The Electronics Supply Chain: Why It’s Not Getting Better

The global electronics and IT supply chain is starting to stabilize, although challenges remain. The good news is that while demand is expected to remain strong and problems continue into 2023, affordability should improve.

This is according to an analysis by Supplyframe, an industrial ecosystem for companies that develop, supply, market and sell products in the global electronics value chain. Longer lead times, geopolitical uncertainty and rising logistics and labor costs could be constant factors in 2023, although the pressure appears to be easing.

“The electronics supply chain is improving, but slowly and unevenly,” said Steve Flagg, CEO and founder of Supplyframe. “The electronics supply chain exists in a complex and volatile environment in which unforeseen and ever-changing events continue to affect productivity, costs, lead times and other factors. Constraints and shortages are not over yet. And inventory rebalancing and component market adjustments are underway.”

Increased availability and lower prices

Supplyframe’s Commodity Intelligence Quarterly (CIQ) Q3 report points to shorter delivery times, price stabilization and reduced demand for certain electronic components. Demand for capacitors and resistors decreased by 12% compared to the previous quarter. Overall memory demand fell 6% between the first and second quarters and is expected to fall another 2% in the third quarter.

The decline in demand in the supply chain is due to increased availability and lower prices, which has a spillover effect on consumer electronics. However, demand increased in other areas, especially in the field of programmable logic devices, the demand for which increased by 9% compared to the previous quarter.

“It’s time for manufacturers to increase sustainability,” says Flagg. “To do this, device manufacturers that rely on electronic components must use new forms of intelligence to inform the decisions they make during the development of new products that could affect the lifecycle of their devices.

For end users, this is all about light at the end of the tunnel. The first signs of slowing inflation as prices remained broadly stable in July. Combined with falling demand and easing supply chain tensions for a number of categories, early signs point to a return to some semblance of normalcy in the market in 2023.

Source: “.com”

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