Jabil's Global Commodity Intelligence Archive

Global Commodity Intelligence

Q2 2023

Executive Summary

Q2 2023

Inventory Correction is in Full Swing, creating an interesting dynamic.

Welcome to the Q2 2023 Commodity Procurement Intelligence report. With inventories across the electronics ecosystem well into “rebalance mode”, a process that began Q3’22, lead times are returning to pre-pandemic levels for some commodities, while certain commodities and components in legacy status remain stubbornly high.

To support the rebalancing of inventories to meet end market demand, whilst also ensuring supply and demand balance, most manufacturers are either reducing or adjusting capacity in the short term. Depending on the required materials, costs continue to be challenging for most suppliers across various levels. The market remains dynamic which is creating unique conditions and driving lead time reductions; however, pricing remains stable and increasing across some passive and semiconductor families.

With the current market environment and global inventory rebalancing process now planned to bleed into Q3, manufacturers are fine-tuning their current capacity and, in the case of memory, reducing CAPEX based on demand. We will continue closely monitoring the situation as a rapid change in demand - especially in the consumer and smartphone sectors, alongside the reopening of the Chinese economy - could tighten the market quickly, driving extended lead time and price increases.

Some specific areas of interest include:

Automotive Market Segment – for suppliers focused on the automotive segment, most components remain extremely tight with long lead times, price increases, and little supply chain flexibility. This ranges from capacitors and resistors to the broad range of semiconductors.
Analog Products – the broad portfolio of Analog parts continues to be constrained in the market across all segments, with Renesas, OnSemi, Microchip, and ADI all establishing price increases through the first 2 quarters of 2023.
Raising Input Costs – although raw material costs may have peaked, they remain historically high. Prices for materials such as palladium, ruthenium, silver, copper, nickel, and ceramic substrates continue to remain at high levels. In addition, most foundries have raised their prices for wafers to semiconductor manufacturers with labor inflation continuing across all regions.

With inventories in the channel - held at EMS providers and at suppliers themselves - adjusting to market demand across all segments, we’ll need to navigate which commodities, suppliers, and components offer price flexibility while also maintaining continuity of supply.

Finally, it remains vitally important that our OEM customers remain aligned with suppliers’ technology roadmaps and continue to qualify multiple sources where possible. The Global Commodity Management team remains available to help with any specific commodity issues.

I hope you enjoy our Q2 report and if you have any questions or comments, please get in touch directly.

Yours sincerely,

Graham Scott

Vice President, Global Procurement

Executive Summary

Q2 2023

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