April monthly update

Our parent company TechPoint have gathered the following information to provide a high-level market overview.

March Market Spotlight

• Lead time relief | Lead times on most products still seem to be trending downwards to the sort of levels that haven’t been seen in the electronics industry for the past couple of years. For example, there still seems to be a low demand for most consumer applications. Due to this low demand and the notable decline in sales, manufacturers are putting themselves at risk of inventory accumulation which may in turn add pressure to them to sell their stock. However in contrast, there is still a high demand for automotive-grade chips and although more capacity is being created for automotive manufacturing, the demand for these high grade chips still outweighs the output.
  • Recommendation: Manufacturers need to increase their output on their production lines for scarce components like automotive-grade chips. It’s also important to make sure that order books are up-to-date and additional orders are paused where necessary.

• Consumer confidence | With consumer confidence still continuing to fall due to various global pressures and a level of uncertainty, manufacturing companies are beginning to respond. Lead times for higher-end silicon products are now beginning to fall, but still remain at a much more elevated level. Experts point to potential relief in this area sometime in Q1 2023.
  • Recommendation| Manufacturers must only build to genuine customer requirements to avoid further stock holding.

• Plastic shortages | plastic shortages are still currently impacting on the lead times for crystals and oscillators.
  • Recommendation: Purchase required stock in advance to avoid probable lead time delays. Continue monitoring your supply lines and make decisive decisions when parts become available.

• Semiconductor supply | The ongoing supply chain crunch has had a notable and severe consequence on the availability of semiconductors. There is little sign that sourcing will become any easier in the short term, with the current situation forecasted extending well into 2023 and in some cases 2024. Texas Instruments has forecast the biggest sales slowdown in three years, with a decline in demand across several end markets. However, as suggested previously, demand from the automotive industry continues to remain robust.
  • Recommendation: Continue building relationships with global distributors to ensure that any ongoing supply chain disruption can be minimised.

• Counterfeit components – In some cases, the current logistics situation is pushing design engineers to source components from unfamiliar distribution sources. This is a risk because some unauthorised distributors may source their components from the grey market where counterfeiting is widespread. Counterfeit component manufacturers may exploit the high demand amidst ongoing supply chain shortages.
  • Recommendation: Source components from reputable distributors and work with supply chain specialists to procure the required components. Ensuring that distributors have the correct certifications is also important for avoiding counterfeit products.
• Fire in Wuxi, China – On January 6^th 2023, There was a fire at the Welnew Microelectronics plant. They are a sub-tier supplier to several semiconductor manufacturers, including Infineon and Vishay. Commodities affected are MOSFETs, RF small signal and LED drivers. It’s expected that replacement production lines will be completed and ready by May this year.

Product Specific Overview

Each month we will focus on different commodities to give you a more detailed overview of the market. It’s also important to note that these lead times come from franchised suppliers and sourcing times can be much shorter when working with non-franchised suppliers.

1. Texas Instruments | lead times seem stable with RF products increasing. Texas are prioritising capacity for military projects, so end-customer information is key for the procurement team when negotiating. They have also invested $30bn in 4 fabs, with 2 already underway, the first will be in production in 2025.
2. Xilinx | Lead times seem fairly stable but with some parts increasing. Looking at the product ranges we have typically supplied over recent times, please note price increases for both the XC6 and XC7 series, with lead times stretching to 2027 for the XC6’s.
3. AD | Lead times are still stable, varying from 40-90 weeks, depending on the product. As mentioned, the automotive series is struggling the most with AD uncommitting the order book on a number of occasions.
4. Microchip | In general, fairly stable lead times. Connectivity products are a little mixed, with some times increasing, and others decreasing. Their memory range is beginning to suffer with increased lead times.
5. ST | And Finally ST, are beginning to stabilise their lead times, with the exception of their transceiver and receiver’s products due to capacity restraints.