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Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q3 2023
Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q3 2023
Executive Summary
Q3 2023
Welcome to the Q3 2023 Commodity Intelligence Report. As the Consumer, PC, and Mobile market segments remain soft, and with a persistent inventory bubble in the ecosystem, we are now seeing lead times across most commodities returning to more traditional levels. However, suppliers and product families supporting the automotive and industrial segments -specifically battery and energy management systems - continue to experience extended lead times due to strong demand.
Despite an initial expectation that inventories would peak in Q4 2022, they have remained stubbornly high across the entire ecosystem, with inventory numbers in Q1 2023 being higher than the previous quarter. This has led to uncertainty over whether inventories will reach their peak in Q1 or Q2 2023. As part of an effort to mitigate additional inventory growth, and balance overall supply and demand, many suppliers are reducing factory output for non-automotive and industrial applications.
With capacity reductions and the desire to reduce overall ecosystem inventories, there is a slight risk that any significant increase in demand can change the market. However, with what seems to be a muted pick-up in the Chinese economy and soft demand in the above-mentioned markets, we see this as a small risk.
Our latest publication highlights several notable market trends that should be observed, including:
China +1 Strategy – we now see more suppliers, across multiple commodities, exploring investment and capacity expansion outside of China based on the increasing trade tensions between US and China.
Raw Material and logistics costs – While most pricing for raw materials has peaked, it has been slow to return to pre-pandemic norms, similarly for logistics costs. In addition, labor inflation, especially in China continues to be an issue.
Demand in the Automotive segment continues to be strong along with energy/battery management systems. Suppliers supporting these segments continue to be constrained and will be for the foreseeable future. This includes passive components, analog and power management, microcontrollers, and SiC and GaN products.
Many suppliers are using the environment to “prune & trim” their product portfolios by focusing on new technologies while establishing end-of-life (EOL) classifications for legacy products and technologies. We recommend qualifying multiple suppliers and considering new market entrants along with second and third-tier suppliers to fill in the gaps for legacy products.
The Jabil Commodity team continually monitors the supplier base and should be used as a resource to help manage supply continuity and mitigate supply chain risk. If you have any questions, please contact the respective Commodity Manager or myself directly.
Graham Scott
Vice President, Global Procurement
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