Abstract: A chip inductor is provided and a ceramic enclosure is formed with a central bore therein by means of known powder metallurgy techniques. The ceramic powders are bonded with a suitable bonder, such as polyvinyl alcohol (PVA), to form particles of a suitable size. The particles are then compacted and pressed by, for example, a hydraulic device to form a desired shape and then sintered and 1,300 to 1,500 degrees Celsius. Thereafter, terminals for external connection, which has three layers of different metals and/or alloys, such as silver, nickel and the alloy of tin and lead, are formed on suitable locations of the ceramic enclosure. The naked chip inductor is disposed inside the central bore of the ceramic enclosure and soldered to the pre-formed terminals. The final phase of the manufacturing process is to seal the openings of the central bore of the ceramic enclosure with resin, such as epoxy resin or acrylic resin.