Main Highlights
Moving into the third quarter of 2022, global market growth (reportedly slumping to 2.9%) has slowed and inflation has soared. Globally, the effects of the Russian invasion of Ukraine are being seen throughout all markets, with inflation nearing record highs last seen in the 1970’s. Even the global Crypto market hasn’t escaped a downturn, with BTC and ETH losing more than 30% in the last quarter. Moreover, COVID-19 does not appear to be in an endemic stage yet.
As a result, the electronics manufacturing sector and supporting supply chains remain fragile. Whilst we are seeing some small improvements in certain commodities, each day remains a challenge and it remains vital Original Equipment Manufacturers (OEMs) collaborate closely with their EMS providers.
Capacity and Lead-Time Issues
There is still no sign of a semiconductor market recovery in 2023, although it is believed we are almost at the bottom of the slump, if not there already. However, recovery will be slow and it is unlikely signs will be visible to the wider market until at least 2023, possibly 2024.
ST Micro (STM) closed their order book with the last dates to place orders with distribution being 30th June 2022 for July 2023 onwards allocation. This is a move by STM to try to bring extended lead times back under control with careful demand planning in place to ensure continuity of supply to the end customer market.
Renesas also closed their order book for 2023 at the end of July 2022 in a move much like STM to try to stabilize supply chains and allow for more effective capacity planning over the next 18 – 24 months. Renesas production was temporarily affected after lightning hit a power line feeding the Kumamoto city facility. It is estimated to have cost as much as two weeks of production time.
Many Texas Instruments product lines are currently being quoted with 90-week lead times. They are not the only manufacturer quoting such lead times, ADI/LTC/Maxim are also quoting 90 weeks for some technologies.
Infineon, Vishay and NXP are currently quoting 52 weeks as standard for semiconductors.
Microchip are continuing to operate their PSP program with customers that have signed up to this. This program aims to fulfil forecasted and scheduled orders from these customers before general market orders and spot buys are fulfilled.
It is critical all 2023 (and where possible 2024 firm demand and forecasted requirements) are shared with your EMS partners so that collaboratively we can get ahead of the chip shortage and secure future supply chains.
PCB Technology
Lead times for materials are now largely back to ‘normal’ with commonly used material being quoted on very short lead times.
The two exceptions seem to be ISOLA and Rogers where lead times are around 1 month.
Some Far East manufacturing hot spots have seen an average 10% increase in minimum wages which are being passed on to the supply chain and therefore end customers.
Price Uncertainty
Semiconductor price increases, in general, are a regular occurrence and, in some instances, we are seeing these monthly. Unfortunately, this pricing is being passed down to distribution directly from the manufacturer and is therefore an unavoidable increase which needs passing through to the end-user.
TE price increases came into effect for some product lines on 15th July 2022.
Rittal passed average cost increases of 8% onto customers on many product lines beginning 1st August 2022.
Siemens issued a new price list on 1st July 2022.
Global Economy
Oil pricing is starting to fall and now back to February 2022 pricing of $105.40 per barrel at the time of writing.
Gold has only seen a 2% decline in pricing over the last three months.
Silver pricing has fallen faster than gold, with a 14% decline in the last three months.
Steel rebar is also falling, 6 month contracts are now at $685.50 per tonne.
Bitcoin is now valued at $20,826.24 per coin, just a little up from the low seen in June 2022. Last time Bitcoin pricing was this low was in December 2020 and remain volatile.