Every quarter, Sourcengine utilizes its robust marketing intelligence resources to create a thorough lead time report for active and passive component markets. Sourcengine’s Lead Time Report features up-to-date availability information on a wide range of electronic components from a slew of chipmakers. This lead time covers the current market standings for component lead time and price, with a forecast of how these trends may change over the next few months.
In Q3 2023, sanctions from the U.S. and China could exacerbate some of the ongoing raw material shortages for PEMCO markets. Excess electronic component inventory in semiconductors is lowering lead times across most market segments, with further downward trends expected.
State of the Market
We are already well into the second half of 2023’s fiscal year. Many things have changed since the beginning of 2023, from the rising chip war and artificial intelligence. The electronic component market is undergoing dramatic fluctuations, despite the worst of the 2020-2022 shortage ending in late 2022 through early 2023.
The shortage is ongoing for PEMCO markets. Raw material shortages continue to impact lead times and prices for numerous passive market segments. Suppliers have decided to increase prices on specific products and could do so again in Q4. This could get worse as sanctions grow between the U.S. and China.
In the chip war’s latest development, China restricted gallium and germanium exports, two critical elements in semiconductor manufacturing. A long-lasting gallium and germanium shortage would impact the electronic component market unevenly, with advanced digital components, such as CPUs, remaining mostly unaffected while, in contrast, LEDs and fiber optics suffer. Market experts from Gartner do not believe the effects would be too impactful on the global supply chain as this could make countries and companies diversify their gallium and germanium sources.
The ceramic shortage continues to affect lead times and availability for some MLCC products and suppliers. This is especially true for EU customers. High energy costs and logistic challenges, mostly spurning from the war efforts in Ukraine, are contributing to longer-than-average lead times throughout the PEMCO market. As stabilization spreads unevenly across PEMCO suppliers, complications may persist going forward.
For semiconductors, much of the opposite is true. Excess electronic component inventory is rising from recession concerns impacting consumer demand. Due to this low demand, the average lead time across the semiconductor market sectors has decreased by seven days. DRAM and NAND are experiencing the worst drops in demand, but things could soon change.
Memory chip suppliers Samsung Electronics and SK Hynix said at the beginning of 2023, when excess inventory was rapidly growing, it would peak during Q3 and Q4. Now, Apple supplier Foxconn Technology is weighing in on the matter as it believes the company will soon see a return to pre-pandemic growth levels beginning at the end of Q3. From this, excess inventory mitigation will be successful enough to make a noticeable impact.
Artificial intelligence is one of the critical technologies that is expected to help diminish excess electronic component inventory. Artificial intelligence, specifically generative AI, is generating a steady return in consumer demand for advanced nodes and memory components. With continued investment in AI the semiconductor market could rebound as early as Q2 or Q3 of 2024.
Key Q3 2023 Lead Time Report Takeaways
Standard Logic & Linear suppliers continue to see downward trends in lead time and price across products. Nexperia has announced that all of their packages for logic are now off allocation, including SOT353, SOT6-series, SOT337-340, and SOT12xx-series which were previously experiencing challenges. Lead times across suppliers are between 8 - 30 weeks, which is a noticeable drop compared to the previous quarter. Texas Instruments and STMicroelectronics are also seeing improvements across product lines, with more items becoming readily available.
For Intel’s programmable logic lines, all FPGA and CPLD products have been removed from allocation. Stabilization will continue in the coming weeks, with lead times ranging between19 to 23 weeks. Expectations are high that lead times will continue to decrease over Q3 and Q4.
Lead times and prices are rising across interconnect suppliers. Over July, FCI and TE Connectivity raised prices on all interconnect technology product lines. This follows an increase by Molex and Amphenol RF at the beginning of 2023 for their respective interconnect technology products. 3M also raised prices on August 1st for its headers/stiks, IDC, DIN, PCB, Mod Jack, and Gang Jack products. In the coming months, buyers in EMEA might see further price hikes by Samtec on their products.
For most passive suppliers, EU buyers will face allocation and longer lead times compared to APAC and NA purchasing teams. The EU is still experiencing a ceramics shortage which is contributing to a lack of availability for Bourns trimpots. This will likely continue through Q4.
Overall, the Q3 Lead Time Report saw a continued downward trend in lead time and price for semiconductor markets as excess inventory mounts. PEMCO market trends are rising due to ongoing raw material shortages and logistics challenges. Stabilization is occurring unevenly throughout PEMCO segments, with no clear indication of when production capacity will meet demand.
Semiconductor orders are still on track to return in Q3-Q4 from the rising use of artificial intelligence products. By the end of 2023, most surplus inventory is expected to have diminished enough for many manufacturers to begin reordering. For more information and forecasts for embedded devices, advanced analog parts, and programmable logic components, check out Sourcengine’s Q3 2023 lead time report.