According to the Freightos Baltic Global Container Index, ocean spot rates across key trade lanes have risen weekly from July 14 to date and are up 21%. Shippers taking advantage of depressed spot rates may be late in securing low-cost long-term contracts, providing additional reasoning for potential increased electronic component pricing upticks.
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The smartphone market stall has wreaked havoc on MEMS demand. The uneven economic environment in China is hampering smartphone sales, yet recovery is afoot. Meanwhile, the MEMS supply base is naturally reluctant to lower prices as it sees demand returning into 2024. But new competition may limit options. Commodity teams are considering MEMS and overall sensor options now
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The Commodity IQ Lead Time Index declined again in July after dropping 8.5% month-over-month in June, indicating that average delivery time trends are now shifting from rising to falling. The index, encompassing electronic components analyzed in Commodity IQ, declined by 1% sequentially in July. |
Despite overall transistor demand decreasing markedly sequentially in Q2, constraints loom, and not just for automotive-grade parts. Multiple suppliers are strained, with the most affected products are SiC-based devices, IGBTs, and high-voltage MOSFETs, with lead times stretching beyond 52 weeks. As suppliers focus product portfolios and manufacturing investments on high-growth newer technologies, procurement and commodity teams should ensure alignment with key partner technology roadmaps and focus on supply assurance.
Lithium carbonate (FOB from South America) prices continue to slide, down on average by 12.6% thus far in August. Through the remainder of the month in China, cathode material production is anticipated to decrease, and lithium carbonate supply will rise. Downstream buyers should continue to press for lithium battery price concessions in the laptop segment. Meanwhile, lithium hydroxide pricing of Chinese origin tumbled similarly in the same timeframe.
Semiconductor buyers should monitor the pricing of the key metal regularly as potential IC price upticks could appear as a result. Produced in small qualities, almost entirely in China, gallium pricing rose by nearly 20% in early July to about $325 per kilogram as China declared the requirement for export permits before settling back to nearly $245 per kilogram in the first weeks of August.
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Global air cargo ton-kilometer (CTK) net charges were down by over 7% in Q2, and for the entire month of July year-on-year, net charges were off by upward of 15%, based on multiple index provider datasets. Electronics supply chain professionals are advised to push back on surcharges and leverage further price deterioration for fall and 2024 contract negotiations. |
Although most electronic component categories emerged from the severe shortage of 2021-2022 months ago, many parts used by the automotive sector have remained scarce throughout this year. However, the latest earnings announcements from leading automakers revealed that the semiconductor supply situation has cleared up significantly.
Transpacific capacity reductions in the form of blank (canceled) sailings and even slow steaming are emerging, as carriers manage overcapacity in an effort to stabilize rates. According to the Drewry, average spot rates from Shanghai to Los Angeles per 40-foot equivalent container (FEU) the first week of August were 20% from 2018 and 24% higher than 2019.
The share of at-volume resistor lead times in the 0-to-12-week band nearly doubled in Q3, signaling readily-available products, save some automotive-grade devices. As consumer and mobile application demand softness endures, so does depressed pricing, with evidence that some manufacturers are willing to negotiate prices directly.