What electronic components are likely to be most in demand in 2024?
We are expecting a surge in demand for various key components primarily across our growth sectors – IoT, renewable energy, healthcare, wearable technology, and the automotive industry, especially electric vehicles (EVs). And military and defence, of course.
Consequently, microcontrollers, power management ICs, SOCs, low-power sensors, imaging chips, display technologies, and advanced connectors will continue to be in high demand.
The tremendous levels of innovation within Generative AI applications will push the demand for chips from Invidia, Google, GraphCore, and AMD into so far uncharted waters. The US is restricting AI chip sales and prices for the devices remains high. Currently, very few AI chips are making it into the open market; there is clearly stockpiling. This opens the industry to the possibility of an AI chip bubble. Watch this space in 2024 and plan for some price rises.
How are price trends for key electronic components expected to change in 2024?
We are expecting the semiconductor sales market to return to a growth trend in 2024. Global semiconductor output in this year’s Q3 was actually better than expected, and it slightly raised hopes for this year and next.
Prices of key electronic components are expected to rise next year due to several factors. The drive for greater functionality in smaller devices is stretching the demand for those same in-demand electronics – microcontrollers, power management ICs, SOCs, and sensors.
Chip manufacturers are still rebalancing inventory after production cuts, so we are expecting some price surges and extended lead times, like the current spike in NAND flash where the price of DDR5 has risen much faster than expected – up to 50%. Compounding the problem, some manufacturers are struggling to expand new production capacity in the short term.
Geopolitical tensions and increased global military spending, exceeding $2 trillion, are also stressing the supply chain; OEMs will face more competition for crucial components.
This combination of high demand and constrained supply conditions suggests that buyers should prepare for fluctuating prices and look at strengthening their supplier relationships.
What are the current and emerging trends in the electronic component markets, and what are the projections for 2024?
AI, AI, and AI. New uses are popping up every day. The 2024 generative AI-driven market opportunity is worth around $50 billion. By 2027, the projections suggest as much as $400 billion, but we should remain cautious as nobody wants an AI chip bubble. AMD has recently said their AI chip supply next year will be considerable, far exceeding the value of US$2 billion
Significant growth is also expected in IoT/IIoT, with a projected yearly growth of over 20%, and in renewable energy sectors. The healthcare technology sector is anticipated to rise by more than 5%, while wearable tech is predicted to grow up to 15%. The automotive EV industry is also expected to see a growth of around 18%. These trends indicate a shift towards more advanced technologies, with an increased focus on energy efficiency and smart applications.
What new products or innovations are on the horizon for 2024, and how can they benefit buyers?
The focus will be on AI and IoT applications, energy saving, and sustainable technologies. The integration of AI into various domains, including smart assistants and AI-enabled integrated circuits, is set to revolutionise the industry.
Typically, the new products offer enhanced efficiency, intelligence, and energy-saving capabilities. AI advancements, for instance, are bringing about more intelligent decision-making and automation, with an impact across all sectors. Take agriculture, for instance, there are many AI /IIoT developments in smart agriculture which are addressing global challenges related to food and water management. In the built environment, there are companies specialising in sensor AI applications – like leak detection. Water claims are a big problem for insurers with $17bn a year spent on escape of water losses in US and UK alone. Smart devices might save the industry a lot of money and reduce stress on homeowners.
Astute has partnered a few manufacturers within IIoT including Convert Technologies with their Salus asset tracking solution that accurately tracks people, tools, and equipment, both indoors and outdoors on the same network.
These innovations are not only addressing emerging market needs but pave the way for a new era of technological excellence.
What strategies can electronic component buyers employ to mitigate supply chain disruptions now and in the future?
The realities of geopolitical tension are impacting the supply chain, signalling a need for OEMs to brace for potential challenges in sourcing and pricing. Buyers should consider contingency plans like diversifying their supply chain, building robust supplier relationships, and staying adaptable to rapidly changing market conditions.
Preparing for potential delays and price surges due to competition for essential components, and planning for alternative sourcing strategies in response to geopolitical shifts will be key to maintaining a steady supply chain.
We recommend customers undertake regular inventory reviews. A proactive and strategic approach will enable buyers to adapt to the changing market and maintain a balanced inventory.
What are the best practices for cost-effective procurement in electronics for the current market and future predictions?
Designing-in standard components with multiple sources and testing and qualifying multiple parts early in the design process can mitigate risks related to future obsolescence or supply chain disruptions.
Astute has strategically invested in expanding our expertise in electronics, electrical, and electromechanical engineering, covering a wide array of areas including semiconductors, power systems, interconnects, and discrete components.
We encourage our clients to not only the latest and greatest but the optimal technology for the lifecycle of their system, blending technological innovation with lasting availability, thereby minimising obsolescence risks and extending the operational life.
Companies should take a strategic approach to inventory management, balancing the risk of obsolescence against maintaining adequate stock levels. Regularly reviewing inventory to identify slow-moving or at-risk items and taking proactive measures will also contribute to cost-effective procurement.
What strategies should buyers employ to reduce challenges associated with component obsolescence and end-of-life notices?
Buyers should focus on proactive obsolescence management. This includes planning for long-term component supply during the design and product definition phases to prevent premature product redesigns and requalification.
It’s crucial to remaining vigilant in monitoring market trends and keeping regular checks on BOMs to identify potential obsolescence before it impacts operations. Employing strategies like cross-referencing obsolete parts, offering second sources ahead of EOL notices, and suggesting products unlikely to go obsolete at the design-in stage are effective.
