Having seen the start of increasing inflation and costs last quarter, unfortunately this upward trend has continued. The Bank of England has hiked the base rate up to 2.25%, the biggest jump in 27 years, with some predictions that inflation could reach 11% before the end of the year.
Coupled with rising interest rates and inflation, energy costs are soaring and showing no signs of slowing as winter approaches.
The value of sterling has taken a hit over the last week, said to be partially due to the tax cuts announced by the UK Government.
Although COVID-19 infections are now at a low level and have been consistently there for several months, there is still some uncertainty on how the virus may impact us as winter approaches.
It is widely thought that there will be a global recession in 2023 and supply chains are waiting to see what this means for product availability and capacity.
Capacity and lead-time issues
- The semiconductor market is still at capacity, with lengthy lead-times now the ‘new normal’ and showing no signs of improvement yet.
- High end ST Micro, NXP, Infineon and OnSemi chips are still on allocation with decommitments coming through distribution against open order books regularly.
- There is some indication that passive lead-times are now generally stable.
- The majority of semiconductor lead-times are still be quoted to be 52 weeks, whereas passives are currently sitting around 30 weeks, the exception being Panasonic who are still reporting longer lead-times throughout their portfolio.
- Overall, Texas Instruments supply is not easing with regular decommitments coming through distribution.
- Analog Devices are reporting that they are seeing an increase in order book cancellations – which could be an early indicator of things to come during 2023.
- Manufacturers are increasingly looking to develop hybrid supply chain resilience by ensuring more products can be manufactured at different fab locations. This enables product lines to be moved between sites depending on individual location capacity.
- Vishay currently have issues securing optocoupler TRIAC wafers due to a cut in allocation which is going to impact product until March 2023.
- It is critical that all 2023, and where possible 2024 demand and forecasting, is shared with EMS partners, so collaboratively, we can get ahead of the chip shortage and secure future supply chains.
- ViaSat and Immersat have received UK Government approval for a proposed combination of their businesses.
- Lunar New Year falls on Sunday 22nd January 2023 to celebrate the year of the Rabbit therefore lead-time disruption is expected from early December for Far East produced boards and any January demand should be placed with factories by the end of November 2022 for January 2023 product.
- Lunar New Year will bring a 7-day factory shutdown but as we are aware, this holiday can cause up to 40 days of disruption to supply chains.
- Price rises are once again being pushed down the supply chain this quarter and are seen across all areas of electronic, electrical, electro-mechanical and mechanical items.
- ADI prices increased on 23rd September 2022.
- Brady products have increased between 5% and 10% from 1st October 2022.
- Advanced Plastic Technologies will be implementing an 8% increase in October 2022 due to soaring energy costs that are unsustainable to absorb.
- Oil pricing is still slowly falling and is now $85.14 per barrel at time of writing.
- Gold is relatively stable at £1,489.58 per ounce at time of writing.
- Silver has risen and is now £17.08 per ounce at time of writing and is a 3.81% quarterly increase.
- Steel rebar is stable; 2 month contracts are now $680.00 per tonne.
- Bitcoin is now valued at $19,179.20 per coin at time of writing with little price movement of significance over the last three months.