Rising concerns over the Hamas-Israel war have caused investors to flock to the relative stability of precious metals, causing spot price increases for gold and silver since the Hamas attack on Israel on October 7. The spot price of gold inflated by 8% to $1,966 per troy ounce from early October to early November and is forecast to sequentially increase into H2 2024 to above $2,000 per troy ounce. Gold price rises will most impact connectors and PCBs, while silver will influence some MLCC and resistor pricing. Procurement professionals should continue to monitor precious metals pricing.

Crystal and oscillator minimum capacity utilization rates declined into Q4 from 85% to 70%, though utilization is over 90% for smaller-size and auto-grade products. Low capacities and production rates for frequency control devices limit flexibility to respond to sudden upsides in demand. Additionally, With an increasing number of products going obsolete due to maturity, profitability concerns, or unavailability of raw materials, supply chain professionals must design end products in alignment with the latest supplier technology roadmaps.

The demand index for resistors overall climbed 10.2% month-on-month in August, on potential constraints of MLCCs due to surging AI server demand. The Commodity IQ Inventory Index for resistors dropped by 22.7% sequentially through the first eight months of 2023 and some YAGEO resistors, including VT-series devices, are somewhat constrained with volume lead times stretching into H1 2024. It is advisable to consider non-automotive resistors for sourcing challenges, particularly as many manufacturers have shifted capacity to automotive applications and despite stable/flexible pricing and commitment concessions from suppliers.

Excess production capacity, lowered material costs, and continued soft demand has increased PCB maker willingness to provide price-downs in exchange for market share. Readily available, with 98% of contracted lead times in Q4 of 12 weeks or less, PCBs should be targets of aggressive price negotiations for parts with multiple sources.

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.