Future Electronics’ VP strategic supplier development, Karim Yasmine, recommends ensuring accurate long-term requirements are in place with sources of supply
We have experienced two of the strongest back-to-back growth years in documented history. As we head into the final quarter of 2022, the long-awaited correction has begun. Yet many technologies remain at extended lead times, giving the purchasing community mixed signals. We see expedites for ‘golden screw’ requirements daily, followed by a slew of cancellations and backlog adjustments as end customers rationalize their supply requirements and start to even-out the bubble that the industry has carried for over two-years.
As we head into 2023, most companies are challenged to forecast 2023 requirements but the end demand and overall supply situation remains murky. 2023 may be a tale of two very different halves. A first half driven by a backlog correction, reduced growth and lead time recovery, with a second half buoyant with strong end demand and a potential return to business health. That could also mean a return to extended lead times so keep your long-term backlog visible to your supply chain partner.
More flexibility is expected on key supply chain programs and long-term agreements. Also, major foundries have publicly stated capacity availability, so stay tuned.
The most important recommendation to purchasing executives heading into the new year is to ensure accurate long-term requirements are in place with your source of supply. It is also key that the EMS backlog matches the aggregate of the requirements from the OEM as we have seen imbalance here throughout the cycle.