The Greensheet: May 2024

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:   

• The earthquake in Taiwan momentarily disrupted production in the memory market. However, business has since resumed and Q2 pricing is now available. 
• Lead times are on the rise in the hardware market, causing customers to turn to alternative sources for more favorable deals. 
• Upgrades and transitions to newer series lead demand trends in the CPU market as customers seek more favorable pricing. 
• New series and product change notifications trigger change, and a wave of demand, in the IC market. 

The electronic component supply chain experienced significant disruptions last month, leading to unforeseen variations in demand. These disruptions, coupled with ongoing pricing fluctuations in 2024, may result in inconsistent supply availability in the coming quarter. 

Learn more about the market happenings in the full report below.  

On April 3rd, 2024, a 7.2-magnitude earthquake temporarily disrupted production for numerous manufacturers based in Taiwan. This situation has caused a backlog for smaller suppliers, as distributors were already holding stock for larger customers. 

The earthquake had a concentrated effect on the memory commodity supply chain, as pricing was already fluctuating due to the onset of the new quarter. DDR4 costs are expected to increase by 20%, while higher-capacity DDR5 will likely go up by as much as 17%. Market prices have varied on an almost a daily basis, making it difficult to source parts with cost savings. Demand primarily focuses on DDR5 32GB and 64GB capacity, while DDR4 activity has dipped slightly. 

Micron Pricing Sees Major Fluctuations Following Taiwan Earthquake 

Micron was among the manufacturers significantly impacted by the earthquake in Taiwan, as the company’s quotes were on hold for a prolonged period. Now that quoting has resumed, costs for LPDDR4 and DDR4 have increased by as much as 20%. LPPDR5 and DDR5 have increased by roughly 25%.  

Customers expected costs to increase before the earthquake disrupted production, as demand for memory components was previously steady. Lead times have not fluctuated much and still sit at six to eight weeks for items with constant demand. Lead times are on the rise as it pertains to upside, and reports indicate lead times are moving above 12 weeks (about 3 months) in those instances. 

Hardware 

Samsung and Solidigm SSD Costs Increase 10 to 30% 

The SSD market continues to experience price increases, driven mainly by rising NAND Flash costs. The Taiwan earthquake further complicated the landscape, adding uncertainty to the supply chain and pushing suppliers to temporarily suspend pricing and shipments. 

Now that manufacturers have assessed the full impact on their facilities, quoting has resumed, and pricing has increased as expected before the earthquake. 

Solidigm SSD prices increased 10% in April, and market reports indicate that costs will continue to escalate in May. Based on preliminary market intelligence from distributors, Samsung SSD costs will expand by 20 to 30%. 

HDD Market Struggles with Tight Supply and Increasing Lead Times 

HDD demand increased in April as vendors saw more orders for high-capacity drives 10TB and above, with a concentrated increase in Chinese markets. This trend pushed customers to the market to secure HDD supply with more favorable costs. Now that excess market supply has depleted, customers have returned to distributor channels to align inventory with upcoming demand. Consequently, Seagate and Western Digital have raised HDD prices by five to 10%. 

Supply remains tight for SAS HDDs, 12TB – 18TB, as manufacturers prioritize fulfilling existing tier-one customer orders. These shortages, combined with longer lead times and increasing costs, are expected to create challenges for end users. The added strain of production capacity limitations amongst major manufacturers like Seagate is expected to exacerbate supply issues for large-capacity storage solutions further and have an indirect disruptive effect on small-capacity storage as well. 

Distributors Struggle to Obtain Data Center GPU Allocation 

Businesses focused on AI training continue to drive the largest demand trends within the GPU market. Distributors have reported constrained allocation for data center GPU models, especially for the popular GeForce RTX 40 series, whose limited availability moves quickly in the market. Lead times are stretching due to GPU chipset shortages, and Nvidia recently announced a 10% price increase. 

Furthermore, cryptocurrency trends are also contributing to spikes in GPU demand. RTX 30 series orders have steadily multiplied. Supply of this series, as well as the RTX 40, may shift further when the GeForce RTX 50 series becomes available in the second half of 2024. 

Unexpected Demand and Raw Materials Shortages Constrain Intel PC Series Supply 

The first month of Q2 was relatively slow for the PC market, with AMD PC CPU market activity limited to the higher end Ryzen 9 7950X, Ryzen Threadripper PRO 5995WX, and Ryzen 9 5950x.  

However, due to unexpected demand upsides, there were instances of tight supply for specific items. This development impacted Intel's latest AI-focused Meteor Lake Mobile CPU H series, affecting the Ultra 7 155H and 165H SKUs.  

In addition to this unanticipated trend, the raw materials used in the Intel Meteor Lake series have been difficult to secure, leading to an imbalance between availability and market demand. Certain Tier 1 original equipment manufacturers (OEMs) are experiencing allocation lead times of up to eight weeks. More customers anticipate facing the same challenges in the coming weeks. 

Customers Seek Cost Savings for 12th-Gen Alder Lake and 13th-Gen Raptor Lake 

There has been an increase in cost savings requests for inquiries on Intel Desktop CPUs, mainly the 12th Gen Alder Lake and 13th Gen Raptor Lake. This trend materialized after April approved pricing was less favorable than expected. Costs for Intel’s Desktop CPUs are primarily in the same range on a global scale, which makes cost savings more challenging to secure as there is little to no price gap between distributors and OEMs. 

Activity for AMD Mobile CPUs has been more consistent, as customers are slowly pulling parts from distributors and directly from the manufacturer. 

Server Market Demand Focuses on Customer Upgrades and Transitions 

Open market activity for Sever CPUs is picking up slightly, focusing on Intel’s Ice Lake and Sapphire Rapids, as well as AMD’s Genoa series. Demand and pricing are on a downtrend for Intel’s Cascade Lake as vendors are keen to move parts due to inventory pressure. 

Market reports claim that Intel is pushing OEMs to transition to the 5th Gen Emerald Rapids by removing special pricing for the 3rd Gen Ice Lake and certain 4th Gen Sapphire Rapids. While not all Tier 1 customers have been affected, some mid-range server builders are facing the brunt of the impact, which is causing a wave of customers to come to the market looking for cost savings opportunities. Current trends are focused on the Gold 63XX, 64XX, and Platinum 83XX 84XX. 

For AMD, while demand for the Rome and Milan series was previously steady, it is now fading as customers switch to the Genoa series.