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Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q3 2024 | JULY - SEPTEMBER
Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q3 2024 | JULY - SEPTEMBER
Executive Summary
Welcome to the Q3 2024 Commodity Review!
The current market dynamics remain reasonably balanced with the inventory correction cycle ending. As component supplier inventories peaked in Q3 ’23 - following six quarters of excessive levels - the market has experienced a steady decline in overall inventories, returning to more traditional levels, including the distribution channel. Lead times have also returned to pre-pandemic levels, with only minor exceptions for legacy and specialty processed parts.
In response to current market conditions, some suppliers have increased factory utilization, especially as the demand dynamics become clearer. AI-driven data centers continue to drive growth, with most other segments, such as automotive and industrial, still to experience any substantial improvements in demand. The Chinese market has also become more active as smartphone demand returns and growth in local EV production has increased.
Many in the supplier community forecast that any major demand pick-up will be in late Q4 2024 and early into 2025, even as some suppliers are starting to report positive book-to-bill ratios. From a demand perspective, many suppliers have intimated that Q2 ’24 was the bottom of this cycle.
Important themes looking forward:
- Regional Optionality—This continues to impact the market as the industry seeks to mitigate supply chain risk. OEMs and suppliers want to expand operations in Mexico, Vietnam, and other Southeast Asian countries. At the same time, China continues to drive a “China for China” strategy relative to its supply base.
- CAPEX Expansions—Despite the current market conditions with muted demand, most suppliers in both the semiconductor and passives communities, continue their investment plans, as the long-term growth for electronics continues to be very positive.
- AI-Driven Data Centers—Demand for servers (GPU & processor), memory and connectivity solutions remains extremely strong as large hyperscale companies build capacity for generative AI applications. As with other early cycle excitement, this may be a “demand bubble” situation as use cases must catch up to overall capacity.
The Jabil Commodity Management team will continue to monitor the electronics ecosystem and respond to any specific changes in the market relative to pricing, lead times, or market dynamics.
If you have any questions, please feel free to contact the commodity management team or me directly.
Graham Scott
VP, Global Procurement
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