Electronic component market review – Q1 2019

Author : Daniella Baldock | Senior Buyer | The Paragon Electronics Group

01 March 2019

JJS Manufacturing 2019 electronics component review

As 2019 begins, challenges surrounding lead times within the electronic component market look set to continue for some time to come. For OEMs, this drives the continued need to make adjustments to the design, and choice of components, for their printed circuit board assemblies (PCBAs).

This article was originally featured on the JJS Manufacturing blog and subsequently in the March 2019 issue of EPDT magazine [read the digital issue]. Sign up to receive your own copy.

And for those original equipment manufacturers (OEMs) working with electronics manufacturing services (EMS) providers, the importance of maintaining regular communication and continuing to share forecast information remains paramount. Daniella Baldock, Senior Buyer at The Paragon Electronics Group, summarises the latest news on the state of the electronic component marketplace, as of January 2019.

Report highlights

•  Multilayer ceramic capacitors (MLCCs) are still the most problematic components within the marketplace. Most MLCC manufacturers are still quoting excessive lead times, or in some cases, allocation. The stock that is becoming available is subject to significant price increases, with the inability to schedule purchase orders.

•  MLCC shortages have now been commonplace for over a year, and it is not certain if any improvement in the market will be seen until 2020.

•  After more than two years of pricing uncertainty and allocation, it appears the memory market is slowly starting to recover, withprice decreases seen on some NAND and DRAM products.

Capacity and lead time issues

•  Infineon have issued an End-of-Life (EOL) notice for small signal products, with a Last Time Buy (LTB) of the 31st December 2019.

•  Nexperia are still struggling with allocation on some product lines, most notably diodes and MOSFETs in cases sizes SOD323, SOT223, SOT23 and SOT232; this issue is still ongoing.

•  Rohm are also struggling to meet demand, with extended lead-times continuing and allocation confirmed on EMD2, EMD2M, PMDU, PMDUM, TUSH, TUMD2S, UMD2M and USM products until further notice.

•  Xilinx lead-times are also extending, making it vital for original equipment manufacturers to share their long term forecast information with

their supply chain partners, to help maintain continuity of supply.

•  NXP have placed a 15%+ price increase on some of the former 32-bit Freescale processors; however lead times appear stable.

electronic-component-january-2019-blog

•  It is reported that some manufacturers have increased MLCC pricing by up to 40% compared to 6 months ago.

Pricing uncertainty: PCB technology

•  The annual Chinese New Year celebrations will see factories close between around 31st January and 10th February 2019. Disruption to lead times should be expected for a few weeks either side of these dates.

•  Copper pricing started to fall at the start of December, but is now slowly climbing, with pricing more in-line with the historic prices we saw back in August 2018.

•  Some PCB suppliers have already carried out a risk analysis for Brexit strategies, and have put stock in place, with facilities to hold bare PCBs should there be the expected customs delays when importing to the UK.

Global economy

•  CIPS (Chartered Institute of Procurement and Supply) Brexit surveys suggest that 70% of UK Manufacturing companies said that currency fluctuations made their supply chain more expensive.

•  CIPS found that 20% of manufacturing companies may look to ‘re-shore’ supply chains to the UK amid Brexit uncertainty.

•  Gold is trading at £1024.27 per ounce, climbing since the lows seen in September 2018 of nearer £900.00 per ounce

•  Silver prices are also rising, with January 2019 reporting pricing of £12.35 per ounce, against a low of £10.75 observed in September 2018.

•  Oil pricing was at a twelve month low in late December 2018 at $50.47 per barrel, with the highest price seen in October 2018 of $84.16 per barrel.

•  Stainless steel pricing in China has remained flat, with low demand in the run up to Chinese New Year, and as a result suppliers are keeping their stock levels low.

•  The EU will vote on 16th January 2019 regarding a cap on steel imports in wake of President Trump putting tariffs on steel and aluminium imported in to the United States. If passed, this vote would put a cap on imports for three years into the EU.

•  A growing number of companies are now holding inventory off shore, as supply chains are attempting to mitigate against the risk of Brexit, and are taking advice from industry and logistics experts on border controls and trade agreements.


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