Where next for IP&E lead times?

Avnet director, IP&E sales, Dan Borelli

Avnet director, IP&E sales, Dan Borelli, explores interconnect, e-mech and passive lead times and discusses the most viable strategy for maintaining supply chain security.

According to the ECIA, interconnect and e-mech component lead times went out from around 10 weeks in Q1/2021 to anywhere from 14 to 20 weeks in Q1/2023. For passive components, the extension was more dramatic, rising from about 12 weeks in 2020 and rising steeply from early 2021 to peak at nearly 18 to 26 weeks by May 2022.

Lead times were driven by several factors including growth across sectors including IoT, automotive, industrial automation and consumer. Supply chain disruption was caused by Covid-19 restrictions, trade wars, geopolitical tensions and natural disasters. This disruption impacted components and raw materials.

A rapid reversal started towards the end of 2022. By Q4 2023, interconnect and e-mech delivery stood at approximately 12 weeks and passives at 14 weeks. Both figures appeared relatively stable, compared to previous volatility. Comparing January 2023 to January 2024, the ECIA’s latest figures show a 2.1 per cent year-on-year drop for interconnect and a one per cent decline for passives.

Everything appeared settled until 1 January 2024, when a 7.6 magnitude earthquake hit northern Ishikawa in Japan, close to several electronic component manufacturers. This caused some disruption to semiconductors but passive component plants escaped relatively unscathed.

Taking multilayer ceramic capacitors as an example, manufacturers have a renewed focus on supply chain security. Some MLCC suppliers have announced capacity increases over recent years, which should provide flexibility to accommodate changes in market environment and demand.

While IP&E lead times seem to have stabilized for 2024, albeit at higher levels than 2020, the forecast market growth—particularly for capacitors—and the demonstrable fragility of global supply chains remain concerns. Many companies are predicting faster growth towards Q4 2024, which could push out lead times again. The most viable strategy for maintaining supply chain security is diversification.

Partnering with distributors like Avnet provides OEMs with access to several suppliers for many IP&E components, plus access to supply chain programs to reduce risk and help smooth peaks and troughs.