The year 2023 seemed destined to be a terrible time for both sides of the purchasing equation, with buyers doomed to face the impacts of severe supply disruptions and labor strikes and sellers consigned to managing the effects of a looming recession.\u00a0<\/p>\n\n\n\n
However, 2023 actually turned out to be notable for the terrible things that didn\u2019t happen, with the feared recessions, logistics strikes and major supply chain disruptions failing to materialize. Moreover, 2023 was also a year when purchasing conditions improved more markedly than
expected, as weak demand and lingering excess inventory produced optimal availability and lead time conditions for buyers.\u00a0<\/p>\n\n\n\n
As Q4 arrived, it became clear how dramatically the balance of power in the electronics supply chain had shifted in favor of buyers, with the quarter delivering the best purchasing environment the electronics supply chain has experienced in years. A look at the year-end numbers illustrates just how dramatically conditions changed during 2023.\u00a0<\/p>\n\n\n\n
The Commodity IQ Demand Index for semiconductors plunged by 22.7% in 2023 compared to 2022, reflecting poor demand from critical end markets, including PCs, smartphones and consumer electronics. <\/p>\n\n\n\n
In H2 2023, the demand index fell below the baseline to reach an average of 95.2, down from 109 in H1, with logic, memory and analog signal devices leading the decrease. The below-the-baseline figure indicates that semiconductor demand declined in H2 despite a marginal sales rebound for some key end markets. <\/p>\n\n\n\n
As demand softened last year, supplies backed up in warehouses, causing the Commodity IQ Inventory Index for semiconductors to surge by 44.7% compared to 2022. The fall in demand and the rise in inventory translated into improved availability, spurring a 26.6% drop in the Commodity IQ Lead Time Index for semiconductors in 2023 compared to 2022, led by declines in standard and programmable logic.\u00a0<\/p>\n\n\n\n
The Commodity IQ Price Index for semiconductors rose 26% in 2023 compared to 2022. However, with pricing trends typically lagging lead-time developments, the semiconductor price index eventually started decreasing in Q4, with a 17% sequential decline and a 22% year-on-year drop.<\/p>\n\n\n\n
Several factors contributed to the shift in favor of buyers during the year. One central element was the decline in end-market demand turned out to be worse than expected, causing inventories to rise and lead times to dwindle.<\/p>\n\n\n\n
At the start of 2023, top market research houses predicted that global semiconductor market revenue would ease in the 4% to 5% range. However, by the end of 2023, forecasts coalesced around an 11% to 12% drop for the year.<\/p>\n\n\n\n
Another factor aiding buyers was the slow pace of inventory reduction. Despite memory suppliers\u2019 aggressive efforts to cut production rates and reduce stockpiles, inventories remained inflated at distributors throughout 2023. This inventory overhang contributed to favorable lead time conditions for buyers.<\/p>","protected":false},"excerpt":{"rendered":"
The year 2023 seemed destined to be a terrible time for both sides of the purchasing equation, with buyers doomed to face the impacts of severe supply disruptions and labor strikes and sellers consigned to managing the effects of a looming recession.\u00a0 However, 2023 actually turned out to be notable for the terrible things that […]<\/p>","protected":false},"author":37,"featured_media":6873,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[220,218,11,102],"tags":[184,47,288,70],"class_list":["post-6872","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commodity-iq","category-component-semiconductor-manufacturers","category-featured","category-resources","tag-commodity-iq","tag-industry-news","tag-iq-insider","tag-semiconductors"],"blocksy_meta":[],"yoast_head":"\n