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08.30.2021

 

 

ICs

Foundries starting to increase pricing

UMC foundry will increase the price of its products by up to 30% in Q3, which is much higher than the previous 15% increase. Similarly, Power Chip, TSMC and Vanguard International Semiconductor Corporation may follow suit. We predict that numerous other IC brands will also inevitably increase their prices.

The main contributors to the IC shortages are the migration from 4G to 5G, the severe growth of high-performance computing and the continued strong demand seen in the automotive market after resuming production earlier this year.

Manufacturers aren’t getting allocations of ICs produced by TSMC and as a result, distributors are expecting allocations to be reduced by 40%, which will last until early 2022.

What’s more, the latest extended lockdown in Malaysia has forced more than 50 semiconductor plants located there to reduce capacity by 40-60%, which may lead to additional supply issues.

 

Strain on connector supply worsened

The ongoing raw material shortage and new COVID-19 measures throughout Asia are further straining supply in the connector market. As a result, manufacturers JST and Lumberg are being affected and are facing lead time increases. JST, for instance, has lead times sitting at around 42 weeks due to Malaysia’s lockdown, reducing the company’s capacity to 40%. Lead times for Lumberg’s connectors have also increased and are currently at 50 weeks.

Other companies are also being affected by material shortages, such as TE Connectivity and Molex. Both companies have introduced price increases in the last month, and all special prices for TE Connectivity have been blocked with no confirmation on when it may recover.

TE Connectivity and Molex are also seeing lead time stretches. Molex has lead times ranging from 18-30 weeks, while TE Connectivity has lead times of 52+ weeks for its products.

On the upside, Samtec has been the least affected because of its production plants in the EU and USA. The company’s lead times are currently sitting at 10 weeks.

In addition to the shortages and lockdowns, rising demand for electric vehicles, 5G and medical equipment are adding pressure to connector production plants. What’s worse, these continued shortages are resulting in price increases across the board.

 

MLCC production takes a hit

Ongoing market trends coupled with the extension of Malaysia’s nationwide lockdown suggest that there is a looming shortage of MLCCs used in products like smartphones, notebooks, networking products and 5G base stations.

Manufacturers with Malaysia-based production plants, including Taiyo Yuden, crystal suppliers NDK and Epson, Panasonic and Walsin Technology, have been disrupted and lead times for MLCCs have been prolonged.

Samsung’s production factory in Malaysia is also only being allowed to function at a maximum of 60%, while Kemet’s production factory runs at reduced capacity as well. It is unknown how long this will continue and what the long-term effects may be as a result.

In an attempt to counter the production setbacks in Malaysia, Japanese-based MLCC production plants like Murata and Taiyo Yuden are working to ramp up production. This is in the hopes of fulfilling the increased number of orders for Q4 without drowning in the imbalance of supply and demand.

 

Altera’s FPGA supply reduced

There’s production of Altera’s Cyclone series FPGAs manufactured in Malaysia has been reduced due to the country’s lockdown. This has led to severe price increases for its MAX10, MAX II, CYCLONE 10, STRTIX 10, 10M, 10C, 10S and CYCLONG 2 3 4 5 series. Lead times for some parts have even been pushed to over one year.

 

 

 

MEMORY

Memory pricing spikes due to increased production needs

Server DIMM demand remained strong at the end of Q2, specifically for 16GB and 64GB RDIMMs (primarily the 3200 speed). This is largely due to the sudden increase in production for Q3 projects.

Despite this, manufacturers are reducing the prioritization of 16GB production and are instead focusing on producing 32GB and 64GB due to higher profit margins. Furthermore, it is speculated that RDIMM allocations across the board are being reduced for all distributors due to yield issues. Allocation priority is going to Tier 1 customers first.

In other news, PC DIMM demand remains weak and overall pricing has dropped 5-7%. Supply remains healthy and vendors speculate this is largely due to IC gating issues, resulting in customers delaying their allocation.

Overall, July pricing spiked 1-2% across all server capacities. Vendors are hopeful that pricing will continue to rise.

 

Kioxia memory production reduced

Due to continued shortages and the increasing price of raw material production, distributors were warned of a 10% increase in memory pricing for the next quarter. A decrease in the volume of current memory products is also expected as lines prepare for the production of upcoming versions.

Lead times for memory have stretched to 38-40 weeks and pressure is already being added from orders being placed in Q3. Thus, it will be prudent to monitor demand and supply fluctuations.

 

2D NAND and DDR4 in tight supply

SK Hynix has reduced the production of 2D NAND as it moves toward 4D NAND. Because of its dependency on 2D NAND, the production volume of eMMCs has also been reduced. This trend will be maintained and the volume of 2D NAND will continue to decrease. Moving forward, eMMC supply from manufacturers will be limited.

In other news, DDR4 is still the most commonly used product, which will remain the case until the end of 2021 at the earliest. We may see more activity around DDR5 ramp up in the coming year.

Because overall consumption was low in the past few months, manufacturers are now regulating market supply in order to control the price of DDR4.

 

STORAGE

Samsung shifts its production focus

Samsung will be strategically shifting its focus toward consumer-grade SSD manufacturing due to material shortages expected for Q3. The company intends to place its focus on the NVME line-up instead, caused by a surge in demand for NVME SSDs over recent years.

For unknown reasons, Samsung also plans to reduce the production of its 860 EVO 2.5’ SATA, 850 EVO .2 SATA, 860 PRO 2.5’ SATA, and 870 EVO 2.5’ SATA. This leaves the 870 QVO line, which has capacities 1TB through 8TB, as the only SATA running at normal production. Customers using Samsung’s 250GB or 500GB SATA drives may run into supply issues unless they are willing to upgrade to 1TB capacity.

Samsung vendors shared that pricing has risen 12-18% for all enterprise SSDs. Besides the price increase, allocation for these products remains limited.

 

Intel SSD pricing continues to be on the rise

Intel informed authorized distributors in the US to expect a large quantity of its newly launched SSD Series S4520 and S4620 to be released at the beginning of Q3. However, they are now being told deliveries are being pushed out to the end of the quarter at the earliest.

Pricing is still not available and though the quantity is undetermined, it is expected to be lower than originally anticipated. This will be the final change to its SSD line-up that Intel will make before transitioning to Hynix.

Intel vendors did not receive the full allocation of SSD they were expecting in Q2 and official pricing was 10-20% higher compared to Q1. The most sought-after series are S4510 and S4610 with the most popular capacities being the 240GB and 480GB. This trend is expected to continue in Q3.

Similarly, Micron vendors shared that SSD allocation for Q3 remains limited and to expect prices to increase by 5-10%.

Generally, some customers are still waiting for the Q3 SSD contract pricing and are holding off from making a purchase in hopes that pricing will become more favorable.

 

Supply of HDDs flood the market

The Chinese government ordered a halt of all cryptocurrency mining base transactions in Alipay and other official banks, suspending 90% of Bitcoin mining capacity and one-third of the global crypto network’s processing power. As such, the price of HDDs in the open market has leveled off to standard pricing

Small-capacity drives, specifically 1TB and 2TB, are facing the worst constraints. Factories are shipping parts, but quantities are small and do not cover existing customer demand.

Overall, the production of enterprise HDDs is tight, though availabilities for large capacities (10TB+) can be obtained from the market. This is due to distributor inventory levels from the previous mining craze not being fully consumed yet.

Some system integrators are stressing over their high levels of inventory and lack of demand as market pricing drops near to official pricing. A few franchised distributors believe the existing inventory is causing pricing to lower, but that it will start rising once inventory is consumed later in the quarter.

 

GPUs

The collapse of Bitcoin mining causes uncertainty around Nvidia’s GPUs

China’s crackdown on cryptomining forced several miners with data centers to drop activities, resulting in a supply chain shock. Many GPU consumers hoped the recent collapse of Bitcoin mining would help supply issues and pricing for Nvidia’s GeForce 3000 series, but we have yet to fully realize the effects.

Secondhand GPUs have flooded the market and many Chinese miners are pushing out their Nvidia backlog. While it appears that customers are seeing a slight uptick in supply, distributors and retailers are still seeing constraints.

Nvidia has decided to stop the shipment of consumer cards and the company will not process any new allocations. The drop in Bitcoin’s value seems to have caused no downward impact on price.

In addition, all of Nvidia’s 3000 series GPUs are short with deep supply constraints as PC builders struggle to fulfill their backlogs. This is especially true for the RTX 3090, which is still in tight supply.

Manufacturers holding a large stock of Nvidia’s CMP HX (the dedicated GPU for professional mining) series 30HX and 90HX are open to discuss pricing.

The supply of Nvidia’s Quadro series is extremely constrained and lead times are very uncertain. This is true for the P2000/P4000 and RTX4000/5000/6000 especially, whereas the new A2000/4000/5000s have a relatively healthy supply.

 

Cryptocurrency causes intense growth of GPU market

Nvidia has been profiting from cryptomining activity over the last 12 months and now has a market value of $300 billion.

The company’s release of its Low Hash Rate (LHR) was an effort to monopolize the market by dictating mining and sales activity. Nvidia is already selling directly to the biggest global miners like Genesis and Hydro.

All in all, this year has been profitable for all GPU partners as margins have greatly surpassed the preceding year. Retail partners margins reached 50% this year compared to the 5% in 2019, while distributor margins reached 20% from 3%.

Ethereum mining may be prolonged for another year, which would guarantee exceptional demand levels but is dependent on the price of Ethereum. If it stays at its current price or higher, demand will continue and GPUs will be priced at the highest possible level. In conclusion, the supply constraint is here to stay.


CPUs

 

Microsoft launches Windows 11 later this year

Six years after the release of Windows 10, Microsoft announced its upcoming OS Windows 11 is scheduled to arrive later this year. According to rumors, manufacturers currently using Windows 10 will get a free upgrade to Windows 11; however, their decision will be based on the system’s compatibility with their CPUs. For reference, the minimum requirement for Windows 11 is Intel’s 8th Gen Coffee Lake or AMD’s Zen+ Pinnacle Ridge.

Depending on when Windows 11 is released later this year, we expect upcoming desktop and laptop builds to be equipped with Intel’s 10th Gen Comet Lake/Ice Lake or AMD’s Zen 3 Vermeer/Zen 3 Cezanne onward. Depending on Intel’s and AMD’s supply support, new builds may or may not incorporate CPUs that run on Windows 11.

 

Windows 11 CPU Compatibility by Manufacturer

WINDOWS 11 SUPPORT FOR INTEL WINDOWS 11 SUPPORT FOR AMD
Intel 8th Gen (Coffee Lake) AMD Ryzen 2000
Intel 9th Gen (Coffee Lake Refresh) AMD Ryzen 3000
Intel 10th Gen (Comet Lake) AMD Ryzen 4000
Intel 10th Gen (Ice Lake) AMD Ryzen 5000
Intel 11th Gen (Rocket Lake) AMD Ryzen Threadripper 2000
Intel 11th Gen (Tiger Lake) AMD Ryzen Threadripper 3000
Intel Xeon Skylake-SP AMD Ryzen Threadripper Pro 3000
Intel Xeon Cascade Lake-SP AMD EPYC 2nd Gen
Intel Xeon Cooper Lake-SP AMD EPYC 3rd Gen
Intel Xeon Ice Lake-SP  

 

Intel’s Xeon Sapphire Rapids has yet to be released

As the wait continues for the launch of Intel’s next-generation Xeon Sapphire Rapids, we anticipate continued demand for its predecessors, Xeon Ice Lake and Cascade Lake. Furthermore, the transition from Cascade Lake to Ice Lake and from Ice Lake to Sapphire Rapids will require new motherboards, so customers may wait until they can transition directly to Sapphire Rapids to avoid the additional cost.

Regardless, we have witnessed a constrained supply of Cascade Lake in the open market, especially of entry to mid-series products (32xx, 32xxR, 52xx and 52xxR). Because of this, we urge customers planning to linger on the Cascade Lake series to obtain buffer inventory before supply gets severely tight and open market pricing worsens.

 

FINISHED PRODUCTS

Lan chip shortage limits network card production

The Lan chip shortage continues, and lead times have stretched up to 40-50 weeks. This shortage, as well as the rising cost of raw materials, caused lead times for Intel’s network cards to stretch to 6-10 weeks.

We have also heard that Intel has invalidated its existing special price support, although the official price has yet to be adjusted. Now, end customers must decide between paying a premium price for priority shipping or accept the extended lead time.

Mellanox’s supply of Network Interface Cards also remains very limited with lead times stretching to 6+ months.

Broadcom’s RAID cards 93xx and 94xx series remain very hot, causing original manufacturer pricing to surge by at least 30%. Limited stock availability is selling out very fast and booking lead times remain at 42+ weeks.

 

The supply of Wi-Fi modules is very tight

It is believed there will be no allocation for Intel’s AX200 Wi-Fi modules from August through the end of this year. Distributors are saying supply will either be limited or non-existent until the end of 2021, forcing customers to move over to the AX210 or AX201.

Other Intel Wi-Fi modules have comparatively better supply, i.e. Wi-Fi module series 7265 and 3168. Despite raw material shortages, demand for other Wi-Fi modules in the open market remains slow. This could be partially attributed to the bottleneck caused by chip shortages.

 

LCD production to be hindered by shortages

Demand for LCD panels in IT applications has been high since Q2 2020, but it has been slowing down in recent weeks. We expect panel pricing to start falling at the end of 2021, but tight supply for various components used in the production of LCDs, such as power semiconductors, driver ICs and glass substrates, will continue until the first half of 2022.

In other news, current demand for Notebook LCD panels continues for 13.3” and 14.0” products. As a result, pricing has increased by at least 10%, whereas the price of most 15.6” panels has not changed much.

Additionally, lead times for Industrial Monitor LCD panels have been increased up to four months and longer.

 

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