19.03.2026Maurycy LewiakowskiGeneral Economic & Global Supply Chain Conditions
The material market conditions within the first months of 2026 have been highly dynamic. The recent events have been mainly driven by increasing geopolitical tensions (Nexperia being a real-life example of how impactful may the consequences be), rising commodity prices (predominantly industrial metals) and surging demand for AI hardware (data-center related). We continued to observe gradually rising lead times in a variety of component categories.
This is connected with:
- Depleted material stocks (and empty warehouses) at the distribution & component level, following the post-pandemic component slowdown.
- Growing demand (major European component distributors observing book-to-bill ratios above 1, after approximately ten to twelve consecutive quarters of results below 1)
- Component foundries (eg. TSMC) have majority resources allocated for artificial intelligence (AI) related chips, as Nvidia.
This trend continues. We believe that 2026 material markets shall observe visibly elevated lead times in comparison to 2025, as well as visible price pressure, due to growing demand and rising costs.
Economic outlook
The IMF shows a stable global economic outlook for 2026, alike to what has been forecasted at the beginning of 2025. Even though the expectations for 2025 have been lower, the final results on the end of the last year have been more positive than anticipated. Based on the IMF forecast, the expectations for 2026 are similar – showing a positive and stable signs.
On the other hand, in September 2025 The World Economic Forum’s reported that 72% of the surveyed chief economists are expecting the global economy to weaken in 2026, alongside high perceived trade disruption and broader systemic shifts.
The inflation levels have decreased and stabilized, and in consequence we have seen further interest decreases in the recent months. This trend is likely to continue in the course of 2026 in the US with expectations of further rate cuts, while moderate stability is expected in the Eurozone.
Geopolitical tensions
When having unofficial discussions with the distribution network, there tend to be more and more voices about an upcoming allocation coming from the materials market. Based on the current data and fundamentals, we do not perceive this probability as high. However, we do see a lifted risk of a potential “black swan” that may be caused by geopolitical tensions – an unpredictable, sudden event that may heavily impact normal market operations and from day to another cause major disturbances. Geopolitcal tensions are picking up a faster pace, and the global systematic shifts seem irreversible. Events such as US tariffs, bombing Iran, kidnapping the Venezuelan president, threats on Taiwan or Greenland, as well as the Nexperia “takeover” clearly suggest growing risks of conflict. One of such future event may cause a “black swan” that may in consequence trigger a very serious disruption in the supply chain. The World Uncertainty Index remains at nearly record heights and has risen significantly within the latter part of 2025.
Supply chain volatility
If we look at the GEP Global Supply Chain Volatility Index*, we can observe that globally we are still moving within slightly underutilized capacity environment, with Europe and Asia showing higher levels of capacity utilization that in the mid-2025. If we look at the trend, its positive signalling growth of demand and an equilibrium. Please, note that GEP looks at the global supply chains in general, a much broader than just electronics.
Electronics component market
If we look deeper into the electronics, the major reports give us a somehow mixed perspective.
On one hand, based on December’s ECIA report, the trend seems to be in line with what we reported in the mid-year, and the majority of the market players report signals of increasing lead times. The December report states: “Pressure continues to build on lead times in all three of the major component segments. Overall, 33% of survey participants report increasing lead time pressure in December compared to 21% in November. There are almost no reports of decreasing lead times. Not surprisingly, the reports of increasing lead times are particularly high in the DRAM and NAND Flash categories at 80%. Reports of increasing lead times range from 44% to 58% in other semiconductor categories. and this is in effect visible in the market data”. The graph below provides a visual:
ECIA also reports on a visible positive trend when it comes to the overall market status and it’s outlook, with over 70% participants projecting positive sales growth in Q1 2026.
The most recent SupplyFrame Commodity IQ is somehow contradictory with ECIA, referring to a so-called tariff ripple effect - boosting high demand in the mid-year of 2025 associated by increased lead times and depleting stocks, and followed by a decrease in the latter part of the year paired with normalized lead times and availability. It is worth to mention, that the SupplyFrame data exclude AI-related chips.
When analysing and discussing with the distribution network, we observe the following:
Depleted material inventories
In the post-pandemic boom, both manufacturers and distribution had significant inventory of final (or semi) products used in the industrial applications, allowing the delivery time even as low as circa 6-8 weeks for a significant chunk of the components. Once this inventory has been sold, what has been confirmed by us through numerous talks with various European distributors, the lead times naturally returned to the levels of an average of 18-22 weeks, reflecting the actual times naturally needed for production process of electronic components. It is important to associate this time period ONLY with components lead time. This means that when planning, you shall also take into account the production and processing time at Assel, as well as reasonable safety time.
Growing Demand
Global distributors in Europe have been observing positive Book-to-Bill ratios (above 1) in the recent months, which has been a shift since around 2-3 years, where the Book-to-Bill has been under 1. As based on the forementioned GDP graph from IMF, it is visible that Asia and US are the driving forces of demand, however the information form ECIA and the signals of rebound in Europe suggest a stronger momentum. Associated with depleting inventory, this brings a higher need of manufacturing resources for chips.
Manufacturing resources allocated for AI chips
Majority of chip manufacturers have limited or even no manufacturing capabilities. Many of them use third-party foundries, a major one known as TSMC. TSMC following a significant growth is currently allocating majority of their resources for Nvidia, while apparently Samsung and Micron are allocating around 95% of their capabilities for HBM memories used in data centers. The AI demand is very significant, with Nvidia alone claiming in November 2025 to have 500$ billion in open orders for 2026, above market expectations. This means that foundries such as TSMC most probably will not be capable to accommodate additional demand for industrial chips, until new capacity will be available. This may cause constraints if the demand grows significantly.
Nexperia: consequences on alternative manufacturers
The tensions caused market panic and instant allocation, once the Chinese halted all worldwide deliveries of Nexperia components manufactured in China. As the conflict eased, Nexperia is in the process of allocating their Chinese production in other factories, outside of the country. This process will take some time to settle. Due to the sudden panic, market players shifted to alternatives and the huge order inflows have caused significant increases of lead times for alternative manufacturers such as ONsemi or Infineon. We currently observe even 40 week lead time on ONsemi components.
The above explains the foundations of the changing environment on the component markets for industrial application, and their impact on lead times. Please note, that the market is rather stable, but to the due to the above circumstances, and especially depleting inventories on the open market, many shall adjust that the lead times will be naturally longer, and in line with the typical production process for chips.
Pricing
What is however consistent between ECIA and Supplyframe Commodity IQ Index is the expectation of price increase expectations in 2026, especially in the semiconductor/passive categories. These exclude the AI GPU’s or HBM’s segment, that is driving the chip market in general. The trend is also in line with our observations.
Expections of increases
As is typical at the start of the calendar year, we anticipate new manufacturer price lists throughout the first quarter. We are already seeing initial signals, and the volume of such updates is significantly higher than during the same period last year, with price hikes reaching as much as 30%. The primary drivers behind these increases are surging demand, depleted inventories, a substantial rise in industrial metal prices, and supply volatility in rare earth minerals—largely fueled by geopolitical tensions. We expect further price announcements to continue throughout Q1.
Industrial Metals (Commodities)
- The price of silver have risen 100% since May, and is at its all-time highs at over 80 USD.
- Copper is currently at nearly 13,000 USD per tonne, an increase of 30% in the last 6 months
- Gold is at nearly 4,500 USD, close to record high - an increase of 30% in the latter 6 months
- Tin is prices at 44,375 USD, also up 30% in the previous half year.
Based on our beliefs, the trend of rising industrial metals prices is likely to continue within the first part of the year. These major industrial metals, together with the rare earth metals, have a direct impact on material prices.
PCB’s
The PCB manufacturers have already started communicating price increases in Q3 of 2025, but we expect this trend to continue and foresee further increases in 2026.
This is predominantly driven by the industrial metals prices, such as gold, copper and silver, as well as high demand for PCB’s driven by Server/Data Centre market segment associated with AI. We have clear communication that the PCB costs have increased, and factories are no longer absorbing.
As per the information from one of the key global PCB distributor the PCB market is changing dramatically, and many factories are now operating at nearly full capacity. This, together with the growing demand for higher-grade materials, will cause increasing lead times for PCB’s.
Freight
As based on the Freightos Balic Index (FBX), the global air and container pricing trends remain more less stable since our last Supply Chain Alert. The oil price remains at its recent lows, which naturally has a positive impact on freight costs. It’s probable that oil prices might be shifting in the future, but in the short term we do not estimate deviations here.
General outlook for Q1 2026
As mentioned above, we are observing a distinct negative trend regarding lead times, which are extending for repeat orders. This pattern was already evident in Q3 2025 and through the end of last year. Buffer stocks on the open market have diminished significantly, leading to a clear necessity to adjust current procurement horizons.
Undeniably, the most critical threat remains the risk of escalating geopolitical tensions. This presents a heightened probability of the 'black swan' event mentioned earlier, potentially triggering hard product allocation. In the coming months, a rapid response to shifting market conditions will be essential—particularly concerning component availability, price pressures driven by rising raw material costs, and potential tariff adjustments.
*The GEP Global Supply Chain Volatility Index, an indicator that focuses on the level of activity across the global supply chains, suggests an increase of activity across the global supply chains. The data is collected based on a monthly survey of 27,000 businesses and tracks shortages, transportation costs, inventories, backlogs and demand.
Sources:
https://fred.stlouisfed.org/series/WUIGLOBALWEIGHTAVG
https://www.ecianow.org/ecst-monthly-survey-summary-public
https://terminal.freightos.com/freightos-baltic-index-global-container-pricing-index/
https://terminal.freightos.com/freightos-baltic-index-global-container-pricing-index/
