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Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q4 2023 | OCTOBER - DECEMBER
Jabil's Global Commodity Intelligence Archive
Global Commodity Intelligence
Q4 2023 | OCTOBER - DECEMBER
Executive Summary
Unprecedented Market Uncertainty
Welcome to the Q4 2023 edition of the Global Commodity Intelligence Review. With continued softness in market demand for Consumer, PC, and Smartphone segments we are now experiencing some slowing in the growth rates across the automotive, energy, and industrial industries. As a result, lead times are returning to more traditional levels, in many cases 12 -16 weeks or less. Many suppliers are now experiencing book-to-bill ratios of less than 1:1 with some as low as .65 - 7:1. Inventories levels across the electronics ecosystem remain at stubbornly high levels with CY Q2 ’23 seeming to be the peak.
In response to lower bookings and the persistently slow burn-off of inventory, many suppliers are reducing their capacity outputs. While factory utilization rates for some passive commodities are as low as 50%, even overall semiconductor utilization rates have dropped to 82% from over 90% as reported by market researcher Omdia. Utilization rates continue to be very high in support of the automotive segment with products such as advanced analog, discrete, MLCCs, and especially compound semiconductors (GaN & SiC) continuing with long lead times.
Navigating in a Complex Market:
- Even with inventories at record levels, we continue to manage component shortages, long lead times, and limited supply chain flexibility for certain product families.
- Optimism of speedy recovery because of the Chinese economy driving demand seems to be fading. Many suppliers are planning for a slower rebound by reducing capacity with forecast for the current market conditions running into Q2 ’24. In addition, the suppliers continue to navigate the variances by region and country across the different market segments.
- Pricing has stabilized in most commodities after price increases at the beginning of 2023. As suppliers and distributors look to accelerate inventory reductions, there will be some opportunities for price reductions, especially in multisource commodity products, however, suppliers have been slow to pass along decreases as the inventories may reflect the higher costs at the time the product was manufactured.
- We continue to experience suppliers looking for “regional optionality” to address labor costs, logistics, and trade & tariff issues. Mexico, Vietnam, Malaysia, and the Philippines seem to be the most common regions for new investments.
Even as the market continues to be biased to the supply balance side, many suppliers continue capital investment in factories and equipment to support the growth markets such as automotive, industrial, energy, and medical segments. As some new lines are activated, the pipeline for new capacity is healthy as companies look to the future.
As we state in most reports, it is extremely important to align with your specific supplier technology road maps and continue to evaluate new suppliers looking to fill demand across various commodities.
I hope you enjoy our latest publication and please do not hesitate to reach out to any of the Commodity Management team or myself on specific issues you may need additional support for.
Graham Scott
VP, Global Procurement
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