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Converge: No sign of change in the DRAM market
Staff Reporter -- Electronic Business, 12/18/2007
Editor's note: The content in "Market intelligence for the supply chain" is provided by Converge, a global supply chain partner for technology driven companies. 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
As anticipated, there is no sign of change in the DRAM spot market, with 512M 667s trading in the $8.50 to $10 range and 1 GIG 667s trading around $17.
As 2007 draws to a close, there appears to be no possibility for any positive market change to occur in the remaining weeks, with the market heading toward a slow period when consumption usually decreases after the holidays. Converge believes the market will remain in oversupply at least through Q1 of 2008 and possibly through Q2. There are no signs of any turnaround in the near future, and generally Q1 of every new year is considered a slow season. These factors will only add to the oversupply.
CPU update
As we approach the closing weeks of the year, 2007 will no doubt be remembered as a time of change among independent CPU traders.
Prior to 2007, most CPU trading completed in the spot market was transacted at a discount – offering buyers a sizable cost savings over procuring product directly from the manufacturer. This dynamic changed in 2007 due to market factors.
At the same time, competition between Intel and AMD heated up with a number of new technology introductions, creating competitive pricing pressures that drove prices down on CPU chips across the board. These factors combined to deliver pricing levels that were not even considered in the past. In many cases, a commodity that cost $150 is now selling at $75.
This pricing trend continued throughout 2007, with CPU trading in the spot market focused on shortage transactions that will usually be at or higher than standard direct pricing. Converge views this trend as continuing into the future – as spot shortages and mobile processors continue to fuel demand.
General IC update
The following parts may be experiencing shortages and delays in the following areas:
There continues to be some activity on Tantalum and High CV capacitors, as spot shortages – which are customer or demand driven – remain across some part numbers. However, we do not consider these shortages to be broad-based.
We are still experiencing requests for Freescale processors in both the leaded and the lead-free versions, with most of the activity on the higher-end host processors. We are also still seeing steady demand on older technology 8- and 16-bit microcontrollers. These parts have been in use for years, and Freescale has recently removed some debits, which has increased the pricing. Even with the higher pricing, it is anticipated that most customers still will not migrate to the newer technologies.
Lead times for Microsemi military diodes appear to be worsening. Product is very difficult to procure, and many customers are experiencing shortages.
Times remain long and customers are still facing shortages on TI Op Amps.
Storage update
Desktop Drives
There remains strong demand for 3.5-inch product in the higher-capacity HDDs. Most of the activity is on the 250 GB, 400 GB and 500 GB SATA drives. Supply is low, resulting in spot market pricing that continues to climb. This is particularly evident on several Seagate models where there are part number-specific requirements in the production space. The impact is being felt in the excess market on a capacity basis, with higher demand and pricing from 40 GB thru 500 GB on both IDE and SATA HDDs.
Notebook Drives
Currently, the notebook market is in a state similar to that of the desktop market. Production demand is heavy on the 80 GB, 120 GB and 160 GB SATA HDDs. We are seeing daily requirements for specific WD and Seagate models, with lower supply and rising prices. Interesting to note here is the increased demand for these two manufacturers in this space. There is no significant change overall in the lower-capacity drives available in the excess market. The 20 GB through 60 GB capacities remain liquid in both the 4200 and 5400 speeds, as well as IDE and SATA interfaces. Pricing has been stable month over month.
Server Drives
In the server space, activity remains limited on the SCSI drives, with only sporadic part specific-demand for service requirements. The mainstream drives for production are the 400 GB through 750 GB SATA HDDs.
For the November “Market Intelligence for the electronics supply chain" report, click here.
