Q3 ended, the semiconductor market was mixed. 

Sales of electronic components in September were lower than expected, and the ECIA Sales Trend Survey (ECST) fell 3.6 points to 87.6. However, respondents expect sales sentiment next month to be closer to 100, the dividing line between contraction and growth, at 94.0.

Interestingly, forecasts from electronics distributors and manufacturers agreed last month for the first time since April this year. In September, nearly all component categories had distributors' indexes at or above 100. The manufacturer's score is also very high, around 100. ECIA chief analyst Dale Ford said this shows distributors are successfully balancing inventories.

"Given that distributors are reporting such positive results, it is difficult to attribute this difference to the need to address inventory balancing," Ford said in a statement. "While the September survey results indicate that the electronic components industry is struggling There have been setbacks along the way, but the industry is still likely to reach a breakeven point by the end of this year, with the potential for a return to broad-based growth in early 2024."

While U.S. manufacturing, which includes the computer and electronics industries, remains in contraction, September's Purchasing Managers' Index (PMI) showed a positive change at 49, with scores above 50 signaling growth. The Institute for Supply Management (ISM) manufacturing employment index rose in September, while prices fell.

"Demand remains weak, but production execution has improved from August as companies prepare for the fourth quarter and fiscal year end," said Tim Fiore, chairman of the ISM Business Survey Committee. "Suppliers continue to have capacity and supply chains have improved. Get ready for growth.”

Expansion of the ECIA component category has been mixed. Electromechanical/connector components increased by 13.8, reaching 98.7 in September, and it is expected that this part will enter the positive growth area in October. Semiconductors lost all of August's gains, falling back to 77.4, but the outlook for October rose by 15.7 points.

The gains in passive components in August also disappeared in September, but expectations for October improved slightly.

Fold said ECIA's overall end-market index jumped to 91.4 in September and maintained that level in the October outlook. Scores and improvements were uneven across segments.

Avionics/Military/Aerospace maintained and improved to above 100 points. Medical equipment and industrial electronics scored in the mid-90s in September. He added that the most positive results from the end market survey are that every category is expected to improve significantly, including expected double-digit growth in October.

Independent distributor Fusion Worldwide noted in its monthly "Green Paper" that a similar situation is occurring in end markets. IC demand from industrial, electric vehicles and solar energy began to weaken. Meanwhile, demand for cars remains strong and lead times are still lengthening.

In the CPU space, demand is outpacing supply, resulting in unpredictable lead times for some midrange core-count MPN and entry-level server and workstation lines. Fusion added that activity in the PC and server markets remains slow and may not recover until the end of the year.

ECIA reports that product lead time trends have improved significantly. Stable lead times dominate, with stable lead times jumping from 61% in August to 69% in September. No lead time extensions were reported in every passive component category in September. Additionally, there were no reports of lead time extensions in the MPU, MCU, and discrete categories.

Typical lead times for most integrated circuits are about 28 to 30 weeks, Fusion reports. Parts on the supplier's "priority" list may have shorter lead times, but this is done on a case-by-case basis and depends on overall demand. Furthermore, stable lead times do not necessarily translate into lower prices compared to suppliers' inventories, primarily due to increased costs for manufacturers over the past few years.

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