A Lasting Impression
Component lead times are among the best indicators of the balance between supply and demand and present an undeniable picture of how those trends develop. As an adjunct to our note on component pricing from last week, we point to the data on automotive and non-automotive lead times presented by TechInsights which shows how automotive component lead times, that were so long during the COVID epidemic as to halt automobile production, reached ~15 weeks last year and have continued to slowly decline during 2Q to 12 weeks, after a small rise (12.9 weeks) in 1Q. Non-automotive component lead times rose a bit in 2Q, from 12.7 weeks in 1Q to 13.2 weeks but remain above the 12 week level. In 2Q every individual automotive component group saw declining lead times, with RF Semiconductors and desecrates showing the least declines (2% to 3%) and power MOSFETS and clock timing semis showing the greatest, between 12% and 13%.
New vehicle sales are the primary driver for automotive semiconductors, however this is a global market, meaning a pickup or decline in US new car sales is not the only driver of the automotive semiconductor market as sales in other markets, such as China (#1 position in units), Japan, India, and Germany can offset trends in the US market. However, the automotive component debacle during the COVID crisis has caused component buyers to change their philosophy from JIT (Just-in-time) during the pre-COVID era to JIC (Just-in-case), a more conservative philosophy that leads to higher inventory levels to ensure component availability regardless of circumstances. These higher inventory levels have led to the shorter lead times seen in the last 18 months and continues to keep lead times from expanding drastically during short-term demand cycles.
New vehicle sales are the primary driver for automotive semiconductors, however this is a global market, meaning a pickup or decline in US new car sales is not the only driver of the automotive semiconductor market as sales in other markets, such as China (#1 position in units), Japan, India, and Germany can offset trends in the US market. However, the automotive component debacle during the COVID crisis has caused component buyers to change their philosophy from JIT (Just-in-time) during the pre-COVID era to JIC (Just-in-case), a more conservative philosophy that leads to higher inventory levels to ensure component availability regardless of circumstances. These higher inventory levels have led to the shorter lead times seen in the last 18 months and continues to keep lead times from expanding drastically during short-term demand cycles.
Figure 1 - New Vehicle Sales - US - 2024 -2025 YTD - Source: FRED
All in, automotive components are a special class of electronic devices that have unique applications in vehicles, especially hybrid or all-electric vehicles. Components like SiC MOSFETs, DC-to-DC converters, or MCUs are among the highest value components outside of the battery pack and motor, and might have longer lead times (typically closer to 20 weeks or more) than more generic automotive components, but the general tone of lead times for automotive components has changed as buyers and supply chain managers still have a strong impression of the COVID years to keep them focused on JIC, and while automotive component lead times still react to global and local automotive sales trends, the overall lower lead times reflects that lasting impression.
Figure 2 - Lead Times for Automotive vs. Non-Automotive Semiconductor Components - Source: TechInsights
Figure 3 - Lead times for Automotive Semiconductor Components - Change M/M - 1Q/2Q 2025 - Source: TechInsights
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