The Greensheet: June 2020

ICs

Infineon / Cypress transition beginning

Since the acquisition of Cypress was completed in April, Infineon has started the transition of production activities, which includes moving the final assembly and testing sites to other Infineon locations. It’s reported that current operations are only at 80% capacity and lead times are longer than normal.

Increase in medical device production adding to Renesas’ allocation issues

The Renesas production plant in Malaysia produces a large portion of their buck boost regulators and transmitters/receivers. Between Malaysia’s lockdown and an upside in demand of medical devices, allocation issues for a variety of these products have arisen. Sources expect that the issue will continue throughout Q3 despite production capacity slowly ramping up.

Production capacity ramping up for pressure sensors

Pressure sensor supply has always been unpredictable, and the outlook is bleak for Q3 and Q4. Currently, lead times are extended due to the low production capacity caused by the coronavirus, and the surge in demand for medical and industrial automation. Distributors are keeping low inventories because the Q3 and Q4 demand forecasts are less than positive.

Microchip increasing prices

Since the beginning of 2020, there has been talk that Microchip would be increasing its prices. However, it is only now beginning to roll them out. The main reason for the price adjustment is due to manufacturing cost increases, which are mainly affecting Atmel series on ATTINY, ATXMEGA & ATMEGA.

The unstoppable demand of Tantalum Capacitors

Raw materials for Tantalum Capacitors are primarily sourced in central Africa and concerns have elevated in recent months about the viability of its supply chain. With the shutdown of mining operations due to the coronavirus pandemic, lead times have stretched and are remaining unstable.

As companies re-open, they are working to meet demand and stabilize supply. It will take weeks for suppliers, such as AVX and Panasonic, to get back up to normal production rates and, with inventory levels at an all-time low across the board, lead times remain long.

Tech giant Samsung builds new NAND flash factory

Samsung is still the No.1 manufacturer for NAND flash memory and is looking to extend its lead. The invention of its sixth-generation V-NAND (Single-stack 3D Memory Die With a 100+ Layer), which launched last year, is taking 3D memory to new heights.

In response, the company has plans to expand NAND flash production capacity to meet demand from emerging technologies, like artificial intelligence, Internet of Things (IoT) and 5G. The plan is to extend to Pyeongtaek, a hub for next generation memory technologies.

In addition, despite the headwind from cloud hardware orders being cut, the NAND manufacturer leader is still confident in the coming 2H server storage market and is investing to expand flash production.

CPUs

Weakened desktop demand continues

As weakened demand continues for desktops, open market pricing for 9^th Gen Coffee Lake is following suit, dipping by 10-20%. Though 10^th Gen Comet Lake desktop is gaining traction, limited supply and demand is stunting its market growth.

In response, we are hearing that many distributors are focusing on clearing their inventories and being more conservative pulling in more desktop processors.

Mobile CPU supply hindered

The overwhelming demand for laptops and Chromebooks caused by work-from-home and e-learning needs has significantly crippled mobile CPU supply. Gemini Lake and Gemini Lake Refresh are the hardest hit. Pricing for these CPUs has risen at least 8-10% in the open market. Many suppliers are attempting to pull in product in advance of their Q3 allocation to solve the increase in demand. This strategy will make the supply constraint for persist into Q3.

Many OEMs are using the predecessor, Apollo Lake, to bridge the supply constraint and combat premium pricing of Gemini Lake and Gemini Lake Refresh. However, the sudden uptick in demand has led to lead time stretches on Apollo Lake to at least 2-3 months longer than usual.

Meanwhile, Intel has been actively pushing customers to implement Ice Lake mobile CPUs. This may be short lived as Intel moves to launch Tiger Lake, its successor, by the end of July or early August. Historically, whenever there is a transition period, there is bound to be supply constraints on both ends. This scenario has the potential to cause customers to reserve and go back to 14NM Comet Lake.

AMD gaining momentum in mobile CPU market as demand has increased for Chromebooks

AMD continues to gain market share in the CPU space, partly due to supply constraints and premium pricing on Intel Gemini Lake and Gemini Lake Refresh products. We are not seeing any open market offers on the AMD Ryzen 4000 Series, Renoir, and as a result, many manufacturers are turning to 7th Generation AMD A-Series APUs, Stoney Ridge.

With the current whirlpool that Intel is in, we expect the demand for the AMD Renoir & Stoney Ridge series to significantly increase. However, it’s unclear if AMD production plants can keep up with the fast pace of demand.

Prices decreasing on Cascade Lake server CPUs

Intel has been shipping more Cascade Lake and Cascade Lake Refresh. As a result, distributors are getting a healthier supply than usual, causing price to decrease by approximately 10%. Because of premium pricing and limited supply for Skylake Purley, discouraged customers are looking to Cascade Lake and Cascade Lake Refresh for cost savings opportunities.

Demand surge for Denverton series

There is a sudden increase in inquiries and demand for the Denverton series – Atom Server workstation CPUs and Xeon D Processor. Intel has reportedly managed to improve the failure rate on these CPUs, resulting in wider usage especially in networking, communication, CCTV / surveillance security and data centers.

The supply on these low-value CPUs is still limited, and we believe the supply constraint will persist into Q3.

MEMORY

Server DIMM growth expected as pricing remains high

Server DIMMs official pricing is still on an upward trend with increases of around 2-3%, especially on 64GB RDIMM and LRDIMM within Q2. However, market pricing is fluctuating significantly every week.

Going into Q3, contract price negotiations will start. It is likely prices will continue to rise with many new product launch announcements (e.g. gaming console PS5, XBOX Series X) and new smartphone launches expected.

Laptop surge causing DIMM market disruptions

Demand for PC DIMMs has dropped, causing customers to request delays in shipment.

However, SODIMM 8GB 3200Mhz is facing a shortage with laptop makers due to higher production orders. Some customers are sourcing for cheaper PC DIMM pricing in the market to gain cost savings for their production. Thus, we are seeing a low target price required from laptop makers.

STORAGE

SSD market has oversupply

We are seeing a healthy supply for the mainstream Intel SSD S4510 and S4610 series. Suppliers had speculated a demand surge and are currently holding large quantities of inventory, which they are eager to move. Because end-customer projects have been pushed out or cancelled, oversupply in the market has led to a dip in price by at least 20% compared to Q1.

Lower capacities, 240GB, 480GB, and 960GB, are in oversupply as well, making it easy for customers to swap to other brands depending on price.

The one pain point for some customers has been on capacities of 3.84TB/4TB and above, where demand has been consistent. This has led to some spot shortages.

Despite the current oversupply situation, we expect pricing in Q3 will be back to normal once most of the inventory has been consumed coupled with an expected increase in demand.

Transition to next-gen GeForce underway

With the upcoming launch of the next-gen GeForce 30xx series, the supply of existing RTX 20xx series has dropped significantly to pave the way for the new product line. Further, combined with steady demand on RTX 2080 TI, and Nvidia’s discontinuation of the RTX2080Ti chipset in mid-May, we are seeing the market price on an uptrend of approximately 5% through June.

Once market availabilities dry up, demand will move to RTX2080 Super. Some sources have indicated that inquiries for 2080 Super have already increased, and we are seeing lead times extending 1-2 weeks.

News has been circulating that the next-gen GeForce 30xx is expected to launch in Q3. However, the company has not made any official announcement, and customers are left struggling to manage the supply gap before the new model is launched.