Fusion Worldwide Greensheet

June 28, 2017

IC

Lead time for passive components has continued to stretch. It was reported that there was an increase in defense and aerospace spending for tantalum capacitors, thus setting off a surge in buying activity. Furthermore, a shift in currency valuation has created an increase in the cost structure of components that have their base operation in the West. Capacitors continue to display tight and rising lead times on a month-to-month basis, particularly on key ceramic capacitors.

The overall lead time for Diodes products has increased by at least 3-5 weeks, with some series extending to at least 20-30 weeks. Part of the reason was due to a huge fire at a Diodes’ factory, which disrupted the supply chain.

The overall Resistor market remains strong, with spikes in demand across the board. Thick film chip resistors are showing a large scale increase in demand which affects all case sizes from 0201 to 1206. ROHM vendors are reporting that case sizes such as 0603, 0805 and 0402 are on tight allocation. This shortage is largely driven by a spike in demand from automotive and computing industries. Vishay resistors with part numbers starting with WSLXXX, WSRXXXX and WSHMXXX have seen lead times stretch to 30-36 weeks.

We heard from On-semi distributors that lead times for automotive parts and discrete semiconductors have lengthened due to the lack of raw materials and an increase in production demand. Within the past two weeks we’ve been quoted lead times of 6, 14 and then 45 weeks for the FMB series.

CPU

In the past month we’ve seen a significant pull back in availabilities of Xeon processors.  Haswell supply in particular has been noticeably tighter and pricing has increased in some cases over 5%.  The ability for the market to support opportunities with these SKu’s will be limited for the foreseeable future and a number of different Haswells have healthy demand for the next 2-3 months so upsides could be challenging.  Availabilities for Broadwell have likewise been tougher to come by and pricing has ticked upwards on more than a few models, which has put a damper on trading activity.  It’s a bit harder to decipher the root cause of this change in Broadwell but the expectation is that July will bring improvements.  The last 12 months have been remarkably stable for this market so some turbulence is to be expected, especially in light of the impending Skylake launch.  We reported in this space last month concern about how the Skylake transition will unfold and we have continued to hear of anxieties about timely deliveries early on, as well as forecasting accuracy during ramp up.

Desktop has been the more active of the PC segments of late.  It had been some time since we had seen anything resembling a true shortage for current generation products but a number of Pentium Kaby Lakes saw drastic cut backs in availability and meteoric price rises.  Core models were unaffected and pricing has remained consistent across i3, i5 and i7s save for some occasional blips upwards and downwards.

The heightened interest in Bitcoin mining stemming from the sky-high valuations has created supply bottlenecks for the desktop GPU that serve as the key component for doing most of the complex calculations during the mining process.  AMD Radeon Series 470, 750 and 580 are priced lower than their Nvidia counterparts, which has created a rush to these offerings that AMD has been unable to support.  Our sources mentioned that Nvidia will be ramping up production on the GTX 1050, 1060 and 1080 to support this surge in demand.

Finished Goods

The global shortage on NAND Flash is still having its effects on the entire SSD market. For Intel, there seems to be no relief in sight, with the shortage expecting to stretch well into 2018. Global sources are reporting supply constraints to last throughout Q3 and Q4 for the entire S3520 series while some distributors are reporting they are already coming up empty on allocations. As OEMs/ODMs cannot run the risk of being line down, they are scooping up supply now in order to be safe for later quarters. Rumors in the channel are circulating that supply in Q3 will be 50% of what Intel ships in current quarter Q2. This month Intel introduced the P4500 and P4600 series, which will replace the P3500 and P3600. Limited shipments are expected to begin in weeks 32-35; however, overall constraints are expected from the time of release. June 30th is the last day to put in orders for the P3500 and P3600 series with a last delivery date of October 31, 2017. Some distributors have been reporting that all Intel SSDs based on TLC NAND memory have been discontinued with no replacement coming until late Q3/early Q4. This, along with rumors of Hynix and Intel having a falling out over memory allocations, could cause even more issues over the next two quarters.

Not much has changed in the LCD space over the past month. Fusion is still seeing daily requirements for 15.6”, 14.0” and 17.3” screens but nothing in record numbers. Q3 has typically been the hot season for 18:9 mobile phones screens (2:1 aspect ratio), automotive, and industrial products. Local distributors and manufacturers have been shifting more capacity and orders to those applications in preparation for their peak season. Major panel players are ramping up production of 18:9 all-screen panels for smartphone applications as prices for these panels are 10-15% higher than traditional 16:9 smartphone panels due to overwhelming demand. As a result, production of notebook and tablet panels will be reduced and prices will be sustained through July and Aug.

Memory

Although analysts once predicted a significant increase in chip supply by the second half of 2017, DRAM supply remains low and demand continues increasing.  Pricing may be two times what it was a year ago, but it is still a ways off from the previous high within the last five years, indicating that pricing may yet have some slack to burn off.  OEMs are looking for ways to protect themselves from the growing cost of DRAM, many even going against their inventory practices by purchasing buffer stock.  Mobile DRAM consumption, as well as growth in the artificial intelligence (AI), market can be attributed to DRAM supply constraints.  AI servers are almost ten times more DRAM intensive than traditional servers.  Even though AI servers only make up 10% of the server market, their DRAM consumption will outpace that of the regular server market today.

Most constrained are the higher capacity server DRAM modules, specifically 16GB and 32GB RDIMMs.  2400 speed RDIMM supply has been tight for quite some time, and recently the problem has become more acute. Mass production of the newer 2666 MHz modules has been affecting pricing and availability of the more commonly-used 2400.   Manufacturers have been taking steps to shift the market toward the 2666 modules, as 2133 speed modules have recently become problematic.  Market experts are unable to anticipate when DRAM pricing will stabilize, but expect costs to increase well into the second half of 2017.

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