Since the last writing - during the unprecedented spread of COVID-19 and all of the challenges that followed - the world has quickly adapted to a ‘new normal’.
Manufacturing industries have been hit hard but as time passes, more and more facilities are re-opening, with a goal to get back to 100% capacity wherever possible, as safely as possible.
Many businesses, however, have continued to operate throughout the pandemic, supporting infrastructure, fighting the spread of infection by ensuring medical equipment is available to those in need and developing a vaccine. JJS was one of those businesses.
APAC, particularly China, Malaysia and the Philippines appear to be through the worst of their COVID-19 struggles, with Malaysia experiencing a three-month lockdown under a Restriction of Movement order to try to halt the spread of the virus.
The Philippines’ fierce lockdown imposed Enhanced Community Quarantine across Luzon continues with it expected to remain in place until at least 15th July.
Europe is mostly through the worst of the first wave of COVID-19, but the fear still remains of a more deadly second wave. But the Americas, on the other hand, are still seeing significant rises in infection rate and struggling to overcome the first wave.
Brazil has seen the highest number of confirmed cases, second only globally to the United States, closely followed by Peru, Chile and Mexico.
Capacity and lead-time issues
- Lockdowns in the Far East have caused extended lead-times on many components from manufacturing operations, to back end factories that carry out test and packaging processes
- There is a global uptake in demand for temperature sensors, pressure sensors and flow sensors to continue to support with ventilators, thermometers and CPAP machines. These sensors are moving on to allocation, with the continued increase in demand anticipated until Q1 2021
- TE Connectivity is struggling still with allocation on relays (still 52 weeks)
- There are reports that Vishay IHLP inductors are on 70 weeks plus, forward visibility of demand is crucial
- AVX lead-times are continually reported to be 30 weeks plus, and in some instances up to 40 weeks. This situation has been compounded by the forced closure of their El Salvador plant that lasted 3 months until 15th June
- Sources have advised that Littelfuse capacity in Mexico has been operating at around 45%, with 451, 452 and 152 Nano fuse lead-times being at 26 weeks
- It is widely reported that ST Microelectronics have limited available capacity for Q3 and Q4 2020, with STM32xxx and STM8xxx MCU’s being severely affected by capacity constraints
- NXP have imposed 45-day NCNR window during Q3 to try and manage output and allocation for microcontrollers in the hope of keeping lead-times at around 16 weeks, or less (24 or less for Network Processors)
- Microchip have added 7% to some legacy Atmel lines as of 7th July affecting all back orders as well and new orders
- It is widely believed that Samtec lead-times and output will return to normal from 1st August after they saw typical lead-times of around 8 weeks extend to 12+ during May
- Renesas lead-times are over 20 weeks and in some cases 30 weeks. Expediting requests are reportedly not being processed whilst they are in recovery
- Cypress had a RAM machine failure on their JCET site, along with Government enforced closures of their Philippines operations stretching lead-times from their usual 8 weeks to 16 weeks; something that is not common with Cypress. The hardest-hit lines are legacy IDT/Intersil lines
- With remote working here to stay, the demand for components to support remote devices such as laptops has increased, causing some capacity issues with connectors, cables and sensors
- Texas Instruments lead-times are extending across all product ranges, further fuelled by a shortage or air cargo availability
- Kemet and Yageo have completed their merger, a push from Yageo to further increase market share
- Infineon has completed their acquisition of Cypress Semiconductor Corp
- ADI announced they will buy Maxim Integrated for $21m
- China is now back near optimum capacity and are pushing for completion of their 5G Network, compounding PCB lead-times for the short term
- Peak Season surcharges are still in place, but there is hope these can be removed from August. Many manufacturers and distributors are heavily reliant upon using commercial airliners to transport goods; without these, cargo and freight space is at a premium with logistics companies/li>
- If copper continues to increase in price, this may drive up PCB pricing. However, suppliers should be watching global indices and securing additional stock at competitive pricing where possible
- Pricing is still volatile, with planned manufacturer increases observed, as well as increases due to constrained supply of product, capacity and raw materials
- Microchip has increased some legacy pricing on old Atmel lines by 7% from 15th July 2020 for AVR and 8051 family devices
- Xilinx is expected to increase pricing once again by up to 5% in July 2020
- Pricing is rising for all Low, Mid and High Power LED’s, lead-times are increasing in tandem
- Cree XHP35Axxx products are becoming obsolete
- Xilinx Virtex II-Pro products will be on last time buy on 31st July 2020, orders must be placed ahead of this date to secure supply as there are no direct replacements
- Many On Semiconductor lines are showing a projected price increase trend over the next quarter
- Oil pricing quickly recovered from the April and May lows; the current price per barrel is $41.84, with the trend slowly increasing, but not as rapidly as the April fall came
- Gold – pricing is relatively unchanged over the last quarter, with prices today around £1400.00 per ounce
- Silver – there is little to no change in silver prices, at time of writing current price is £14.86 per ounce
- Copper pricing has been steadily climbing since April, and is now at a 52 week high, suggesting a strong recovery in China. Current price is $2.84 per pound
- Steel production has been outweighing demand, with prices Rebar falling to just $410 per tonne
- It forecast that the price of aluminium will rise, even if the market flips from a deficit to a surplus. This is due to the expectation that investors will focus on a more positive backdrop for aluminium demand, amid low inventory levels.