Market Intelligence
February 1, 2023

The Greensheet: February 2023

https://info.fusionww.com/hubfs/Insights/The%20Greensheet/Hero%20Image/2023/The%20Greensheet%20-%20February%202023.pngfeatured image
Sign up for The Greensheet to unlock this post.
Subscribe to receive Fusion Worldwide's monthly market trends report.
 

IC

Fire at Plating Plant in Wuxi Looms Large 

On January 6, a fire broke out at a plating plant in Wuxi, China, causing severe and widespread line damage. The factory housed two production lines for Vishay, resulting in at least 931 affected MPNs and an estimated minimum five-month delay. The site also partnered with OSRAM and Infineon, the latter of which housed 18 production lines at the site. Similar fire-related events in recent history have had an outsized effect on the market, and early indications are that this iteration will be significant given the scope of the damage and the feedback that has been coming from manufacturers about recovery.

Market Reports Imply Supply Shortages and Extensive Lead Times Will Persist 

Research indicates that while some of the supply chain bottlenecks have improved, supply shortages and long lead times will persist throughout 2023. In particular, automotive shortages will be widespread. Sensor lead times are at an average of 30-plus weeks; supply is available on an allocation basis only and not showing signs of improvement. Nevertheless, there are some positive changes as lead times for MOSFETs are contracting. 

Prices are slowly stabilizing for discrete components, power modules, and low-voltage MOSFETs. Market pricing for common parts is starting to decline and stabilize. Silicon carbide semiconductors that were previously subject to allocation are becoming more readily available, causing forecasts to predict that demand will ease in Q1 2023. Power module pricing, on the other hand, is still relatively high. 

The growth of the global new energy vehicle enterprise caused a demand uptick for rectifiers (Schottky ESD), and supply is still low. The supply of power management ICs, such as LDO, AC/DC, and DC/DC converters, is improving. Lead times are now between 18–20 weeks, but supply remains tight for automotive-related parts. 

STMicro Lead Times Worsen as Customers Are Still in Line for 2020 Orders  

It is reported that lead times for MCU products continue to worsen, with current lead times at 76 weeks. Supply of the series STM32F4XXX, STM32F7XXX, and STM32H7XX is still extremely tight, as deliveries for orders placed in 2020 remain unfulfilled.  

High-voltage parts, mostly for automotive applications, are facing critical shortages, with no available backlog to pull from. Currently, the VN and SPC series are under heavy allocation and no new orders are being accepted as the lead times on these series span over 52 weeks. Lead times for MEMs automotive parts are at 32 weeks, while multiple other automotive series’ lead times and deliveries are pending updates regarding allocation.  

Analog Devices and Maxim Merger Is Nearly Complete 

Analog Devices has almost finished the process of integrating with Maxim. This year, it is expected that vendors carrying Maxim will expand their business to Maxim automotive-grade parts. 

Historically, prices usually increase at this juncture. General lead times for Maxim products are around 18 weeks. 

5G Stumbles Over Raw Material Costs, but Demand Is Still Strong

As the rising cost of raw materials continues, cheaper 5G chipsets have opened doors for OEMs to supply more 5G devices at a lower price bracket. However, this growth is limited for the same reasons that have beset the chip industry for the last couple of years. To make up for these limitations, some OEMs have moved away from key features in their products in order to reduce the effect of rising component costs. This strategy, combined with the limited availability of 5G networks, has negatively affected demand from consumers.  

Even with the dip in demand, studies have shown that the number of 5G smartphone shipments will exceed 100 million by Q2 of 2023 and outstrip 4G smartphone shipments by year end. 

Solving Overcapacity Becomes a Long-Term Problem for the Memory Market 

The current overcapacities in the memory market will take some time to resolve. Oversupply and demand are slowly steadying after worsening during the COVID-19 pandemic. Reports indicate that DRAM and NAND flash production, which increased during the period of unforeseen demand, have resulted in excess supply now that demand has returned to standard levels.  

Oversupply is not expected to ease until demand matches today’s production volume. Memory prices will remain unchanged.  

To maintain healthy production, manufacturers like Kioxia and Micron are reducing capacity and have announced wafer production cutbacks. It is uncertain whether these reductions will be sufficient to bring balance to the market. The wafers that recently entered the manufacturing line will remain in process for about one quarter, so it will take some time for the cuts to take effect. 

Material Prices for Passive Components Continue to Rise and Affect the Market 

Lead times for passive electronic components were stable throughout 2022, but the rising cost of raw materials is changing that. The price of copper, nickel and aluminum is greatly increasing manufacturing costs for MLCCs, capacitors and inductors. 

Nickel in particular is the main material used in MLCC production, while steel is also used in capacitor processing. These price fluctuations will result in price hikes for finished products and could send further ripple effects through demand for MLCCs as prices for these components continue their upward trend. 

 

Hardware

Intel Customers Transition to New Series While Overall SSD Market Demand Declines 

Intel’s Solidigm S4510 SSD series is set for discontinuation within the next quarter. This will push customers to transition over to the Solidigm S4520 series. Historically, S4510 240/480 GB has been the most popular capacity, so as demand increases and supply contracts, the market may see prices fluctuate. As Intel focuses on the S4520 series becoming the next mainstream series, supply is predicted to increase, resulting in lowered pricing, as customers are encouraged to make the switch to this part.  

Overall demand within the SSD market continues to drop. Excess supply has already begun to hit the market as customers postpone or cancel projects.  

Memory Market Pricing Reaches a ‘Sweet Spot’ as Supply Stays Healthy  

Memory module demand remains healthy overall as open market pricing stays on a downward trend. However, the pace of price decreases has slowed compared to last quarter. To better align with demand, manufacturers are reducing production in Q1 and requiring tier-1 customers and distributors to provide 6–8-week forecasts. This practice will help them manage inventory levels and prevent overstock.  

Despite the low demand and production cuts, there is optimism that memory demand will recover in Q2 2023 with the announcement of Intel’s CPU Sapphire Rapids series. This launch will help rejuvenate key commodity groups, as DDR5 modules are essential for optimal performance of the new CPU series. Demand is improving slightly, especially for higher-density modules like 64GB and 128 GB. 

Despite Supply and Production Shortages, Nvidia Delivers Record GPU Revenue Results  

RTX 4090 series GPUs are still facing some production shortages and, with no clarity on delivery schedules, there has been an increased push for offers on RTX 4070 and 4080 models as an alternative. RTX 40 series is priced higher than its predecessor, the RTX 30 series. Consequently, requests for RTX 30 series are higher, despite its reduced availability. 

The upcoming launch of the new professional card model RTX 6000 ADA has caused the previous generation model, the RTX A6000, to experience a shortage. Demand is still on an uptrend for the RTX A6000 and the supply backlog for this model will remain unstable through at least the beginning of February. 

Despite the variations in supply and demand, Nvidia’s GPU Q1 2023 global revenue increased by 46% compared to the same quarter a year ago. Forecasts indicated that demand for gaming GPUs had diminished, leading to speculation that price drops would hit Nvidia’s revenue, but business continued to grow and deliver record results.  

Network Adapter Card Supply Remains Healthy as Manufacturers Explore Options to Boost Demand 

For Mellanox, the higher runner models have been the MCX-5 and MCX-6 series. The MCX-4 series is heading towards end-of-life status and demand is now low; consequently, supply has dropped. Overall supply across all series is healthy, with no signs of shortages, largely due to previously accumulated overbooking and demand slowdown. 

Booking lead times have improved for Intel’s network adapter cards and pricing has decreased. In an effort to boost demand in the face of further price drops, Intel is considering special price support for distributors in Q1 2023.  

2023 Shaping Up to Be a Big Year for Cooler Fans 

Previously, shortages in raw materials and chips greatly reduced supply and increased demand for cooler fans. These shortages caused cooler fan lead times to extend to at least one year, but lead times are starting to improve across all major brands as supply chain bottlenecks loosen. In addition, the rise of new energy and industry automation modernization is only going to further increase demand.  

However, while lead times are decreasing, prices are expected to increase due to the combination of heightened demand and raw material costs. 

 

CPU

Changing Trends Indicate Demand May Increase for the PC Market 

Thanks to distributors working to reduce their inventories, December 2022 offered several cost-savings opportunities on Intel Ethernet chipsets. However, January 2023 saw a change, as pricing remained flat for some chipsets while others began to increase. This is partially thanks to vendors trying to avoid losses at the beginning of a new quarter, which has pushed them to reserve parts and slowly offer them to end customers. 

In addition, the Chinese New Year always influences supply and demand at the beginning of the year. Vendors have adopted a “wait-and-see” policy to analyze market trends after Chinese New Year concludes. Business is expected to resume slowly, and demand should recover. 

In terms of Desktop CPU and Notebook CPU pricing and inventory, movements are minimal in the open market. Overall demand and supply are stable for both Desktop and Notebook CPUs. Alternatively, 12th Gen Alder Lake Desktop and Notebook CPU demand has increased thanks to cost-savings opportunities. 

Server CPU Demand Picks Up as Customers Begin to Build Buffer Stock 

Activity and transactions in Server CPUs are increasing compared to previous months. One of the potential causes of this shift could be customers building buffer stock on older generations in preparation for supply hiccups that could occur during the transition to the newly launched Intel Sapphire Rapids. Apart from that, general open market pricing on Server CPUs is negotiable, particularly for those struggling with inventory pressure. Certain price points could attract demand from customers looking for cost-savings opportunities. This trend is already affecting both Intel and AMD’s Rome and Milan series. 

Intel’s Latest 4th Gen Xeon Scalable Processor Sapphire Rapids Competes With AMD Genoa 

Intel launched the 4th Gen Intel Xeon Scalable Processor Sapphire Rapids on January 10. Intel has dubbed it the “most sustainable data processor,” and is touting its ability to offer a range of features for efficient power and performance while using CPU resources to hit the customer’s desire for sustainability.  

Unfortunately, good things come at a price. The pricing of Sapphire Rapids was notably higher than AMD Genoa, which is believed to be the more efficient price performance option. Customers will be monitoring the adoption rate and overall market share in the coming months as the competition between Sapphire Rapids and AMD Genoa continues. Intel’s loyal customers will likely stay with the previous generation of Ice Lake and Cascade Lake Refresh over the newer models because of the cost. 

 

Sign Up for Market Intelligence Today
By providing your contact information, you’re giving Fusion Worldwide permission to contact you about our products and services. You may unsubscribe from these communications at any time. For more information on our privacy practices and commitment to protecting your personal information, please review our Privacy Policy.
Contact Us

General Inquiry

Lead Gen Graphic
Complete this form to contact Fusion Worldwide about our products and services.
Geographic Region
Interest
By providing your contact information, you’re giving Fusion Worldwide permission to contact you about our products and services. You may unsubscribe from these communications at any time. For more information on our privacy practices and commitment to protecting your personal information, please review our Privacy Policy.