The Greensheet is Fusion Worldwide's monthly market intelligence report detailing the most significant developments across the memory, hardware, central processing unit, and integrated circuit supply chains. Here are some key takeaways from our latest report:
- Micron expands capacity for HBM as 2024 supply sells out.
- The HDD market experiences an uptick in activity thanks to AI-related customers, leading to supply constraints.
- CPU market slumps slightly as demand remains minimal and customers focus on cost savings.
- IC manufacturers and distributors increase order costs as forecasts indicate recovery may be delayed until later in the year.
The supply chain is under pressure due to rising AI-related demand and logistical challenges. Memory prices, especially for DRAM and NAND, are set to increase through 2025 due to tight availability and high demand from AI servers. The HDD market faces supply constraints, with prices expected to rise for high-capacity drives. CPUs and ICs are also seeing fluctuations, with excess supply and extended lead times causing market disruptions.
Learn more about the market happenings in the full report below.
AI server demand drives rapid growth in HBM, DDR5, and data center SSDs, leading to tighter availability for DRAM and NAND. As a result, costs across all memory and storage end markets will likely continue rising.
If the supply-demand imbalance persists, DRAM and NAND pricing levels will continue to see significant increases and limited availability throughout the remainder of the year. This trend is bolstering manufacturers' profit outlooks. Early predictions for 2025 suggest profitability will continue to improve, potentially reaching record revenue levels if demand continues to outpace supply.
Micron Expands Capacity for HBM as 2024 Supply Sells Out
Micron has officially sold out of HBM capacity for 2024, and 2025 allocation is limited. Due to this robust demand, the company plans to expand HBM production capabilities in its Taiwan factory. This strategy may reduce production lines for other products, impacting DDR5, DDR4, and DDR3.
HBM3E, the latest version of HBM, consumes approximately three times the wafer supply compared to DDR5 to produce the same number of bits. As the industry transitions from HBM3E to HBM4, demand will increase due to HBM4's improved performance. The added complexity of HBM4 packaging requires more support, potentially causing further disruption.
Micron stated that manufacturing will restrict DDR3 production to industrial applications. Capacity will also focus on DDR5 over DDR4 as customers increasingly transition to DDR5. These changes in manufacturing will likely result in higher prices, with early indicators suggesting RDIMM pricing could rise by five to eight percent next quarter.
Data center and server customers are bracing for the impact of these cost adjustments and limited availability, as DDR4 RDIMM is popular in these industries. Furthermore, the mobile, automotive, and industry markets, which rely on Micron memory, will be similarly affected.
Hardware
Rising Demand and Supply Constraints Impact the HDD Market
HDDs have emerged as the most cost-effective and efficient option for AI’s current projects as the need for data center libraries has grown alongside AI proliferation. AI-related customers are consequently increasing demand for HDDs as they adopt them for data storage applications.
This trend has resulted in dwindling supply, and vendors have shared that supply is not likely to improve as allocation is insufficient, and the backlog of orders is steadily growing. Pricing will expand by at least three to five percent over the coming quarters, with high-capacity enterprise HDD drives likely seeing the most significant increase.
SSD Cost Savings Draw Customers to the Open Market
Stabilizing supply across mainstream series has led to a slowdown in SSD markets over the past month. However, challenges persist in securing higher-capacity drives of 15TB and above and niche form factors like the M.2 and E1.s series.
Customers are very price-sensitive and persistently seek the most competitive pricing on mainstream series. Despite this, manufacturers are expected to increase prices by 10 – 15% in the upcoming quarter, which may further complicate the demand landscape.
GPU Market Sees Fluctuating Demand Amidst New Product and Tariff Announcements
The GPU market has recently seen a slight decline in demand, mainly in gaming and workstation series, as supply and booking lead times have improved. However, demand remains robust for AI GPUs such as Nvidia's A100 and H100, with limited allocation making it challenging to source. Due to their high cost and scarcity, manufacturers prefer delivering fully assembled servers to customers rather than standalone GPUs. This strategy restricts availability in the open market, keeping supply and pricing under the manufacturer’s control.
In other GPU news, Nvidia announced that its next-generation AI chip platform, Rubin, will launch in 2026. Rubin will integrate GPUs, CPUs, and networking chips, though details on the new products are currently limited. Nvidia's CEO Jensen Huang showcased these developments at the Computex trade show, affirming the company's commitment to releasing a new family of AI-focused chips annually. More information on the announcement can be found here.
Recognizing GPUs' critical role, the U.S. government extended tariff exemptions for graphics cards, SSDs, and motherboards until May 31, 2025. If this exemption expires next year, the GPU market will be highly impacted, and manufacturers like Nvidia will need to adapt how they market and distribute their products.
CPU Market Sees Slow Demand with Focus on Cost Savings
Demand in the CPU market slowed in June, primarily due to customers waiting for the usual quarter-end release of more availability from manufacturers. Minimal spot demand was observed for products with sudden popularity, such as AI PCs, or those seeking cost savings in mainstream series like the i3, i5, and i7 in the 13th Gen Raptor Lake and 12th Gen Alder Lake. Demand for AI PCs will likely increase in the coming months, potentially changing the landscape for CPUs.
Due to these market conditions, Intel is still grappling with an excess supply of the Meteor Lake Core Ultra H series. Reducing the mainstream Meteor Lake Core Ultra 125H, 155H, and 165H inventories has been the most challenging. This situation may shift as Tier 1 customers transition to the Meteor Lake series. However, the upcoming release of the Lunar Lake, expected in the last quarter of 2024, could further complicate demand as Meteor Lake pricing and availability would be subject to change.
One area experiencing supply constraints is Chromebooks related to the ATOM CPU of N100 or N200, currently facing limited availability.
Server Market Pricing Impacted by Inventory Pressure
Cost concerns limit customer demand for the 5th Gen Emerald Rapids as demand mainly focuses on the 4th Gen Sapphire Rapids and 3rd Gen Ice Lake. However, stable supply has made customers more focused on pricing competitiveness, making the competition to secure orders steep. Special pricing for the 6th Gen Granite Rapids may come at the end of 2024, reinvigorating demand. Mid-core count (MCC) items like the Gold 63XX and Gold 64XX have the healthiest demand.
AMD continues to see slow adoption of the Genoa series as customers prefer the older models with a healthy market supply. The upcoming launch of the series EPYC Turin may influence the demand and availability of older series as customers and distributors work through the transition to the new product. The launch will likely come by year-end.
Logistics Requirements Leads to Service Fees
Rising logistic-related costs are pushing manufacturers and distributors alike to increase costs for pricing and service fees. Avnet recently joined the companies making this move and announced that there would be a service fee for new shipments from June 2024 onwards.
The announcement cited ESG compliance and other logistics requirements as the reason behind the fee, which comes at a time when customers have reported issues with support on both supply and price.
Broadcom Lead Times Extend as the Company Initiates Fees to Expedite Orders
Broadcom lead times are extending, and while customer reports vary, some have seen delivery lead times up to 52 weeks. Supply constraints affect the BCM5 or BCM8 series, and the manufacturer has been increasingly pushing out orders.
Material issues are partially to blame for this trend, which may increase component costs. The company has already instated expedite fees for customers who want to ensure timely delivery.
IC Market Sees Mixed Forecasts as Inventories Normalize but Remain a Headwind
Over the past two months, irregular demand and intermittent bookings defined the integrated circuit supply chain landscape. The muted recovery forecasted for the year's second half is materializing slower than expected, as there were limited signs of improvement in end market demand. Customers are still sensitive regarding pricing.
Despite the lingering concern of excess supply, there are positive indications as inventories have started to normalize at leading foundries and memory makers. This normalization would directly impact lead times and pricing, as both would increase as inventory levels decrease. Furthermore, with the pending tariff increase in 2025, manufacturers are more likely to increase costs in time for customers to attempt to make purchases ahead of the tariff update.
Market intelligence sources have revealed that this development has triggered a significant trend in the IC industry, with manufacturers like Texas Instruments hesitating to confirm allocation schedules for next year. This hesitation is likely due to the industry's cautious approach as distributors wait to see the extent of the rebound in the coming months.
Customers are closely monitoring onsemi, Maxim Integrated, and Analog Devices due to supply challenges each faces in the semiconductor market. Onsemi is navigating manufacturing changes, focusing more on automotive components at the expense of industrial parts. This shift, coupled with phasing out older technology and operating below full production capacity, has raised concerns, especially in ASICs and diodes.
For several months, Maxim Integrated has struggled with unstable lead times, which have caused delays and frustration among customers who rely on timely deliveries.
Analog Devices recently adjusted its distribution strategy and partnerships, including extending its cancellation window to 45 - 70 days. This move aims to manage supply chain dynamics but could lead to order volume fluctuations as customers explore alternative cost-saving options.
