Global electronics supply chain shows promise for 2023

Demand for electronic components remains strong and the environment is still volatile, but there are positive indications for manufacturers and consumers.
Written by Greg Nichols, Contributing Writer
A supply chain worker surrounded by a visualization of data

The global electronics supply chain is beginning to stabilize, albeit unevenly. The good news is that even though demand is expected to stay strong and issues will persist into 2023, availability is expected to improve.

That's according to an analysis of data from Supplyframe, an industry ecosystem catering to businesses that design, source, market, and sell products across the global electronics value chain. Lingering factors heading into 2023 could include extended lead times, geopolitical uncertainty, and elevated logistics and labor costs, though pressures do seem to be easing.

"The electronic component supply chain is improving, but slowly and unevenly," Supplyframe CEO and founder Steve Flagg said in a release Aug. 11. "The multitier electronics supply chain exists within a complicated and volatile environment in which ever-evolving, unforeseen events continue to impact capacity, costs, lead times, and other considerations. Constraints and shortages are not over. And a rebalancing of inventories and component market corrections is in play."

The findings, part of Supplyframe's Q3 Commodity Intelligence Quarterly (CIQ), forecast 52% of all electronic component lead time dimensions to decline or stabilize in the third quarter. The analysis indicates shortening lead times, stabilizing prices, and lower demand for select electronic components. Capacitor and resistor demand shrank by 12% compared with the previous quarter. Global demand was down 11% month-over-month in June versus historical 4% increases, with Asia-Pacific and the EMEA region declining by 11% and 14%, respectively. Overall memory demand dipped 6% from the Q1 to Q2 and is forecasted to decrease again in Q3 by 2%.

Lower demand in the supply chain is correlated to increasing availability and falling prices, which has follow effects for consumer electronics and durable goods. Still, demand has climbed in other areas, including programmable logic devices, which experienced a 9% increase in demand since the previous quarter.

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"As things become more opportunistic, now is the time for manufacturers to build resiliency," Flagg said. "To do that, manufacturers of devices that rely on electronics components need to use new forms of intelligence to inform the decisions that they make during new product design that could affect their downstream product life cycles."

For end consumers, this all points to some light at the end of the tunnel. There are early indications of inflation cooling, with prices remaining broadly flat in July. Combined with falling demand and easing supply chain tensions in a variety of categories, there are early indications of a return to some semblance of market normalcy in 2023.

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