Main Highlights
Now we are beyond the mid-way point of 2024; the UK have called a general election with Labour being the majority winners, and the USA Presidential campaign for 2025 is well under way. UK service and production sectors have grown by 0.8% and 0.6% respectively during Jan-March, although construction output fell slightly by 0.6%, according to ONS data. The EU also showed growth in the first part of the year as inflation dipped again – with 2024 predicting 1% total GDP growth in the EU.
Meanwhile in Asia-Pacific, China have seen a surge in industrial output by 0.4% month-on-month for June, mainly stemming from the EV market. Growth in China is often viewed as a positive, but fast growth in commercial areas can in turn cause pinch points for the rest of the world as China secure huge amounts of production manufacturing capacity in advance.
Inflation in the United States is still high, and not yet cooling as it is globally. America are still pursing China-focused tariffs which ultimately, could further negatively impact the economy and the strength of the dollar, which is already under pressure from high interest rates.
AI Technology is the driver of innovation and in many areas is seen as the new way to transform the global economy by boosting productivity. Whilst this seems a sure way to improve the global outlook, it brings its own struggles to the world of electronics and the supporting manufacturing industry. Is now the time for a sharp increase in demand and capacity – and what impacts will this have on supply chains?
The global chip shortage that started in 2020 and now seems a distant past nightmare to many, but it could be about to repeat – now is the time to put preventative measures in place and ensure a robust supply chain with you manufacturing partners. Securing capacity, sharing forecast visibility into 2025 and committing to stable designs is a priority which must be done now. Warning statements are already being made by the likes of NXP and these must be listened to.
To mitigate potential risk in the future and ensure a controlled and continuous supply of materials, ESCATEC are encouraging customers to take the following proactive steps:
- Engage in long-term planning: Placing longer-term orders for Q4 2024, and even into mid to end 2025 will help to secure your supply pipeline. This is particularly important for stable and repeat products that are critical to your operations.
- Leverage order management flexibility: Utilise the current flexibility offered by manufacturers to place orders with longer lead times. This flexibility may not be available once the market rebounds so taking advantage now is recommended.
- Expand supply chain coverage: Where possible, expand your supply chain coverage for commonly used products to mitigate risks. This will help you avoid potential shortages and ensure continuity of supply.
- Establish materials authorisation agreements: Consider setting up agreements to place orders for stable-demand products beyond the current short lead times, ensuring a steady supply without the risk of end-of-life (EOL) issues.
- Develop a supply chain risk mitigation strategy: Work with us to develop and implement a strategy to mitigate supply chain risks. This could include diversifying your supplier base further and planning for potential disruptions.
Capacity and lead-time issues
- Following damage to Murata’s Anamizu plant (manufacturing chip inductors and common choke coils) production has now resumed methodically since May 13th 2024.
- Lead-times in electronics are generally stable, but this is not forecast to remain, and orderbook coverage is critical for 2024, and at least Q1 and Q2 2025.
- Capacitor lead-times (MLCC, Aluminium Electrolytics, Tantalum, Polymer Caps) are generally decreasing slightly with most between 10 and weeks, some exceptions up to 26 weeks.
- High-bandwidth memory (HBM) is being heavily invested in by the memory giants, there are predictions that this could cause DRAM shortages in Q3 and Q4 this year.
Manufacturer Mergers/Acquisitions
- Kioxia and Western Digital have restarted merger plans yet this is still opposed by SK Hynix.
- Taiwan’s WT Electronics has completed a $3.8b acquisition of Future Electronics.
PCB Technology
- Copper pricing has risen sharply, now at its highest levels, causing increases throughout PCB manufacturing as copper laminate prices raise in tandem.
- Factory capacity is now on the rise, meaning less spare capacity and the potential for price rises and slightly longer lead-times than have been expected.
- EV and AI Technology and putting increased demand onto PCB manufacturing capacity.
Global Economy
- Oil pricing fell in the middle of last quarter but is now back up, currently trading at $85.11/barrel at time of writing.
- Gold has held its value, only falling marginally since last update, currently £1,860.28 per ounce, a 3.59% decline in 3 months.
- Silver is also down marginally by 2.31%, currently priced at £22.52 per ounce, midway between the 3-month low and high.
- Steel rebar is still stable, 3-month contracts are listed at $571 per tonne at time of writing.
- Bitcoin has held its value, despite a couple of dips, now $64,383.20 per coin.
- Copper pricing has peaked and remained high, currently $9,480 per tonne for 3-month contracts.
