July 15, 2009

IC shortages and lawsuits - oh my!

Converge Integrated Circuits and Semiconductors Update.

As we head into the middle of summer, we have started to track significant increases in the amount of shortage requirements. As reported in last month’s Market Insights, lead times have begun to stretch for many different manufacturers due to limited inventories and reduced capacity at the manufacturing fabs. TI, Altera, Freescale and Xilinx are some of the manufacturers that have been affected. It is rumored that Xilinx is having some major delivery issues on its Virtex-5 due to lower yields at UMC. This has caused some major shortages of certain Virtex-5 chips that are in high demand. Ultimately, this supply tightness might not correct itself until September.

Another potential issue that could affect more than just the IC market is the Tessera ITC patent ruling. This ruling will affect the importation of certain BGA packages from particular suppliers: Freescale, AMD, ST Micro, Motorola and Spansion. Supply and pricing in the United States of these particular chips could be affected, and companies building with chips in the US need to make sure they have taken the necessary steps to ensure adequate supply and firm pricing on these devices. It will be interesting to see how this unfolds going forward and how much of an impact this will have on manufacturers.

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