** Below is the abbreviated version of our Compute Supply Chain – Passive & Discretes Insights Report
** Backlogs Support 3Q Sales, Bookings/B2B Moderating, We Still See 4Q – 1H23 Correction
What Changed/What’s New in This Update?
1. Shipments noted as tracking in-line for 3Q at +2-5% Q/Q; shipments in 4Q expected +0-3% on continued strong backlogs.
2. Bookings noted as continuing to decel M/M, book-to-bills <1 into Sep. for 3Q, expected to remain <1 in 4Q.
3. Passives bookings and shipments appear to have decelerated throughout 3Q; inventory elevated but pricing still steady.
4. Pushouts picked up in mid’22 across end mkts, steady or accelerated in 3Q; cancellations steady and still primarily PC/CE/mobile.
Other Industry Datapoints of Interest
5. Vishay continues to be noted as worst relative lead times of peers; viewed as likely losing some PC/CE/smartphone share in 2H22. Vishay communicating they expect lead times to begin to contract in 4Q22.
6. Infineon, Vishay, NXP, STMicro MOSFETs remain bottleneck in Auto/Ind. builds; MOSFETs noted as difficult to 2nd source & add capacity.
7. Lead times in other passive & discrete lines noted as continuing to contract, expected ~15-20 weeks by 1Q23.
8. Auto forecasts remain the most optimistic for CY23; growth expected from stronger cars/units, content gains, and EV strength.
9. Industrial still 2nd best market, seeing increased pushouts as customers adjust to better availability and softer macro.
10. CE/PC/mobile component orders noted down 15%+ Q/Q in 3Q, likely down >10% Q/Q in 4Q. Rebalance likely through 1H23.
11. Europe demand remains surprisingly steady, US still best relative market. China/Asia weak across end markets.
12. Distribution and OEMs noted as increasing focus on narrowing inventory as supply improving broadly on (1) supply shifts from PC/CE/mobile, (2) supply shifting away from soft China, and (3) capacity adds. Better availability weighing on 2H22+ bookings.
13. Distributors are noted as cutting off credit to customers, some for the first time in their history, and putting EMS on credit watch. Payments are noted as delayed to as much as 2x normal/contracted levels with cash tied up in inventory awaiting “golden screws”.
14. Supply chain remains concerned on smaller EMS dumping product as key ICs constrain some builds & macro/demand softens.
15. Pricing steady with limited/no increases in 3Q; VSH believed to be weighing potentially increasing price again in 1Q23.
Conclusion：
Passive & Discrete fundamentals remain largely unchanged through mid-September, with backlogs continuing to support shipments near-term, lead times falling in virtually all product categories, and inventories broadly viewed as elevated. Bookings continue to moderate driving book-to-bill ratios broadly below 1:1. We remained more cautious near-term on industry fundamentals and continue to expect a cyclical correction to start in the next 3-6 months.
