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Edgewater Research: Electronics Supply Chain Weekly Digest

Dennis Reed
|  Created: February 5, 2024  |  Updated: July 1, 2024

 

Edgewater Research

A weekly collection of news summaries, survey results and channel insights, and report summaries from Edgewater Research 

DATAPOINT OF THE WEEK: 

S&P reported January Eurozone mfg. PMI of 46.6 vs 44.4 in December, reflecting a slower rate of deterioration compared to recent months with an easing decline in output and new orders, though Red Sea disruption lengthened lead times. Germany PMI showed a similar improvement to 45.5 in Jan from 43.3 in December, marking an 11-month high. In the US, S&P January PMI jumped to 50.7 vs 47.9 and ISM PMI jumped to 49.1 from 47.1 in December, reflecting an upturn in new orders and a slower contraction in output. Employment in the US also rose for the first time in three months according to S&P’s survey. China government official PMI rose to 49.2 from 49.0 in December driven by an uptick in output which appears to be partially offset by continued decline in orders. In contrast, China’s private Caixin PMI was unchanged M/M in Jan at 50.8 signaling stable output and the first rise in new export orders since June, which has lifted business confidence to a nine-month high. 

Key Takeaways:

  1. 4Q global POS at best seen in-line, with downside in Europe on year-end shutdowns and mixed demand in APAC/Americas. 
  2. 1Q outlook seen sub-seasonal (down LSD-MSD) on extended shutdowns (CNY/Europe) and continued inventory digestion globally. 
  3. APAC feedback down ticking vs. Oct/Nov on end-demand uncertainty, lack of China bookings recovery, and incremental headwinds from high inventory at brokers.  
  4. Inventory progress noted as limited in semis, better in IP&E. Semi digestion expectations seen partially pushed to 3Q. 
  5. Competitive dynamics seen up ticking in volume/catalog distribution driving some discounting and incremental margin pressure. Competitive dynamics more pronounced in APAC, but also in IP&E with private distis defending share vs. Arrow/Avnet. 
  6. Suppliers seen raising pricing support to distis, particularly in APAC. Increased rebates seen driving some inventory writedowns. 
  7. Analog Devices noted establishing a strategic initiative to drive more 2024 sales direct. TI seen continuing to push to more direct in 2024. 

About Author

About Author

Dennis Reed is a Senior Research Analyst in Technology. Dennis started in the industry in 2005 at FTN Midwest Research on the technology & semiconductor team. In 2006, he was a founding member of Cleveland Research Company and continued to develop and extensive network of technology industry professionals in the semiconductor, distribution, memory and HDD industries throughout the world. Dennis worked at KeyBanc Capital markets in New York, on teams covering Consumer Staples and Paper & Packing companies. Dennis also brings wide level of experience working in various roles with Travelers Insurance, including Market Research and various product roles supporting business unit growth in targeted end markets. Dennis is a 2002 graduate of Ohio University with a major in Sports Management.

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