February 21, 2008

Don't be fooled by the sudden rise in spot market pricing for DRAM

Don’t be fooled by the sudden rise in spot market pricing for DRAM memory over the last four weeks. Although the market has spiked roughly 20%–25% on the staple 64x8 PC667 chips, there have been no signs of any module activity in the spot market. The 64x8 PC667 chips rose from $0.85 to $1.10 over the past month, but they have since settled at roughly a $1.00 price point. With the rise in 64x8 PC667 pricing, module pricing also rose — not due to demand, but due to the cost of goods to assemble. In fact, there is still plenty of 1 GIG PC667 module inventory available in the channels. The 1 GIG modules rose from $17 to $20–$21 during the time span already mentioned but also retreated to an $18.50 price point. Various industry analysts believe the rise in price was due to a slight reduction in production from the DRAM manufacturers and spot market buys needed for builds before the Chinese New Year. As the holiday approached, pricing quickly dropped by about 10%.

None of this activity should be considered a rebound, as the market has not been able to sustain the increase in price. Converge still believes we are several months away from a true, sustainable rebound in the DRAM market. It is still too early to forecast an exact timetable as to when the market will gain some meaningful momentum, but we are hoping that by the end of March we will see some signs of life.

February 18, 2008

Chinese New Year quiets IC market

The anticipated slowdown leading up to Chinese New Year arrived a little sooner than expected this year. There will be little movement in the industry until Asia returns to full force by the middle of February. We are currently tracking parts that might experience shortages and delays in the following areas:

- TI op amps, Freescale processors, and Microsemi military diodes continue to experience long lead times.
- Some high-CV capacitors are still seeing spot shortages, as are some of the "run of the mill" ceramic caps.
- Lead times on Kemet tantalum capacitors are extending, and there is an increase in demand for AVX tantalum caps.
- Pressure on Cypress microcontrollers and clock drivers seems to have abated somewhat.
- We are tracking some spot shortages on Fairchild and Maxim devices.
- We see continued shortages of Broadcom parts, especially the Serverworks chips.
- There are continuing inquiries for Qualcomm mobile phone chip sets from Asian mobile phone makers, confirming a slight upturn in mobile phone demand.