12 Hot Purchasing Trends for 2024
Estimated reading time: 4 minutes, 30 seconds
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Published September 29, 2023
As we enter 2024, the electronics industry stands on the precipice of change. Companies are gearing up to meet the evolving demands of the market, driven by technologies like the Internet of Things (IoT), 5G, artificial intelligence (AI), and a push toward sustainability. Navigating these dynamic purchasing trends will require electronics buyers to be vigilant about market shifts and respond proactively to optimize their purchasing strategy for 2024.
This article offers scenarios to consider as we begin the new year.
1. Highly Sought-After Components
Although inventory shortage levels are beginning to stabilize, they are still causing a scramble for certain components, mainly within the semiconductor category. Dubbed a "golden screw" situation, these now-rare components continue to be highly sought after. As overstock depletes through the year, customers are likely to focus on replenishing inventory levels on core interconnect, passive, and electromechanical (IP&E) components.
2. Declining Demand for General Purpose Semiconductors
General purpose semiconductors, such as memory and standard logic ICs, are expected to see a decline in demand and pricing. Given the downturn in new orders compared to device shipments, lead times will likely decrease as well.
3. Evolving Technologies
Technologies such as IoT, 5G, and AI are shifting the landscape of demand for electronic components. IoT continues to flood the electronics market with new products, increasing the need for electronic components in traditionally low-tech products such as home appliances and wearables. This surge in connectivity also creates a ripe environment for 5G implementation, a technology fast becoming indispensable. Industries like healthcare, security, and education are now at the forefront of demand.
4. Growth in Infrastructure Markets
Passive component manufacturers are anticipating demand growth in late 2023 for some infrastructure markets, including electric vehicle (EV) charging, energy storage, and renewable energy sectors. Buyers in these sectors should remain aware of potential shortages as capacity utilization for some suppliers is relatively low.
5. Decreasing Demand for Certain Components
While there isn't a marked decrease in the popularity of specific components, some technologies are witnessing a decline. For instance, projectors, flash drives, printing presses for catalogs and booklets, and manual movie and music players are some technologies experiencing a decrease in demand. This change in consumer preferences is likely to affect the market for components used predominantly in these technologies.
6. Recovery from Supply Chain Disruptions
Industries are still managing the aftermath of recent supply chain disruptions, although inventory levels of affected parts are gradually increasing. Authorized distributors like Mouser Electronics play a pivotal role in this recovery, as they've had these components on order for a significant time, ensuring these parts are in stock for purchase as soon as possible.
7. Factors Affecting Availability and Pricing
Availability and pricing of components are being influenced by factors such as customer demand, changing technology needs, delivery logistics, production costs, and government regulations. Customer orders on backorder take precedence over new orders, often inflating demands and driving up prices from manufacturers.
8. Influence of Green Tech
Advancements in sustainability and "green" tech are not just influencing purchasing trends but also shaping them. Customers are demanding green technology and incorporating it into their designs. This may limit vendor options as these products often require certifications, which can impact the availability of components and the overall project cost. However, the increased cost to the end user is generally justified by other forms of cost savings and the overall positive impact on the environment.
9. Surge in Data Center Investments
The AI revolution, driven partly by advancements like ChatGPT, is prompting cloud and enterprise data center operators to invest heavily in AI-accelerated servers and related equipment. The expected surge in server shipments, following a double-digit drop earlier, will bolster the semiconductor market, particularly microprocessors (MPUs), memory, programmable logic, and ASIC markets.
10. Heightened Demand in the Automotive and Industrial Segments
Solid demand for EVs and the increasing incorporation of advanced safety systems in EVs and traditional autos will continue to draw attention from semiconductor suppliers. An uptick in industrial demand related to power applications is also expected. Buyers focusing on these areas can expect supply constraints to continue, with analog and power management components, microcontrollers (MCUs), and silicon carbide (SiC) and gallium nitride (GaN) products being particularly challenging to secure.
11. Increases in Price and Lead Time
As electronics demand rises in the second half of 2023, buyers who have enjoyed favorable pricing and lead-time trends may face increases in both. MPUs and MCUs, analog signal circuits, and transistors could be affected. As such, buyers should consider initiating their 2024 purchasing programs as early as possible to take advantage of current conditions.
12. Changing Customer Needs and Preferences
Customer needs and preferences are evolving rapidly. With shortages looming in certain commodities, customers are increasingly relying on the latest tools and resources for risk mitigation and long-term forecasting. They are working closely with distributor partners to stay on top of rapid market changes and leveraging partnerships to maintain a steady inventory flow.
In 2024, the electronics components purchasing landscape will be shaped by the evolving demands of the industry, the pressures of supply chain recovery, and the relentless march of technological innovation.