North American Electro-Deposited Copper Foil
09 December 2010
Table of Contents:
5) Neighboring Markets
The North American Electro-Deposited Copper Foil market is a very unique market. Copper foil is used in our everyday lives, mostly unnoticed. From cell phones and TVs, to cars and refrigerators, copper foil is the main component that allows these products to run efficiently. It is the circuitry inside of these products, connecting a computer chip to a compactor to transfer signals. Copper foil is an intermediary product, meaning it is a product that the final consumer doesn’t buy. It is used in conjunction with other inputs to make a final product. It is similar to the Ready-Mix concrete industry that we studied earlier this semester. However, copper foil does not have the transportation issues, as did the concrete, but rather a set of its own unique barriers. The Copper Foil market doesn’t fit the standard competitive, oligopolistic, or monopolistic markets that we have studied this semester. The markets uniqueness is due to the product being an intermediary product, the extreme start up costs, and limited profits. These factors make it difficult to enter the market. Also, Copper Foil is rather inelastic, making the dynamics of the market even more unique. An interesting factor for copper foil is the size of the final assembly for the Electronic Good market in America. It is second largest (24.2%) where as the rest of Asia is (42.2%). Most people tend to view Asia as an assembly powerhouse for electronic goods; however, North America has a significant market share. This means that there is an efficient market size in America for copper foil. Electro-Deposited Copper Foil is made by first dissolving bales of scrap copper, such as wire, using sulfuric acid and oxygen, producing a blue colored liquid called copper sulfate. This liquid mixture is the poured over a large titanium drum where electricity is applied. The outcome is copper foil. The process is very expensive due to the extreme amount of electricity that is consumed, the raw inputs, and the machinery that is used. The largest company in this market, Oak-Mitusi, owns a $200 million plant where is produces copper foil and various other electro conductive foils. Having a high start up cost, being inelastic, and being an intermediary product makes this market very unique. By looking at supply, demand, equilibriums, neighboring markets, competition, imperfections, and regulations, we can further extrapolate how complex and unique the North America Electro-Deposited Copper Foil market truly is.
In North America, there is only 1 producer, however there are an additional 2 sellers that produce over seas but sell their product in North America, totaling only 3 suppliers in North America. This is and incredibly small market compared to other industrious markets in North America. The North American market is only $105 million or 20 million pounds of copper foil per year, compared to the US Automotive industry, which is $424 billion per year. The suppliers produce a homogeneous good. Copper foil is such that no matter who makes it, it is all the same. Similar to aspirin, it has to meet certain requirements to qualify as aspirin. Copper foil must meet certain requirements to be considered a certain grade of copper foil. In this sense, two different suppliers making the same graded copper are making a...
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