Rising Design Activities Signal Timing For Electronics Recovery

Global electronics design activity rose to a two-year high in May, confirming an expected rise in demand during the second half of 2023, according to the Supplyframe Commodity IQ Design Index. Design actions rose by 14% from April and 10% year-over-year in May.

As a result, the Commodity IQ Design Index increased to one and half times the baseline in May, the highest reading since 2020. The return to positive month-on-month growth in May reverses five consecutive months of declining design intent.

Design as an Indicator of Demand

Significantly, the design index is now dramatically higher than the Commodity IQ Demand Index, with 36 points separating the two measures in May. This gap represents the highest margin that the design index has exceeded the demand index since the onset of COVID-19.

May’s large gap follows another sizable margin of 25 points in April. Design typically serves as a leading indicator of demand. Moreover, the formation of a large gap between design and demand activity indicates a buildup of new designs in preparation for production introductions that is expected to trigger rising sales activity. 

With design activity typically leading demand trends by five to six months, a recovery in electronics sales potentially could materialize as soon as late in the third quarter. For electronics buyers, the impending increase in market demand means now is a good time to commence buying for the second-half peak season before potential increases in demand and lead times erode the favorability of the purchasing environment.

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