March Monthly Market Update

March 14, 2023

The electronics industry is still facing supply chain challenges with high levels of uncertainty around price and availability due to a number of factors, such as the global pandemic, transportation and packaging issues, extreme weather conditions, and container shortages. While product lead times are showing signs of improvement, supply chain instability and inflationary pressures remain.

Procurement specialists at TechPoint have gathered the following information to provide a high-level market overview.

March Market Spotlight:

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

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

Plastic shortages – plastic shortages are currently impacting on lead times for crystals and oscillators.
- Recommendation: Purchase required stock in advance to avoid lead time delays. Continue monitoring supply lines and make decisive decisions when parts are available.

Semiconductor supply– The ongoing supply chain crunch has had severe consequences on the availability of semiconductors. There is little sign that sourcing will become easier in the short term, with the current situation forecasted to extend well into 2023 and in some cases 2024. Texas Instruments has projected its biggest sales slowdown in three years, with a decline in demand across several end markets. However, demand from the automotive industry remains robust.
- Recommendation: Continue building relationships with global distributors to ensure that 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.

Texas Instruments – lead times are stable with RF products increasing. They are prioritizing capacity for military projects, so end-customer information is key for the procurement team when negotiating. They have also invested $30bn in 4 fabs, 2 are already underway, with the first to be in production 2025.
Xilinx – again lead times are stable but in parts increasing. Focusing on the product ranges we have historically supplied, please note price increases for both XC6 & XC7 series, with lead times stretching to 2027 for XC6’s.
AD – Lead times are stable, varying from 40-90 weeks depending on the product. As previously mentioned, the automotive series is struggling the most with AD decommiting the order book on a number of occasions.
Microchip – on the whole a stable lead times, with connectivity products mixed, some are increasing and some decreasing. Their memory range is suffering for increased lead times.
ST – Finally ST, are stabilizing lead times, with the exception of their transceiver and receiver’s products due to capacity restraints.