New Component Industry Association Figures Support Commodity IQ Demand Index Trends

January results from the Electronic Components Industry Association (ECIA) confirm robust sales trends in the global electronics supply chain, as noted by the Commodity IQ Demand Index.

The ECIA Electronic Component Sales Trend (ECST) index increased by more than 20 points from December to January to reach a score of 98, the highest reading in 21 months – and close to the baseline level, indicating sales growth. The ECST noted double-digit growth across all electronic component segments, i.e., semiconductors, electromechanical devices, and passives.

Comparing ECIA Figures With Commodity IQ’s Demand Index

Based on the January results, the ECST appears likely to break through the baseline level in February. The ECIA noted that substantial sales increase is driven by a broad-based rise in demand from several end markets, in contrast to 2023, when growth was confined to select segments like industrial, automotive, and military-aerospace.

The only market still in decline in January was the wireless sector. However, even this area is on the verge of breaking into positive territory in February, according to the ECIA. The new ECST figures conform with the January reading of the Commodity IQ Demand Index, which rose at the strongest rate in 35 months during the month.

The demand index rose 27% sequentially in January, the highest increase since March 2021. The index increased to 99.3 during the month, just slightly short of the baseline.Regarding component types, passives and analog devices generated strong sales growth in January, with capacitor demand up by 29% sequentially in January, analog signal devices up by 27%, and analog power chips up by 22%.

Looking Ahead

While it’s too early to identify a trend, the January demand figures bid well for demand throughout the year. Semiconductor demand growth is expected to be well-diversified in 2024, with five out of six end markets set to generate double-digit percentage growth in 2024, according to market watchers.

The rise in demand is expected to be broad-based, with all end markets for semiconductors set to experience growth and five out of six segments set for double-digit percentage increases.

The broad-based increase in demand is set to bring more challenging conditions for buyers, with lead times and prices set to rise later this year. Buyers need to monitor supply as market conditions shift.