Supplyframe’s Commodity IQ insights index projects inventories to ease for many components while prices level off or fall. Exceptions include programmable and logic devices, microcontrollers, and analog and discrete ICs
OEMS specifying and designing in electronic components have faced several years of parts shortage and skyrocketing part prices, forcing them to in some cases alter their design and procurement practices. But recent data from Supplyframe, a marketing research and consulting firm which monitors electronics supply-chain activity, indicates the worst may be over for OEMS, as well as their distribution and electronics manufacturing service (EMS) partners.

For the first quarter of 2023, Supplyframe’s Commodity IQ forecast projects the market will experience an 8% decline in the number of rising lead times and commodities with part allocations for active and passive electronic components.  Commodity IQ’s Price Index for Q1 also expects a low double-digit decline in pricing. In addition, global electronic components demand and sourcing activities in Q1 are expected to be down by 2% from the previous quarter, while engineering design will be off by 20%– which Supplyframe stated indicates further demand erosion.

Any hint that more normal conditions are returning to the electronics industry would improve the mood among suppliers, many of whom are dealing with inventory corrections and lagging profits in recent quarters. But the volatile global geo-political situation could derail the industry at a moment’s notice.

“New Commodity IQ insights, the resilience of world economies to inflation and threats of recession, and China’s reopening economy in the second half suggest there is reason to be optimistic,” said Supplyframe CEO and founder Steve Flagg in a statement. “Commodity IQ indicates that component availability has improved in large part, and prices across many commodities and sub commodities have stabilized. But electronic component lead times remain longer than historical norms. And in this age of macroeconomic uncertainty, where it is becoming increasingly difficult to forecast demand amid mixed end-market signals, further intensification of the Russia-Ukraine war, continuing COVID-19 challenges in China, or any number of other disruptions could emerge.”