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Jabil's Global Commodity Intelligence Archive
Q2 2022
Jabil's Global Commodity Intelligence Archive
Q2 2022
Executive Summary
Q2 2022
New Supply Chain Challenges Emerge as the Effects of COVID Linger
Welcome to the Q2 2022 Global Commodity Intelligence edition. As we enter calendar Q2, we continue to see the same trends for extended lead times and price increases across many commodities. In previous reports, we covered some of the driving factors to the current market conditions. Now it’s the impact of the Russian invasion of Ukraine. In the short time since the beginning of the invasion, we are already experiencing impact to raw materials, precious metals, oil prices and logistics challenges. This, on top of the existing price and supply headwinds.
Many companies are already implementing their Business Continuity plans to establish the immediate risks from suppliers in Ukraine, Russia, and the neighboring countries along with a second order effect of suppliers. All of these are on the backdrop of many new import/export restrictions and government trade policies to move supplies into and out of the affected region.
- Raw materials – with Ukraine being a country rich in raw materials, we are experiencing an immediate impact on pricing for Gold, Zinc, Nickel, Copper and Aluminum. These metals, all used in various electronic components, were already at elevated levels prior to the Russian invasion. Neon gas is a critical material used in semiconductor manufacturing and primarily supplied from Ukraine. Most Integrated Device Manufacturers and foundries have up to a years’ worth of inventory which should buffer the supply situation in the short term. However, it could become a problem in the months ahead if supply continues to be disrupted – especially with the current elevated demand.
- Oil and energy costs – as oil prices have spiked to over $110 per barrel, the effect is felt immediately for all logistics modes - air, ocean, and land. Increased energy costs are already affecting some of the largest metal suppliers in Europe with energy pricing almost doubling within days of the invasion.
- Compounding supply challenges – many semiconductor product families are already experiencing lead times of 40+ weeks (uControllers, FPGA’s, Standard Analog, Logic, etc.) with some suppliers now quoting 64-week lead times. For fabless semiconductor companies, their foundry partners such as Global Foundries and TSMC are now implementing additional 10%-20% price hikes for 8” wafers and are sold out for all of 2022. Suppliers across many commodities continue to EOL legacy product families and are investing in newer, more profitable technologies.
COVID lockdowns are impacting production and logistics in many Chinese regions. Due to the dynamic and severe nature of these lockdowns, we will continue to monitor and provide periodic alerts and updates to our Supply Chain team and Business leaders as the situation evolves.
The Global Commodity Management (GCM) team continues to monitor and take the appropriate actions regarding all the aforementioned challenges. We highly recommend following your most critical supplier’s technology roadmaps for new designs and to qualify new or additional suppliers to provide maximum supply chain flexibility.
The GCMs highlight many specific recommendations in the report and are always available to help with any specific customer requirements. Please reach out to the respective commodity manager or me for support in these challenging times. Also, stay tuned for the release of our new online Global Procurement Intelligence portal which provides more timely and relevant updates to address these rapidly changing market conditions.
Graham Scott
Vice President, Global Procurement
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