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Jabil's Global Commodity Intelligence Archive
Q1 2023
Jabil's Global Commodity Intelligence Archive
Q1 2023
Executive Summary
Q1 2023
Preparing for 2023 in an Uncertain Global Economy
Welcome to the Q1 2023 edition of the Global Commodity Intelligence report. As the year draws to a close, the market continues to transition in response to a slowing global economy and a challenging macroeconomic outlook.
With inflation at record highs and forecast to remain stubbornly above targets over the next year, global central banks continue in their efforts to stem cost rises by tightening monetary policy.
In addition to inflationary pressures – including rising energy and fuel costs in Europe, Japan and other regions - Russia’s invasion of Ukraine and China’s COVID-Zero policy have all impacted the current uncertain market conditions.
Following the welcome return to in-person gatherings, the world’s largest electronics trade fair, Electronica, met at the end of November. The conference provided our team with the opportunity to meet with over 200 supplier partners and share our insights for the year ahead.
With continued softness in the consumer market, perennial growth segments are being closely monitored closely by the industry. Many suppliers are now experiencing a book-to-bill ratio of less than one for the first time in over two years.
To ensure continuity of supply and competitive pricing, we remain focused on:
- Inventory “rebalancing” across the ecosystem – As inventories have increased at OEMs, EMS and distribution, many suppliers are acutely aware of the current bubble and are adjusting capacity and output to ensure that as the market evolves, production will meet underlying demand.
- Design win semiconductors still experiencing extended lead times – Analog, microcontrollers, FPGA, discrete, and selective passive components are still experiencing lead times in excess of 40 weeks, with relief not forecast until the second half of 2023. We are also experiencing price increases from January onwards.
- China +1 Strategy – Many suppliers are adjusting their manufacturing footprint in response to continued geopolitical concerns in China. Led by PCB suppliers, several are considering the addition of Thailand, Malaysia and the Philippines; however, despite the shift, almost 70% of the industry will remain due to elevated costs and a lack of established supply chains elsewhere.
The long-term outlook for electronics continues to be very bright, however, we will experience bumps in the road as the industry rebalances overall supply and demand. In addition to the capital investment suppliers have made, the CHIPS and Science Act (US) will inject a further $52 billion in investment capital, research and development, and education over the next few years to support forecasted demand and maintain an overall supply-demand balance.
Moving forward, we will continue to monitor shifts in the supply market as we endeavor to ensure success for our end customers. To that end, if you have any questions or require further information, please do not hesitate to contact the commodity management team or me directly.
Yours sincerely,
Graham Scott
Vice President, Global Procurement
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