The Greensheet

June 6, 2019

IC

Signal relay lead time relief not likely until 2020

The global relay market has taken a turn for the worse due to increased demand, finite production capabilities and raw material delivery delays. Relays are essential in the development of antennas and therefore have become hot commodities as auto and commercial sectors move toward including internet connectivity in their latest products. The impending 5G roll out has also played a major factor in this global increase in demand as telecommunications companies worldwide look to secure the stock on these integral parts for their new networks.

The sophisticated nature of relays and their relative high production cost compared to other board-level components makes mass fabrication an issue. We are hearing that production facilities across all major manufacturers will be adding bandwidth in the second half of 2019 and into the beginning of 2020. Unfortunately, the added lines will not have significant impact on the current status of relays.

Lead times for TE Connectivity signal relays have extended well beyond 52 weeks – distributors are estimating shipments of new orders between February and October 2020. Some items, especially TE’s IM series, are so constrained that 2017 orders have yet to be filled. TE has committed to expanding production output by 40%, but customers won’t feel any relief until Q2 2020 at best.

Panasonic is also hesitant to confirm delivery dates on their popular AGQ series, but lead times are averaging 32 weeks. The company is also confining production to Japan-based plants, which will now support all global orders. As such, shipments may be delayed with new order lead times expected to reach 40+ weeks.

Omron’s G6K series is facing lengthening lead times due to Omron moving their China-based production facility from Shanghai to Shenzhen. The transition affected 6-12 months of production capacity and there is still 4-6 months of backlog allocated to the Shenzhen and Japan factories. Customers should expect delays until Q1 2020, which is when Omron expects their production to begin stabilizing.

Fujitsu relays have been severely constrained since 2018 with lead times averaging 30+ weeks, but the manufacturer has decided not to increase production as they compare viability to associated costs.

Cypress’ JV with Hynix complete prior to acquisition by Infineon

Infineon Technologies and Cypress Semiconductor have announced that Infineon will be acquiring Cypress in a $10 billion purchase. Infineon intends to expand their business in automotive, industrial and IOT segments where demand for connectivity solutions is rapidly growing. The deal is expected to officially close at the end of 2019 or beginning of 2020. While it’s still too early to tell how the move will affect Cypress product lines in the long term, we’ll be keeping a close eye on the situation to monitor for any supply disruptions.

Prior to the announcement of the Infineon acquisition, Cypress and Hynix’s joint venture, SkyHigh Memory Limited became fully operational with the companies splitting a 60% to 40% ownership respectively. Taking over Cypress’ SLC portfolio, and spearheading the development of next generation NAND flash, SkyHigh seeks to be the NAND flash leader in memory with applications for consumer, networking, industrial and automotive markets. Distributors report a seamless transition so far as SkyHigh overtakes the support of SLC NAND products for its entities.

Marvell acquires Avera Semiconductor to create a leading ASIC manufacturer

Marvell announced on May 20, that it has agreed to acquire Avera Semiconductor from GlobalFoundries. Avera provides custom silicon solutions for a variety of mobile applications, as well as custom solutions for multiple generations of switches, routers and base stations. Merging with Marvell’s advanced technology platform will create a leading ASIC manufacturer well-equipped to cover demand for both wired and wireless communications and will enable Marvell to be more competitive in the growing 5G market.

The acquisition is expected to be completed by the end of 2020.

Xilinx raises prices on Spartan & Virtex 2-7 series

Certain Xilinx products will experience price increases of roughly 3.5% effective July 2019. The reasons, as explained by the Market Price Adjustment (MPA) notice, are due to increasing production costs and drop in production demand on matured family series. Impacted families are mostly the Spartan 2-7 series and Virtex 2-7 series.

Volatility with raw materials causes new issues for polymer capacitors

There is a decline in supply of polymer capacitors because the raw materials used to produce them – aluminum and tantalum – are constrained by unique geopolitical circumstances.

Tantalum, which is inherently difficult to source, is mined in the central African Republics. Thus, the material is subject to various sanctions on parallel trade, which result in extremely volatile prices and irregular supply.

Raw and finished aluminum are largely sourced from China and Russia, and consequently subject to each country’s respective sanctions and tariffs. Therefore, supply has to be relocated to countries not affected by tariffs in order to be exported to the USA. As an alternative, The Trump administration has recently opened the door for Canadian aluminum products, but it’s not enough to alleviate cost concerns.

So long as the US-China trade war and the geopolitical uncertainty of central African Republics persist, raw materials for polymer capacitors will be a costly endeavor for all manufacturers, and the components will come at a premium for all end customers.

 

CPU

61XX and 81XX shortages dominate the server market

Although many customers have started transitioning to Cascade Lake, the majority of market activity still centers on Skylake. The imbalance of supply and demand for Skylake 6XXX and 8XXX series continue to widen. Availability has shrunk, and strong demand is driving prices up. Lead times have also stretched to 4-6 weeks from the normal 1-2 weeks on many SKUs. Supply tightness is expected to last through July and into August/September.

Desktop woes continue through May and into June

As Intel launches the Coffee Lake Refresh family in May, struggles to balance supply with forecast continue to persist. The Core I3 Kay Lake and Coffee Lake models have been a massive issue. Strong demand coupled with limited supply for I3-7100 and I3-8100 has driven market prices to premiums that we have never witnessed before. I5-8500 is reported to be tight and highly anticipated that supply cannot cope with any spike in demand in coming months.

Newly launched Coffee Lake Refresh models have also been a major problem. Customer feedback is there is very minimal supply for this family and they are struggling to keep up with orders.

Kaby-R and Whiskey Lake mobiles are starting to tighten up after long period of calm

The market is showing early signs of supply constraints in Kaby Lake Refresh and Whiskey Lake models, which could mean an uptrend in prices if supply continues to struggle to cope with increasing demand.

For Skylake and Kaby Lake mobiles supply is improving and subsequently reducing the premiums that were seen for most part of 2019.

Chipsets finally stabilizing

The chipset market has seen calm waters in May. Supply has been healthy and news that Intel will stop producing some of its chipsets on 14NM has not caused any imbalance. It is highly speculated that gaps may start popping up in June-July period for B360, H310 and H370 as Intel migrates some resources back to 22NM as a strategic move to manage resources.

 

Finished Goods

SSD pricing continues to fall

SSD pricing is expected to drop another 4-5% in June with Samsung parts having the largest hold on the market.

Samsung SSDs in the open market are currently 10% less than what’s being offered from authorized distributors. It’s PCIe SSDs are currently priced at $0.32/GB while SATA is $0.21/GB.

Transition to higher capacity HDDs remains slow

The HDD market is entering the off-peak season and overall demand is getting softer. Server and data center customers remain reluctant to transition to higher capacity HDDs (12TB and 14TB) as pricing for 6TB/8TB/10TB HDDs remains too attractive to turn down. However, with the Crypto-mining sector beginning to recover, the expectation is more demand for the 8TB and 10TB HDDs.

Many of the largest storage suppliers such as Intel, Western Digital, Sandisk, Seagate and Kingston are expected to stop selling parts to Huawei in compliance with US government mandate. If the ban persists, we expect pricing to continue to drop as stock previously allocated to Huawei begins to be made available in the open market –allowing customers to delay the transition to higher capacity HDDs even longer.

 

Memory

DRAM demand strengthens against all odds

Demand for DRAM memory could be poised to increase despite earlier projected uncertainties. Macroeconomic concerns and overall weakening demand have been looming over the DRAM market recently. However, DRAM manufacturer response and signs of improving demand indicate the market might be ready to take a turn.

Recently, manufacturers have tried to reduce supply through increased adoption of high-end/high-density memory, while limiting or ceasing production on low-end/low-density memory products.

At the same time, there are several indicators of usage increasing. New smartphone models and increasing PC orders are set to help boost mobile DRAM demand. Electronics manufacturers also plan to generate more high-end products, push LPDDR for portable devices and transition to the new 1Y-nm die in major applications.

We should see overall enterprise memory demand increase in Q3 due to the seasonal trends in server production, combined with the adoption of new CPU and higher density memory.

Transition to 2933MHz RDIMMs is slow

Micron was the first to launch 2933 in early Q2, and while new speed 2933 RDIMMs are already available in the market, complete adoption has not yet taken place. While most users are still in testing stages, only a small number have transitioned to the new speed. Predictions for the full transition are around August and September 2019.

Module pricing stabilization still uncertain

In the past couple of months, most of our vendors have been informing us that the overall memory module pricing may spike or stabilize by Q3. However, the Huawei situation makes this unlikely now. The word on the street is there may be a flood of excess entering the market as a result of the US ban on Huawei, which will cause another price dip.

In the past month, we have seen memory prices continue to drop and most distributors are estimating a continued downward trend of 2 to 5% throughout the month of June.

Most RDIMM stock levels are relatively high – except for the 8G 2400 ECC UDIMMS because Samsung has decreased production of smaller demand DIMMs.

In addition, 64Gb LRDIMMs and SODIMMs are also experiencing low stock level availability.

Samsung C-die issue is improving

It has become apparent that 32GB RDIMM C die with a more recent DC of 1910+ can be used without risk. Stock for this requested DC are not easy to find as most current offers are DC 18+; however, distributors can support the demand based on short lead time to produce.

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