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Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q2 2024 | APRIL- JUNE
Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q2 2024 | APRIL- JUNE
Executive Summary
A Tale of Two Markets
Welcome to the Q2 edition of the Global Commodity Review.
With overall demand a function of which markets are in focus, AI-related applications and opportunities - including Data Centers, Hyperscale, and Storage - lead the growth parade, followed by the automotive industry, military-grade products, and healthcare applications. On the other hand, smartphones, wireless and enterprise communications infrastructure, and consumer and some industrial applications continue to represent slower growth opportunities.
On the supply side, we continue to see a reduction in the inventory overhang from last year, however - despite falling - it continues to represent a challenge for both the distribution channel and component suppliers. With the exception of AI-related GPUs, Storage, and Memory suppliers, most anticipate a recovery in the second half of the year, however, in some cases, organizations are working to maintain flat revenue levels year-on-year. Lead times are now almost back to pre-COVID levels and with very few exceptions, with 85% of all part numbers quoted for this quarter being less than 26 weeks compared with 94% pre-COVID. The stabilization in the market has also produced some opportunities for price reductions.
The overall market sentiment for the year's first half was pessimistic, but it is becoming more positive as we approach the second half of 2024.
Based on our extensive engagements with our partnership network, our key market observations include:
- Regional optionality continues to be a driving force based on geopolitical uncertainties and the desire to mitigate supply chain risk where possible. OEMs and Suppliers are looking to expand operations in Mexico, Europe, Vietnam, and other Southeast Asian countries.
- Memory and Storage price changes are being driven by reductions in CAPEX and wafer starts since the second half of 2023 and supplier consolidation prompted by profitability challenges. Pricing for DRAM, FLASH, and storage products continues to rise.
- Inflationary pressures continue to impact the industry. Even with the inventory overhang and slower market demand, price reductions have slowly materialized as raw materials, energy, human resources, and capital equipment remain high.
The overall macro trends remain extremely positive as the market rebalances the current supply and demand dynamics. The Jabil team continues to monitor the supply environment across all commodities to mitigate risk and ensure continuity of supply for our broad base of customers.
I hope you enjoy the publication and please feel free to reach out to the Global Commodity team or myself directly to address any specific issues or for additional support
Graham Scott
VP, Global Procurement
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