Moving through the second quarter, the economy remains uncertain globally, with continued rises in interest rates still visible. The British economy is predicted to shrink by 0.3% during 2023, although it is less than the initial 0.6% drop in GDP forecast earlier in the year.
Energy prices in the UK are slowly falling, and this, in part, is reflective of some economists’ opinions that the world will narrowly miss a global recession in 2023. It is likely growth will be stagnant, or very small in certain regions – but even a stagnant economy is better than a shrinking economy. Supportively, the Bank of England is forecasting UK growth for quarter two, an adjustment on the decline anticipated earlier this year.
UK inflation reduced slightly in March from the February high and is currently 10.1%. Conversely, the base rate is now at 4.25% (up 0.25%) and although the economy is struggling to stabilise consumer pricing, the Bank of England is still optimistic about falling rates over the next quarter and believes a 2% target is achievable mid-long term.
Capacity and lead-time issues
- It is predicted that semiconductor shortages will continue throughout 2023, with demand vs. supply beginning to balance out in 2024. The automotive sector is still recovering and is responsible for a huge percentage of high-end, high-value semiconductor demand both in Europe and Asia.
- The market typically reacts to what is happening within manufacturers and TSMC are suggesting signs of a downturn in demand from Q3 2023 – meaning the market may finally be coming out of its allocation phase.
- Global semiconductor industry sales are down 20.7% from February 2022 – further cementing views that the market will see recovery from the end of 2023 into 2024.
- Lead-times remain lengthy but stable, some product lines remain on allocation, however.
- ADI are confident in a reduction of lead-times with a quoted 50% of their product portfolio quoting 13-week lead-times or less.
- Microchip plans to invest $880M in silicon carbide and silicon device manufacture at its Colorado Springs fab.
As we have continued to advise in many of our updates, 2024 needs to be secured via your EMS partner asap to ensure strategic sourcing options can be implemented to limit grey market sourcing and high PPV costs. Signs of recovery do not mean ex-stock availability of products immediately; supply chains will take time to react and adapt to the changes seen. We do, however, remain optimistic!
- Vicor (manufacturers of power modules) has signed a global distribution deal with Avnet.
- APCT has acquired and merged with Advanced Circuits Evertiq reports.
- Microchip applied a portfolio price increase on 1st March 2023.
- RAM increased prices by 11.25% on 1st April 2023.
- Weidmuller applied a range of price increases on their portfolio with immediate effect in February 2023.
- Stanley prices increased by 8% on 1st March 2023.
- Oil pricing is averaging between $80 and $90 per barrel, down from the last blog priced at $81.66.
- Gold is slowly climbing, trading at £1,596.96 per ounce, a trend usually seen when inflation rates rise.
- Silver has continued to rise, and is now £20.19 per ounce, not far from 5-year highs seen in 2020 and 2021.
- Steel rebar has fallen during the last quarter. 2-month contracts are now at $615.00 per tonne.
- Bitcoin is now valued at $27,614.90.00 per coin, up from January 2023.
- Copper pricing is fluctuating slightly with bids today at $8,815 per tonne, down from January 2023.