Most ceramic capacitor manufacturers are aggressive and flexible on pricing to maintain or increase capacity utilization. However, slowing rates of cost reductions are likely as manufacturer operating margins erode. The pricing of high-end products, like smaller case sizes and high-capacitance/high-temperature parts, remains elevated and exhibits upward trends. Commercial-grade capacitor demand remains weak while inventory levels drop, necessitating the monitoring for sudden demand upticks, which may cause short-term supply issues.

Year-on-year, the Commodity IQ Demand Index collapsed by 19%, 26%, and 35% for amplifiers, power analog, and signal ICs, respectively, in 2023. Amplifier, power, and signal analog IC inventories are over twice the Commodity IQ Lead Time Index pre-pandemic baseline. Both add up to pricing favoring the buy side. Texas Instruments is extremely aggressive on pricing, prompting other players, including Onsemi and Microchip, to follow suit. High-performance analog product prices will be primarily flat-to-flexible. Standard products are ripe for cost-downs, particularly for new orders.

Global sourcing activities for sensors were down by 27% for 2023, and excess inventories still linger in the supply chain. Chinese sensor producers are vigorously seeking new design-ins with shortened lead times and more competitive prices. Demand across all sensor types is forecast to rise by 6% sequentially in Q1; suppressed automotive, industrial, and medical demand paired with a slowly recovering smartphone market will translate into largely flat pricing into H2. However, cost-downs from tier-one suppliers are available for new projects.

Previous Commodity IQ sourcing guidance to focus on graphite and manganese supply due to China’s export graphite restrictions has come to fruition – with export sales down a massive 91% month-on-month in December and the surge in sales in November before the restrictions, according to the GACC. China accounts for nearly all refined natural graphite, and China produces over 95% of battery-grade manganese. Conversely, lithium and cobalt remain in oversupply, with excess inventories and downstream de-stocking prevailing into H2 as automotive and other OEMs continue to push out orders and downgrade 2024 demand forecasts. While surplus nickel – LME inventories have risen markedly since Q3 2023 – lackluster demand has driven pricing down by 47% year-to-date. The buyer’s market will last into H2 for NCA and NMC battery chemistries. Critical battery materials remain plentiful for now – however, lithium, for example, is likely headed for shortage in 2025.

The year 2023 seemed destined to be a terrible time for both sides of the purchasing equation, with buyers doomed to face the impacts of severe supply disruptions and labor strikes and sellers consigned to managing the effects of a looming recession.

Deep declines in offered capacity across multiple ocean trade lanes, especially Asia-to-North-Europe, transiting the Suez Canal are resulting from ongoing attacks on commercial vessels by Houthi rebels in Yemen. Capacity shortages for Asian exports to Europe are more than likely in the coming weeks. As ocean freight is re-routed around the Cape of Good Hope, thousands of nautical miles are added to journeys, increasing transit times by over a week. Due to drought, this routing is also particularly problematic as Far-East-to-North-America-East ocean freight pivoted to the Suez Canal from the Panama Canal. Though the disruptions pale compared to the ocean freight challenges during the pandemic, electronic component lead times and prices could be negatively impacted in the near and short-term. The Drewry Global Container Index has increased by 50% from mid-December to just over $3,000 per 40-foot container. 

Focusing mainly on multilayer chip capacitors, passive makers, including Yageo Vishay, are reducing passive component production, causing some large EMS providers to indicate the building of MLCC safety stocks ahead of potential shortages this year. Additionally, film capacitors are currently the most limited supply of all capacitors. The Commodity IQ Lead Times Index for capacitors rose 4% from November to December 2023. After dipping below the Commodity IQ Demand Index baseline in Q3 2023 (signaling declining sourcing activities), the capacitors' index is forecast to inflate each month of Q1, exceeding the baseline by the end of the calendar quarter.  

Lower consumer electronics demand has translated to excess inventories and better availability of low-voltage MOSFETs. Meanwhile, high-voltage MOSFETs from Infineon are out-of-stock, with its IPD and IPW-series showing May lead times at volume. From December 2023 through the first quarter, sourcing actions for all transistors are projected to climb by 43%, according to Commodity IQ Demand Index data.

The Sea of Japan earthquake that struck Japan’s Noto Peninsula on January 1st has forced the suspension of operations at multiple electronics production facilities, including a multilayer ceramic capacitor (MLCC) plant owned by Taiyo Yuden.