🧠 Food for thought

Implications, context, and why it matters.

Inventory cleanup may be ahead of the outlook

• Inventory days (how long inventory sits before shipping) fell from 266 to 199 over three quarters 1. July orders hit a three-year high, with September high 1. Many buyers schedule deliveries for the March quarter 1.
• Microchip logged its first positive book-to-bill in nearly three years in the March 2025 quarter, and April orders topped any month in the prior quarter 2.
• Lead times (order-to-delivery wait) have begun to rise on some parts due to substrate (package materials) and foundry (contract manufacturing) limits on advanced nodes (newer, smaller-process technologies) 1. Broader markets look steady for general-purpose components 3.
• Management puts inventory write-offs in the “eighth or ninth inning” 1. Incremental gross margin sits at 95% 1.

Short lead times give buyers an edge in a mixed market

• Procurement teams at original equipment manufacturers (OEMs) and contract manufacturers face a split market where general-purpose parts look stable 3. Memory and power passives stay tight, leaving room to rethink sourcing.
• Microchip lead times sit at 4–8 weeks, while Susquehanna Financial Group pegs the global average at 26.2 in February 2025 14. Buyers of microcontrollers and analog chips can push for sharper prices and cleaner delivery terms.
• Customers and distributors trim stock into year-end 1. Electronics Manufacturing Services (EMS) providers can time buys to capture volume discounts.
• Asia–U.S. freight costs for ocean and air nearly doubled since May 2025 3. Local or nearshore sourcing looks more attractive for buyers diversifying away from constrained Asian routes.