Market Intelligence
April 12, 2023

The Greensheet: April 2023

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Here are the headlines of current market conditions for semiconductors, finished goods and hardware components.  

  • Analog Devices has invested in R&D to modernize its operation and is now targeting high-demand markets.  
  • NXP’s sensor supply has stabilized, but MCU constraints continue for automotive and industrial customers.  
  • Demand for Microchip's conventional MCUs has softened, but demand for EEPROM is rising, leading to extended lead times.  
  • The memory market is struggling due to low demand and conservative inventory policies. HDD demand remains low, and memory pricing drops in the open market.
  • Supply of gaming GPUs is healthy and consistent, except for RTX 4090, while lead times for high-end GPUs are extending due to the popularity of AI technology. 

Overall, the industrial and automotive sectors continue to battle shortages, while the computer industry is increasingly wary of market fluctuations in supply and demand. For more details, see the full report below. 

 

IC

Analog Devices Plays the Long Game To Boost Supply 

Over the last year, Analog Devices has expanded its investments in research and development. The aim was to create more resilient operational practices and modernize the company’s fabs for more sustainable production, and the aim succeeded. As a result, it can now target verticals with high demand such as the industrial and automotive markets. 

This should bolster supply, but shortages still impact the LTC4XXX and LTC6XXX series. Both are used for battery charging and monitoring, meaning the demand for electric vehicles likely played a role in triggering the supply constraints. Analog Devices attributed much of its revenue last quarter to the current electrification trends. 

Yet, despite the constraints, general supply forecasts indicate that AD’s inventory should improve this year. Allegedly, half of its portfolio will see lead times shorten to less than 13 weeks, even if this will likely take until October for 95% of products. Supply and lead times for the ADUXXX series, on the other hand, are already stabilizing. 

Sensor Availability Stabilizes While MCU Constraints Continue for NXP 

Supply of NXP sensors is stabilizing, while constraints continue for MCUs. In late February, reports indicated that MCU lead times were unstable, and delivery timeframes stretched into 2024. While lead times for certain parts have shortened since then, delivery schedules are still inconsistent which makes it difficult to factor lead time orders into production. 

Automotive and industrial customers have been hit particularly hard by shortages. Their backlog of orders has only seen minimal improvements, and quarterly price increases have added to their frustration. 

Microchip Sees Demand Soften for MCUs, but Lead Times Extend for ICs 

Demand has softened for Microchip's conventional 8-bit and 16-bit MCUs, and supply in the open market is improving. Furthermore, supply of Bluetooth modules is also healthier, with lead times currently between 24 – 26 weeks.  

For the ATMEL SAM series, lead times have been extending steadily this year due to issues with the supply of raw materials necessary for production. In January, lead times were at or above 50 weeks, but now the ATSAMA5D series is seeing lead times up to 100 weeks. Parts like these are typically used in industrial applications or for technology requiring high connectivity. As demand continues to rise, so will lead times.  EEPROM is also experiencing a rise in demand. Although lead times have come down, they still extend beyond 52 weeks.  

The consumer end market has struggled in recent months as demand has been on a downward trend. However, according to Microchip, home appliances were a bright spot. Home appliances usually use EEPROMs to simplify programming and maintenance. Customers within that vertical may turn to the open market if the shortage continues. 

DRAM Market Struggles as Low Demand and Reduced Revenue Lead To Production Cuts 

It’s no secret that the memory market has been struggling over the past several quarters, with multiple manufacturers signaling periods of low demand and reduced revenue. The conservative inventory policies of North American server companies have exacerbated market conditions, slowing DRAM and NAND shipments further and dragging prices down. 

As inventories of DRAM and NAND have inflated, bit shipments have fallen due to their importance for both memory products. Demand forecasts continued to decline, leading to lower foundry and LSI production performance.  

Because of this, Samsung has announced cuts to production for the next quarter. Instead, the company intends to enhance its investment efficiency and better its constitution by advancing product line efficiency and line facility compatibility. 

Last year, SK Hynix announced its plan to reduce capital spending investments by over 50% in 2023. Production cuts mainly targeted low-profit, low-demand products. 

 

Hardware

SSD and HDD Demand Remains Low 

Hard Drive (HDD) demand remains low. End customer excess has been flowing into the open market, making manufacturers compete on pricing for large-volume orders. Apart from 16TB capacity and above, overall demand continues to dip. 

Intel struggled with the system changes between itself and Solidigm last year, causing longer lead times for SSD products. Since then, supply has increased alongside weaker demand, as evidenced by the availability of the P4510 and S4610. Despite the EOL notice issued last year for both series, distributors can still place orders with manufacturers as customers have shown little interest in the products. 

Memory Pricing Drops in the Open Market 

End customers are funneling their excess memory inventory into the open market, dragging prices down by 4 – 9%. Despite the manufacturer's official price drops, vendors are still optimistic that the market will turn around in Q3. The hope is that the reductions made to production will help to control global inventory levels. 

While 32GB and 64GB have been impacted by falling prices and excess supply, 128GB is experiencing the opposite. Demand has risen steadily, and open market pricing is at least 5 – 10% higher than official market pricing due to its constrained supply. 

Gaming GPU Supply Stabilizes But Chipset Supply Issues Cause Constraints for RTX Series 

Supply of gaming GPUs remains healthy and consistent. The exception is RTX 4090, as customers have received limited allocation. The constraints are mainly due to supply issues with the GPU's chipset. Additionally, the competitive pricing and availability of RTX 4070 have made it challenging to push RTX 4080. 

The professional GPU, RTX 6000 ADA, was in a similar situation when it faced unstable supply and overall weak market demand. Initial costs were at a premium but fell because of discount pricing intended to support industry growth. The other mainstream series, like the RTX A4000, A5000, and A6000 have seen an uptick in demand, but market pricing remains flat. 

Moreover, the popularity of services such as ChatGPT is causing lead times for high-end GPUs to extend. AI technology needs optimal performance for the best training model results, so demand is concentrated in large quantities. The recent launch of GPT-4 increased demand and pricing for high-performance computing GPUs such as the A100 and H100. 

If demand continues, which is likely considering the far-reaching forecasts of AI companies, there could be implications for the SSD, high bandwidth memory, DRAM, switch, network cable, and GDDR6 markets. 

 

Finished Goods

Supply for Raspberry Pi Continues to Worsen 

The ongoing Raspberry Pi shortage shows no sign of improvement, despite promises that supply would recover in 2023. The leading cause of the supply and demand imbalance is sourcing for the component BCM2711 from Broadcom. The BCM2711 (MPN: BCM54210EB) acts as the brain of each Raspberry Pi computer, and standard lead times are around eight to ten weeks. 

Despite the lack of delivery dates or quantity estimations, demand for Raspberry Pi remains consistent. Lead times are up to 52 weeks, but customers are still willing to place orders to secure allocation. This has provided a window of opportunity in the open market for those trying to receive supply earlier by paying more. As a result, prices are 50 – 200% higher than authorized retailer pricing. 

Long Lead Times Continue for Industrial Power Supplies 

There has yet to be any progress in reducing lead times for most industrial power supplies, primarily because a lack of raw materials has caused a halt in production. In general, lead times are up to six months for industrial I/O products. Market demand is still growing globally, especially for high-value parts. As a result, suppliers receive limited and unstable allocations every month. 

Likewise, the lead times for industrial products from manufactured Germany are also unstable. Forecasts indicate leads could stretch by another three months or more. 

Due to IC shortages, component shortages, and heightened demand, mainly from new energy and the automation industry, most industrial fan manufacturers are also raising their lead times. Reports indicate they may stretch to 52 weeks, and open market pricing could reach two to three times more than standard booking prices. 

The NIC, Raid and Ethernet Card Markets Start To Absorb Excess Supply and See Demand Increase 

Mellanox has seen lead times recover significantly overall. Distributors may have digested some of their inventory due to a slight surge in demand for networking products involved in new Chinese projects. One cause could be the recent increase in AI technology and development, as many vendors are optimistic and banking on the rise of services like ChatGPT. 

Intel is reportedly reviewing official pricing for ethernet items after foreseeing a dip in demand. Fewer customers are stocking up, choosing instead to play the market. Open market availability is more accessible now, especially for EOL models like the I350T2V2 and I350T4V2. Distributors continue to receive shipments from Intel despite the initial EOL and last time buy announcements. 

For raid cards, Broadcom still maintains most of the market share. However, brands like Microsemi are taking up the lower tier of the market share, as those customers were up for grabs due to Broadcom strategically prioritizing tier-one customers during the shortages. Currently, raid cards are in oversupply, and open market pricing has dropped by 5 – 10%. 

Furthermore, rumor is the U.S. government blacklist may include more companies and products. This has resulted in panic buying and customers pulling in inventory, which is why Broadcom and LSI higher runner parts are experiencing constrained supply. 

 

CPU

Server CPU Demand Expands as Buyers Search for Cost Savings Opportunities 

Overall, server CPU saw a lot of activity recently, and opportunities are forecasted to increase in the coming months. Open market activity for CPUs was relatively stable over the past few weeks. Server CPUs saw the most demand, about 70%, while mobile CPUs came in at 20% and chipsets at 10%. 

In general, buyers hold negotiating power as suppliers make a concerted effort to plan their backlogs to match their forecasts strategically. As a result, the main objective on the supplier side is to avoid oversupply. Oppositely, customers are keen to find good deals. 

In the open market, desktop CPU movement has been slow compared to mobile CPU. Demand has been wavering for Intel DT CPUs as customers are mainly looking to save costs, and the price range still needs to come down for them to commit to an order. Compared with Intel Desktop CPU pricing across regions, there is little difference for tray and box packaging. 

Open Market Opportunities Improve for Intel Despite Unstable Supply  

Pricing has been volatile for Intel since supply has been unstable compared to the last one to two months. Plus, allocation cancellations have come along with deliveries being pushed out, mainly on the Ice Lake series. These circumstances, which affect both the customer and supplier, have created plenty of opportunities for open market business. Additionally, Sapphire Rapids' pricing and availability have yet to be released to the open market due to Sapphire Rapids' low adoption rate. 

As of February, Intel announced it would be phasing out the 400 and 500 series desktop chipsets and the 10TH Gen Comet Lake, pushing prices up as supply dwindles. Intel issued the notice in preparation for the launch of new products. Demand within the PC market is focused on 12th Gen Alder Lake, while more customers are steadily transitioning to the 13th Gen Raptor Lake. 

Price gaps and generally favorable pricing are available for Intel mobile CPUs, which has created better open-market opportunities. In addition, factory excess inventories significantly contributed to the uptick in demand, boosting customer cost savings opportunities. In particular, the 11th-Gen Tiger Lake and 12th-Gen Alder Lake are popular. 

Cost Savings Drive Demand as the PC Market Trends Down 

While cost savings opportunities have driven demand to create certain hot spots, the PC market has been on a downtrend for several reasons. Intel and AMD have closely monitored authorized distributors’ factory part consumption, including which orders they are pushing out or canceling. Distributors are consequently pushing customers to pull parts on time. Some of these factors could contribute to another round of price adjustments by manufacturers.

For AMD, shipments have reportedly been on hold for certain customers. This has caused inventory hold-ups for authorized distributors. While the full extent of the delay remains to be seen, it impacted the Rome and Milan series significantly. At this point, AMD distributors are reluctant to bring in the new Genoa EPYC despite the ongoing demand due to inventory concerns. 

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