The Greensheet: November 2020

CPUs

AMD takes over the desktop landscape 

AMD’s newly released Ryzen 5000 series, ‘Vermeer’, desktop processors have been reportedly flying off the shelves with each re–stock. Because of this, we are seeing limited availability in the open market, and, thus, buyers can expect to pay a premium for the product. 

Currently, AMD seems to be gaining the upper hand in the desktop landscape with Intel’s desktop CPU, 11th Gen series, ‘Rocket Lake’, not launching until at least Q1 2021. Only time will tell if this series will be able to dethrone AMD’s Ryzen 5000, ‘Vermeer’.  

Chain reaction in the mobile landscape  

As demand for AMD’s Ryzen 4000 series, ‘Renoir’, mobile processors continue to outweigh supply, customers are increasingly switching back to its predecessor, AMD’s Ryzen 3000 series, ‘Picasso’.  

To recap, production for AMD’s Ryzen 3000 series’, ‘Picasso’, 12nm mobile processors were cut short in an effort to push the market to adopt and use its latest technology, AMD’s Ryzen 4000 series’, ‘Renoir’, 7nm mobile processors. Consequently, AMD has now backed itself into a corner due to the shortage of its new series. With supply for its only two mobile products falling short, AMD lacks a way to fill this supply gap.  

This could potentially be good news for Intel as customers may switch back to its products due to the variety of its mobile CPUs. If customers do make the switch back to Intel, we foresee that customer allocation support may not be fulfilled on time.  

Therefore, we urge customers that have decided to switch over from AMD’s mobile processors back to Intel’s to check open market availability. 

Limited availability of Intel desktop chipset in the open market 

There is growing concern about the limited availability of Intel’s desktop chipset in the open market. Though we are unsure if the recent hike in desktop CPU demand has led to this, customers should take a conservative approach by stocking up on Intel’s desktop chipsets, 400 series, ‘Comet Lake’, and 300 series, ‘Coffee Lake’. 

Substrate Shortages Affecting AMD Supply 

Supply of substrates used in the manufacturing of high-end ICs and processors has been constrained due to demand growth outpacing capacity expansion. ABF substrates, in particular, have seen lead times stretch to 4-5 months and pricing rise by as much as 40%, according to Digitimes.  

Fusion Worldwide’s customers and suppliers have confirmed that this shortage will affect AMD CPU supply. According to our sources, substrate makers have been prioritizing Intel and Nvidia over AMD, and the company’s efforts to secure more supply has fallen massively short. AMD will reportedly cut back support for small core count processors at least until the end of January in favor of higher-end CPUs that are more profitable.  

Given the volume of orders on small core count processors related to the surge in demand from the education sector, it is hardly good news for PC manufacturers since it could make an already-challenging supply situation even worse. Shifts to Intel as a result will likely exacerbate supply gaps being seen with the Gemini Lake series processors.

ICs

The wafer shortage continues to cause market disruptions  

The wafer shortage, coupled with the unrest in 2020, continue to cause a lot of disruptions in the market. In Q3, we’ve seen supply constraints from mainstream semiconductor manufacturers, including STMicroelectronics, Texas Instruments, Intel, NXP and Infineon.  

These supply disruptions have caused lead times to stretch tremendously and have triggered price fluctuations in the market. The market prediction is that these disruptions will continue through Q1 2021.  

AKM fire leads to supply constraints  

AKM’s (Asahi Kasei Microdevices) fire has badly affected supply for ADC and DAC chips. AKM is the biggest supplier of ADC and DAC chips, which are used in high-end audio devices. Although AKM is reportedly planning to outsource the production of the affected lines, the fire has caused a lot of panic in the market, leading to skyrocketing market prices in the days following the fire.  

Because of this, customers are currently stocking up on supply to prevent further disruptions in their supply chains. Based on the current assessment, supply will remain affected for at least 6-12 months and will impact production for both consumer and automation audio applications.  

Extended lead times at Qualcomm 

Because the demand for audio applications has largely increased, there are now extended lead times for all Bluetooth/Wi-Fi chips. Qualcomm is specifically seeing a current lead time stretch of up to 26+ weeks due to its high market share in the high-end Bluetooth headset and speaker manufacturing space. 

One of its product series, the CSR86xx series, an audio SoC solution, in particular, is seeing heightened demand. 

Realtek experiencing shortages in 2nd half of 2020  

In the second half of the year there has been an increase in demand for Realtek components, which has led to some shortages. This uptick in demand is expected to last until the end of the year.  

The RTL8xxx series, which is mostly used in networking applications like Wi-Fi, Bluetooth and IoT, is experiencing a lead time stretch of 8–25 weeks. Additionally, the ALC series, which is used in audio related products, is also experiencing lead time stretches. Because the product is manufactured on an order-only basis, limited supply has led to current lead times for the ALC series to average around 22-26+ weeks. 

Unrest leads to issues at ST Micro 

Due to the unabated demand for 5G, artificial intelligence and automation, demand for ST Micro remains strong. However, the wafer shortage has led to spot shortages and ongoing price increases.  

On another note, there was a strike at ST Micro’s factories. While an official notice from the company has yet to be distributed, some suppliers believe that this is a one-off shortage issue and should be able to be remedied quickly. If ST Micro is able to resolve the shortage trend before Q1 2021, the impact will be limited; however, it is bound to cause some customers to panic and start looking for alternatives.  

MCUs face supply constraints  

Pricing for MCUs has reached its peak and lead times have been extended to 24-30+ weeks. These supply constraints are expected to continue until Q1 2021. Some MCUs, MEMS (micro-electro-mechanical systems) and sensors will recover by the middle of next year. There may be no incoming goods until the end of 2020. 

MEMORY

GPU manufacturers battle for market share 

Bitcoin pricing has increased by almost 30% over the past month, driving the demand for GPUs even higher and exacerbating an already constrained market. This will cause the GPU shortage to last until the end of the year.  

The huge shortage of GDDR6 has also added constraints for GPU supply, making it difficult for manufacturers to catch up to demand. Concurrently, the launch of RTX 3060Ti has been postponed from mid-November to early December.  

In addition, the Nvidia RTX 3000 series’ GPUs are running low in supply, mainly due to Nvidia using Samsung’s 8nm production facilities, which were reported to have low yield rate issues.  

Finally, the next-generation GPU battle is under way after AMD officially announced its new Radeon RX 6000 series GPU as a competitor against Nvidia’s RTX 3000 series. AMD has also ceased the production of older-gen GPUs, such as Radeon RX 5700, to pave the way for its next-gen and free up capacity for its production.  

AMD vs Nvidia Product Comparison Chart 

There are rumours that Nvidia cancelled its plan to launch 3 models – RTX 3080 20GB, 3070Ti and 3070 16GB, mainly because there is no significant competitiveness in price and functional performance compared to the AMD RTX 6000 series.  

Furthermore, AMD is going to release its new workstation/accelerator GPU, expected to launch mid-November. It will be going head-to-head against Nvidia’s recently launched Ampere series workstation GPU, like A100 40GB. There is market speculation that Nvidia might switch their consumer grade GPU production over to TSMC 7nm by Q1 2021 for a better yield rate to increase supply and capture market share.  

Strong demand for memory  

Demand for consumer electronics is peaking as holiday shopping is underway.  

Chromebook and laptop sales continue to be strong and are driving demand for DRAMs and LPDDR4 chips, which are key components in portable devices. Already, some of the new Chromebooks are now using ARM based processors that utilize significant quantities of LPDDR3 and LPDDR4 chips, further straining supply.  

In addition, Apple has introduced its new M1 chip to be used in its new MacBook and Mac Mini.  

Smart phone sales and bookings are also on the rise. Newer models adapting to evolving 5G technologies are driving up the demand for DRAM and NAND flash storage. New models are increasingly using higher pixel cameras and offering gaming capabilities that require higher storage capacities, densities and speeds.  

This trend will occupy a significant portion of memory chip manufacturers’ production capacities. Memory chip manufacturers are also in the midst of adjusting their production focus to better align with market demands, so expect the imbalance between supply and demand to continue. 

STORAGE

HDD demand remains soft 

Many manufacturers have lowered HDD pricing by at least 5% in hopes of stimulating buying activity from customers and gaining more market share. The sale of higher capacity storage has performed slightly better, but demand has mostly come from big datacenters and server makers.  

However, demand for 1-8TB density HDD continues to be flat and pricing remains constant.   

SSD market demand spiking – except for enterprise SSDs 

Overall, demand for enterprise SSDs continues to be low, and we are seeing plenty of inventory in the market. Currently, it is a buyer’s market with opportunities for cost savings.  

Higher capacity SSD demand is relatively higher due to the rise of increased interest in Bitcoin mining.  

Consumer SSDs are experiencing a short-term spike in demand due to an increase in year-end notebook demand. Affected customers are going to the open market to source these SSDs because manufacturers’ distributors are not able to fulfill all demand.  

Intel goes fabless 

US chip manufacturers, like Intel, are opting for a fabless model, which leaves the manufacturing of its products to contractors. Because this is a more profitable business model, Intel is selling its NAND storage and memory business to SK Hynix. 

Intel sources have shared that this acquisition will not have much of an impact on Intel’s SSD supply. The company is not giving up the storage business but simply outsourcing the manufacturing. During this period, Intel will continue to supply its SSD products to the market, as well as relevant technical support and software upgrading services to customers. 

FINISHED PRODUCTS

Wi-Fi card demand struggles to be met 

Wi-Fi cards are still in high demand offset by the increase in market activity. We have heard that end customers are encountering supply slack from manufacturers, and it is expected to extend into early Q1 2021.  

The Wi-Fi shortage was due to production capacity issues and the lack of wafer material in the market. Some of the affected series include the commonly used Intel 3265 and 3165 series Wi-Fi cards. 

Logitech is limited 

The supply for Logitech webcam products has been tightening and authorized suppliers are only getting limited allocation. Some suppliers have tried to stockpile inventory of the most commonly used series hoping to sell them at higher prices on short notice.  

For the hot series, such as C270, market pricing is still unstable and fluctuates within the $29-$32 USD range. Demand has also increased in EU/CHINA market for BCC950 with a price range of around $210~215 USD.  

For headset products, the supply for the low-end models H110, H111, H340 and H390 is still very short with limited supply, and shipments from the factory are uncertain. 

LCD panels experience unstable supply 

Current LCD panel supply remains unstable due to an upside in demand. The most wanted specifications are the 14.0 inch and 15.6 inch from HP, Toshiba and Sharp, while the demand for Dell is focused on the 14.0 inch and 17.3 inch (4K resolution).  

The spike in demand is due to the COVID-19 pandemic because of the increase in laptop demand from people working from home, which in turn requires more LCD panels.