The latest Commodity IQ analysis from Supplyframe indicates that inventory reductions and corrections initially expected to be largely complete by the second quarter will continue into the third quarter of 2023. Lead times and prices across most commodities will drop further toward historical norms in the second quarter. Consumer markets remain lethargic, but automotive and industrial segments are relatively robust. And macroeconomic shifts will have massive repercussions for the global electronics supply chain – with a demand rebound for PCs, smartphones, and data centers required to drive new growth.
“Despite global economic challenges and uncertainties, Commodity IQ shows that commodity supply-demand rebalancing is well under way,” said Supplyframe CEO and founder Steve Flagg. “Some electronics commodities and end markets have shown initial signs of recovery through Q1.”
Global electronic component sourcing activity rose quarter-on-quarter by 3.6%, led by fiber optic component demand, which increased by 22.1% and offered signals for potential demand rebounds, according to Commodity IQ findings.
In the second half of 2023, just 4% of all semiconductor lead time dimensions (excluding memory) will expand, while 35% will decline. However, to a lesser degree, lead times for certain devices – including power MOSFETs and some automotive-grade ICs – will remain extended. At-volume passive components under 12-week lead times for the second quarter more than doubled, the latest data from Commodity IQ reveals. The number of quoted lead times beyond 52 weeks was halved.
Just 1% of pricing dimensions are projected to increase, and over half will be stable across all electronic commodities in the second half of 2023. But average selling prices for global DRAM are eroding and will continue to slide into the third quarter. Yet spot prices for DDR4 are stabilizing, reinforcing the first quarter Commodity IQ forecast that DRAM recovery is set for the fourth quarter. Supplyframe Commodity IQ analytics also suggest that additional flexibility in both price and availability exists across many materials commodities and sub-commodities, including resins and metals.
“Supplyframe forecasts a markedly more balanced electronics supply chain in the second half and expects component inventories to be largely digested into the third quarter,” said Richard Barnett, chief marketing officer and SaaS sales leader at Supplyframe. “However, industries sharply cut factory utilization to adjust to weakened demand. Some manufacturers and distributors need to rebalance inventory positions, and macroeconomic uncertainty still lingers.”
SOURCE: Businesswire