HDD logistics costs and lead times increasing due to COVID-19 lockdowns/disruptions
The Philippines government lockdown of Manila and 16 other cities was initially due to end on April 14, but has since been extended to April 30 and may yet be extended further. Logistics and factories have been greatly impacted, including Toshiba’s HDD production. Prices are speculated to rise in the coming weeks as the supply shock filters through the market.
The same situation has been playing out in many parts of the world’s supply chain. Numerous manufacturers and distributors have cited increasing freight costs due to reduced logistics capacity and increased restrictions. Seagate, for example, is increasing prices on all capacities of HDD by $3/unit (up from $2/unit in March) specifically to cover higher logistics costs. In general, HDD prices could rise as much as 10%.
SSD Supply tight, especially in higher capacities
As China begins to relax its lockdown measures, factories are coming back online to an increase in demand for high capacity server storage. This is a continuing effect of some large server projects that began in March but were put on hold due to the lockdown. Because of this, demand for high capacity SSD has spiked and will remain strong in China.
However, many businesses in the US and EMEA, including some server builders, are seeing much more uncertainty in demand as there is less clarity on when the COVID-19 restrictions will be lifted. Many projects in these regions are on hold as timelines for returning to work are uncertain. This has put pressure on an already tight market, causing businesses in the USA and EMEA to factor in increasing supply issues for ongoing and future projects.
Intel SSD seeing temporary reprieve
Intel’s SSD capacity has been tight for quite some time now as an industry insider noted that Intel can only support about 50% of forecasted demand. The supply constraint is particularly impacting capacities of 1.9TB and higher, and the 660p, S4510 and S4610 series.
As recently as mid-March, it was widely speculated that Intel would increase prices 20-25% in Q2 due to the shortage. However, due to general market uncertainty and interruptions, particularly in the US and EMEA markets, some supply has become available on the open market and some prices have even had a slight decrease.
This is likely a temporary market adjustment as some OEMs and CMs reduce their inventory positions while awaiting more clarity on future demand. It is uncertain how long the price and supply softening will persist. Intel’s production capacity, for instance, was already lagging behind demand prior to market shocks, and it may become an issue again.
Samsung SSD lead time stretch
Samsung is experiencing production constraints, and it is expected there will be price increases of up to 15-20% in Q2. Currently, there is a minimum of 12 weeks lead time for all lines and as such, the company will be focusing their support on Tier 1 Global OEMs. It is expected that the limited product availability will also impact Micron and Hynix models.
End of the line for Nvidia GeForce RTX 2080 Ti?
Nvidia is reducing production on the GeForce RTX 2080 Ti graphics card as it prepares to launch the next generation GeForce RTX 3080 Ti, which has been postponed launching in Q3. There has not been an official EOL announcement for RTX 2080Ti yet ,but Nvidia has been gathering demand for last-time buys, which is expected to be end of April.
Demand for RTX2080Ti has been pushed out for various reason leading to more stock availability on the open market with a roughly 3% price drop.
AVX Tantalum Capacitor production takes a hit
At the beginning of the year AVX announced that it would be transitioning some production from its Adogawa, Japan facilities to El Salvador. The transition meant that all of AVX’s tantalum capacitor production would be split between production facilities in El Salvador and Prague, Czech Republic. However, due to the COVID-19 pandemic, both of these countries have been under lockdown and their Tantalum capacitor production may be taking a hit. As a result, AVX stopped taking orders on tantalum capacitors or providing lead time schedules for open orders.
From the demand side, the surge of demand from the medical industry is making the availability of supply worse. AVX promises to prioritize all the open orders with medical customers as the TRJ series is being identified as top priority, since they are used in ventilator equipment.
We have received feedback from distributors that all tantalum capacitors are actively being transacted in the open market and that price fluctuates on a daily basis. There is a 50-80% price increase that can be observed from common parts. The AVX tantalum capacitor lead time has stretched to 20+ weeks. For the TAJ series, current orders can only be shipped out from September – October.
Infineon completes acquisition of Cypress
Infineon Technologies has completed its purchase of Cypress Semiconductor Industries. While the agreement was announced in June of 2019, there were delays while waiting for final regulatory approval, but now both sides have confirmed the deal has been closed. While we do not expect any immediate impact to the supply chain, there may be further complications ahead in later 2020 if/when production is moved or consolidated to different locations. Those details are still pending from Infineon.
Desktop and accessories pricing continue to drop
Pricing has continued to drop for desktop CPU, specifically 9th generation. Demand for desktops remains soft as users have preferred laptops and notebooks due to their portability and convenience, causing a 20% increase in laptop and notebook pricing. Shortages on other desktop components, including accessories, chassis and board level ICs, have slowed the production output. This has created a logjam of supply in the channel and is bringing down pricing accordingly.
Savings opportunities have begun to emerge on some parts, but there is very little appetite to capitalize on this due to the softness in demand. The only DT CPUs seeing notable transactions, specifically in China, have been items i3-8100, i3-9100, i5-9400, and i5-9500.
Distributors still do not have large quantities of 10th Generation Comet Lake DT CPUs. They are reporting that they have notified Intel of forecasted demand but have received no allocation.
Coronavirus quarantines greatly increase mobile CPU demand
Work from home orders have increased notebook demand greatly, thus straining supply for processors. Whiskey Lake supply is extremely limited and getting close to no supply for both the i5 and i7 series. Intel has focused production on Ice Lake resulting in a more stable supply outlook there.
Gemini Lake processors are still moving at a considerable pace in the market and showing no signs of slowing down. Gemini Lake Refresh will fully launch in the first week of May, and we are already hearing of huge shortages on this series.
Server CPU demand still increasing
Demand for server CPU is still increasing, but supply is showing no signs of recovery or improvement. Currently, 42XX parts are the most constrained though we have seen orders for all types of Cascade Lakes in recent weeks. For the remainder of Q2, support for demand upsides will be hard to come by.
Some vendors are also reporting that special pricing has been removed for Purley series 41XX, 61XX, and 81XX.
China factories slowly re-opening, placing more pressure on RDIMM market
As the coronavirus outbreak is stabilizing in China and people are returning to work, demand for RDIMMs has spiked and is expected to continue to grow. Pricing for 16GB, 32GB, and 64GB RDIMM has increased 10-15% compared to last month and will continue to rise based off market trends.
The largest spike in demand has been for 32GB 2666 RDIMM, and prices have increased to over $140. This tight supply has forced customers accepting B die to switch to C die, causing a temporary spike in 32GB 2666 C die.
Work from home increasing demand for DRAM and NAND
The spread of COVID-19 is driving higher demand for DRAM and NAND for servers and personal computing devices.
As more people and businesses move online, it’s causing a surge in data traffic. Based on current technology, computing vendors are looking to expand their service capacity and the positive impact on the memory markets, specifically for DDR4, GDDR6 and LPDDR. Due to capacity swap, certain parts, such as DDR2 and GDDR5, will go EOL.
Large spike in webcams as workers and students move online
Because offices and classrooms are operating from home, there has been a spike in demand for tools to help people do so. Webcams, in particular, are very short on the market and prices have jumped from 20-30% — and up to 200% on certain models.
Availability on the open market is already shrinking, particularly in the USA and EMEA. For market share leader, Logitech, the most notable models are C525 and C270 series.