Market intelligence for the electronics supply chain

Staff Reporter -- Electronic Business, 10/16/2007

Editor's note: The content in "Market intelligence inside the supply chain" is from Converge, which has been an independent distributor of electronic components, technology products and supply chain services worldwide for more than two decades.

The Converge Market Intelligence team, made up of commodity managers and data analysts located around the globe, monitors and analyzes the daily pricing and supply and demand of high-tech commodities.

It provided the following market insights.

Memory Update

The DRAM market is not showing any signs of a rebound after prices reached a new low at the end of September. The spot market was flooded with available parts, but there were not many buyers – even with pricing well below direct. In contrast, we observed prices for a 1 GB/667 desktop drop to $21 and for a 512 MB/667 to $13. We now believe that pricing concerns no longer drive the current state of the DRAM market. Converge believes the PC OEMs are still trying to utilize their higher-priced inventory, and although spot-market pricing is tempting, demand is not strong enough to warrant open-market buys at this time. Adding to the market woes is the desire to no longer hold inventory, which is keeping plenty of supply in the distribution channels.

China’s Golden Week holidays had no overall impact on pricing. In fact, the complete opposite occurred and the market moved at a crawl. These are all bad signs for the DRAM market for the remainder of the year. Fortunately, October is a long selling month. Although Converge does not believe there will be any significant upside in the final three months, based upon the time of the year, we hope there will be some positive market signals before the major holidays are upon us. 

CPU Update

There has been little change in the CPU open market since the last edition of "Market intelligence inside the supply chain." Consistently, month to month, the number of notebook processors moving through independent distributors has been increasing. At Converge, over half of the shortage requirements received from OEMs have been for mobile applications. This transition has occurred not only because of increasing popularity of notebook computers with consumers, but also because processor buyers at notebook manufacturers have begun to accept reputable independent resellers and the value they provide to the supply chain.

Overall, more worldwide CPU traders are trading notebook processors than just a year ago, decreasing the risk involved with working with a small group of eligible buyers. However, the growing confidence in the open market has contributed to an uptick in sales activity. With no running trends currently driving the market, we recommend that buyers partner with a reliable open-market source with genuine interest in following the processor markets relating to your business.

General IC Update

The market for general ICs also remains unchanged since our September Market INsights update, with the exception of some increased supply tightness in the passive sector, where some high CV caps are once again experiencing extended lead times.

The following parts may be experiencing shortages and delays in the following areas:

Converge is still observing spot shortages in the MPC family of Freescale processors, especially with the MPC 8260, 8270, 7410, 860, and 755 models.
The availability of the TI/Burr Brown INA, OPA, and DAC family of op-amps remains tight.
Some Broadcom part numbers remain in short supply, such as BCM5708 and BCM5241. The lead time for Broadcom parts has increased to 12 to 16 weeks, compared to the eight to 10 weeks previously reported.
Converge has experienced an increase in inquires for Intersil devices over the past week. Lead times have extended to 12 weeks, from six to eight weeks earlier. Part numbers in demand include ISL6612, ISL6310, ISL6526, and ISL6566.
In Asia, demand has slowed due to China’s Golden Week holidays. The market is currently experiencing supply tightness on passive components such as capacitors; however, buyers are conservative on pricing and are unwilling to pay a premium on the open market.

Storage Update
 
Desktop Drives
The shortage of 80GB desktop HDDs continues. Distribution pricing for 80GB SATA and IDE HDDs is currently $40 to $41, with limited availability. As a result, we are observing a spike in demand for the higher-capacity HDDs, especially 160GB SATAs, with prices trending higher across the board.

Notebook Drives
Demand at the production level remains in the 80GB to 160GB SATA 5400 RPM range. There is no apparent shortage and activity is steady. The lower-capacity drives remain liquid in the 20GB to 60GB range. There is little price difference between 20GB and 30GB capacities. This is also true for 4200 RPM and 5400 RPM speeds of a same-capacity HDD. Generally, pricing has remained constant month to month.
 
Server Drives
We continue to see increased demand for 250GB to 500GB SATA HDDs for enterprise applications. Therefore, activity in the SCSI market is light. Open-market pricing discrepancies among different brands is growing, with Seagate carrying a premium.

For the September “Market intelligence for the electronics supply chain” report from Converge, click here.