As we head into 2024, it's important for buyers and purchasing professionals to remain vigilant and informed about market trends to optimize their purchasing strategies and supply chains. To facilitate this, Mouser Electronics has created a list of 12 buying trends that provides an overview of the current state and future expectations of the electronic components market.
1: Growing demand in automotive and industrial applications
Demand for electronic components has increased significantly in the automotive and industrial sectors due to the growing popularity of electric vehicles (EVs) and the integration of advanced safety systems in both EVs and conventional vehicles. Additionally, the industrial sector is experiencing a surge in demand related to power applications. Buyers focused on these areas may face ongoing supply constraints, particularly in securing analog and power management components, microcontrollers (MCUs), and products such as silicon carbide (SiC) and gallium nitride (GaN). You need to prepare for it.
2: Rapid increase in data center investment driven by AI technology
The AI revolution, fueled in part by advancements in platforms like ChatGPT, has led cloud and enterprise data center operators to invest heavily in AI-accelerated servers and related equipment. The expected increase in server shipments following the previous decline is expected to significantly strengthen the semiconductor market, particularly in areas such as microprocessor (MPU), memory, programmable logic, and ASIC markets.
3: Decrease in demand for general-purpose semiconductors
General purpose semiconductors, including memory and standard logic ICs, are expected to see a decline in demand and prices. This trend is due to a decline in new orders compared to device shipments, which could lead to shorter lead times.
4: High demand for certain semiconductor components
Although inventory shortage levels are stabilizing, competition for certain components continues, particularly in the semiconductor field. These now rare components, sometimes referred to as “golden screws,” continue to be in high demand. As excess inventory is depleted, customers are likely to focus on replenishing inventory levels for core interconnect, passive, and electromechanical (IP&E) components.
5: Recovery from supply chain disruption in the electronics sector
The electronics industry continues to weather the effects of recent supply chain disruptions. Inventory levels of affected parts are gradually increasing, and authorized distributors like Mouser Electronics are playing a critical role in this recovery. These distributors have been ordering these components for a long time and have parts in stock to make them available for purchase as soon as possible.
6: Impact of green technology on purchasing electronic components
Advances in sustainability and green technology are not only influencing but actively shaping purchasing trends in the electronics market. Customers are increasingly demanding green technology and integrating it into their designs. This change can limit vendor choices, as such products often require specific certifications, which impact component availability and overall project cost. However, the increased cost to the end user is usually offset by other forms of savings and positive environmental impact.
7: Decreasing demand for certain technologies and components
While not all technologies have experienced a significant decline in popularity, some have. Demand for technologies such as projectors, flash drives, printing presses for catalogs and booklets, and manual movie and music players is decreasing. This change in consumer preferences may impact the market for the components primarily used in these technologies.
8: Factors influencing the availability and price of electronic components
Component availability and pricing are increasingly influenced by a variety of factors. These include customer demand, evolving technology needs, delivery logistics, production costs, and government regulations. Backordered customer orders often take priority over new orders, inflating demand and increasing prices from manufacturers.
9: Increased price and lead time
As demand for electronics increases in the second half of 2023, buyers who have enjoyed favorable pricing and lead-time trends may see an increase in demand for both. This change is expected to affect components such as the MPU and his MCU, analog signal circuits, and transistors. Buyers are encouraged to start their 2024 purchase programs early to make the most of the current situation.
10: Rapid changes in customer needs and preferences in electronics
Customer needs and preferences in the electronics sector are evolving at an unprecedented pace. With shortages of certain goods on the horizon, customers are increasingly relying on advanced tools and resources for risk mitigation and long-term forecasting. They actively collaborate with distribution partners to keep abreast of rapid market changes and leverage these partnerships to maintain a steady flow of inventory.
11: Evolving technology in electronic applications
Technologies such as IoT, 5G, and AI are significantly changing the demand for electronic components. The proliferation of IoT applications has led to a surge in new product development in previously unrelated areas of high tech, such as home appliances and wearables. This connectivity boom is simultaneously accelerating the implementation of 5G, a technology that is rapidly becoming an essential technology in fields such as healthcare, security, and education, among others.
12: Growth of electronic component infrastructure market
There are growing expectations among passive component manufacturers that demand will increase in the second half of 2023, particularly in infrastructure markets such as electric vehicle (EV) charging, energy storage, and renewable energy sectors. This growth is due to the expansion of infrastructure for EVs and the global push towards sustainable energy solutions. However, buyers in these areas are advised to remain vigilant about potential component shortages. The utilization rates of some suppliers in these markets are relatively low, which can lead to supply chain bottlenecks. Therefore, strategic planning and early collaboration with suppliers is essential for companies operating in these sectors to ensure a steady supply of the necessary components.
Looking ahead to 2024, the electronics purchasing landscape will be shaped by evolving industry demands, supply chain recovery pressures, and continued advances in technological innovation.
One of the challenges buyers are almost certain to face next year is the need to identify and select replacement parts for the BOM. Mouser offers some great tips in this video.
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