All indicators are pointing to a memory recovery, Converge reports
The memory market continues to rebound, with all indicators pointing to a recovery in more than one commodity. In addition to a DRAM recovery, the NOR and NAND flash memory market has been extremely active. The volume of requests for Spansion and Numonyx flash memory has tripled over the last two months. Supply is tight and quantities are limited for NOR flash, with demand from contract manufacturers significant. Spot market transactions are occurring daily and volumes remain high. While Numonyx continues to grow as a new company and Spansion continues with its reorganization, demand for NOR flash and MCP memory (cell phones) continues to increase, with neither company prepared for an up tick in demand.
The NAND flash market is also experiencing various shortages, ranging from 8-GB modules to lesser capacities. Currently, Converge is tracking an increase in demand for Samsung NAND flash, which various flash buyers have attributed to the upcoming holiday build season. NAND flash is still priced reasonably low, and we feel that many contract manufacturers are restocking ahead of an impending price increase.
Lastly, the DRAM market continues to rise. Since late March, DDR2 and DDR3 have steadily increased in price each passing week. Converge is tracking demand for both DDR2 and DDR3 notebook and desktop modules. Due to the large gap between contract and spot market pricing, box builders are still not prepared to take in any inventory at this time. This could change as most 1-GB and 2-GB DDR2 PC667 and PC800 inventory continues to evaporate in the spot market.
Converge is tracking an increase in demand over the August period as indications for September suggest that the holiday peak season has begun. Repair markets have been steady in demand, but cost-savings opportunities are becoming fewer as shortages dominate.
Shortages replace savings
Microprocessors, which spent the early summer period as a cost-savings opportunity, lurched into shortage during August, with the Intel N270, T9400, T9500, T9600, T3400, E6300, E6320, and E5400 all being sought-after parts. For example, Converge observed a swing of 30% in the market price on the T9400, which is an unusual trend during an otherwise stable summer.
Some older reliable processors, such as the Q6600, are stuck in short supply. We have mentioned this model many times in our Market Insights updates over the past year, and it stubbornly remains in demand, with market supply limited.
The repair market was also hit by this late spike in pricing, as it principally affected older parts that were sliding into end of life. However, demand remains steady, with normal supply availability.
Awaiting the Capella arrival
As we look toward the end of the year, Converge is anticipating the arrival of the Capella family of microprocessors. It marks quite a departure for Intel's mobile market, as Intel seeks to match AMD's Fusion platform. This new family of CPU, chipset, and Wi-Fi card will ultimately make the Intel Montevina obsolete, making many OEMs nervous as they seek a consistent brand for the peak holiday season. The arrival of Capella microprocessors was originally scheduled for the third quarter this year, but we understand that delays are expected, with a new release schedule to be announced shortly. The CPUs will feature the i5 and i7 part numbers, which were introduced for the desktop CPU range earlier this year.
Also of interest will be the OEM or TJ models that are expected in the market. Tier-two and tier-three manufacturers, who traditionally do not have access to these processors, will look to the open market to provide the first supply of the T4xxs and T6xxs replacements. Converge will provide updates on developments in future editions of Market Insights.
Semiconductors and IC update
Converge is currently tracking parts that might experience shortages and delays in the following areas:
-Capacitor shortages continue with some Tantalum components but are frequently found with ceramic, which includes Murata, Yageo, Vishay, Sanyo, Kemet (Arcotronics) and AVX.
-TI shortages are the most prevalent, with the primary line being the TPS series of controllers. However, Converge is also tracking Logic SN74 shortages as well. Some logic lead times have stretched from eight weeks to 18 weeks. TMS microcontrollers are still tight. These factors could lead to most TI lines being affected in varying degrees.
-Xilinx, Altera, Freescale and Broadcom lead times, which were already widening, are definitely becoming an issue -- especially for Broadcom, which has been experiencing a number of issues recently.
-Microsemi nonmilitary diodes lead times, which were already long, are now stretching out from 18 to 30 weeks.
-We are tracking preliminary indications that Dialight LEDs may be the next problem area, with some lead time reschedules just very recently surfacing.
-ROHM has recently announced that a significant number of its resistors have been placed on allocation, as well.
-Last, Converge is tracking an increase in activity for On-Semi, Maxim, National, Pulse, and Fairchild components.
The downward trend in the 3.5-inch market continues month over month, with pricing in higher-capacity drives still falling, which is especially evident in the 500-GB, 750-GB, and 1-TB SATA HDDs. We have also been monitoring contract pricing in the spot market for some 1-TB drives in the low-to-mid-$80s range. Meanwhile, there is some part-number-specific production and service demand in this same capacity range commanding a premium price with manufacturer delivery dates up to two months out. With supply levels shrinking, we expect stabilization in prices or even an up tick in the coming months for this segment. Demand continues for the 250-GB through 400-GB HDDs in both the IDE and SATA interfaces, with little change in pricing over the last 60 to 90 days.
Converge is not observing the same price volatility in the higher-capacity 2.5-inch HDDs as we are in the 3.5-inch market. This is in contrast to the August Market Insights update, when we were experiencing significant swings week to week. Demand remains strong for both the production and service arenas. As in our last report, most of the activity is in the 160-GB to 320-GB SATA range. However, we have received requests for 400-GB and 500-GB of the same interface recently. Similarly, demand for the IDE interface has remained strong month over month, with price points stable.
For the August Market Insights report, visit
Converge note: Prices listed for products in Converge's Market Insights report are based upon market conditions at the time the articles are written (September 16). Prices quoted in these articles should be used only as a guide, as market conditions vary daily and can affect overall spot market pricing.