The Greensheet is Fusion Worldwide's monthly market intelligence report detailing the most significant developments across the integrated circuit, central processing unit, and hardware commodity supply chains. Here are some key takeaways from our latest report:
- Automotive IC demand begins to falter despite the prolonged shortage for IGBTs and EOL notices for older MPNs.
- The Notebook CPU market begins to see a rise in spot demand; however, Desktop CPU sales remain contingent on cost savings opportunities.
- Flat results for the HDD market push manufacturers to implement production cuts and price increases.
While the IC market has begun to slow, trends in the server CPU and SSD market are reversing as supply is unable to meet demand. This has impacted the memory market, as memory module demand related to SSDs has increased and pushed pricing higher.
Learn more about the market happenings in the full report below.
IGBT Shortage Persists Despite Automotive Demand Trending Down
Since September, IGBT modules have been experiencing constrained supply due to an imbalance between manufacturers’ inventory levels and mounting demand. This shortage has persisted, and lead times currently exceed 40 weeks. Consequently, demand remains high, especially for EOL and obsolete MPNs with older versions of direct currents.
In addition, MOSFET and power management (PMIC) demand is also increasing, but supply is less constrained, so customers are more hesitant to place orders.
Alternatively, automotive material demand has declined substantially. Market prices have subsequently begun to trend downward for all microcontrollers. As a result, high- and low-voltage MOSFET supplies have gradually returned to normal. However, there are still some high-voltage MOSFETs with elevated pricing, and supply for these components remains limited.
Central Processing Units
AMD Notebook Demand Rises, While Repair Business Drives Intel Sales
AMD Notebook CPU demand has steadily increased over the past few weeks, mainly for the Ryzen 5 7350U and Ryzen 7 7730U. There is reportedly a manufacturer supply issue on the 7030 series, and lead times have consequently extended as distributors have pushed out allocation.
This constraint is likely due to capacity moving towards the newer, higher-performing 7035 series. Market intelligence has speculated that there may be a price adjustment on AMD Notebook CPUs sometime this month. In preparation for this possible cost adjustment, Tier 1 customers began pulling in parts at the end of November to secure lower prices.
Interest in Intel Notebook CPUs primarily comes from spot demand for the 11th Gen Tiger Lake CPU, mainly from customers in the repair business. The manufacturer recently released some of the allocations for the popular i5-1135G7(SRK05), but demand has been lower than expected. The last discontinuance shipment on this EOL series is at the end of December, and pricing is on a downtrend as distributors try to encourage sales.
Desktop CPU Customers Remain Focused on Cost Savings
Overall, Desktop CPU activity has been comparatively lower than Notebook CPU activity over the past few weeks. Intel inquiries have focused on cost savings, predominantly for the 12th-Gen Alder Lake and 13th-Gen Raptor Lake. Furthermore, demand for the 13th-Gen Raptor Lake Refresh and the 14th-Gen Meteor Lake has been minimal.
Supply constraints have impacted authorized distributors of mainstream series i3-12100, i5-12500, and i7-12700. The EOL notice on the 10th-Gen Comet Lake and 11th-Gen Rocket Lake caused a drastic reduction in availability. However, even with the pockets of short supply, the market has felt little impact as customers are moving away from older series.
Alternatively, AMD has observed a rise in Gaming Desktop CPU demand, principally the Ryzen 5 5600G and Ryzen 7 5700G. Pricing has increased, and even open market transactions are growing consistently.
Slow Server CPU Trends Finally Start to Reverse
After a year of slow demand and sales driven by cost savings opportunities, Server CPU market activity has escalated. The recently released EOL notice for the 2nd Gen Cascade Lake and Cascade Lake-Refresh has persuaded Tier 1 customers to push manufacturers for allocation. Market activity for the 4th Gen Sapphire Rapids has also begun to expand.
Also, the special pricing allocation for the Ice Lake 3rd Gen has been depleted. Most of the OEMs and distributors for this series are now unable to submit new booking orders to the manufacturer based on the prior special cost as the supply quota has been exhausted.
Since last month, supply issues have also started to plague the Intel Cooper Lake, predominantly the Gold 6330H, Platinum 8360H, and Platinum 8380H. These constraints are likely the result of capacity adjustments as the company prepares for the upcoming 5th Gen Emerald Rapid launch, which is expected in mid-December. Availability for Cooper Lake may consequently take until Q1 of 2024.
Meanwhile, AMD demand has also increased, primarily for the 3rd Gen Milan series and 4th Gen Genoa series. Supply of the 3rd Gen Milan series is reportedly low, and AMD has issued pricing controls to keep costs at a specific range. This move by AMD is an attempt to encourage customers to upgrade to the 4th Gen Genoa.
SSD Pricing Changes Daily as Manufacturers Struggle to Fulfill Allocation
After a slow year, manufacturers drastically reduced SSD allocation to distributors and end customers while pushing higher pricing to recover profits. Customer-submitted forecasts were conservative due to the flat demand over the past few quarters, but developments in the SSD market took a sudden turn as allocation and production cutbacks saw an unexpected upside in demand.
Due to this situation, SSD pricing is very volatile as market costs change daily. The dwindling supply has resulted in extended lead times, now at 6-8 weeks. Pricing is based on the shipped date, so expenses are subject to change based on the day orders ship.
All SSD manufacturers have implemented strict control on all allocations, and backlog delivery dates are unconfirmed. Manufacturers are updating vendors weekly on allocation status. In an attempt to increase visibility, manufacturers are also pushing customers to sign long-term agreements (LTAs) so they can have priority on allocation. Customers who fail to sign these LTAs may receive little to no allocation of SSDs due to the constraints. There will likely be another price increase in Q1, thanks to the ongoing demand, and vendors believe it will be an adjustment of at least 30% to 50%.
Higher capacity SSDs are still the most sought-after, but availability is limited after vendors allow buffer inventory to dwindle over the period of flat to down demand. The lack of clarity on availability, the possibility of future price increases, and mounting demand have forced customers to turn to the market to buy buffer stock in the interim.
HDD Market Remains Stagnate, Resulting in Further Production Cuts
HDD market demand has been flat since November, with most demand centered on large capacity 16TB and above products. Major HDD manufacturers continue to cut down production capacity while planning for a price increase of 10% to 15% by next quarter. Manufacturers are making this move to stabilize overall market price levels to increase profitability.
However, customers are looking for lower-cost orders to fulfill spot demand, so most sales are based on cost savings opportunities.
Updated Export Restrictions Impact Nvidia, AMD, and Intel
The U.S. Government recently updated its ban list for GPU exports to China. With the new restrictions coming into effect in mid-November, GPUs from Nvidia, AMD, and Intel that were previously unaffected are now feeling the impact.
The latest Nvidia products on the export ban list include the A100, A800, H100, H800, L40, and L40S, as well as the RTX 6000, RTX 4090, A30, A40, L4, RTX A6000 (Ampere), DGX, and HGX systems. The U.S. also added AMD’s MI 250 MI300 and the Intel Gaudi 2 chip to the list.
The expanded restrictions and the EOL announcement for the A100 and A800 80GB PCIe GPU have caused higher demand for the Tesla GPU series. The final shipment for the EOL products will be at the end of 2024, so the new year may bring a wave of demand for alternative products. Market pricing for GPUs, especially the affected series, is expected to increase.
Booking Lead Times Continue to Extend for Networking Products
Demand for high-end servers and components related to AI-related industries continues to boom. This trend has pushed networking product booking lead times up to 3 to 6 months for most parts. High-end series of switches, NIC, and optical transceivers are experiencing the highest demand and most constrained supply.
Memory
Memory IC Inventory Adjustments Continue, But Forecasts Indicate Recovery
Since the onset of 2023, demand in the PC market has gradually improved in relation to memory ICs. As demand has strengthened, there has been a trickle-down effect for DRAM and DDR5. Both product categories have rapidly grown this year, and demand is still increasing.
However, the server market is still adjusting inventory as demand for ICs and beyond has been low. Internet demand has declined, and companies have postponed domestic operator tendering due to the challenges experienced across the industry this year. Major cloud service providers have also tightened their capital expenditures, leading to further decline.
Looking ahead to 2024, the server market will likely see an uptick in demand due to a rebound in internet demand, ongoing investments in AI servers, and a rise in general server investments. Due to these forecasts, server shipments will experience a certain degree of recovery next year, but the overall revival of the server market will be a prolonged process.
Memory Module Trends Shift Alongside Emerging Demand
Memory module manufacturers previously reduced production, tightly controlled allocation, and increased pricing to recover profits during a prolonged lull in demand. DDR4 saw more significant production cuts as manufacturers put a greater emphasis on DDR5.
Due to this transition, pricing for DDR4 modules has increased by at least 5% to 8% and is expected to continue expanding through Q1 2024. DDR5 demand is slowly growing alongside costs, and customers are now looking to secure buffer stock against a further increase in the new year.
The demand for DDR5 comes primarily from AI customers looking for the most optimal way to store data and instructions for machine learning. However, cloud service providers and hyperscalers' memory needs are unique to their applications, so there is still some debate over the best drivers for CPUs that will allow AI to develop further. Hyperscalers are looking to high bandwidth memory (HBM) to solve power consumption and memory bottlenecks. With AI workloads becoming more demanding, the need for high-throughput memory solutions like HBM is rising.
However, customers building AI components are still debating the transition to HBM. Memory manufacturers will have to decide whether or not to support production for HBM over DDR5, as HBM requires more wafers. If manufacturers transition wafer allocation to HBM, there is the potential for disruptions as DDR5 support could decline, and customers will have a more challenging time navigating the transition to HBM.
