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November 30, 2022

The Greensheet: December 2022

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Demand Remains Soft for Storage and Memory Markets 

Both the memory and storage markets have maintained their downward trend in demand, despite cost-saving opportunities. Speculation suggests that this may continue for the memory market until at least Q2 2023. 

Open market supply still seems healthy, with many customers dropping or delaying shipments. While official pricing for memory modules has dropped consistently by 8%-12% over the past three months, open market pricing is more volatile and changes almost daily. Many distributors are still basing orders on back-to-back purchases from manufacturers to reduce their risk of deteriorating pricing. 

Within the storage market, client storage demand is even slower than server storage demand and vendors have disclosed that laptop storage demand has fallen drastically. This has resulted in vendors dealing with excess inventory and transacting at a loss. 

Additionally, Intel’s low-capacity SSDs are seeing similarly low demand and cost-saving opportunities make up the majority of orders. Market pricing has gradually dropped by 15%-20%. Due to internal system shifting from Intel to Solidigm, there has been downtime within their systems, which may potentially cause delays in the future.  

Alternatively, the discontinued Samsung PM883 series is seeing spot demand and increased pricing for certain capacities.  


Nvidia’s New RTX 4090 Experiences a Rocky Launch 

The initial reviews from customers for the RTX 4090 are mostly positive, and vendors’ first allocations from manufacturers were purchased immediately. Regarding subsequent demand, there is no firm confirmation on delivery. There is speculation that the delay may stem from the overheating issues that have been circulating in the news, as Nvidia is working to identify and fix the problem.  

Despite the early interest in the RTX 4090, demand is persisting for the previous generation RTX 3080 and 3090, particularly the blower edition. While these are the cheaper alternatives to the RTX 4090, they are difficult to source, as manufacturers are no longer taking orders for these models. There is speculation that Nvidia is focusing on production of the Hopper H100 GPU, due to the higher profit margins, and this could affect availability of the RTX 4090 if demand outstrips supply. 




Oversupply Pushes Manufacturers to Cut Production and Delay Projects 

The decline in demand for memory has led to both consumers and producers carrying inflated inventories. The diminished demand from consumer electronics that started in Q4 of 2021 was briefly offset by the war between Russia and Ukraine, pandemic measures, and price increases, but as the pressure from these events is easing, the downtrend continues. 

As manufacturers try to navigate this situation, some are announcing reduced DRAM and NAND Flash output. Micron was the first to reveal cuts, but was shortly followed by KIOXIA, who intends to reduce NAND production by 30%. Compared to DRAM, the market scenario for NAND Flash is far worse, as the average contract price of mainstream capacity wafers has dropped to its cash cost, and is almost selling at a loss. 

Furthermore, as funding becomes more difficult to secure and demand visibility remains weak, memory manufacturers are delaying the transition to new productions in the new year. Instead, they are concentrating on major products to secure a profit. KIOXIA and Micron will be dedicated to products with 176 and 112 layers. 

The currently oversupplied market is expected to see the DRAM Sufficiency Ratio drop from the predicted 11.6% to less than 10%. The NAND Flash field's ratio will decrease from 10.1% to 5.6%. Therefore, price decreases are anticipated to slow down, and it is likely that the pressure on inventories will lessen in 2023 as production cuts limit oversupply. 


Automotive Sensor Restrictions Create Volatility for Manufacturers 

Severe supply constraints and control procedures have resulted in a restriction in trading automotive sensors with brokers. In some cases, distributors require complete knowledge of the intended end-customer, and a letter of authorization to sell to any party that is not the end user. This has not improved the supply situation, which is falling far behind demand. Standard lead times for all sensors has now climbed to over 52 weeks. 

Analog Devices produces two categories of automotive sensors and have seen their supply severely affected. The first category, MEMS Safety and Security sensors, include accelerometers and gyroscopes for crash sensing, security, and stability control. The second category is Autonomous Vehicle Perception Sensing and Navigations. Most of the accelerometers and gyroscopes are assembled and tested in factories in the Philippines, which now have a 26- to 52-week lead time for popular series like the ADXL1/2/3 xxx. The hottest series, ADXL312, ADXL362 and ADXL345, have lead times of up to 90 weeks. 

STMicro, on the other hand, is steadily seeing improvements but has yet to stabilize supply and lead times, which are still 50+ weeks, with highly restricted allocations. STM’s MCU series, the M4 and M7, are still experiencing elevated price levels and short supply that began in the early days of the wafer shortage.  

M0 and M3 series are starting to stabilize, and supply has improved within the last three weeks. The market for common parts is also starting to decline and stabilize. Pricing has significantly improved as OEMs and EMS customers unload stock in the market. This is because of lower demand figures for Q4 and full allocation deliveries by manufacturers, which have been significant for the STM32 series. 

In addition, there is a rumor that the STM8 series will be further affected in the coming months, due to shrinking production capacity at the fab. 


Bosch and Murata Pivot Plans to Better Navigate the Market 

As an established leader in MEMs technology, Bosch has become synonymous with components that are small, reliable and affordable. These components are integral parts for major automotive customers throughout the world, but elevated demand is extending lead times, which now sit at 26 weeks. To meet the increasing needs of customers, Bosch is concentrating on the following applications: 

  • Bosch barometric pressure sensors SMP58xx 
  • Highly automated driving system with MPN SMUxxx 
  • Active suspension systems SMAxxx 
  • Vehicle comfort system with acceleration sensors SMA13x & angular rate sensors SMG13x and integrated inertial sensor SMI23x 

Murata is also making changes to their production and supply chain to better suit current supply-and- demand conditions. In an attempt to handle the swift decoupling between the United States and China, Murata is duplicating its supply chain to serve both markets. Currently, China and Japan are home to Murata’s primary production facilities, but Murata is now trying to establish new facilities in Thailand and Vietnam. They are also increasing production in India. 

Additionally, China is one of Murata’s primary resources for various rare metals. In an attempt to gain greater flexibility for these kinds of resources, Murata is attempting to broaden their pool of suppliers. However, establishing these kinds of partnerships is challenging, as resources are scant, so it will be difficult to eliminate reliance on Chinese sources. 

While it is not possible to gauge the exact effects of the U.S. export control, Murata may be starting a real trend for manufacturers.  




The PC Market Continues to Cool Despite Hot Deals From 11.11 Singles Day 

For China’s 11.11 “Singles Day,” also known as the Double Eleven event, AMD applied new and improved pricing for the Ryzen 7000 series. The price reduction was in the range of 23%-27%, and directly competed with Intel’s Gen Raptor Lake sales. The volume of sales for the 12th Gen Alder Lake and 13th Gen Raptor Lake is still lacking compared to previous generations, such as the 10th Gen Comet Lake. 

Even with these cost-saving opportunities, overall demand for this year’s Double Eleven event was relatively weaker compared to last year, as PC demand continues to decline. In accordance with this deterioration, distributors are not adding buffer stock to their Intel forecasts, in attempts to avoid surplus.  

The demand downside is also affecting the open market, where excess inventories are emerging from factories. In particular, Intel Ethernet chipsets are seeing open market pricing match direct pricing, as supply becomes more readily available. Rumors indicate that the ongoing oversupply situation will persist until the second half of 2023. For now, there are plenty of cost-saving opportunities to uncover. 

If the current market conditions continue or worsen, in conjunction with the rising inflation, there could be layoffs, hiring freezes, or reduced wages for affected manufacturers and OEMs. 


Cost-Saving Opportunities on Intel and AMD May Not Be Available Much Longer 

The launch of Intel Sapphire Rapid Xeon CPUs is now reportedly delayed until Q1 2023, due to poor yield rates stemming from the competition, AMD’s already-launched 4th Generation EPYC Genoa. Rumors indicate that once Sapphire Lake is released, all special pricing for the previous Generation will end, as this is Intel’s usual move to hasten transition to the newest design. 

The transition from AMD Zen 3 EPYC Milan to AMD Zen 4 EPYC Genoa requires changing motherboards, as it is not backward compatible. The same applies to the Intel Sapphire Rapid. As of now, the adoption rate for Intel Ice Lake CPUs is increasing, compared to months prior, mainly on the Ice Lake 63XX and 83XX series. Offer pricing is mostly negotiable due to low demand, despite Intel’s price adjustment. 

AMD is also supposedly planning its own price increase for the Milan series soon. The exact increase is unknown, but customers are encouraged to purchase AMD EPYC Milan CPUs and Intel Cascade Lake and Ice Lake series now, while cost savings are still available. 




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