Depressed, high-volume consumer electronics and smartphone sensor demand revenue cannot be easily be replaced by manufacturers, so except for certain image sensors, significant tier-one price-downs are not likely outside of new, volume design-in projects in 2023. Consider alternative and dual sources, including Chinese manufacturers who are aggressively seeking new design-wins with shortened lead times and more competitive prices.
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Standard logic prices are normalizing and supply is easing as global demand was off quarter-on-quarter by 11% in Q1 and 16% in Q2 according to the Commodity IQ Demand Index. Suppliers are more open to pricing reviews, with tier-one suppliers like Texas Instruments and Nexperia seen as the most flexible and compelling in terms of pricing. Newer suppliers, like China-based SG Micro and Wuxi i-CORE, are challenging the logic supply landscape by offering competitive pricing as well. |
Copper pricing has fallen by 9.3% through mid-July since January. Overall connector pricing fell by 19% year-on-year in H1 and connector demand slumped by 25.3% in the same period. The combination of the decline in metals pricing and the fall in demand is affording buyers with select opportunities to make long-range capacity bookings with favorable pricing terms before a possible rally in demand and prices later this year.
Even as the networking and communications chipset supply-demand imbalance has lessened, lead times from top manufacturers like Broadcom, Marvell, and Qualcomm remain extended beyond 40 weeks. With 62% of MPNs quoted over 36 weeks for Q3, at-volume chipset lead times showed less improvement than anticipated from the previous quarter. Taiwanese manufacturers MediaTek and Realtek are taking advantage of the situation, offering more attractive lead times, and should be considered.
The capacitor market has seen a slowdown in both sourcing and demand activity since 2022. Commodity IQ data indicates that elevated prices and lead times could continue throughout most of 2023 as well. Over the next decade, global capacitor demand is forecast to grow by about 6% annually.
On its fiscal Q3 earnings call, Micron chief executive Sanjay Mehrotra stated that the company believes "the memory industry has passed its trough in revenue." Mehrotra’s comments confirm Supplyframe's determination in mid-May that market demand for memory is bottoming out, and demand indicators are pointing in a positive direction.
Capacitor lead times fell by 7% sequentially in Q2 and were down by 10% year-over-year in H1. General-purpose, small case-size MLCCs, while readily available on lower demand, will become tight with abrupt demand increases. Most factory utilization rates average 60%, and capacity ramps would lag sharper demand. Additionally, channel inventory for all capacitor types was off by 19% for the first six months of the year compared to 2022.
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Excess capacity, lower material costs, and weakening PCB demand will continue to push prices down, with ASP declining substantially in H2, particularly for low-end conventional boards. Connector demand declined by 25% year-over-year for H1, and supplier book-to-bill ratios below 1:1 have translated into capacity utilization rates as low as 50%. With standard connector lead times now stable after dropping by 12% in Q2, conditions are ripe for price negotiations and cost savings. |
According to the SEMI Foundation, global talent shortages through 2025 number 935,000 for the semiconductor industry, with significant constraints across all regions. Geographic production shifts, including re-shoring efforts and capacity expansions, are adding increased urgency and personnel demand. The shortfalls have created an intensely competitive market for production workers and engineers, with labor rates continuing to increase markedly.
Global electronics design activity rose to a two-year high in May, an expected rise in demand during the second half of 2023, according to the Supplyframe Commodity IQ Design Index. Design actions rose by 14% from April and 10% year-over-year in May. As a result, the Commodity IQ Design Index increased to one and half times the baseline in May, the highest reading since 2020. The return to positive month-on-month growth in May reverses five consecutive months of declining design intent.