THE GREENSHEET
The Greensheet: October 2019
IC
Demand in MLCC market expected to increase
Demand in the MLCC market has been stagnant for the last few quarters. Customers and manufacturers alike have been burning through high levels of inventory throughout much of 2019. However, as we are entering Q4, the market is showing signs of transition. While there have been spot shortages on large case size MLCCs throughout the last few months, smaller case size availability is starting to become more of a concern.
Walsin has reportedly depleted their inventory levels on some MLCCs and lead times have extended from 3 – 4 weeks to 8 – 12 weeks. Other manufacturers may be seeing the same issue as recent mobile phone builds have led to spikes in demand.
Distributors are reporting an increase in the amount of large MLCC RFQs, some OEMs have been taking buying positions, and some manufacturers stopped taking orders at the end of September — possibly due to production at maximum capacity and / or anticipation of price increases after China’s Golden Week.
With the increase of 5G builds, we may see a demand spike that could hit this quarter.
Renesas releases price increases
After halting production in 13 factories in Q2 2019, Renesas is increasing prices for legacy analog products. The range of affected series is quite wide including 6K types of parts for original IDT line (70V/T-, 71V/T-, 72V/T-, 74F/L-, 8V-, 8T-) and 1K types of parts for original Intersil line (EL7-, ISL21-/23-/28-.ISL31-, ISL59-, ISL61-, ISL76-, ISL88-).
All new orders placed on or after the effective dates – and all backlog shipped on or after this effective date – will be processed at the new prices. The prices will increase between 10%-20% and goes into effect this month.
Renesas acquired IDT and Intersil in 2018. This price increase suggests that the company is trying to simplify and focus on new parts more compatible with ever evolving technology.
Microsemi transistor arrays experience increased lead times
Microsemi is reporting a 52+ week lead time for its line of Darlington Transistor Arrays (e.g. SG2000 series). The increase is due to an ongoing raw material shortage with the package. The situation has deteriorated to the point Microsemi has “no bid” some orders. The company has given no timeframe to distributors on when the issue will be resolved.
Other manufacturers of Darlington Arrays are experiencing a lead time increase, but none are experiencing a push out like Microsemi is.
IC MOSFET and wafer issues continue
Since first reported in Q3 2019, MOSFETs supply uncertainty continues with continued shortages. The reason is rumored to be because demand has increased for MOSFETs being used as voltage regulators in processing units and memory RAMs.
In addition, Infineon IR355x series is currently facing a supply issue because of unforeseen wafer issues. Infineon started investing in wafer production in August 2019, so it is expected that this current supply issue will stabilize by November 2019, once production is in full swing.
MEMORY
Trade War continues to affect DRAM market
The memory market continues to reflect caution regarding trade risks and macroeconomics — and is predicted to continue in 2020. This uncertainty resulted in the slowdown of the DRAM industry in 2019 and led to manufacturers tightly controlling production. While demand was low, pricing still increased due to trade war concerns. Now and into 2020, some manufacturers are expecting DRAM demand to exceed supply — citing the growing market for flagship smartphones, edge computing and increased data center projects.
Demand is forecasted to increase by 20% while supply is only expected to grow in the mid-teens. As a result, some customers are planning and implementing strategic decisions to build up inventories.
In the short term, however, DRAM pricing may continue to decline with a rebound expected in early 2020.
B-die RDIMMs remain a problem area
Samsung continues to run into issues supplying the market with 2666 B-die RDIMM. Distributors are struggling to receive any allocation on the 16GB and 32GB.
The shortage is likely caused by increasing demand from OEMs and CMs that are trying to avoid the high failure rates of the corresponding C-die.
DIMM prices continue to drop
Supply constraints on server CPUs have reduced market demand for DIMMs. The result is a surplus of DIMMs in the open market. This, paired with quality issues with the Samsung C-die, has caused continued erosion of memory pricing. Pricing for C-die modules is roughly 20-30% cheaper than other die revisions. To keep pricing competitive and parts moving, other dies have had to reduce their pricing as well.
Market pricing for other revisions are currently around 20-25% lower than Samsung official pricing.
When will the market transition from 2666 to 2933 RDIMMs?
The adoption rate from the 2666 to 2933 remains slow, but vendors believe things will begin to pick up in Q1 2020. However, due to the saturation in the market, we are hearing that some large OEMs and CMs may continue using the 2666, forego the 2933, and wait for the release of the 3200. We have not received any official confirmation about the release date for the 3200, but authorized distributors have already received samples, which indicates a rollout soon.
At the same time, 2933 supply seems to be a problem on higher capacity RDIMMs. 64GB 2933 RDIMMs are in shortage right now because of unexpected demand upsides. There have been no supply or production issues yet, but stock is selling for 10-15% higher than official pricing.
CPU
Coffee Lake 8th Gen and Coffee Lake Refresh 9th Gen supply constraints ahead
We experienced a breath of fresh air on desktop supply last month, but it seems that will be short lived, as Intel is pulling back allocation on a number of SKUs.
For 8th Gen, the recent focus has been on i5-8400s and i5-8500s as distributors are holding back stock. Pricing continues to spike with heavy market activity on these SKUs and there is very limited backlog supply. It also appears customers are coming to the table to buffer stock for supply assurance in Q4. All these factors led to a pricing spike around 5 – 7% in just one week. The trend has continued as prices climbed even higher after last week’s Golden Week in China.
The 9th Gen market activity has started to heat up because there is limited supply for Q4 on most customers’ high running SKUs (i3-9100, i5-9500 and i7-9700). We started seeing this activity last month, and over the past couple of weeks, a spike in demand has occurred because Intel started making customers aware of how much allocation they will be receiving this quarter.
Purely shortage expanding to LCC SKUs
Demand has remained strong on 61xx and 81xx processors. Despite pricing premiums over the past couple of months, customers are still loading orders for deliveries in the November and December timeframe. Pricing and supply were stable on lower-end SKUs for most of Q3, but we are now starting to see the shortage effects on 41xx and 51xx. Price increases of around 5% on both Silver and Gold are expected as there will be a significant drop in supply and stretched lead times this quarter. We’re expecting continuing supply constraints into Q1 2020.
As mass production ramps up on Comet Lake and Ice Lake, Kaby Lake R and Whiskey Lake supply suffers
Intel has started mass production on Comet and Ice Lake mobiles. As such, we are beginning to see some offers on the open market, but availability is still limited.
Kaby Lake Refresh was a major pain point for customers last quarter and things will continue to worsen as there is virtually no supply available on the three main SKUs — i5-8250u, i5-8350u and i7-8650u.
Whiskey Lake demand started spiking toward the middle of September with issues arising on i5-8265u and i7-8565u supply. We expect Whiskey Lake to be the next domino to fall for all mobile customers with price spiking 3-5% across the board.
Coffee Lake H mobiles have seen some recent challenges as well with customers and suppliers alike getting decommits on i7-9750H and i5 9300H.
Overall, we expect the mobile space to go from bad to worse in the coming months with supply disruptions across multiple product families.
AMD gaining traction in the European market
While Intel still has a strong hold on the CPU market in South Europe, Nordic countries are preparing to switch over to AMD. The main driver is favorable pricing on their new high-performance CPUs. AMD pricing is estimated to be six times less than the comparable Intel CPUs.
Intel is not sitting back and letting this happen, however. The company has already lowered pricing in order to remain competitive in this market.
FINISHED GOODS
Intel hardest hit in SSD market shortage
As we reported in late September, an SSD shortage may be coming. Since the article was written, we’ve learned Intel SSDs are facing a major supply constraint mainly due to the production supply rate, low wafer production and increased demand in Q3. As a result, the company’s pricing has increased by 10-15%, and supply issues are expected to last until 2020. Currently, the most affected Intel series are the S4510 240GB and 480GB while P4510 and P4610 series are also running tight.
Due to the shortages at Intel, customers are also actively seeking alternative manufacturers like Samsung and Micron. For the past several months, Samsung has been limiting production to only confirmed orders, and its enterprise SSD drives prices have increased by 15%. Because of this, Micron has taken the opportunity to increase Q4 pricing by 8-10% including current stock.
Seagate fast tracking EXOS HDDs
Seagate has been pushing the market to shift demand toward the new EXOS series, which is leading to supply tightening for previous Enterprise models. The company reportedly warned distributors there will be fewer shipments for Enterprise 3.5” series in Q4 but have fallen short of providing an EOL date or LTB schedule. While vendors are still able to order both series, most shipments being received are for the new EXOS model. Distributors are also expecting the price for the new series to be more competitive. Therefore, the prevailing market price for Enterprise Capacity dropped 3-5% by end of Q3.