We continue to see a tight supply for multilayer ceramic capacitor (MLCC) due to the rising demand in smart phone, automotive and Internet-of-Thing (IOT) applications. This supply shortage situation may persist until Q2 of 2018. For high-capacity MLCC, some manufacturers reported a lead time stretch of up to 48 weeks. We also observed a 10-30% price hike for major MLCC brands across the board.
Yageo, one of the major suppliers in the MLCC space, sent out a recent notice to their customers that detailed the price increase and lead time stretch. Prices increased 15-30% and lead time allocation was increased from 1 month to 6 months. These increases apply to low-capacitance capacitors and medium- and high-voltage, mobile-usage capacitors. From mid-September onwards, many Yageo distributors stopped accepting orders from customers due to the constrained allocation. The situation has worsened as multiple distributors reported that any stock coming available had to go through a bidding process, which may continue to be used for the foreseeable future. We’re seeing a similar situation with Samsung MLCC, where the lead times are not stable, especially for 0603/X7R/0.1UF, 0402/X7R/0.1UF and 0402/X5R/1UF series which have seen lead times stretch as long as 24 weeks.
We are also seeing tight supply constraints with standard thick-film chip resistors. Vishay is experiencing tight production capacity and a strong increase in demand over the last few quarters. As a result Vishay marked up pricing on their most wanted R-Chip series. The increase in demand for Vishay is reported to be a direct result of its main competitor, Rohm, reportedly closing down their entire automotive product line causing a rush to Vishay which in turn caused a heavy strain on Vishay lines. Vishay CRCW series has been overwhelmed with requirements and this has filtered down into the SMM/MMA series. We’ve also seen a recent trend where customers are choosing to use automotive grade parts due to these components being more readily available.
Aside from passive components, we observed tight supply allocation on memory chips as well. In particular, the SGRAM Double Data Rate Type 5 (GDDR5) Video Ram (VRAM) is experiencing tight allocations and will continue to be constrained through Q1 of 2018, driven primarily by the demand from the gaming PC segment. In addition, distributors we spoked to mentioned that the pricing has increased by 30% across the board, and will based on a landed cost, regardless of the contract pricing previously submitted.
The desktop processor market has been hot and isn’t showing any signs of slowing down. Across the board, Skylakes have seen challenges, from Celerons up through Core i7s, with extra attention being paid to two Core i5s and a smattering of “T” models. We’ve heard more than a few explanations as to why this segment has been so turbulent for the past several months, but it sounds like changes within the OEM with respect to how end-users and distributors can gauge the supply picture at a given time deserve a big share of the blame. Allocations have become more difficult to predict and often times are handed out on a first-come, first served basis, causing considerable frustration at OEMs and forcing distributors to shift how they manage their backlogs. The strength of the gaming market hasn’t helped matters as we’ve seen a number of customers coming to us for upside support. We did hear that more fabs are being reallocated to Skylake production to help bridge some of the gaps we’ve been seeing so perhaps the months ahead will bring some relief on that family. If and when Skylake recovers, we’re expecting the pain to shift to the Coffee Lakes. Intel pushed forward the launch of this line and supply is expected to be poor for all of Q4. Coffee Lakes are trading at 10-30% above their Kaby Lake predecessors and despite these premiums, product is moving, especially on the i7 models which have seen transactions in the $400 range. Many end-users are already looking to higher-end Kaby Lakes as an option to deal with this burgeoning issue. Mainstream Skylake Ultrabook models continue to face supply constraints. The i3-6100U, i5-6200U and i7-6500U have been the most affected, and while availabilities can be had, lead times are longer and very unstable.
The Broadwell to Skylake Xeon transition has picked up steam in recent weeks with more and more customers reporting an increase in order flow on the newer models. We’re continuing to see plenty of signs that the transition may still be slower than going from Haswell to Broadwell, namely owing to the price premiums on Skylakes and the fact that the motherboards for Skylakes are not backwards compatible. Broadwell processors are getting more scarce and costlier by the week, with some models trading at 8-10% higher than low points reached in the spring as rebated pricing and special deals have all but vanished from the scene.
Overall demand for SSDs was extremely high over the past month while the market has slowly started moving to newer and more efficient technologies. Samsung has already started mass production of their new PM871b series, a 64-layer (3D) V-NAND, which will be even more efficient and offered in even higher capacities. Distributors are speculating that as soon as Samsung is able to start shipping this new technology and move away from the current PM863a (48 layers on V-NAND) and SM863a (32 layers) series, there will be a massive shortage on both of these series. Some top-tier OEMs have already expressed major concerns and are anticipating this transition to cause majors issues for their Q1 forecasts. Expect Samsung to be a little bit less flexible on pricing in Q4 compared to Q3, while only getting worse the closer we get to this NAND transition.
Intel took a different approach; instead of developing their own 3D NAND, Intel is focusing on improving communication between the storage and CPU, which has always been a bottleneck. With the release of Intel Optane technology, Intel uses a combination of 3D X-Point memory media, Intel memory, storage controllers, and Intel software that will significantly speed up the reading and writing speeds. Intel’s NVME SSDs continued to be in high demand over the past month. Both the P3500 and P3600 series are now both EOL with the majority of users now searching for P3700s. We’ve seen multiple requirements from OEMs and end-users that are having trouble getting allocation from distribution while stock keeps becoming more constrained.
As Q3 came to a close, the LCD market remained tight with limited amounts of stock available in the open market. Over the past month we’ve seen multiple requirements on mostly 14.0” and 15.6” notebook panels, along with some customers still seeking help on 17.3” desktop panels. As reported at the end of Q2, supply remained tight over the past few months with pricing increasing just slightly. Top panel makers AUO and Innolux announced this month that they are expected to generate profits for all large-size panel shipments for all of 2017, as sales increased by almost 6% on 200 million units. Even though large-size panel shipments were down last quarter for both AUO and Innolux, they were able to increase all TV panel sales drastically over the past quarter.
The memory market was impacted the first week of the month with Golden Week shutting down most of Asia. Both 16GB and 32GB RDIMMS remained in high demand with an 8-10% price increase at the start of the new quarter. Distributors are expecting direct pricing to surpass the $300 threshold by the beginning of Q1 for all 32GB 2400-speed RDIMMs. Both 16GB and 32GB 2666-speed modules have grown in demand over the past month with demand expecting to only increase well into 2018. With Toshiba recently suspending NAND flash production at their Japan facilities for a few weeks due to ransomware attacks, global supply should tighten causing pricing to only increase further on all memory modules. Recent large-quantity transactions in the open market for Hynix 8G UDIMMs have caused prices to increase 10-15%. Overall, distributors are reporting a 5% increase on all 2400 SODIMMs and UDIMMs. Some distributors are less eager to move stock, speculating that pricing on both SODIMMs and UDIMMs will continue to increase over the rest of the quarter.