FUSION: MARKET INTELLIGENCE, FUSION: THE GREENSHEET
The Greensheet: August 2024
The Greensheet is Fusion Worldwide's monthly market intelligence report detailing the most significant developments across the memory, hardware, central processing unit, and integrated circuit supply chains.
Here are some key takeaways from our latest report:
- Micron, Samsung, and SK Hynix continue to adjust memory prices, driven by continuous demand from AI customers. As these manufacturers strategically shift production capacity towards newer components, customers brace for EOL notices on older memory modules.
- In the storage market, HDD demand is outpacing production, which is causing increases in pricing and lead times. However, SSD costs remain higher than HDDs and have jumped by 10-25% due to similar fluctuations in NAND flash pricing.
- Weak PC demand impacts the CPU market, causing suppliers to worry about excess supply. However, market analysts indicate demand is set to recovery after shipment trends show signs of a rebound.
- A recent surge in demand for PMICs is impacting Monolithic Power Systems’, causing lead times to extend and a trickledown effect for other brands as they see a rise in demand for their alternative products.
The inventory correction cycle seems to be coming to an end as the market begins to stabilize. Lead times have notably returned to pre-pandemic levels, with only minor exceptions for legacy and specialty processed parts. Many suppliers predict a major demand increase in late Q4 2024 and early 2025, as positive book-to-bill trends support the idea that Q2 ’24 marked the bottom of the current cycle.
Learn more about the market happenings in the full report below.
Micron announced a 15% price increase for LPDDR5 memory at the start of Q3. This increase stems from the high demand for AI applications and the component’s exclusive compatibility with AMD-based PCs. Supply of LPDDR5 has yet to keep pace with escalating demand, which forecasts indicate will continue through the second half of the year thanks to additional shipments in chrome books, handheld devices, and mobility products.
Conversely, LPDDR4 demand remains weak, causing excess supply to be a concern for distributors. DDRR4 prices are consequently kept low and have only increased by 8% this quarter.
In addition, DDR3 demand is picking up as Samsung and SK Hynix recently announced plans to push towards EOL. Once Samsung and SK Hynix transition away from DDR3, the plan is to increase support for DDR4 and DDR5. Micron has a longevity program for DDR3, and there is still ample supply of Micron’s version, so availability is not a concern yet.
Hardware
HDD Demand Outpaces Production
Market intelligence reports indicate that HDD supply cannot match demand, extending booking lead times. High-capacity storage prices have risen by 10-20%, driven by a shortage of raw materials such as glass substrates.
Seagate is one of the manufacturers signaling that there are supply constraints in the HDD market and has noted an uptick in delivery issues for high-capacity HDDs. Starting this quarter, the manufacturer requests customers provide more visibility into their demand and submit 52-week committed orders for all product ranges.
SSD Prices Jump 10-25% Across Capacities
SSD costs remain above HDD prices, with fluctuations in the cost of NAND flash driving up SSD costs. Samsung and Solidigm recently increased their SSD prices by 10-25% across all capacities.
Market activity remains flat as customers adjust to new pricing. The open market has mirrored these price trends, reflecting the overall increase and making cost-effective alternatives more challenging to secure.
NVIDIA AI GPU Demand Soars as H100 Supply Tightens
Demand for NVIDIA AI GPUs, especially the H100, remains robust despite speculation about it possibly going end-of-life (EOL). Supply is consequently tight, leading many customers to face gating issues. The upcoming B200 is also generating significant interest, with end customers forecasting and placing orders for future allocations.
Despite these constraints, the demand backlog is healthy and expected to pick up soon. Meanwhile, AMD's MI300X accelerator benefits from spillover demand from customers who initially sought the competing NVIDIA H100 GPUs.
Pricing has been on a downtrend for the Quadro series, dipping by about 3-5% over the past few months. To spur additional activity, the manufacturer plans to keep market pricing low.
High-Spec Cards and Optical Transceivers Face Localized Shortages
The overall supply of networking products remains healthy despite the increased demand last quarter. Shortages are localized to high-spec networking cards, cables, and optical transceivers. The surge in demand for H100 GPUs has also led to increased inquiries for Mellanox MCX7 series products compared to the MCX5/6 series. Lead times for the CX6 have extended, and customers report a lack of confirmed delivery dates as Mellanox continues emphasizing support for CX7 production.
Mobile CPU Market: Weak PC Demand, Tight Intel Supply, and Growing Interest in AMD AI Chips
Demand for traditional PCs is sluggish as customers prioritize cost-effective planning. This trend resulted in fewer orders from laptop manufacturers, affecting Tier 2 and Tier 3 suppliers. While AMD observed a 10-15% drop in laptop customer orders, Intel’s overall demand is reportedly stable as supply remains healthy.
While shipments were previously on a decline that lasted seven consecutive quarters, recent research indicates market trends are ready for a reversal. IDC’s research showed global PC shipments finally expanded last quarter based on tailwinds from mounting AI PC demand and a corporate refresh cycle. Weak sales in China are one of the headwinds hindering demand.
On the supply side, Intel's Meteor Lake H series CPUs for laptops and 12th Gen Alder Lake N series ATOM CPUs for Chromebooks (N200, N300, N305) are expected to see minor constraints through the end of Q3 2024. Additionally, AMD has extended booking lead times for desktop CPUs by 2-3 weeks, possibly reallocating capacity to high-margin AI-related products.
Intel plans to launch its Lunar Lake CPUs in Q3 2024, while AMD focuses on its AI 300 series, with the recent availability of LPDDR5X versions for Ryzen AI 9 365 and Ryzen AI 9 HX 370. Both companies are enhancing their offerings to meet evolving market demands, such as AI acceleration.
Server CPUs: Intel Faces Supply Constraints While AMD's Genoa Series Thrives
Intel is seeing spot demand for some 3rd Gen Ice Lake SKUs, with Tier 1 OEMs requesting allocations. Supply constraints have led to a 1-2 week extension in general booking lead times for 3rd Gen Ice Lake and 4th Gen Sapphire Rapids CPUs. Intel is shifting focus toward 5th Gen Emerald Rapids, which will improve availability.
AMD's 4th Gen Genoa series server CPUs are seeing steady market activity, especially from non-Asian markets, which comprise about 70% of recent overall demand. Distributors report strong interest in Genoa EPYC processors (e.g., EPYC 9124, 9654, 9754, 9534, 9554), with open market prices being highly negotiable due to competitive pressures.
Surge in Demand Strains MPS PMIC Supply
A recent surge in demand caught Monolithic Power Systems by surprise, and manufacturing has been unable to support the uptick in orders. This development has led to shortages in key MPS Power Management ICs (PMICs) parts, such as those beginning with MP and MPQ, primarily due to large customers monopolizing production capacity.
The supply challenges for these PMICs may impact other brands like Intel and Renesas, which offer similar components. Currently, MPS's PMICs account for approximately 20% of their total production, with automotive and consumer applications each making up 20% and 15%, respectively. Industrial items comprise the remaining share.
Market intelligence reports indicate that lead times for standard and automotive products are 26 weeks. Production capacity for Q3 is fully allocated, exacerbating supply challenges.
Samsung Adjusts Its LED Business Amid Financial Strain and Faces Backlash
Contrary to rumors of a complete market exit, Samsung is instead strategically shifting its focus away from low-spec LED products. Having faced financial losses for several years, the company will be phasing out less profitable product lines. However, distributors still wait for specific end-of-life schedules for these products.
Recent price increases imposed by Samsung’s overseas legal entities have sparked considerable customer dissatisfaction, further compounding the financial strain on Samsung LED. While Samsung will continue to support its automotive LED production according to current directives, many customers are migrating designs to alternative brands. For Korean customers, Seoul Semiconductor is emerging as a popular choice due to its competitive pricing. In Europe, Osram is the preference for high-spec requirements, with a strong demand trend stemming from the horticulture sector.