Pricing for analog ICs continues to be down in no small part due to Texas Instruments' agressive pricing strategies to achieve larger share and more design wins – with new volume business priced as much as 20% lower, and existing order reductions being more modest. 

For the automotive industry, the good news in 2024 is that the severe semiconductor shortage is mainly in the rear-view mirror. The bad news is that the engine of automotive sales growth in recent years – EVs – is experiencing a decelerating expansion, contributing to a slowdown in overall car demand growth in 2024.

Wage growth has ebbed after historical increases globally – though some regions and countries continue to see expanding wages. In North America, the combination of still-high interest rates and slowing inflation is helping to mitigate increases in the U.S. and Canada. And yet, Mexico’s manufacturing wages increased to $4.30 per hour in February, up from $4.10 per hour in January, far above the recent historical average. Labor cost growth slowed in Germany, France, and Spain, while expenses in Italy were flat; nevertheless, unrelenting inflation and labor shortages have pushed upward European labor rates. According to multiple sources, hourly manufacturing rates across Western and Eastern European countries will inflate by an average of 8% year-on-year.

Price increases are appearing for low-margin and legacy products like headers and receptacles, but overall connector pricing, according to the Commodity IQ Price Index, remains depressed, with a 13% year-on-year decline in April. Sales will be generally slow across most market segments in H1, with customers adjusting their strategies as they try to deplete inventory. Most buyers expect demand to improve during H2. 

In its fiscal Q1 earnings call recently, Inventec projected expansion for all products, including demand-challenged smart devices and notebook computers. Counting partly on the calendar H2 resumption of expenditures from key cloud services providers. General-purpose servers are indeed seeing demand upticks in the form of upgraded CPUs from Intel and AMD. The original design manufacturer expects most server growth for AI servers, suggesting that its AI-server revenue 2024 will more than double. Inventec also indicates an upswing in AI-enabled PCs in the second half of 2024. This commentary from the leading ODM puts further upward pressure on already short GPUs and memory devices. 

Copper pricing exceeded $10,000 per metric ton the last of April and has climbed even higher through mid-May on fears of short supply and as Chinese smelters cut production. In a recent Commodity IQ snap poll, all respondents indicated that they review copper pricing at least quarterly to gauge impacts on connector pricing. While the Commodity IQ Price Index for connectors dropped by 1% compounded annually through April, sequentially in Q1, the index inflated by 34%.

In-market observations indicate that passive supply challenges stemming from the New Year's Day seismic event endure. Murata, Toshiba, and other passive device manufacturers with production facilities in Japan are bolstering Vishay's position in the market. For passives, the Commodity IQ Index rose nearly 4% month-over-month for March.   

Gold and silver pricing climbed by 3% and 9%, respectively, last week – suggesting price inflation in Q3. Gold pricing exceeded the Commodity IQ upper forecast band to reach new highs of about $2,300 per troy ounce. The Commodity IQ Price Index for connectors has increased for four of the last five months, rising 5% sequentially in March. With increasing labor rates, H2 demand confidence in multiple markets, and ongoing inventory normalization – pricing will be mostly stable in Q2.