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Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q1 2024 | JANUARY- MARCH
Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q1 2024 | JANUARY- MARCH
Executive Summary
Welcome to the Q1 2024 edition of the Global Commodity Intelligence Review.
Muted demand across most end markets and continued uncertain macroeconomic conditions are providing headwinds for any short-term recoveries. Most segments, now including the robust automotive and industrial segments are forecasting slower growth.
However, looking forward into 2024, there are some bright spots – with the automotive segment still considered a pivotal area of growth for many component suppliers, Artificial Intelligence (AI) and the required demand for new data centers to support the high level of compute and memory requirements and an early PC refresh cycle supporting Windows 12 upgrades will all be drivers for growth even though they will become more relevant in the second half of the year.
For the supply side, almost every commodity is reporting book-to-bill ratios less than 1:1 and most are in the 0.7:1 region. As a result, many suppliers are trimming output capacity with some suppliers down to almost fifty percent of capacity. Inventories across the ecosystem remain stubbornly high even as OEMs and the EMS channels lead the way in lowering their on-hand material, , however, distributors and component manufacturers are still are record levels. Despite this backdrop, many suppliers continue to invest for the future in both capacity and new technologies.
Important trends to highlight:
- Supplier Technologies – Passive suppliers continue to drive smaller case sizes to support miniaturization driven by consumer, smartphone, and IoT applications. While driving advanced technology for the smallest process nodes, semiconductor suppliers are also investing in building additional manufacturing capacity for mainstream products such as microcontrollers, analog, sensing, timing, and discrete technologies. Compound semiconductors (SiC & GaN) continue to be a key growth area to support EV and power management applications.
- Regional Optionality – many suppliers are expanding their geographic footprints to include Malaysia, Philippines, Vietnam, Mexico, and even India to address geopolitical issues, labor inflation, and logistical challenges.
- Pricing & Leadtimes – for most commodities lead times have returned to pre-COVID levels. For some semiconductor and passive families, we are experiencing “simultaneous shortages and over inventory” conditions based on vendors and product mix. Any price reductions typically come from new technologies, where suppliers are investing, with legacy, high reliability, and automotive grade components lagging for any price reductions.
- Memory – we continue to monitor the market closely. The slashing of ASPs on lowering demand signals has resulted in significant losses for the major suppliers. For the next 6 months, we expect to see more significant price increases and reduced wafer starts as the supply base looks to recover profitably. This may also cause a spike in demand, which must be carefully monitored.
Our commodity teams continue to work with our supply base to monitor trends and navigate market dynamics. We recommend an active supply base review and consider qualifying new suppliers while aligning with existing supplier technology roadmaps and investment plans.
Please contact me or any commodity team directly to address any specific issues.
Graham Scott
VP, Global Procurement
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