December 26, 2007

General IC Update: Some minor shortages and delays are being experienced

The following parts may be experiencing shortages and delays in the following areas:

  • There continues to be some activity on Tantalum and High CV capacitors, as spot shortages – which are customer or demand driven – remain across some part numbers. However, we do not consider these shortages to be broad-based.

  • We are still experiencing requests for Freescale processors in both the leaded and the lead-free versions – with most of the activity on the higher-end host processors. We are also still seeing steady demand on older technology 8- and 16-bit microcontrollers. These parts have been in use for years, and Freescale has recently removed some debits, which has increased the pricing. Even with the higher pricing, it is anticipated that most customers still will not migrate to the newer technologies.

  • Lead times for Microsemi military diodes appear to be worsening. Product is very difficult to procure, and many customers are experiencing shortages.

  • Times remain long and customers are still facing shortages on TI Op Amps.

Memory Update: No sign of change in the DRAM market

As anticipated, there is no sign of change in the DRAM spot market, with 512M 667s trading in the $8.50–$10 range and 1GIG 667s trading around $17.

As 2007 draws to a close, there appears to be no possibility for any positive market change to occur in the remaining weeks, with the market heading toward a slow period when consumption usually decreases after the holidays. Converge believes the market will remain in oversupply at least through Q1 of 2008 and possibly through Q2. There are no signs of any turnaround in the near future, and generally Q1 of every New Year is considered a slow season. These factors will only add to the oversupply.

December 3, 2007

General IC Update: A look at current shortages and delays

The following parts may be experiencing shortages and delays in the following areas:

  • Ceramic capacitor supply has tightened significantly over the last several weeks. Shortages are primarily with high CV caps across multiple manufacturers.

  • Tantalum capacitors have also experienced a slight increase in demand, primarily as an alternative to ceramics that are in short supply. After the tantalum shortage of 1999–2000, many manufacturers switched to ceramic capacitors. The increase in tantalum capacitor demand may signify a deeper issue within the ceramic capacitor supply chain.

  • Freescale processors in the MC and MPC family are still experiencing spot shortages, with some extended lead times.

  • Microsemi military diodes (JAN, JANT and JANTX) are still short, with lead times on some parts more than 60 weeks.

  • TI/Burr Brown Op Amps are still short, with many Analog Devices crosses also becoming short.

November 26, 2007

Storage Update: Tracking current storage trends

Desktop Drives
The demand for 80 GB through 400 GB HDDs remains strong. This is true for both the IDE and, especially, the SATA interfaces. The 80 GB pricing has increased month over month, with limited quantities available at $43–$45 each. Meanwhile, pricing for 750 GB and TB drives is on the decline.

Notebook Drives
We continue to see regular production requirements for 80 GB to 160 GB 5400 RPM SATA 2.5" HDDs. Customers are seeking cost-savings opportunities, as product appears to be readily available in the market. However, demand for the PATA equivalent of the aforementioned capacities is tapering off. There is still significant activity among the lower-capacity drives in the trailing-edge and wholesale markets. This is especially true of the 40 GB and 60 GB capacities in both the 4200 RPM and 5400 RPM speeds. Mobile HDD in the 10 GB capacities and lower are slow moving, primarily with part number–specific demand in the service space.

Server Drives
There has been little change in the server market since our report last month. The migration from SCSI HDDs to SATA HDDs continues, with the 250 GB through 500 GB capacities remaining the most widely consumed. Activity around SCSI HDDs is most prominent in the service space.

November 20, 2007

Memory Update: A disappointing year for the memory market

As we approach the end of 2007, we reflect back upon a disappointing year for memory and a holiday build season when the market never gained any strength or momentum regardless of the numerous predictions about a possible turnaround.

Looking back, there were high expectations coming into the year, especially after 2006 finished with record highs for memory prices in the contract and spot markets. Once the 2006 holiday season passed, the market went into a pricing free fall. Aside from a brief uptick occurring in the middle of the summer of 2007, which we feel was based more on pure optimism than on true demand, the market has become one of the worst since the early days of fast page mode technology back in the mid 1990s.

Overcapacity by DRAM manufacturers is one major reason for the current state of the market. Many manufacturers were forecasting a big year in 2007 due to the release of Microsoft® Windows Vista® operating system. Various articles published in numerous publications late last year quoted many high-ranking representatives from Samsung, Hynix and other DRAM manufacturers alluding to Vista being a make-or-break platform for DRAM throughout 2007. Fast forward to November and the only mention of Vista is, “There’s always 2008.”

Without support from the corporate sector spending on new systems, the market has remained in a severe oversupply situation throughout the year. We are once again in a situation where pricing is no longer an issue. Pricing has been stable for a few weeks now with 1GIG DDR2 around $20 and 512M DDR2 at $11. Both are at a level that DRAM experts would never have anticipated, not now or at any point during the last 11 months.

As we wrap up the final months of the year, we look to the future and say, “There’s always 2008.”

October 29, 2007

Supply tightness is being experienced in the passive sector

The market for general ICs also remains unchanged since our September Market INsights update, with the exception of some increased supply tightness in the passive sector, where some high CV caps are once again experiencing extended lead times.

The following parts may be experiencing shortages and delays in the following areas:

- Converge is still observing spot shortages in the MPC family of Freescale processors, especially with the MPC 8260, 8270, 7410, 860, and 755 models.

- The availability of the TI/Burr Brown INA, OPA, and DAC family of op-amps remains tight.

- Some Broadcom part numbers remain in short supply, such as BCM5708 and BCM5241. The lead time for Broadcom parts has increased to 12–16 weeks, compared to the 8–10 weeks previously reported.

- Converge has experienced an increase in inquires for Intersil devices over the past week. Lead times have extended to 12 weeks, from 6–8 weeks earlier. Part numbers in demand include ISL6612, ISL6310, ISL6526, and ISL6566.

In Asia, demand has slowed due to China’s Golden Week holidays. The market is currently experiencing supply tightness on passive components such as capacitors; however, buyers are conservative on pricing and are unwilling to pay a premium on the open market.

October 18, 2007

Shortage of 80 GB desktop HDDs continues

Desktop Drives
The shortage of 80 GB desktop HDDs continues. Distribution pricing for 80 GB SATA and IDE HDDs is currently $40–$41, with limited availability. As a result, we are observing a spike in demand for the higher-capacity HDDs, especially 160 GB SATAs, with prices trending higher across the board.

Notebook Drives
Demand at the production level remains in the 80 GB to 160 GB SATA 5400 RPM range. There is no apparent shortage and activity is steady. The lower-capacity drives remain liquid in the 20 GB to 60 GB range. There is little price difference between 20 GB and 30 GB capacities. This is also true for 4200 RPM and 5400 RPM speeds of a same-capacity HDD. Generally, pricing has remained constant month to month.

Server Drives
We continue to see increased demand for 250 GB to 500 GB SATA HDDs for enterprise applications. Therefore, activity in the SCSI market is light. Open-market pricing discrepancies among different brands is growing, with Seagate carrying a premium.

October 5, 2007

CPU Update

Open-market production desktop CPU trading has begun to slow slightly, as heavy demand and short supply of several 900 series and older 800 series CPUs began to taper off. However, mobile processor activity has accelerated.

Currently, general CPU trading tends to be divided into three distinct areas: production desktop, production notebook, and service/repair. Due to the nature of the open market, the balancing act between these three areas is mostly dictated by supply and demand rather than industry management. Oddly enough, as any one category tends to dip, another takes off. Of late, at least 60% of the CPUs we are shipping are to notebook OEMs. Seventy-five percent of our shortage requirements are for notebook builds, and mobile processor buyers are very interested in all cost saving opportunities. As the Santa Rosa platform is marketed heavily by Intel, for example, volumes of the Napa processors, in some cases, are being traded openly at significant savings.

Overall, the increased number of older technology CPUs shipped to repair sites this summer has positioned Converge as a one-stop-shopping house for those needing older or trailing edge AMD and Intel CPUs. For example, classic Pentium processors with 100 MHz core speed were recently sold. If you are in need of obsolete hard-to-find processors or need to sell no-longer-needed processors that may be in your inventory, contact a Converge sales representative.

September 24, 2007

Mobile Processor Activity Accelerates

Open-market production desktop CPU trading has begun to slow slightly, as heavy demand and short supply of several 900 series and older 800 series CPUs began to taper off. However, mobile processor activity has accelerated.

Currently, general CPU trading tends to be divided into three distinct areas: production desktop, production notebook, and service/repair. Due to the nature of the open market, the balancing act between these three areas is mostly dictated by supply and demand rather than industry management. Oddly enough, as any one category tends to dip, another takes off. Of late, at least 60% of the CPUs we are shipping are to notebook OEMs. Seventy-five percent of our shortage requirements are for notebook builds, and mobile processor buyers are very interested in all cost saving opportunities. As the Santa Rosa platform is marketed heavily by Intel, for example, volumes of the Napa processors, in some cases, are being traded openly at significant savings.
Overall, the increased number of older technology CPUs shipped to repair sites this summer has positioned Converge as a one-stop-shopping house for those needing older or trailing edge AMD and Intel CPUs. For example, classic Pentium processors with 100 MHz core speed were recently sold. If you are in need of obsolete hard-to-find processors or need to sell no-longer-needed processors that may be in your inventory, contact a Converge sales representative.

September 18, 2007

DRAM Prices Dip Again

Against industry expectations, the market for DRAM memory is approaching the same lows experienced back in the spring, when most thought market prices had hit bottom. Generally, August is a strong month for memory demand due to production ramp-up for back-to-school and pre-holiday builds, but the market has taken a step back and spot pricing has declined. Current spot market pricing for DRAM has dropped to $17 and $31–$32 for 512MB/667 and 1GB/667, respectively. Contract prices are expected to remain low for the first half of September, and judging by the amount of product available, Converge believes there will be an additional drop in the latter half of September.

Currently, there exists much uncertainty and confusion as to where the DRAM market is headed. Many in the industry were forecasting an uptick for DRAM memory for the second half of 2007, but it has not come to fruition. OEMs claim they have plenty of stock on hand; however, we believe they have more than needed. The spot market is running well below contract and there are no signs of any opportunity buys taking place. We still believe the market will not show any significant signs of an uptick for the remainder of the year, unless a drastic event occurs over the next 2–3 months.

September 4, 2007

Are CPUs going retro?

The CPU market is experiencing a bit of a time warp. While “retro” remains in vogue, so do the 6XX and 9XX series of Intel desktop processors, which continue to be in demand and in short supply. The 631, 641, 651, 661, 915, 925, and especially 935 and 945 processors are all being sold above direct distributor standard pricing. The heaviest demand shifted upward from the 925 earlier this summer to the 935 and 945, which have not been available in production quantities so far this month. Fortunately, while we expect the market on the 3.2 and 3.4G siblings to remain stable or climb, we have product arriving that was committed to months ago at then-current market prices. We expected the 3G 925 to trade far below today’s standard price of $80; however, demand for the part will be enough to maintain a price premium. As manufacturers migrate completely to the E-series, we expect the market on the trailing edge to fall at least to direct pricing. We also expect open market discounts on current technology to be more substantial. For example, we are currently offering the E4300, E6400, and E6600 below published direct pricing.

August 16, 2007

DRAM market showing modest, short term activity

The spot market for DRAM has been rather quiet, with modest activity occurring over the short term. Pricing has remained relatively stable with minimal fluctuation over the past six weeks, after a volatile month in June when prices rose significantly. Although DRAM manufacturers have successfully increased contract prices several times since June, the overall impact on the spot market has been minimal, which leads us to believe supply will remain strong. Through the first week of August, the anticipated back-to-school demand has been rather weak from a spot market perspective, and traders at Converge have not been surprised at the lack of activity in this market. As previously mentioned, the severity of oversupply during the first half of 2007 will require additional time to work its way through the supply chain. Combined with a soft back-to-school demand, we believe the DRAM market will remain unstable.

August 9, 2007

The IC Market Is Beginning to Show Signs of Picking Up

We have seen some signs in the IC market that things are picking up. We are getting days and / or weeks where the activity increases dramatically, with this activity primarily being paced by shortage requirements. The combination of the supply chain being stretched so tight and slight up ticks in demand are creating spot shortages and increasing activity. With so little of the "right" inventory in the market, the spot shortages can be difficult to solve. If the market continues to pick up as we head into the traditional build season, things will certainly get interesting.

Here are some current market trends:

Current IC shortages

  • Shortages for Maxim products continue as lead times are generally very long, stretching to 26 weeks++.
    There is increasing shortage pressure in Power Mosfets. Lead times (23-28 weeks) are stretching and direct supply is under allocation.

Embedded processors

  • Tight supply from Freescale, MCU and processors due to lead times stretching to 13-20 weeks. It may be even longer lead times for certain MPC series and, as a result, we are seeing strong demand. As for DSP products, price and lead times (8-15 weeks) remain stable.

Analog and logic products

  • Price continues to drop 5-10% due to decreasing demand and excess stock in market (including products like Commodity Amplifiers, Comparators, CMOS Single /Dual Gate and HC/HCT series.)

Passives


  • MLCC supply is stable with no shortages at this moment. Pricing pressure exists due to raw material cost increasing.No shortage for Tantalum Capacitors and other passives components. Lead times remain 6-14 weeks and pricing trend unchanged.

August 2, 2007

CPU prices are still at a premium

Premiums continue to be paid by the vast majority of mainstream desktop PC builders on at least a half dozen Intel low cost processors. For the past several weeks, processor number 925 is the most demanded CPU in the independent or open market and there appears to be no end in sight to this trend. Trading at 15% above the $70 standard, product doesn’t remain for sale for long before it is swept up and headed towards assembly lines. We expect the 925 to remain in short supply throughout the upcoming 90 days, along with the 935 and the 3.4 GB in the same stack. The 600-series continues to be in great demand and limited availabilities are being found. The 3 GB 631 and 3.2 GB 641 show the strongest demand from our global customer base at this point and speculative buys on either have been and will continue to pan out for the next quarter at least. On many Intel desktop processors currently, a good strategy is to place blanket purchase orders and at least know you are next in line when and if product is confirmed.

July 23, 2007

The Memory Market is Starting to Rebound

Spot market pricing has rebounded significantly in the last 4 weeks. A lot of the activity and a rise in price had to do with the anti-smuggling rules put in place by China. The spot market pricing for DDR2 went up significantly in the second half of June. 512M/667 modules went from $15 to $20 in less than a week. 1GIG/667 modules went from $32 to $40 in roughly the same amount of time. Both densities have since stabilized at these current levels. Both are also above contract price even after a meaningful increase of roughly 12% from the DRAM manufacturers for the first half of July. All of this being said, there are signs of brokers pulling in parts for the first time in six months from all three regions. Many are banking on another increase in contract for the second half of July and strong seasonal demand. It looks like another increase in contract is for certain based upon the feedback from the box builders, but how big the percentage will be this time remains to be seen.

The NAND flash market could have an impact on the DRAM supply over the next several months. NAND flash continues to be in high demand, especially for 4G and 8G. Spot market pricing has almost doubled over the last two months for both densities. Look for the major DRAM manufacturers to take full advantage of the NAND market while they can. Ultimately this should cause some interruptions into the DDR2 supply channels over the next few months but we don’t think it will lead into any full blown shortages.

June 28, 2007

How long will the DRAM market stay at bottom?

We are finally starting to see some stability in the DRAM market. Although there were a lot of parts on the street for month end deals, pricing remained fairly stable. It appears we have hit bottom. The question now is how long does the market stay at bottom? It doesn’t look like there will be any rebound until late July at the earliest. Usually by then the market starts gaining some momentum as various OEMs begin their fall and winter builds. That said, there are still too many parts in the channel for any significant turnaround in the immediate future.

Industry analysts are split as to when the market will rebound. Many feel the adjustments the DRAM manufacturers are making in response to the oversupply / lack of demand will be enough to stimulate the market by the middle of Q3. Others feel the demand will remain below expectations which means the market will not turn around until early next year. Based upon our channel checks each week, we feel the market will not turn around until early next year. Usually when the market falls as fast and as hard as it did it takes some time for things to recover and regain sizable momentum. Since the second half of 2006 saw record highs for spot market pricing and huge gaps between contract and the open market, OEMs will not be quick to use the spot market unless a pricing or delivery advantage can be obtained. After the pounding the market has taken over the last five months stability is a step in the right direction.

June 21, 2007

What's in a name?

What's in a name? It's an age old question that makes you sit up and think for a second......what is in a name???

We live in a world that loves to categorize and use naming conventions. Everything in its category and a name for each. We all do it and examples are everywhere. If you live in metro Boston or New York, you're either a Red Sox fan or a Yankees fan...no in-between. No middle ground, one or the other. Democrat or Republican....North vs. South.....East Coast vs. West Coast....make your choice.
In a business context, it gets even more definitive. Names like "customer" and "supplier" have been traditionally etched in stone. We also have names like "product provider" or "service provider" and "software vendor" or "hardware vendor". Once again, pretty strict lines and definitions. No co-mingling the offering...one or the other...but not both. You know that old saying: if it looks like a duck and quacks like a duck, well then, it must be a duck. Or is it??

Let's get out of the theoretical for a moment and look at the real world example of how the "name game" is changing in the high tech supply chain. Historically, the high tech distribution space has used broad category names in order to designate segments or "turf" where companies play. Primarily, they fell into two main spaces, commonly referred to and "named" the "back end" and the "front end" of the supply chain.

Traditionally, the back end folks, a/k/a Electronic Component Distributors, linked suppliers such as Philips and Atmel with OEMs, ODMs, and EMS companies and the front end guys, a/k/a Resellers, VARS, and Retailers, connected end user communities with finished goods. Very simple, very clean, and in some respects, these "names" gave order to a supply chain that ordinarily had none. That said, we now live in a world that has electronic component distributors moving into the finished goods space and resellers pushing into service marketplaces. Won't there be chaos if we step outside our "named" areas? Not really. In fact, most of this movement is customer and market driven with the end result being a better, more comprehensive, and more valuable service for customers.

Now let's look at the Independent Distribution category. There seems to be a consistent hole in the way the historical and current supply chain participants are "named", specifically, Independent Distributors are left out. Not the "right" name so no category or value proposition. Believe me, I know the talk track used to explain this omission. To name a few, statements like "they operate outside the lines" or "they have no official product designations" have been used for a long time. In reality, both are untrue and irrelevant at the same time.

The fact is, Independent Distribution has been supporting both "front end" and "back end" customers for as long as there has been a "front and back end". And in the current environment, the more diversified Independents are moving outside their traditional model of helping to source products customers need and sell products they don't, and into really effective reverse supply chain and service supply chain spaces. Once again, customer driven services leading to a complete portfolio offering for the forward and reverse supply chain. All under one roof. What a great idea. Although the overwhelming majority of high tech supply chain participants use an Independent Distributor in their forward or reverse supply chains, it seems that the industry is now just beginning to acknowledge the value others have discovered long ago. Capabilities...plus service.... plus flexibility... equals value, regardless of the name or category.

I guess it all boils down to another age old saying...you can't judge a book by its cover.

June 14, 2007

Quality is an issue in the general IC space

There have been some increases in activity in the board level component space, but it has been sporadic and not limited to any one product type. Most of the activity on shortages continues to be in TI, Siliconix, and Freescale. We have seen an increase in requirements from the military space, especially in diodes.

Quality concerns are becoming more and more of a hot button issue with customers globally. Few independents have the quality control resources and infrastructure to ensure their customers complete quality assurance. Converge has a strong team of procurement specialists and a staff of Electronic Component Engineers that is unparalleled in the industry. This team is dedicated to supplying customers with only 100% quality assured devices. In this volatile market, customers should be wary of bottom-barrel prices as this may be an indicator of suspect quality of the product. The old adage "you get what you pay for" is applicable here and lowest price may not always be the best value if the quality of the product is compromised.

May 29, 2007

Update on the CPU Market

The CPU market is evolving more than ever. The days when desktop processors and Intel ruled the world are slowly taking a different course. To begin with, we are now seeing a much greater volume in mobile requirements and orders than ever before. Even though there are fewer notebook manufacturers than desktop the demand is to the point that AMD has invaded the space Intel once solely owned. AMD mobile requirements and orders have been showering in from both production builds and the service/repair end. That being said, Intel is feeling AMD’s market presence and they too are no longer holding true to their published direct price drops. This is a play right out of AMD’s playbook. More now than ever we are seeing Intel offering new pricing weeks before the official Intel price drop. Many now are getting the June 22nd prices this week, giving Intel an edge over AMD and their customers the best deal for their dollar.

May 21, 2007

The Memory Market

April has come and gone without any hope of a turnaround in the memory market. The only good news is 512M DDR2 UDIMMs only dropped $4-5 over a 30 day period as opposed to the $10-12 drops seen throughout the month of March. Current spot pricing for major 512Ms is in the $19-21 range. Tough to call that good news but we are trying to be optimistic. Unfortunately, 1 GIG DDR2 UDIMMs continued a hefty slide and are currently available in the $36-38 range. That’s a $10-12 drop from the end of March.

We get asked almost every week where is the bottom. And the fact the same question gets asked repeatedly in markets like this means nobody has the answer. It takes a significant spot market buy from a major box builder to indicate we have hit bottom. Until that happens, the free fall will continue. Judging by today’s current spot prices, the amount each density (512M and 1GIG) will drop going forward should be less and less. The DRAM manufacturers are running out of money to give back.

We’ve all been in markets like this before. It’s frustrating and unavoidable but it doesn’t last forever, it just feels that way.

Welcome!

Welcome to Converge Market Insights, the blog designed to give you an up-to-date look into what is happening in the electronics supply chain industry. This blog will offer an insider's look into what is going on around the industry in terms of pricing, inventory, news about the big players in the industry and anything else that may be newsworthy. Read on and enjoy. We look forward to your feedback!