Component Design Activity Growth Decelerates in January

Despite a major surge in demand in January, growth in global electronics design activity decelerated compared to December, prompting Supplyframe to trim its Q1 outlook for global component development activity.

The Commodity IQ Design Index decreased by 3% month-over-month in January as development activities softened in the Asia-Pacific region. This fall contrasts with the historic 2% to 5% growth recorded during the month.

Revisiting Q1 2024 Forecasts

Despite the sequential decline, the index rose 3.4% compared to January 2023. Furthermore, the index reading remained well above the baseline, indicating that design activity continued to increase during the month.

Following the slower-than-anticipated results for January, global design activity projections have been revised downward. The Commodity IQ Design Index is now set to remain flat on a quarter-over-quarter basis in Q1 compared to the previous forecast of a 2% increase.

The January decline in the index was driven by the Asia-Pacific region, which saw a 12% sequential decrease in activity. In contrast, the Americas, Europe, Middle East, and Africa regions experienced increases of 4% and 1%, respectively.

The decrease in Asia-Pacific is being led by power circuits and driver and interfaces, which both suffered 17% plunges in the Commodity IQ Demand Index during the month.

What Does This Mean for Demand?

With design activity presaging demand by five to six months, current indications may point to flattening demand growth in mid-2024.

The tepid design results contrast with a demand recovery from a traditional soft Q4 2023, with global sourcing activities increasing by 27% in January compared to December 2023.