Of all electronic commodities, no group is experiencing a more dramatic transformation in conditions in Q1 than the passives segment. Market demand is undergoing a 180-degree swing compared to Q4, courtesy of surging sales driven by tariff threats, amplified by low inventory levels and the impact of offshoring initiatives. <\/p>\n\n\n\n
The Commodity IQ Market Dynamics Forecast shows that 91.7% of passive component supply chain dimensions are set to experience rising demand and inflated supply chain risk in Q1. This situation represents a complete turnaround from Q4 2024, when the same percentage of passive parts registered low risk and a balanced supply-demand situation. <\/p>\n\n\n\n
Moreover, on average, the Commodity IQ Demand Index for passives and interconnects has risen sequentially in January and February and March is forecast to be up over 25% compared to February. <\/p>\n\n\n\n
The demand shift impacts every type of passive, with circuit protection devices\/resonators, filters, oscillators, inductors, and all capacitors transitioning from green to red status between Q4 and Q1. Resistor demand is moving more moderately, changing from low risk in Q4 to stable risk in Q1, while transformers are migrating from a state of stability to a high-risk condition. <\/p>\n\n\n\n
The demand surge is primarily fueled by tariff threats, which have compelled buyers to snap up available supplies of capacitors and other passive components at relatively low prices before new duties are enacted. In addition, reshoring initiatives related to the worsening trade situation are spurring redundant purchases, further fueling sales growth. <\/p>\n\n\n\n
The impact of the rise in demand is being magnified by the fact that passive inventories are at extremely low levels in Q1. According to the Commodity IQ Inventory Index, capacitor, resistor, inductor, filter and circuit protection stockpiles fell to 12-month lows in February. <\/p>\n\n\n\n
With inventories depleted, there is little slack in the supply chain. As a result, it doesn\u2019t take a substantial sales increase to translate into significantly increased demand for suppliers. <\/p>\n\n\n\n
Outside of the tariff phenomenon, demand continues to be driven by the booming shipments of AI servers for data centers. Although the arrival of DeepSeek has thrown some uncertainty into the outlook, AI server shipments will rise by nearly 30% in 2025. <\/p>\n\n\n\n
Passives are employed in various uses in servers, including capacitors, inductors, and resistors for power supply filtering and conditioning, crystals\/resonators for timing and clock generation, and capacitors for decoupling and bypassing. <\/p>\n\n\n\n
Even though muted, the EV market is also juicing passive demand as a new round of subsidies in China boosts domestic sales in Q1. In January, China renewed a trade-in subsidy for new energy vehicles (NEVs), equivalent to $2,730. Passives are widely used in EVs, performing tasks like power conversion, battery management, and motor control. <\/p>\n\n\n\n
The Chinese government\u2019s efforts to boost the market are maintaining high sales growth in the nation despite slowdowns in other countries. <\/p>\n\n\n\n
While the outlook is unclear amid the rapidly changing tariff situation, Supplyframe expects the rise in demand to stop in Q2, reducing buyers’ supply chain risk.<\/p>","protected":false},"excerpt":{"rendered":"
Of all electronic commodities, no group is experiencing a more dramatic transformation in conditions in Q1 than the passives segment. Market demand is undergoing a 180-degree swing compared to Q4, courtesy of surging sales driven by tariff threats, amplified by low inventory levels and the impact of offshoring initiatives. The Commodity IQ Market Dynamics Forecast […]<\/p>","protected":false},"author":37,"featured_media":7382,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[220,11,102],"tags":[184,129,288,77,339],"class_list":["post-7381","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commodity-iq","category-featured","category-resources","tag-commodity-iq","tag-industry-trends","tag-iq-insider","tag-supply-chain","tag-tariffs"],"blocksy_meta":[],"yoast_head":"\n