All major suppliers are affected by contingent supply chain disruptions
From quarter to quarter, the global supply chain has experienced a consecutive line of disruptions. Most recently, in the first quarter of 2022, there were two earthquakes in Japan impacting various manufacturers in the country; major hubs in Asia had to shut down operations due to COVID-19 outbreaks; and Russia invaded Ukraine, inciting war and cutting off supply chain resources in the region.
As a result, the global supply chain has seen an uptick in supplier backlog, price increases and longer lead times.
Largescale shortages continue to impact IC production
All major integrated circuit (IC) suppliers have prioritized automotive orders due to high demand. However, severe supply shortages are straining production lines – this includes both workforce and raw material shortages impacting factories. Affected components include power management and analog ICs, analog signal converters and MOSFETs manufactured by STMicroelectronics, Infineon and Microchip. Infineon’s lead times increased from an average of 48 weeks to 60 weeks.
STMicroelectronics deliveries extend beyond Q4 2022
In Q2, STMicro announced a 15% price increase affecting all product lines from April onward. This disturbs existing backlog due to surmounting raw material, energy and logistic costs.
In May, an additional price increase of 25-30% will apply to its discontinued STM8 (8-bit) MCU series. The series will be discontinued by Q3 and will lead to customers to the alternative STM32 (32-bit) series. However, the STM32 has been impacted by delivery delays and will require customers to redesign their boards to accommodate the part. For all series, deliveries are delayed to Q4 2022 or Q1 2023.
Microchip implements price increases on all products
Microchip has implemented a wide range of price increases between 5% to 40% across the board, with an average increase of 10%. Lead times are currently up to 50 weeks and any new orders are required to be NCNR with a one-year delivery window. There have been numerous instances where participation in Microchip’s Preferred Supplier Program has not guaranteed full allocation, with shortfalls as high as 50% reported. This suggests that gaps in supply are much higher for those that do not participate.
Vishay Intertechnology lead times extend beyond one year
Operations at two Vishay factories in Shanghai, China have been impacted by mandated lockdowns and workforce restrictions due to COVID-19. One of the factories manufactures MOSFETs while the other is a small diode factory.
The quarantine restrictions at Vishay distribution and sorting factories affect both MOSFET and diode production, preventing customers from receiving orders. This is expected to create supply gaps well through April.
Automotive MOSFETs are currently under hard allocation with 75-week lead-times. The SI943 series appears to be the most affected, while standard resistors are currently facing lead-times of up to 100 weeks (CRCW series). Thin film resistors have 50–80-week lead-times and shunt resistors have current lead-times of up to 80 weeks.
Renesas Electronics Corp. factories in Japan see long-term impact from earthquakes
Three Renesas factories in Japan were impacted by two separate earthquakes in Q1. The production delays, caused by operations being halted to assess damage, have hindered output. The three factories located near the epicenter of the March 16 earthquake include the Naka factory, Takasaki factory and Yonezawa factory.
All factories have since resumed operations, but not without consequence. At the Naka factory, semi-finished products under production were partially destroyed. Losses due to ruined work-in-process and reduced production account for approximately two weeks’ worth of production for the 200-mm (8-inch) wafer fabrication line, and approximately 3 weeks for the 300-mm (12-inch) line.
In terms of losses, the Takasaki factory lost about 10 days of production, and the Yonezawa factory lost two days of output.
Production capacity for onsemi has maxed out for 2022
Onsemi lead times continue to surpass 50 weeks with no sign of improvement as production capacity is at its max for 2022. Allocation levels also remain tight as priority is currently being given to customers in USA and EMEA. As prices for raw materials continue to increase, prices are also expected to rise in Q2.
To add to existing delays, onsemi’s “Ship and Debit” initiative to protect customers is requiring customers to seek allocation approval amongst thousands of other claims. However, the labor-intensive process creates more challenges affecting all series.
Primary coolant supplier closes its production plant
Under tightened local environmental regulations, 3M closed its semiconductor coolant plant in Belgium indefinitely. The plant accounts for over 80% of the global coolant supply used for etching, a step in the chipmaking process.
The measure was taken on March 8 with 3M sending an official notice on March 18 to its customers, which includes Samsung Electronics, SK Hynix, TSMC and Intel. This does not have immediate impact on the market; however, manufacturers now must find an alternative source and current coolant stock is estimated to have a one to three life span.
Intel server CPU pricing and supply impacted by global events
There was an apparent price drop on Intel server CPUs when the government-mandated lockdowns at factories in March in Shenzhen due to COVID-19. This is likely due to vendors actively reducing inventory of existing Intel Cascade Lake and Cascade Lake Refresh supply.
The two server CPU series have been under severe constraints, which is expected to continue through Q2 with the additional sanctions imposed amid the Russia-Ukraine war. The US and other countries have imposed the sanctions to block exports of commercial electronics, aircraft parts, semiconductors and more from Russia.
Intel’s Ethernet controllers and chipsets undergo major product shifts
Intel is not prioritizing its Ethernet controllers and chipsets because they are lower value parts among the manufacturer’s product line. The existing Intel Ethernet controllers and chipsets are 45NM technology, which is an older technology and produced by TSMC.
The minimized production of older series is actively pushing customers to transition over to the latest Ethernet Controller, I225 Series. However, the transition will take time as the latest Ethernet Controller I225 Series is not pin to pin with the predecessor which requires a redesign of customers motherboards. The projected timeline for customers to transition from the older series is estimated at six months.
Intel is announcing the end-of-life support across the follow Ethernet controller/chipset series:
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Additionally, the following product change notices have gone into effect across various Intel Ethernet controllers:
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Orders are Non-Cancelable and Non-Returnable After: January 31, 2021 Last Product Discontinuance Shipment Date: December 31, 2022
Ø Products Affected/Intel Ordering Codes:
Orders are Non-Cancelable and Non-Returnable After April 22, 2022
Ø Products Affected/Intel Ordering Codes:
Orders are Non-Cancelable and Non-Returnable After January 22, 2022 Last Product Discontinuance Shipment Date April 22, 2022
Ø Products Affected/Intel Ordering Codes:
Orders for Discontinued Products Become Non-Cancelable April 30, 2022 Last Product Discontinuance Shipment Date September 30, 2022
Ø Products Affected/Intel Ordering Codes:
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Open market activity on the soon-to-be EOL series has been brisk and pricing has been rising steadily on whatever product is available.
EEPROM shortages are affecting transceiver production
The shortage of EEPROM programmable memory parts is affecting transceiver production. The demand for transceivers surged in the China market, but limited raw materials, workforce shortages and insufficient output of EEPROM’s is delaying deliveries. EEPROM, manufacturer of Microchip, STMicro and NXP, anticipate supply gaps as lead times reach 52 weeks.
Finisar, a transceiver manufacturer, requires EEPROMs to produce its optical communication components and subsystems. However, EEPROM shortages mean longer lead times, which have stretched beyond 30 weeks. The 85xx series 8574 and 8536 parts are among those affected by constraints. Decommitments are anticipated in Asia and other regions as well with the limited availability becoming more widespread.
Multiple manufacturers increase SSD prices in Q2
The shortage of power management IC controllers is a driving factor in SSD price increases that have gone into effect in Q2. All major brands have risen their SSD prices by 5-10%. This includes Samsung, Intel and Micron.
Intel and its SSD business, Solidigm, experience production strain due to the Shanghai lockdown
Solidigm is continuing to use Intel distribution channels through Q2 and Q3 in an effort to reduce possible market disruption, but both Intel and Solidigm series are experiencing production constraints.
The following Intel SSD lines continue to be short:
Intel 240GB and 480GB small capacity SSDs are also under critical shortage.
Although production resources are focused on the NVMe, SSD customers will still find market availabilities tight and pricing elevated due to manufacturers focusing on delivery to tier 1 OEMs.
Additionally, an end-of-life notice will impact the following Intel/Solidigm series:
Some parts are so constrained that they will not be released until after Shanghai’s Labor Day, which is May 1. Both small and large capacity SSDs are impacted.
Hard drive manufacturers navigate higher logistics costs and sanctions
Raw material shortages and higher logistics costs due to sanctions implemented amid the Russia-Ukraine war are impacting hard drive (HDD) pricing. In Q2, Seagate increased prices by 3-4%, while Western Digital increased its HDD prices by 5% in Q2. While pricing is increasing, demand has slowed, leading to overstock in some cases by vendors in Europe.
There has been limited supply of low-capacity HDDs, such as 1TB due to end-of-life notices and 2TB HDDs due to supply constraints. However, supply of high-capacity HDDs, such as 16TB and 18TB has improved in recent months, increasing availability for customers.
Mellanox sees demand outpace supply
The average lead time for Mellanox products remains as high as 36 weeks due to demand outpacing supply. The most severe supply gap is affecting the MCX-6, MCX-5 andMCX-4 series as demand continues to remain high, leaving customers with limited options, as well as higher product pricing. Effective from April onward, Mellanox is increasing pricing by 25% and production constraints are extending lead times beyond a year.
Restrictions as a result of the Russia-Ukraine war limit GPU shipment
GPU demand from Russia has halted due to sanctions. As a result, suppliers are stuck with inventory that they are unable to ship.
GPU production capacity is unlikely to improve as COVID-19 lockdowns in Shanghai and Guandong, China disrupts manufacturing.
The US temporarily lifts tariffs on graphics cards imported from China
GPU prices are expected to lower by 10-15% as a result of the US lifting its tariffs. Components excluded from the pre-existing tariffs include PC graphics cards, motherboards and other higher-grade GPUs. The exclusions reportedly apply to imports dating from October 2021 to December 2022.