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Material Market Update – Q4-2023

Electronic Components: Market Sales & Forecasts

As we move into the final quarter of 2023, all forecasts are indicating a sharper decline in worldwide semiconductor revenues. Gartner’s models reducing its 2023 forecast to -12.3% ($74 billion) on 2022 numbers.

All industries, except for automotive have seen a decline in semiconductor revenues in 2023. This decline has contributed to a moderate surplus the supply chain, which is a downgrade on the severe surplus reported by Gartner in Q2-2023. Figures 1 -3 show this in more detail.

2024 continues to see significant growth forecasted. Despite 2023 forecasts being downgraded, 2024 figures remain as strong as the previous quarter, with Gartner forecasting 20.4% growth taking the industry to $633
billion.

Significant growth continues to be forecasted as we move through 2024-2027 and beyond with the $1 Trillion barrier expected to be broken in 2033. Although Wafer Fabs are in construction globally and expected to come on line in the next few years, the growth forecasted presents a real risk of the next constraint period for the industry.

Electronic Components: Wafer Fab Update

In our previous updates we have highlighted the record investments by Semiconductor manufacturers but also advised that these positive moves by industry should be met with caution as a CAPEX correction was anticipated
with the downturn in forecasted revenues.

Latest indicators forecast that CAPEX for Fab Equipment (which drives Fab Capacity) to be at $136.3 Billion for 2023, which is -22.5% YOY. Growth of just 1.35 ($138 B) is expected in 2024, and then single digit % growth in 2025-2027.

Capacity forecast for 2023 to 2026 is as follows, which highlights the risk that growth will struggle to meet the demands of the forecasts for 2024 and 2025. This creates a real possibility for constraints in the semi-conductor market as we move into 2024 and beyond.

Lastly, it is important to acknowledge that many of the $ billions invested are being directed into new / smaller technologies (5 nm – 10nm). Older technology products will continue to lag as manufacturers encourage developers towards the newer technology nodes.

Electronic Components: Pricing and Lead Time Trends

Market updates from our key suppliers show that lead times are reducing as some of the new Wafer Fab capacity starts to come online. In general terms, wholesale price reductions are not expected as we move into 2024.
Ongoing macroeconomic factors are contributing to a high level of volatility, and pricing could change at any moment.

The messaging from distribution remains consistent. To secure the best pricing please place orders as early as possible, and where program funding is available it is recommended to drive inventory into stock at the earliest
opportunity.

Allocation still exists for some manufacturers and/or technology types, so we advise customers to provide the clearest visibility of program nature and special contractual exceptions which can be applied.

Electronic Components: Passive update

Provided by Raluca Maxim – Passive Commodity Manager, Cicor
Sources: TTI Market Update Q3 2023 & Smith Market Intelligence Report, September 2023

Global Material Supply and Logistic Trends

Raw material price index for passive components stable through Q2 2023 for all keystone metals (nickel, copper, titanium and palladium).

Printed Circuit Board Update

Provided by Howard Phillips and Adrien Suciu, PCB Commodity Manager, Cicor

Graphic PLC update

Metals Update

Copper ended the quarter roughly the same as where it started, but it must be noted that pricing has been trending downwards since 1st week of September and is currently at its lowest point since mid-2022.
Tin in general has remained stable for the last quarter. After the drop noted in our last update, the pricing of Aluminium and Steel have both remained stable. Availability of raw materials is not considered a risk this time.

Macroeconomics

With 2024 rapidly approaching we continue to see new macroeconomic factors influence supply chains and different markets across the world.