Following a steep drop throughout most of 2023, global semiconductor manufacturing equipment demand began a recovery in Q1 that will gain momentum in 2024, leading to rising prices and lengthening lead times this year.

After falling nearly 15% sequentially in Q4 2023, the Commodity IQ Price Index for diodes finished 2023 down by 6% and remained below the index baseline through January. Suppliers have become more flexible regarding price adjustments; while overall discrete prices are rising, vendors’ eagerness to accept lower costs generates opportunities for buyers to negotiate reductions.

After declining seasonality and subdued demand in Q4 2023, connector and terminal block pricing snapped back in January, rising by 1.9% and 6.7%, respectively, according to the Commodity IQ Price Index. And some price increases may come for low-margin and legacy products, like low-speed I/O connectors. Nevertheless, most connector suppliers (distributors and manufacturers) are open to pricing reviews for new or existing businesses, but pricing is largely stable in H2.

January results from the Electronic Components Industry Association (ECIA) confirm robust sales trends in the global electronics supply chain, as noted by the Commodity IQ Demand Index. 

Over 57% lower year-on-year, the average value of the Commodity IQ Global LMO Battery Price Index for hydroxide-based cells is more than 30 points below the baseline. The Li-ion battery indexes will generally keep falling on stalled EV demand and speculative lithium buying by EV makers. However, procurement teams should acknowledge that price upswings like those of 2022 may again become prevalent as the Chinese economy continues to falter, high borrowing costs extend planned critical battery material capacity investments, and if consumer electronics demand ramps sharply. 

Programmable logic inventories finished 2023 up by 22% versus the year prior, after rising by 28% sequentially in Q4 2023 – positively moving prices and lead times for the buy side. The Q4 2023 quarter-on-quarter decrease in the Commodity IQ Demand Index was within 2 percentage points of the previous forecast and is projected to offset the Q1 sourcing activity upturn. Design actions will ebb by 1% in Q1 the previous quarter, yet will increase by 13% into Q2, suggesting demand increases in H2 and beyond. 

Resistor prices are expected to remain stable for the next three quarters, as manufacturers have unused capacity and ruthenium cost inputs are down slightly. The Commodity Price Index for resistors fell month-over-month in January by 5.4% after declining 8.9% from Q4 2023 to Q1, but year-on-year in 2023 was up 4.8%.

The Commodity IQ Price Index for amplifier, converter, power, and signal analog devices fell by an average of 20% sequentially in Q4 2023. Texas Instruments is extremely aggressive on pricing, prompting other players, including Onsemi and Microchip, to follow suit. High-performance analog product prices will be mostly flat-to-flexible; standard products are ripe for cost-downs, particularly for new orders.

Despite indications of a rise in PC demand in Q4 2023 and expectations of a strong rebound in shipments in 2024, demand for computer-related chips is following divergent trends in Q1, with microprocessor sales set to increase while total memory is on track to decline.