Converge Freight and Compliance Alerts.
The Hong Kong Association of Freight Forwarding and Logistics is reporting at least 4,000 tons of cargo backlogs heading to the United States and Europe from Hong Kong (as of the first week of November). Affected airlines believe that this backlog will increase and sustain through mid- to late-December. Some carriers report at least two weeks of backlogs. These backlogs are starting to impact regional airports, particularly in China.
Converge is keeping in close contact with its providers to stay on top of this situation.
As in all markets when demand exceeds supply, rates are being impacted. Add in the push of consumer goods to the United States for Christmas, this perfect storm has caused spot market pricing to double (currently up to $4.50/kg) since August.
To manage through these capacity constraints, the Converge freight and logistics teams work with multiple forwarders and these constant communications allow Converge to capitalize on excess spot availability. Leveraging our mix of vendors allows Converge to take advantage of the best transit time versus cost by obtaining multiple quotations. Currently, Converge is reaching out to its network and reviewing options for advanced bookings through calendar year-end.
November 11, 2009
Converge Freight and Compliance Alerts.
Posted by Converge at 3:53 PM
Converge LCD Update.
Strong demand from China for TV panels led the recovery in the LCD business in early 2009. As production capacities expanded, however, most panel makers remained cautious about the market outlook in 2010. One reason is fear of surplus, particularly when sales numbers fell below expectations during China's Golden Week holidays in early October. Sony's aggressive pricing strategy and its recent collaboration with Foxconn have also created concerns among panel makers about diminishing profits for TV panels. As a result, TV panels will likely continue a downtrend in pricing in the near future.
Since LEDs found their way into many LCD panels and replaced traditional cold cathode fluorescent lamps (CCFLs) as the light source, there has been an ongoing shortage of models with CCFLs. The trend has intensified, particularly on 14.1", 15.0", 15.4" and some 17.0" panels. Many of these models were discontinued in the past six to 12 months. With just a quick look at the recent demand from the service industry, it is apparent that 14.1" to 15.4" panels are in the highest demand in today's market. It is estimated that this trend will continue well into 2010. The market prices on these highly allocated sizes are expected to continue to rise due to this shortage.
The market for desktop monitor panels has been rather quiet, compared with netbooks and televisions. Pricing remains stable as neither demand nor supply has fluctuated significantly. The introduction of Windows 7, with its newly incorporated touch screen capability, is speculated to ignite a new wave of demand for desktop panels. Currently, the market impact has been modest and will likely continue to be so until more users and software makers begin to adopt Microsoft’s new operating system.
The industrial LCD market continues its calm and steady pace. There may be some short-term instability in the supply chain once the rumored merger between Canon and Hitachi takes place, but the impact is expected to be minimal as each company has a rather modest footprint in the panel industry.
Posted by Converge at 3:39 PM
Converge Storage Update.
We are seeing significant volume requests for 3.5" SATA HDDs in the 320GB through 1TB range. This increase is indicative of widespread shortages across all manufacturers. Box builders are turning to the open market with the largest volume demands seen in CY09. Meanwhile, the requests are less part number specific and more specifications driven in an attempt to secure the volumes needed to maintain production levels. As anticipated in October’s Market Insights, the result is a relative stabilization of contract pricing with an uptick in spot market prices. Again, this trend is expected to continue through Q409 and likely into Q110.
While demand remains steady in the 2.5" market, we are not seeing the same shortage issues as in the 3.5" market. Builders are able to secure the supply needed to maintain production and are turning to the open market for cost savings opportunities and service support for EOL drives. However, we are not seeing the available inventory to support the price point variance requests, suggesting a leveling in the market. As we approach the end of what is traditionally the most robust manufacturing period of the year, it is unclear which way the market will shift. As previously reported, most of the activity is centered on the 160GB–500GB SATA 5400 RPM HDDs.
Posted by Converge at 3:34 PM
Converge Semiconductors and Integrated Circuits Update.
The market is settling into a consistent pattern of spot shortages and extended lead times, being driven by the following:
- Texas Instruments (TI) continues to lead the way among companies facing shortage problems with its DSPs, TPS series of converters and SN74 logic series; once again being joined by their OPA series of OpAmps. After quieting down for several months, the OpAmps look to be returning to a problem status of significance.
- There is no change in the capacitor shortages on Murata ceramic high-CV caps and AVX tantalum caps.
- Freescale processors and Altera PLDs continue to be short, with the Altera products heating up considerably over the past several days and Broadcom's delivery on some of its BCM5 series Ethernet controllers turning out to be less significant than expected.
- NXP logic, controllers and LCD drivers have also become tighter over the past several weeks, as have some Tyco high-density connectors.
- Voltage regulators have also started to show tightness recently, with Infineon and Fairchild leading the way.
Posted by Converge at 3:27 PM
Converge CPU Update.
As discussed in previous editions of Market Insights, the CPU demand mix for production builds has shifted away from desktops to notebooks and lesser-priced netbooks, which have become the secondary computer of choice. This, combined with the overall mix of reliable and inexpensive technology that has reduced the average cost per chip, means that opportunities for cost savings are abundant for CPU buyers.
In the desktop market, we have identified some encouraging trends for price savings in each of the principal price bands. Currently, the Celeron D 430, E2220, E5300, E7400, E8400 and Q9400 are all available at a cost savings. This represents parts that trade in the $30, $50, $60, $100, $160 and $180 price brackets, respectively, with potential cost savings up to 12%. This is usually caused by oversupply of a particular or similar model.
The picture is somewhat different in the mobile market, where T3000, T4xxx, T6xxx and P7xxx models are in healthy demand when prices fall below their unofficial direct cost, but more often than not we are seeing uneven shortage demands and a sell price of 1% to 2% on either side of direct pricing.
The netbook market and the Intel Atom family are driving unit volume growth in the CPU spot market. After an initial sluggish beginning for the Atom in the spot market, sales have now soared, with primary demand driven by the motherboard and chipset bundle. Demand for the low value/low power Atom chip is the greatest in Asia, while U.K. and U.S. manufacturers tend to prefer their Atom-equipped computers be prebuilt before shipping into their particular markets.
Converge is also continuing to observe steady demand in the server, embedded, industrial and repair markets.
Posted by Converge at 3:24 PM
Converge Memory Update.
Pricing continues to increase at a rapid pace for both DDR2 and DDR3 memory modules. Earlier in the year market expectations were for another down year for the memory market, and yet at the close of business for October, the DDR2 and DDR3 markets had experienced eight straight months of rising prices. Clearly, computer builders did not see this coming or they would have forecasted for more supply in the second half of 2009. Most builders are getting caught short, and savvy buyers are finding that the spot market has been instrumental in assisting with supply shortages. The sweet spots are still 1GB and 2GB PC800 for desktops and notebooks, and 2GB DDR3 PC1066 and PC1333 for desktops.
While it appeared that DDR3 had stabilized for a few weeks in October, activity has once again picked up as we close out the first week of November. DRAM manufacturers have their hands full as they decide which technology to produce more of so they can take advantage of these high resale prices. Converge believes November will continue to bring shortages for modules as well as for chips. While all the talk is about module shortages, the chip market is also experiencing severe shortages. Micron parts in particular have been on a lot of contract manufacturers' radar screens for shortages, with lead times running 10+ weeks.
Posted by Converge at 3:22 PM