October 29, 2009

Converge expands Reverse Supply Chain Services

The market may have stabilized, but demand by manufacturers to streamline their reverse logistics operations is skyrocketing. To meet this challenge, Converge recently expanded our global processing center and hired additional supply chain professionals in all phases of the business. This expansion has increased our overall capabilities to meet growing demand by major technology manufacturers to control costs and boost the efficiency of their service and repair operations.

Our new laboratory in Peabody, MA is ultra-modern, combining the security and specialization required by our customers with thorough electronic components service, repair, storage and shipment services around the world. The lab is complete with testing equipment and protocols identical to the testing schemes of the leading ODMs.

Management of reverse logistics can be a significant cost for large electronics companies. Reverse supply chain partners provide enormous value handling unsold and returned products by establishing just-in-time electronic parts procurement services which streamline service inventories and manage product returns more efficiently.

The link to vendor-managed inventory (VMI) provides more information about these services, and details about the new expansion can be found here.

If you have any comments or questions, please contact us.

October 15, 2009

Customs, Trade and Commerce first-ever meeting on counterfeiting of semiconductor products

Converge Freight and Compliance Alerts.

On Sept. 22, officials from U.S. Customs and Border Protection, the Office of the U.S. Trade Representative, and the Department of Commerce concluded the first-ever meeting with customs authorities from all six major semiconductor-producing economies to discuss the problems posed by trade in counterfeit semiconductor products. The meeting in Jeju, South Korea, preceded the annual Governments/Authorities Meeting on Semiconductors (GAMS), which gathers industry representatives and trade ministry officials from China, Taiwan, the European Union, Japan, Korea and the United States to address topics of importance for the global semiconductor industry in areas such as trade, the environment, intellectual property and regulatory requirements.

According to a joint statement issued after the Sept. 22 meeting, participating officials:

  • Reaffirmed their commitment to protect and enforce intellectual property rights
  • Shared their experiences and best practices in combating counterfeit semiconductors, from both import and export customs-control perspectives
  • Presented options for enforcement actions among GAMS members as well as increased cooperation between members and industry
  • Underlined the importance of having access to information on products and processes from the semiconductor industry to facilitate the identification of suspected counterfeit products
  • Agreed to undertake enforcement measures, as appropriate, against semiconductor counterfeiting
  • Agreed to keep other members informed and to report back on their activities at the 2011 GAMS

The joint statement notes that the worldwide semiconductor industry represents a market valued at approximately $250 billion in 2008. Counterfeiting of semiconductors poses an increasing threat, not only in economic terms for the companies whose products are counterfeited but also to the operation of critical technologies. Semiconductors are increasingly a core technology used in products ranging from mobile phones and car-braking systems to medical devices and satellites.

While these efforts are essential to the livelihood of the semiconductor business they have the potential to add lead time to the delivery of parts crossing international borders. Importers are likely to face increased cargo inspections and requests for documentation.

Dedicated professionals at Converge review all import / export documentation for accuracy, prior to submission to customs, in order to minimize the opportunity for the inspection of cargo. This includes validating manufacturer part numbers, accuracy in pricing and verifying classifications. Additionally, we work closely with manufacturers to assure product is properly classified and to have datasheets available upon customs’ request. Participation in programs such as C-TPAT also highlights Converge’s commitment to all areas of compliance with U.S. and international agencies.

Converge predicts price stabilization in 3.5” storage market

Converge Storage Update.

3.5" drives
While higher-capacity 3.5" HDD direct pricing continues to slide, Converge is tracking a growing number of part number–specific shortages, with spot market pricing rising accordingly. These opposing trends lead us to believe that there will be stabilization in contract pricing in the near term while manufacturers increase production to meet demand. Most reports suggest that this will be the case for the remainder of 2009. This is specific to the 500GB through 1TB SATA HDDs. Meanwhile, we are seeing a slight uptick in open-market pricing in the 80GB thru 250GB IDE and SATA interface drives, with the 400GB capacity unchanged month over month.

2.5" drives
There is little change to report in the 2.5" storage market since last month. We still are experiencing strong production demand, as is typical for the fall manufacturing cycle year over year. Most of the spot market activity is centered on cost-savings opportunities for volume purchases in the 160GB to 500GB SATA 5400, RPM HDDs. The more sought-after brands appear to be Western Digital and Fujitsu. Meanwhile, service activity is centered on the Toshiba and Fujitsu brands. This appears to be reflective of changes in market share reported amongst the major HDD manufacturers for this market segment.

IC shortages and extended lead times continue

Converge Semiconductors and Integrated Circuits Update.

The integrated circuit market has remained fairly consistent over the past month. Spot shortages and extended lead times are continuing for most of the manufacturers that experienced problems in September.

Converge is currently tracking parts that might experience shortages and delays in the following areas:

  • There has been some slight movement in lead times on TI DSPs, TPS series of Converters and SN74 Logic series out to 20–21 weeks.
  • Capacitor shortages are continuing with Murata Ceramic High CV caps and AVX tantalum caps leading the charge.
  • Broadcom has begun to deliver on some of its BCM5 series Ethernet Controller’s, but others still are causing delivery issues for the company’s customers.
  • Anticipated shortages on Dialight LEDs have yet to materialize, but we have seen increasing tightness on Pulse "H" series of Magnetic Transformer Modules and Microsemi is still having shortages on both military and non-military diodes.
  • ST Micro also has started to see some extended lead times, but there are no new concerns for On Semi, Maxim, National and Fairchild.

CPU market speeds along with no clear leader

Converge CPU Update.

In this month’s Market Insights, we examine briefly several of the current trends and continue the commentary on the Intel Calpella as its launch approaches.

A busy market, with many different contributors.
The CPU market has picked up speed again, with several sharp shortages and pools of excess inventory, and without any one particular family of processors dominating the market. The market is very fragmented, but the overall picture is of healthy push and pulls on demand.

Old favorites have a last hurrah.
End-of-life cost savings or shortages are a common occurrence in the spot market. As a CPU passes out of mainstream production it can accumulate in excess or dive into constraint. It is rare that a family of CPUs that has been end-of-life for a number of years reappears into the supply chain in volume. During September, the Intel Core Duo Napa, and Santa Rosa E4400, E7200, T7800, T9600, T2390 and T8100 models provided some of the best value in the spot market. The actual current end-of-life models, such as the T3200, T6400 and E7400, quietly sold at stable price points, which suggested that they still have pockets of demand in the market.

This is indicative of the delays in the launch of the Calpella family. Some OEMs are pushing on with October launches of the i7-920, i7-950, i7-975, i7-720qm, i7-820qm and i7-920xm models. An uncertain market keeps the current Intel Montevina family of CPUs in steady demand.

AMD mobiles’ price variances.
The run on AMD’s older Turion TL series of CPUs largely has come to an end, but the newer TK and QL models have replaced them with excellent opportunities for cost savings. The key issue is that volume and regional differences in pricing are quite sharp, driving price variations in the market. Some of the desktop Phenom, X4, 9850 and 9750 parts also carry similar spot market savings.

Surprise twist: Converge reports DDR2 demand slaughters DDR3

Converge Memory Update.

In a strange twist, the spot market is experiencing a great deal of demand for DDR2 modules when most were anticipating an uptick in demand for DDR3. Spot market pricing has soared over the past four weeks for 1GB and 2GB PC800 material. The 1GB PC800 desktop module has gone from $14 in mid-September to $23 by the close of the first full week of October. Demand remains high and spot market activity has been strong, especially for the 1GB desktop and notebook modules. Although demand for 2GB PC800s does not appear to be as strong, the spot market still has managed to spike from $30 three weeks ago to an average of $43 per module by the first week of October. Converge believes the surge for DDR2 will continue for at least the rest of October and maybe even into the first half of November. We could blame “Golden Week” for the surge in price, but the bottom line is that most material comes from everywhere but mainland China. The supply channels in Asia were open but the amount of product simply was not there.

The DDR3 market still is limited in supply, but demand has not been very strong the past few weeks. Pricing has stabilized after several weeks of increases throughout the month of September. If there is any uptick in demand for DDR3, we anticipate it will occur in the next two weeks.