During the past two years, the enormous buildup of excess inventory has been prevalent in the electronics component market. However, the latest signs from the Commodity IQ Inventory Index and the marketplace reveal that the inventory dragon may have been unequivocally slain.<\/p>\n\n\n\n
Recent months have brought news of normalizing inventories at leading foundries and memory makers. <\/p>\n\n\n\n
Analog Devices joined the chorus in May, with CEO Vincent Roche noting, \u201c…the industry has gone through an indigestion period, with an oversupply of products for the last year and a half, two years. We\u2019ve seen that the indigestion is abating, and we\u2019re returning to a normal growth pattern in bookings. That, coupled with extremely bullish PMIs, gives us great confidence that we\u2019re returning to a more normalized pattern of demand growth.\u201d <\/p>\n\n\n\n
The Commodity IQ Inventory Index for all components tracked by Supplyframe reflects this view, with a reading of nearly 40% of the index baseline, delineating growth and decline in stockpile levels. <\/p>\n\n\n\n
Significantly, the index has been below the baseline for four consecutive years, reflecting the massive size of the inventory overhang that needed to be reduced. SEMI gave further confirmation in May, reporting that semiconductor inventory levels are set to decline in Q2.<\/p>\n\n\n\n
As inventory levels are falling, lead times and pricing are rising. The Commodity IQ Price Index totaled 234 in May, more than twice the baseline, reflecting robust sales increases. The Commodity IQ Lead Time index amounted to 109.4 for the month, showing delivery lags are flat-to-rising.<\/p>\n\n\n\n
For buyers, normalizing inventory conditions will bring further pricing and availability challenges that are typical during a rising demand. As demand is projected to increase in Q2 and Q3 due to sales recoveries in key end markets and typical seasonal patterns, buyers must prepare by building safety stocks and locking in prices for critical components.<\/p>","protected":false},"excerpt":{"rendered":"
During the past two years, the enormous buildup of excess inventory has been prevalent in the electronics component market. However, the latest signs from the Commodity IQ Inventory Index and the marketplace reveal that the inventory dragon may have been unequivocally slain. Recent months have brought news of normalizing inventories at leading foundries and memory […]<\/p>","protected":false},"author":37,"featured_media":7033,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[220,11,102],"tags":[184,47,129,288],"class_list":["post-7032","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commodity-iq","category-featured","category-resources","tag-commodity-iq","tag-industry-news","tag-industry-trends","tag-iq-insider"],"blocksy_meta":[],"yoast_head":"\n