Why reactive buying costs more in 2026

Procurement teams spent much of the last two years benefiting from declining component prices and improving availability. However, ever since the explosion of AI, prices across memory, power semiconductors, MCUs, CPUs, and passive components have risen exponentially. Geopolitical challenges impacting raw material supplies and rising foundry costs have further contributed to extreme purchase price variance (PPV).

These shifts have dramatically altered the economics of procurement teams must adhere to. In today’s market, waiting to react carries steep costs, and reducing PPV must start before a purchase order is placed.  

Price increases are no longer isolated

Semiconductor pricing volatility in 2026 isn’t contained in one or two categories. As the market continues to grow at a historic pace, nearly all sectors are feeling the impact.  

Gartner’s April forecast put worldwide semiconductor revenue on pace to top $1.3 trillion this year, a remarkable 64% increase over 2025. Memory continues to carry much of the growth thanks to demand coming from AI buyers, with DRAM pricing on track rising as much as 125% and NAND Flash 243% for the year.  

Over the past several weeks, numerous suppliers have announced price adjustments. How far the pressure has spread has become evident. Some of the more notable moves include:  

• Infineon raised prices on power devices
• Microchip announced August price adjustments  
• STMicroelectronics increased MCU and power pricing  
• Intel raised CPU pricing  
• Samsung is negotiating ~20% DRAM increases  
• Murata issued a price increase in July on MLCCs
• Taiyo Yuden issued a price increase on MLCCs
• Yageo increased prices 15%-20%

Not all these adjustments are the direct result of AI demand for the components whose prices are being raised. However, AI infrastructure buildouts are pulling wafer and packaging capacity, as well as test resources, away from the mature-node lines that supply power ICs, MCUs, and passives. As a result, the entire supply chain is moving in the same direction.  

Upstream, raw material constraints have compounded the problem. More than a dozen rare earth inputs essential to semiconductor production remain under Chinese export licensing controls first introduced in 2025. Since China still refines more than 90% of global rare earth supply, approval timelines and prices remain closely tied to any geopolitical upheaval. Beyond this, rising prices for fuel and non-rare-earth inputs have sent foundry costs skyward across the board, a trend expected to remain in 2027.  

Even for procurement teams with a BOM consisting of no AI-related GPUs or server memory, heightened PPV is a major concern with almost every corner of the market trending upward.

Procurement teams are feeling the pressure

According to Gartner, hyperscaler AI infrastructure spending is climbing more than 50% year-over-year. With this kind of money to be made, suppliers have been incentivized to shift capacity toward their highest-margin products, often at the cost of maintaining support for a broader portfolio. While AI tightens capacity even outside its key markets, end-user demand is simultaneously recovering.  

In procurement budgets, this combination creates both higher unit costs and a heavier reliance on safety stocks to fill the gap. A March Omida survey of channel partners found that price increases had hit more than seven in ten respondents. Shipment delays affected upward of 90% of those surveyed.  

Suppliers are responding to the market’s imbalance by reintroducing non-cancellable, non-returnable (NCNR) orders—a term many buyers haven’t negotiated in years. These orders shift risk onto the buyer in exchange for reliable allocation.  

Lead times have stretched accordingly across many segments, and further, allocation-only buying is also making a comeback. Though allocation orders in memory should be expected given the height of demand, it is also now standard practice for many of today’s top suppliers across power semiconductors, MCUs, and passives.  

Mature-node capacity has proven itself to be a particularly difficult bottleneck to navigate. Foundries have little incentive to expand legacy nodes when leading-edge and advanced packaging capacity commands better margins. So, even as demand for MCUs and analog ICs is climbing, mature-node output has remained flat or even shrank in some cases as manufacturers prioritize profits.  

Reacting after price adjustments makes things worse

Purchase price variance tends to move quickly in the days after a supplier confirms a price adjustment. The market compresses months of repricing into a short window, giving PPV increases a sudden feel that belies the dynamics unfolding beneath the surface over the weeks or months prior. As suppliers announce new pricing, a familiar cycle plays out:  

1. Everyone starts buying: Procurement teams with near-term volume commitments are forced to move immediately to secure remaining inventory at the old price. This dramatically shortens the buying window, often into only a few days, before supply is gone.  ‍
2. Spot prices rise: Open-market pricing reacts almost instantly to the surge in demand. In many cases, it may even overshoot the supplier’s list price increase.  ‍
3. Allocation tightens: As suppliers prioritize accounts with confirmed orders and established relationships, reactive buyers are left to compete for a shrinking pool of available product. This is one of many reasons why building strong partner relationships early can pay dividends in a high PPV market.  ‍
4. Alternatives become the next target: With primary component inventory drying up, buyers shift their attention to alternate parts at volume. As demand for these second-source parts rises, their suppliers respond with their own allocation limits and price adjustments.  

By the time a price increase shows up on a quote, it’s likely the market has already repriced around it. Reactive procurement teams evaluating alternates or negotiating with a secondary distributor at this point are already behind. Worse, with every team in the same position trying to do the same, extreme PPV shifts are practically unavoidable.  

This market-wide scramble rewards whoever is prepared to pivot ahead of the announcement and penalizes everyone who is forced to react to it.  

Build a PPV strategy proactively with market intelligence, not reaction

The alternative to absorbing large PPV swings is preparing for disruption before the scramble starts. This means relying on market intelligence and revisiting approved alternatives before the market forces a rushed purchase. A handful of practices separate teams that avoid PPV shocks from those left blindsided by them.  

1. Forecast market cycles  

Historical pricing and lead-time data reveal patterns well before they manifest on a price sheet. Procurement teams that review these trends before finalizing budgets can build contingency for categories showing early signs of tightening. The difference between reacting to a gap discovered mid-cycle and pivoting before price adjustments happen is massive.  

2. Buy before the announcement  

Pricing changes rarely come without warning. Often, they are preceded by a visible run-up in demand, lead times, or spot pricing on secondary markets. Teams monitoring those indicators can lock in volume ahead of the official increase. Waiting for confirmation tends to force orders at the new price, but moving quickly makes it possible to capture pricing that’s no longer available after the announcement.

3. Treat market intelligence as financial intelligence  

Just as engineering tracks product roadmaps and finance tracks budgets a regular routine, procurement teams should apply the same discipline to part-level trends. By treating market intelligence as a planning tool rather than a newsfeed, teams can develop contingencies to minimize PPV.  

4. Revisit approved alternatives  

When a primary supplier raises prices by 20% or more in a single adjustment, a second-choice part that was marginally more expensive six months ago can quickly become the better financial decision. Reassessing your approved alternatives list against current pricing and forward-looking projections, not the pricing on file from a past qualification cycle, keeps those options available.

Use a partner that helps you stay ahead of reactive buying cycles

Anticipating PPV requires real-time market data and a multi-contingency strategy that most internal procurement teams don’t have the bandwidth to achieve alone. Sourceability gives buyers the visibility needed to track pricing trends and supply shortages before they become formal announcements.  

Additionally, partnering with Sourceability unlocks:  

• A team of industry experts who monitor supplier announcements, allocation shifts, and demand changes
• Global sourcing expertise to expand your purchasing options as primary channels tighten
• Franchise partnerships that unlock access to vetted, high-quality alternatives to reduce your exposure to price spikes  
• Strategic buying support grounded in market intelligence to enable smarter procurement decisions

The biggest opportunity to control PPV happens before you place a purchase order. Sourceability’s market intelligence and sourcing experts can help you take advantage by anticipating supplier price changes before they impact your bottom line.