The Greensheet: July 2021

CPUs

Product change notification for Intel's 9th Gen Coffee Lake Desktop CPU

Because the last product discontinuance order date for Intel’s 9th Gen Coffee Lake desktop CPU was Jun 25, 2021, expect supply to be limited in Q3. Additionally, the last product discontinuance shipment date is set for Dec 24, 2021, and there will likely be less support from Intel.

As a result, customers staying on the 9th Gen Coffee Lake desktop CPU will face higher prices.

Intel customers stuck in a transition crossfire

We expect customers to refrain from transitioning to the 11th Gen desktop Rocket Lake, and instead wait for the release of the 12th Gen desktop Alder Lake. Customers are likely to stay on Intel’s 10th Gen desktop Comet Lake provided the 12th Gen desktop Alder Lake has a healthy yield rate, especially since this is Intel’s first 10NM desktop CPU. What’s more, brand-new motherboards are required to transition from Intel’s 10th Gen Comet Lake to 11th Gen Rocket Lake. The same will be true for the transition from the 11th Gen Rocket Lake to 12th Gen Alder Lake. Going through transitions twice a year may pose issues for customers since the gating issues will not be resolved anytime soon. Despite desktop demand picking up, shortages of other essential materials are causing ongoing gating issues and continuing to halt the production of desktop machines. With Intel rushing the release of its new desktop series to compete with AMD, customers are caught in a product transition crossfire.

AMD monitors its point of sale

AMD’s 2nd Gen Rome and 3rd Gen Milan EPYC server CPUs remain highly desired in the market. Manufacturers are receiving small pockets of supply as ongoing shortages continue for the 2nd Gen Rome; however, it is barely sufficient for production needs. They are unlikely to risk their limited supply by trading on the open market, especially since AMD has been closely monitoring its Point of Sale (POS) and inventory.

According to vendors, there will also only be small pockets of supply for AMD’s 3rd Gen Milan at the end of Q3 and onward. Vendors are not expecting many re-sell opportunities due to limited supply, as well as AMD’s monitoring.

Furthermore, AMD is pushing distributors to send back any unsold inventory of its 1st Gen Naples EPYC server CPUs. It is likely that AMD will try to sell these CPUs to other system integrators using them, instead of having them wait for the 2nd Gen Rome and or 3rd Gen Milan.

Moving from Naples to Rome and Milan does not pose an issue as they use the same 4094 Land Grid Array (LGA), Socket SP3 and motherboard, though we are unsure of how many customers will revert to using 1st Gen Naples EPYC. It is possible that this move could backfire and cause customers to switch back to Intel’s Cascade Lake and Cascade Lake Refresh instead.

ICs

Malaysia lockdown affects various manufacturers 

The recent lockdown in Malaysia has put a spotlight on potential supply issues for more than 50 semiconductor plants based there.

As such, manufacturers who have plants in Malaysia, such as Infineon, NXP, Renesas and ST Microelectronics, are now only allowed to run at 60% capacity with government approval.

Though it is being reported that the reduced capacity will not influence production outputs, market conditions have changed and manufacturers may be unable to cater to the increased demand. Production plants running at any less than 100% are likely to cause a chain reaction for the months to come.

Infineon

Infineon is expected to announce price and lead time increases due to Malaysia’s lockdown. Distributors have reported that lead times for Infineon products have stretched to 26-39 weeks, and existing orders are highly subject to stock allocation.

Infineon had already planned on increasing prices by at least 15-20% as the company continues its efforts of fulfilling backlog orders from last year.

On Semiconductor

On Semiconductor also shared that the lockdown will significantly impact its regional facilities based in Malaysia. The company is currently assessing production and distribution delays, and is looking to operate at full capacity as soon as possible.

Prices rose in June and another increase is expected for July as allocations are put in place for series directly produced in Malaysia. Lead times for the BD135,137 and 139 series transistors have stretched out to 40 weeks, while lead times for the NCP3, NCP1, NCP5, NCP6 and NCP7 series controllers are up to 60 weeks.

Taiyo Yuden

It is reported that Taiyo Yuden’s production plant in Malaysia was shut down from June 1-14 after workers tested positive for COVID. While operations have resumed, outbound shipments have now been delayed by two weeks.

The Malaysia plant mainly produces commercial MLCCs and its lead time is currently 16 weeks. Both commercial and automotive grade parts are facing tight allocation.

Samtec

Samtec’s production factory in Johor Bahru was also affected by the shutdown in Malaysia. The production factory was able to operate at 60% capacity; however, they have now been forced to shut down for 3 days due to unknown reasons and may shut down entirely for 10 days.

Samtec has two other production plants in Malaysia, currently operating at 60% capacity.

NXP

It has been reported that NXP’s assembly and testing factories based in Malaysia and Taiwan have been affected by the lockdowns. With certain deliveries already facing delays, it is predicted that automotive MCUs will continue to be heavily affected throughout Q3 and Q4. The ‘S9’ series is the most notably impacted and has been experiencing high demand in the market.

NXP is also investigating distributor trading activities within the open market to ensure parts are being properly sold. Product shipments are now being put under a microscope, causing delivery delays for distributors and partners.

ST Microelectronics

ST Microelectronics is also being affected by the Malaysia lockdown. The company continues its struggle to recover from increased demand, resulting in high lead times for the STM8/STM32 series, LIS series and STP MOSFETs. Currently, delivery schedules are being missed, leaving customers to turn to the open market where prices are on the rise and stock availability remains low.

Diodes Incorporated lead times affected by wafer shortage

Diodes Incorporated announced that they are preparing to raise prices after July 1st; however, the company has not shared by how much. Due to the wafer shortage and subsequent price increases, lead times have stretched to 52+ weeks.

Rising demand strains MLCC supply

The ongoing rise in demand for consumer electronics, mainly 5G smartphones, laptops and automobiles, continues to strain the supply of MLCCs. Production cannot keep up, resulting in increased lead times across the board.

High-capacitance MLCCs have been hit the hardest and are under allocation due to network server demand surges, as well as the ever-changing demand for Bitcoin mining equipment. Lead times are being extended every 3 months and all automotive parts across the board are subject to allocation.

In other news, the raw material shortage has worsened from Malaysia’s lockdown, forcing Samsung’s production factory to only function at 60%. The company’s ability to recover its production is almost nonexistent. These continued shortages are also resulting in price increases.

SSD supply to tighten in Q3

Intel’s SSD supply is expected to be reduced by 30-40% in Q3 compared to Q2. Allocation in Q3 will remain limited, and Intel will be increasing its official pricing by 20%. Pricing in the market will only continue to spike.

Samsung’s SSD prices are likely to be increased by 10-20% in Q3 as well. Samsung planned to announce the end-of-life for its PM883, SM883 and PM983 in August 2021; however, with many customers not planning to switch to the new series, it has been pushed to March 2022.

Micron’s SSD supply will also continue to be affected by shortages and, as a result, allocation will be limited in Q3. The most sought-after capacities are the 480G and 960G, which are being snatched up by end customers. Consequently, current demand continues to outweigh supply.

Demand remains strong for SATA devices, especially lower capacity offerings like 240GB, 480 GB and 960GB, which are currently constrained the most due to a lack of controllers.

Compared to last month, the tight supply of Intel’s ‘P’ series SSDs has eased slightly. We are even starting to see stock offers on the market for the P4510 series 1/2/4/8TB. China and Hong Kong’s interference with cryptocurrencies has caused storage crypto to drop significantly.

HDD market to see volatile pricing

The enterprise HDD market fluctuated throughout June with big jumps in price. Because miners stocked up large capacity HDDs (10TB+) at the beginning of the month, there was an exponential price increase of approximately 100-200%.

As with SSDs, storage crypto in the HDD market was also affected by Hong Kong and China’s crackdown on cryptocurrency mining. Now, pricing has dropped and stock offers are appearing in the market. Regardless, the market is not likely to return to pre-pandemic levels, since the drop in demand will ripple into July and August, at a minimum.

What’s more, the IC and raw material shortages are affecting HDD production and manufacturers are likely to prioritize highly profitable lines over lower-end capacity drives.

Expect highly variable prices in the next month.

GPUs

GPU demand drops as cryptomining takes a hit

Crypto mining has taken several hits, driving down the value of digital currencies and components used in mining operations, such as GPUs.

Prices for GPUs have declined rapidly due to lower demand and Nvidia’s new security feature, LHR (Lite Hash Rate), which is more effective than the company’s previous attempts to stop miners from using its new 30 series cards. The only exception to this falling demand is Nvidia’s RTX 3090, which is still experiencing tight supply and inflated prices.

While the Chinese government’s crackdown on mining has depressed demand globally, mining activity has shifted to other regions like Kazakhstan. Expect demand for crypto mining farms to increase in this region due to Kazakhstan’s pro-crypto stance, as well as other factors, such as low energy costs compared to in China.

Despite this news, supply constraints are expected in the near future as Nvidia works through a massive backlog. As the company allocates production capacity to its most popular lines, namely the 3080 and A6000, it will take some time for Nvidia to clear the backlog. Even so, US card suppliers are optimistic that supply will improve midway through Q3. If this occurs, it should lead to better and more stable pricing in the US market.

PC builders are expecting the majority of available stock to go to the retail market with restrictions on the number of GPUs a customer can buy at one time.

FINISHED PRODUCTS

LCD manufacturers look to safeguard against shortages

Throughout the beginning of Q2, LCD panel prices experienced a continuous increase in pricing due to raw material and component shortages. Most Tier 1 PC manufacturers prioritized securing LCD controllers and setting up supply and pricing agreements with LCD manufacturers. This is an attempt to safeguard themselves against further shortages.

Big market players predict prices will start to soften by the end of 2021. There has already been a slight drop in market pricing from demand being lower than anticipated. Thus, supply is higher than anticipated and vendors are able to get allocation for July. Open market pricing for 15.6” panels was as high as $70, yet we are now seeing a range of $58-$63.

RAID Controllers continue to face shortages

Amidst the recent crackdown on crypto mining in China and Hong Kong, RAID controllers are remaining constrained. Broadcom’s MegaRAID 93xx and 94xx series, specifically, are being affected and will face end-of-life in October 2021, with a last-time buy in October 2022 and a last-time sell in March 2023.

Lead times have stretched from 28 weeks to 42 weeks, so expect fierce competition for the upcoming allocation.

Manufacturers re-route production of less profitable SKUs

Distributors shared that current Mellanox booking lead times have stretched to 4-6 months. Mellanox has had to limit booking allocations to 500 pcs per month for ethernet adapters and InfiniBand cards (combined SKUs, not 500pcs per single SKU).

The recent Israeli-Palestinian conflict has also greatly affected the production of ethernet cards as factory workers are unable to return to work. Manufacturers in this region have been forced to re-route the production of less profitable SKUs to Taiwan, China, India and Malaysia facilities as they focus on high-margin products.

Intel shifts focus away from its network cards

There has been a lot of market activity surrounding Intel’s network cards after a recent spike in demand. Even so, supply remains short due to raw material and substrate constraints.

Furthermore, the company is now allocating more of its substrate supply to the production of mobile CPUs in hopes of gaining traction against AMD in this segment. As a result, Intel is shifting focus away from its network cards, resulting in a tight supply of Ethernet cards and prolonging lead times.