Only automotive and still mature technologies can escape falling prices and deadlines
Supplyframe’s quarterly report on things showing relief in price and lead time in the electronic component value chain, for the first time in many parts. However, the data provided by the Commodity IQ report of supply frame points to rising prices and delivery times that will affect the automotive industry and other industries that rely on mature semiconductor technologies throughout 2023.
” Component availability is improving and pricing is stabilizing in many categories, especially for passive components. But we continue to see significant challenges related to other components and raw materials. Additionally, the economy, energy costs and growing geopolitical instability have dampened user demand and supply activities, and cast a cloud of uncertainty over the outlook for the electronics value chain. said Steve Flagg, CEO and Founder of Supplyframe.
The excess of stocks has led to falling lead times and prices for memories and, to a lesser extent, for some passive components. This development occurred against the backdrop of slowing demand in many end markets, as central banks continue to raise interest rates to curb inflation, and economies around the world are in brink of recession.
The report’s forecast for the first half of 2023 indicates that only 27% of semiconductor prices across all major commodities will see an increase, compared to 76% in the first half of 2022. From the first to the third quarter of 2023, less than 20 % semiconductor prices will show an increase, and more than three quarters will stabilize. In total, nearly 30% of semiconductors and passive component prices will fall in the first half of 2023, Commodity IQ estimates.
While long lead times will continue into 2023 for components such as microcontrollers and analog ICs, data from Commodity IQ indicates that for 23% of components delivery times will decrease in the first quarter of 2023 .For the third quarter of 2023, the report estimates that half of the delays will stabilize, and that they will increase for only 3% of the shares.
Supply cut 5.8% in November in Europe
Commodity IQ’s demand index also shows a nearly 22% drop in global ingredient sourcing activity in November 2022 compared to November 2021, due specifically to a reduction in lead times for those already constrained share and reduced spot market purchases. Compared to October 2022, global component sourcing activity decreased by 7.4% in November 2022. In November 2022, sourcing activity was below the baseline index for 40% of major passive and active components.
All regions saw reduced supplies in November: Europe was down 5.8%, Asia-Pacific was down 3.1%, and the US region saw the biggest drop, down 15%, hauled down 16.1% in the United States.
Recession fears, central bank monetary policy measures to curb inflation, and China’s struggling economy are all affecting downstream demand for electronic components in many industry segments. Additionally, Supplyframe’s forecasts for early May identified a sharp slowdown in demand for consumer devices – which we are now experiencing – as well as a slowdown in the enterprise data center sector.
supply frame offers Design-to-Source Intelligence (DSI) solutions, to transform the way companies throughout the global electronics value chain design, source, market, and sell products. Supplyframe’s DSI platform uses billions of continuous signals of design intent, demand, supply, and risk factors. According to the company, more than 10 million engineering and supply chain professionals worldwide rely on its services and solutions to accelerate innovation and optimize more than $140 billion annually in direct purchasing. Supplyframe is headquartered in Pasadena, California, with operations in Austin, Belgrade, Grenoble, Oxford, San Francisco, Shanghai, and Shenzhen.
More information in the report Commodity IQ
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