Chinese cobalt sulfate pricing dropped to $4,938 per metric ton in late May, the lowest value since December 2015. Cobalt costs, in part, have led to the 44% decline in the Commodity IQ LCO Battery Index from January to mid-June. Lithium cobalt oxide (LCO) batteries are prized for their ability to delivery power for relatively long periods under low loads and are common to smartphones, laptops, and other small electronic devices.

China’s chip imports are plunging more quickly than domestic semiconductor production is increasing, illustrating the challenges that worldwide buyers will face in the coming years. Regional electronics markets are shifting their focus away from globalization, and embracing localized supply chains. 

To limit additional inventory growth as the electronics industry seeks supply-demand balance, many component manufacturers are reducing production output for applications other than automotive and industrial. Buyers are advised to monitor channel inventories, despite the current environment of low book-to-bill ratios, to avoid availability issues.

The shortage of SiC power MOSFETs will continue through mid-2024 based on Commodity IQ analytics and analysis. Asia-Pacific sourcing activities for power MOSFETS are projected to increase to twice the Commodity IQ Demand Index in July, nearly a 20% jump from April.

Channel inventory 'dumping' for general-purpose resistors and ceramic capacitors are depressing prices as consumer and mobile application demand softness endures. Procurement teams are advised to take advantage of the intense MLCC price competition among Taiwanese manufacturers, and between Korean, Taiwanese, Japanese, and U.S. suppliers.

Server makers were reporting tight supplies of AI GPUs in April. Prices are now climbing for some GPUs, with NVIDIA hiking the cost of its AI GPUs for the Chinese market to as much as $36,500. Demand for greater AI acceleration capabilities at the edge (including PCs) will rise in 2024. Buyers need to adjust to a reality where AI acceleration is increasingly necessary, but chips could be expensive and in short supply.

Active and passive component manufacturers are trimming product portfolios of mature devices, focusing instead on newer technologies and pivoting to more stable markets like automotive and new energy. End-of-life notifications are on the rise, qualifying second and third-tier suppliers is strongly recommended for legacy components, as well as newer suppliers such as SGMICRO for standard logic and analog ICs.

The good news for buyers is lithium carbonate spot pricing slumped by 70% between November and April, and Chinese cobalt prices from China declined by 22.5% from January 1 to mid-April. The bad news is natural flake graphite supply, an often-overlooked battery material, is heavily constrained. By 2030, it is estimated to have a supply deficit of over 1 million metric tons.

While non-automotive purchasers should not expect significant price flexibility, price increases should not be accepted on lower demand. Taken together, MCU and MPU prices declined 4% through Q1, falling 7% between February and March.

In a complete reversal from 2022 and earlier this year, a full 50% of at-volume lead times are now quoted at 12 weeks or less. Those at over 52-week lead times have plummeted from 54% at the start of 2023 to just 4% currently.