As we are now coming into Spring, right after observing the rest of the world celebrating the Lunar New Year, and welcoming the year of the Tiger. This year is said to be a year of positive changes and we are all hoping for that as manufacturers continue to evaluate their supply chains to fill gaps caused by persistent disruptions.
The list below highlights what the new year will bring for our industry with the latest quarterly roundup of news surrounding the global electronics component market.
Overview
After a whole year of unpredictable turbulences for the supply chain caused mainly by the COVID-19 pandemic and the global chip shortage, we finally started to see a bright light at the end of the tunnel getting closer to us. This didn’t last long as we have been dramatically hit by the unexpected Russian invasion of Ukraine causing further disruptions to the already fragile supply chain.
Our thoughts are with all of the families on all involved sides who are affected by this tragedy, and we hope that both parties find a peaceful solution to the conflict without any more heart-wrenching consequences.
The ongoing Ukraine conflict may further affect the global supply chains as Ukraine produces 50% of the world’s semiconductor-grade neon, the key ingredient for making chips. On the other hand, Russia provides the United States with more than a third of its palladium, a rare metal required to produce semiconductors.
Lead-time Issues, Negative Price Trends, and Component Shortages
Extreme long lead times, negative price trends, and raw material shortages are here to stay for another while. According to our industry experts, the situation is unlikely to improve until at least 2023. However, due to higher inflation and rising interest rates, we may see some slowdown in demand at the end of the year.
It is advised that long-term planning in the supply chain should remain the new normal throughout the whole of 2022 and well into 2023.
Global Economy
Prices continue to rise throughout the whole supply chain due to further raw material, shipping, and production cost increases contributing to this.
The gold price has recently gone up after staying relatively stable for a while. Gold is up 13,49% from last year standing at $1967.77/oz.
Silver has remained relatively steady trading at $25,295/oz.
Copper costs are affecting the prices of cables, PCBs, and other technologies that rely upon the commodity. Copper prices are up by 8.5% from last year standing at $4,4975/lb.
Palladium price has recently hit new highs of £60,67/g growing by 5% in the last month as Russia accounts for 40% of the global palladium supply.
Neon-grade surges are expected throughout 2022 as Russia’s attack on Ukraine halts half of the world’s neon output for chips.
Oil hits a new 14-year high at $139 per barrel.
Fuel prices constantly increasing as the average cost of petrol on UK forecourts stands at 163.5p.
Conclusion
The current situation on the material markets is not improving as it will most likely continue well into 2022 and even further until the start of 2023. However, recent inflation pressure and rising interest rates may cause slowdowns in demand and we can expect some stabilization.