In the second half of 2022, despite reports that demand for computers and smartphones is slowing, buyers will see prices for consumer-grade devices drop by 3-6% in the second half as MLCC inventories build up.
But there are also different voices in the industry, that "the shortage of electronic components may get worse before it gets better". Electronics prices are expected to rise this year — and it may not start to fall until the end of 2023. It's time for electronics manufacturers to start preparing for the coming price hikes, persistent shortages, and above-average lead times for key electronic components and raw materials.
Large manufacturers tighten orders
Over the past quarter (Q2 2022), electronic component prices have increased by an average of 5-40%. Lead times for these components have also increased. Microchip maker Microchip, for example, has started telling manufacturers that it expects to take up to 50 weeks to fill orders. The company also requires that new orders be non-cancellable and come with a non-returnable clause (NCNR).
Some media said that STMicroelectronics Asia Pacific has notified its distributors that all its product lines will increase in price in the second quarter of 2022. NXP expects to raise prices on all products by 15% from July 14, and has a backlog of pre-orders until 2023. Intel expects to increase the price of all server CPUs by 7-10% in the fourth quarter.
Chip supplier Infineon's lead time has also increased from an average of 48 weeks to 60 weeks, while IP&E supplier Vishay Intertechnology's lead time is now more than a year. The price and delivery performance in the first quarter of 2022 is based on similar rapid growth in the fourth quarter of 2021.
According to media reports, the delivery time commitment of large semiconductor manufacturers has now exceeded 52 weeks, and they have spent high costs to ensure delivery during the most demanding period of the first few months, so the media believes that in the rest of the year , "Chip suppliers should have little incentive to improve and control lead times."
Although summer is a low season for electronic products, higher component prices will lead to faster rise in electronic product prices in the fourth quarter of this year. According to CNBC, the world's largest chip foundries, including TSMC, Samsung and Intel, are considering raising prices due to inflation, rising costs of chemicals and other raw materials. Rising chip prices will help offset those costs and drive continued behavior such as industry repatriation, and help foundries maintain their growth targets for the year.
Fab prices have risen 10-20% over the past year. However, chip foundries already have a big say in pricing due to the ongoing shortage of semiconductors. When the supply of chips is constrained, electronics makers and other businesses that rely on semiconductors, such as automakers, will again be forced to "do what they can".
It should be said that the current situation is so chaotic that many experts are reluctant to draw conclusions about when prices will return to normal, or when the shortage of parts that has caused prices to rise will end.
With the exception of a few non-hot components, for the semiconductor industry, the price of electronics and components could be affected and increase once manufacturers face labor, supply and logistical uncertainty. Given that the current global epidemic, inflation, logistics, raw materials and other factors still exist, the overall increase in electronic component prices may not start to slow down until 2023.
Terminal manufacturers should prepare for future price increases, longer lead times and ongoing supply chain challenges. Because over the next few years, if continued "increase" in prices and lead times becomes the norm, the just-in-time approach may become less and less feasible.
Conversely, manufacturers may need to keep their safety stock and finished goods on hand at all times “just in case” to deal with longer lead times and supply chain disruptions. Additionally, as shortages and supply chain disruptions continue, communication with suppliers and customers will also be essential. The component market is constantly changing. You should actively choose digital platforms and technologies to maintain real-time and good information communication with upstream and downstream links.
