The Commodity IQ Lead Time Index for analog signal ICs fell by 19.2% and by power ICs by 13.1% through H1 compared to H2 2022. Despite sourcing actions being down sequentially through the first eight months of the year (analog signal and power demand were off by 24% and 19%, respectively) and inventories for signal and power ICs still well above one and half times the index baseline, automotive OEMs and their subsystem vendors remain troubled by potential high-end analog shortages in H2 2024. Procurement and supply chain professionals are advised to monitor capacity utilization rates, lead times, and inventories.

Automotive OEMs and tier-one automotive systems suppliers are requesting connector price-downs, but connector makers have been relatively resistant in Q4 despite soft book-to-bill ratios. Price concessions for the automotive sector are plausible in Q1 2024. According to the Commodity IQ Price Index, connector prices have fallen 15.5% year-on-year through August on average. If buyers have not already sought lower pricing, now is the time.

Trimming of product portfolios at semi-custom LED manufacturers including Panasonic, Nichia, and Dialight continues. To mitigate supply chain risks, it is recommended that procurement teams qualify additional suppliers. Optoelectronic inventories were down 17% this year through August compared to the year prior and remain well below the pre-pandemic baseline of the Commodity IQ Inventory Index.

Relays for automotive electrification and renewable energy applications remain constrained and various power and signal relays are subject to long lead times. Pricing is stable overall, but solid-state devices are subject to volatile raw material costs from China's export control of gallium and germanium, and industrial relays are still subject to price increases. Year-on-year through the first eight months of 2023, the Commodity IQ Price Index for relays rose by 30.2% to exceed the index baseline. 

Electronics supply chain professionals are advised to monitor IC channel and manufacturer inventories and lead times as the capacity expansion emphasis yields to not-seen-in-decade capital investment reductions this fiscal year by top foundries and chipmakers. The likes of GlobalFoundries, Micron, Intel, SK Hynix, and TSMC have decreased investment budgets, fearing the lethargic Chinese economy and oversupply in some semiconductor processes, such as 10 and 14-nanometer nodes, which produce processors, SoCs, and FPGAs. 

Taiwan-based manufacturers of general-purpose MLCCs – like YAGEO, Darfon, and Walsin – are competing intensely for market share and sales growth in H1 2024. Likewise, Taiwanese and Korean makers are emerging as formidable contenders to the more established Japanese and U.S. producers of automotive-grade ceramic capacitors. On a three-month moving average basis, the Commodity IQ Price Index for all capacitor types was up 5.6% year-over-year through the first eight months of 2023. These rivalries result in shorter lead times, improved supply flexibility, and more favorable pricing.

The Commodity IQ Design Index rose for the fourth consecutive month in August, with global growth driven by a surge in U.S. processor design activity as companies develop new chips to keep pace in the generative AI race.

Using a three-month rolling average, global activity in August for all components tracked by the Commodity IQ Design Index increased by 12% compared to August 2023.