Market Intelligence
November 2, 2022

The Greensheet: November 2022

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Hardware

Storage market activity has slowed, but orders for high density SSDs are trending upward 

Overall, storage market activity has been on a downtrend as customers and suppliers have been forced to hold higher inventories. Open market pricing for both Intel and Samsung has dropped by at least 5-10% across all densities, but low capacities (240G, 480G and 960G) have seen the most significant cuts. Vendors indicated that production for these products is healthy, and supply is readily available in the open market. 

Vendors are seeing increased spot inquires and demand for higher density SSDs like the Samsung PM883 1.92T and higher. PM883 1.92TB pricing has gone up 10-15%, due to the manufacturer discontinuing the series and consequently depleting their inventory. Prices for the 64-layer flash have stabilized and SSD products using NAND tech are not expected to see fluctuations in the near future, despite being in a state of oversupply. In comparison, products using 112-layer flash have more room for price negotiation. 

 

Memory module demand remains low, and prices continue to drop 

As in previous months, demand within the memory module market remains weak. Many vendors are receiving back-to-back orders with direct manufacturers and pricing is continuously dropping. As a result, there has been increased activity in the open market for cost-saving opportunities. 

Vendor forecasts for Q4 indicate that prices will continue to drop, likely by an additional 5-10%. 

 

Vendors try to clear excess inventory, but hope that the RTX 4000 series will reinvigorate the market 

Demand within the GPU market has been sluggish for the past few quarters. This has resulted in higher inventories, causing vendors to lose money as they try to clear out their oversupply of series like the RTX 3000. Following the announcement of the RTX 4000, most vendors shared that they have reduced the bulk of their older series GPUs. The hope is that the release of the RTX 4000 series will revitalize demand in the GPU market overall. 

As the EOL notice on the high grade RTX 30 series hits the market, demand has increased for the blower edition in RTX 3089 and RTX 3080 12GB. Market pricing remains aggressive because of overall soft demand. Supply is expected to become tighter, but the new RTX 40 series launch saw some complications as it took time to resolve heat dissipation issues, due to higher power consumption in the new model. 

For professional cards, spot demand for the RTX 4000, RTX A4000 and A5000 has been seen in the market. Vendors have been able to negotiate with the factory for pricing support to capture some cost saving demand from customers. A prior example would be the situation with the legacy model Tesla T4. 

 

Oversupply impacts the cost of Mellanox adapter cards  

As a result of previous double bookings and orders, Mellanox adapter cards are currently seeing an oversupply, especially the MCX4 and MCX5 series. The sudden increase in supply flowing into the open market has caused pricing to drop around 5-10% across these two series. Vendors also shared that the supply of MCX6 has improved slightly, with lead times slowly decreasing. In Q2, supply of this series was constrained due to material shortages, but the manufacturer has improved production and deliveries. 

 

 

IC

Supply remains tight for Infineon and NXP  

Availability continues to be tight for production materials necessary for Infineon’s SAK / TC27 series, which are heavily utilized in manufacturing industrial robotics and automotive sectors. This situation is expected to continue through Q2 2023, and prices will likely stay high. Currently, the standard lead time on these products is steady at 40 – 50 weeks. 

Market availability is similarly constrained for NXP, as a result of customers’ reluctance to shift their current projects to use the S9xxxAxxx model. This comes after NXP transferred MCU orders over to TSMC, which will result in more availability of the S9xxxAxxx as opposed to S9xxxxF0xxx. Allocation for the F0 models will likely be difficult to secure moving forward. 

 

Micron struggles with surplus and order cancellations 

Consumer product forecasts and demand have dropped dramatically, but Micron has rejected cancelations and reschedules for the coming three months. Customers are pushing to cancel backlogs for 2024, and Micron reportedly accepts these cancellations on a case-by-case basis. Distributors have shared that inventory levels are sharply increasing, causing surplus issues for them. 

DRAM/NAND pricing has dropped to the lowest we have seen in a while, and while Nor Flash pricing is dropping, demand remains quite high in the market. 

 

Increased pricing is on the horizon for TSMC, Samsung and Intel foundry customers 

TSMC, Samsung and Intel are once again increasing contract pricing in 2023 for their respective foundry businesses. TSMC has also become stricter in enforcing its customers’ NCNR orders, all while pushing for larger material orders than their customers’ demand foresees. This strategy is likely being implemented to secure production line space which grants TSMC added support from contract chipmakers. Additionally, it provides better visibility into the market’s actual needs. Rumors indicate that the price increase could be 6-9%, depending on the complexity of the manufacturing process. 

A number of media outlets have also stated that Samsung is planning to change its pricing approach and raise prices on many microprocessors and peripheral chip goods. 

As the development of electronic products within the communication industry continues to necessitate more complicated production, the cost of manufacturing is increasing. These rumored price hikes intend to pass on the added costs of production to the customer, while maintaining high quality standards. 

One of the largest mobile telecommunication customers has already voiced their dissatisfaction with TSMC for this move and is refusing to pay the extra costs.  

 

Unpredictable supply and decommits spell trouble for Microchip 

According to rumors, Microchip is requesting customers pay a $2,000 USD fee to check if materials can be delivered earlier than expected. Even if delivery cannot be expedited, customers are still told that they need to pay this fee to cover the effort. Customers have already made use of this service, but some reported that they haven’t received any feedback whatsoever. 

Reports also indicate that Microchip is issuing decommits on multiple projects. At the same time, customers are trying to remove themselves from the Microchip Preferred Supply Program due to market demand dropping significantly. Several OEMs and ODMs are unable to calculate their future demand, cutting down forecasts by at least 20% with several cancellations. 

Due to the unpredictability of supply, customers are diverting to different manufacturers and causing Microchip to carry excess stock. This may appear beneficial, but standard lead times remain between 45-48 weeks, on average.  

In the market, automotive parts are still in high demand. Many small OEM and ODM companies that are on the verge of closing operations have excess stock to get rid of, which is slowly increasing available supply. However, these orders are all NCNR, therefore cancellation is prohibited unless the customer pays a 30% forfeiture fee of the total price. 

Decommits are also increasing for the MCU 16/31 series, mainly due to a major shortage in wafers. There may be another wave of price increases based on these rumors, but there is no indication of what that increase would be or the potential timeline. 

 

 

CPU


Despite a drop in demand, Intel prices continue to rise for server CPU 

As customers continue to reduce their demand forecasts, Intel distributors are reducing on-hand availability for Intel’s server CPUs. Despite Intel’s recent revision to its official pricing, open market suppliers and vendors are open to compromise on prices in order to reduce the pressure on their inventory.  

That said, there is limited availability on both Cascade Lake SRF8Z Gold 6244 and SRF91 Gold 6252 in the open market. 

All eyes are on AMD to see whether they will raise prices for the EPYC server CPUs. The belief is that open market pricing will trend upwards for both Intel and AMD, in accordance with Intel’s latest price increase. Therefore, customers are encouraged to purchase parts now to take advantage of cost savings opportunities while they last. 

 

Uncertain forecasts lead distributors to withhold open market offerings 

Prior to October 2nd, there was an increase in inquiries for Intel Desktop CPUs. However, distributors and vendors are withholding or limiting offers for the open market as they continue to observe the situation. The sense is that these suppliers plan to lower their demand forecasts with Intel as the PC market remains pessimistic.  

On the other hand, demand is increasing for retail boxes that include fan/heat sink, as supply is currently constrained, and shortages are deepening.  

Online news suggests that the Intel 13th Gen Desktop CPU, Raptor Lake series will be available from October 20th onward. As of now, the initial launch includes a high-end Desktop CPU and Z790 motherboard. The key selling point in comparison to the Ryzen 7000 series is Raptor Lake CPUs have LGA1700 sockets, and are therefore compatible with the predecessor Intel 600 series desktop chipset motherboards. The Ryzen 7000 series CPUs require a brand-new AMD motherboard, the AM5. 

 

Motherboard shortages impact AMD’s newly launched Ryzen 7000 series 

Distributors received limited supply and support on the recently launched Ryzen 7000 series (codename Raphael) desktop CPUs, partly due to shortages of the new AM5 motherboard. There are only two motherboard selections (X670E and X670) for the current four enthusiast computing CPUs. Products that have been affected by this shortage include: 

  • Ryzen 9 7950X 
  • Ryzen 9 7900X 
  • Ryzen 7 7700X 
  • Ryzen 5 7600X 

Rumors indicate that by the end of October, AMD will be launching two more motherboards, B650E and B650. More mainstream Ryzen 7000 series CPUs are expected to be introduced, as well. 

 

 

 

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