry in the 1980s precisely because it solved the cost and magnetic property problems associated with silver termination in high-layer-count, high-capacitance parts. It is a mature, optimized chemistry with qualification histories spanning the automotive, aerospace, medical and consumer electronics segments. No alternative base metal termination system – tin, zinc or otherwise – has been mass-qualified to replace copper in this application.

The result is that passive component manufacturers are price-takers in the termination metal market. They cannot substitute their way out of this cost structure. They cannot innovate quickly enough to escape it. They can hedge forward contracts modestly, they can adjust product mix at the margins and they can — as Murata has now demonstrated — pass the cost increases through to their customers in the form of higher component prices.

Who Pays? The OEM and EMS Perspective

The downstream impact of simultaneous silver and copper termination cost escalation is being felt across every tier of the electronics supply chain. OEMs building AI servers, the most MLCC-intensive electronic systems ever commercially produced, face increasing bill of materials costs precisely when platform costs are already under scrutiny. Automotive OEMs adopting 800V EV architectures, which require high-voltage MLCCs with precious metal electrode and silver termination systems, face a double exposure: silver prices are elevated both in their passive component supply chain and in their EV battery contact and solar energy supply chains.

Consumer electronics OEMs building smartphones and laptops, which collectively represent the largest single volume sink for BME MLCC with copper termination, face a market in which weak end demand is colliding with rising component costs.

EMS providers operating on thin margins face the classical cost pass-through dilemma: absorb the increases to preserve customer relationships or reprice contracts and risk losing volume to competitors who are facing identical cost structures.

The Historical Context: How Unusual Is This?

To properly calibrate the significance of this simultaneous dual-metal escalation, it is worth briefly reviewing historical precedent. In the 1990s, palladium price escalation – palladium being the primary electrode metal in precious metal electrode MLCC at that time – drove the most significant raw material cost crisis in the modern history of the passive component industry. The industry's response was the transition to nickel-based base metal electrode technology, a decade-long migration that eventually reduced electrode costs dramatically. Silver termination remained throughout, but its cost was manageable relative to the palladium savings.

In the 2010s, rare earth price escalation impacted ceramic dielectric formulations, particularly in MLCCs employing Class II dielectrics. The industry reformulated where possible and absorbed costs where reformulation was not viable.

What we are experiencing now is different in a critical respect: the cost pressure is concentrated in the termination layer, which is the one structural element of the passive component that all product lines have in common, that cannot be eliminated and for which no reformulation pathway exists on a commercial scale. Silver and copper are not competing electrode chemistries for which one can substitute. They are co-existing termination systems for different but complementary market segments. When both escalate simultaneously, the entire passive component product portfolio is affected simultaneously.

Conclusion: A Constrained Chemistry in an Unconstrained Market

The passive electronic component industry has navigated raw material price escalation before. It will navigate this one as well. But the simultaneous escalation of both silver and copper – the only two commercially deployed termination metal systems in mass production – with no alternative chemistry available to provide relief, and with demand from AI infrastructure, automotive electrification and consumer electronics all competing for a finite and inelastic supply of finished components, represent a cost environment of unusual severity.

Dennis M. Zogbi is the founder of Paumanok Publications, Inc. and has covered the global passive electronic component market since 1988. He is the author of numerous market research reports on capacitors, resistors, inductors and their raw material supply chains. His column appears regularly in TTI MarketEYE.