USA: USA: Presenting Converge's Market Intelligence Report, August 2009.
The DRAM market continues to show signs of improvement. We are currently tracking increased demand from module manufacturers for 128x8 DDR2 chips, both in PC667 and PC800 speeds. Pricing has increased significantly over the last five months.
For example, the average price for a 128x8 DDR2 chip has risen from $0.85 in March to roughly $1.50 in the second week of August. There are mixed opinions on why the market has become so tight for these modules.
Many end users believe that DRAM manufacturers are squeezing the supply from the market in order to increase prices.
Some are claiming that their demand volume has remained steady throughout the past five months and there should be no reason for the market to heat up, while other end users are experiencing improving business conditions as we head into the second half of the year. All of this could also be leading to an increase in demand.
Either way, the market is steadily improving for both DDR2 and DDR3. The key to sustaining these improvements is to stay the course and avoid drastic spikes and dips in spot market activity. Any sign of inventory "dumping" will erase some if not all price increases in the memory market this year.
Showing posts with label Converge Market Insights. Show all posts
Showing posts with label Converge Market Insights. Show all posts
Thursday, 13 August 2009
CPU update: Demand for mid- and low-range mobile CPUs continues
USA: Presenting Converge's Market Intelligence Report, August 2009.
As the summer heats up, the spot market remains cool with no sign of the big shortages that headlined the news in previous years. At this time, we don’t anticipate any late surge. Instead, a spread of demand pockets contributed to respectable CPU demand in July. Currently, we are tracking the following trends:
OEM TJ models see a sluggish changeover
Demand for mid- and low-range mobile CPUs is continuing for end-of-life technology, while newer models lurk in the shadows. We’ve been anticipating the Intel T4300, T6600 and T3000 chip series to reach mainstream demand in early summer; however, many OEM builders prefer the end-of-life models, as the supply of new parts and customer interest is slow to develop.
At this point in the season, following the Computex event, we would expect to see a big rise in interest surrounding newer models. Relatively flat demand, a large price gap to the new models and a limited supply has conspired to a market reluctant to make a significant move. The T4200 for example is selling at $70+, while the new model T4300 is in short supply, more expensive at $80+ and only boasting a 0.1 GHz faster speed, which is not exciting consumers.
Elsewhere, Atom CPUs are slowly creeping into the spot market in bundle deals complete with chipsets and motherboards.
Xeon savings a worthy quest
Large cost-saving requirements for Intel Xeon 5140, 5160 and E5420 swept the market in July as customers were actively searching for savings. While a cost reduction of 6 percent on desktop parts is a good find, for Xeon processors it is not unusual to find 20 percent+ price differentials from region to region.
The supply is uncertain, and volumes are less than mobile or desktop requirements. However, the size of the savings opportunity makes it the best value in this market.
Old favorites headline desktop market
The Intel E8400, the popular desktop CPU, has been highlighted in previous editions of Market Insights over the past year. It is not yet scheduled for a price drop, meaning demand remains steady. However, the market price has varied wildly during the summer, swinging from a classic 8 percent cost-saving part to shortage and back again.
The Intel Q6600 and E4600 processors lead the list of parts in demand and as a result are commanding a premium price. Demand in the spot market for high-end Core I7 desktop processors remains low, resulting in minimal cost-saving opportunities. Converge will be monitoring demand patterns for high-end CPUs and the low-end Atom mobiles in the coming months.
As the summer heats up, the spot market remains cool with no sign of the big shortages that headlined the news in previous years. At this time, we don’t anticipate any late surge. Instead, a spread of demand pockets contributed to respectable CPU demand in July. Currently, we are tracking the following trends:
OEM TJ models see a sluggish changeover
Demand for mid- and low-range mobile CPUs is continuing for end-of-life technology, while newer models lurk in the shadows. We’ve been anticipating the Intel T4300, T6600 and T3000 chip series to reach mainstream demand in early summer; however, many OEM builders prefer the end-of-life models, as the supply of new parts and customer interest is slow to develop.
At this point in the season, following the Computex event, we would expect to see a big rise in interest surrounding newer models. Relatively flat demand, a large price gap to the new models and a limited supply has conspired to a market reluctant to make a significant move. The T4200 for example is selling at $70+, while the new model T4300 is in short supply, more expensive at $80+ and only boasting a 0.1 GHz faster speed, which is not exciting consumers.
Elsewhere, Atom CPUs are slowly creeping into the spot market in bundle deals complete with chipsets and motherboards.
Xeon savings a worthy quest
Large cost-saving requirements for Intel Xeon 5140, 5160 and E5420 swept the market in July as customers were actively searching for savings. While a cost reduction of 6 percent on desktop parts is a good find, for Xeon processors it is not unusual to find 20 percent+ price differentials from region to region.
The supply is uncertain, and volumes are less than mobile or desktop requirements. However, the size of the savings opportunity makes it the best value in this market.
Old favorites headline desktop market
The Intel E8400, the popular desktop CPU, has been highlighted in previous editions of Market Insights over the past year. It is not yet scheduled for a price drop, meaning demand remains steady. However, the market price has varied wildly during the summer, swinging from a classic 8 percent cost-saving part to shortage and back again.
The Intel Q6600 and E4600 processors lead the list of parts in demand and as a result are commanding a premium price. Demand in the spot market for high-end Core I7 desktop processors remains low, resulting in minimal cost-saving opportunities. Converge will be monitoring demand patterns for high-end CPUs and the low-end Atom mobiles in the coming months.
Storage update: Tracking price weakness in higher capacity drives
USA: Presenting Converge's Market Intelligence Report, August 2009.
3.5" Drives
According to Converge Market Insights, in July's Market Insights, we reported that prices were eroding for the 500 GB capacity. Over the last several weeks, the 750 GB and 1 TB capacities have joined this occurrence, with open market pricing in the low $50 range and low $70 range respectively.
This is in contrast to 750 GB pricing in the $70–$75 range and the 1 TB capacity at $90–$95 only two to three months ago. On the positive side, pricing for the lower-capacity HDDs has remained stable month over month. Overall, demand remains strong for this period of the year.
2.5" Drives
The predictions of growing demand and shrinking supply are beginning to take shape in the 2.5" market. We are tracking significant volume requests for SATA HDDs in the 160 GB to 320 GB range.
Meanwhile, pricing is becoming more volatile day to day. The service space remains active as well, with part number–specific requests for the aforementioned interface and capacity range. We expect this trend to continue for the balance of the quarter.
Similarly, demand for the IDE interface has not weakened. However, activity in this interface appears to be more excess supply and cost savings driven.
3.5" Drives
According to Converge Market Insights, in July's Market Insights, we reported that prices were eroding for the 500 GB capacity. Over the last several weeks, the 750 GB and 1 TB capacities have joined this occurrence, with open market pricing in the low $50 range and low $70 range respectively.
This is in contrast to 750 GB pricing in the $70–$75 range and the 1 TB capacity at $90–$95 only two to three months ago. On the positive side, pricing for the lower-capacity HDDs has remained stable month over month. Overall, demand remains strong for this period of the year.
2.5" Drives
The predictions of growing demand and shrinking supply are beginning to take shape in the 2.5" market. We are tracking significant volume requests for SATA HDDs in the 160 GB to 320 GB range.
Meanwhile, pricing is becoming more volatile day to day. The service space remains active as well, with part number–specific requests for the aforementioned interface and capacity range. We expect this trend to continue for the balance of the quarter.
Similarly, demand for the IDE interface has not weakened. However, activity in this interface appears to be more excess supply and cost savings driven.
Sunday, 19 July 2009
Global semicon mid-year review: Chip market revival or blip on stats radar screen?
A recent report from Future Horizons suggests an 18 percent growth for the chip market in Q2-2009! So, is this a sign of the chip market recovery or a mere blip on the statistics radar screen?
It is both, said, Malcolm Penn, chairman, founder and CEO of Future Horizons, and counselled that: "The fourth quarter market collapse was far too steep -- a severe over-reaction to last year's gross financial uncertainty -- culminating with the Lehman Brothers collapse in September. The first quarter saw this stabilise with the second quarter restocking, but there are other positive factors also in play."
Examining a bit further, here's what he further revealed. One, the memory market is seeing some signs of slow recovery. He said, "This has already started DDR3 driven!" Likewise, companies are also in the process of revising their forecasts. The reason, Penn contended, being, "The maths has changed dramatically since Jan 2009!"
According to him, factors now leading to conditions looking up in H2 2009, include the normal seasonal demand -- from a tight inventory base -- and tightening capacity. There is also a clear indication of the correction phase to rebalance over-depleted inventories having started. "This is what's driving Q2's high unit, and therefore, sales growth," he contended.
Firms advised to stop seeing and waiting!
This isn't all! Penn further counselled firms who are still in a wait-and-see mode to 'stop seeing and waiting'! Next, fabs are also looking to maximize their returns. For one, they have stopped over-investing.
Do we have enough stats from others to back up what's been happening in the global semiconductor industry? Perhaps, yes!
IC Insights stands out
First, look at IC Insights! It has stood out by pointing out in early July that H2-09 is likely to usher in strong seasonal strength for electronic system sales, a period of IC inventory replenishment, which began in 2Q09, and positive worldwide GDP growth.
IC Insights has predicted global IC market to grow +18 percent; IC foundry sales to grow +43 percent; and semiconductor capital spending to grow +28 percent in H2-09.
DDR3 driving memory recovery? Flat NAND?
Elsewhere, Converge Market Insights said that according to major DRAM manufacturers, DDR3 demand has been on the rise over the last two months and supply is limited.
This is quite in line with Future Horizons contention that there is a DDR3 driven memory recovery, albeit slow. It would be interesting to see how Q3-09 plays out.
As for NAND, according to DRAMeXchange, the NAND market may continue to show the tug-of-war status in July due to dissimilar positive and negative market factors perceived and expected by both sides. As a result, NAND Flash contract prices are likely to somewhat soften or stay flat in the short term.
Semicon equipment market to decline 52 percent in 2009!
According to SEMI, it projects 2009 semiconductor equipment sales to reach $14.14 billion as per the mid-year edition of the SEMI Capital Equipment Forecast, released by SEMI at the annual SEMICON West exposition.
The forecast indicates that, following a 31 percent market decline in 2008, the equipment market will decline another 52 percent in 2009, but will experience a rebound with annual growth of about 47 percent in 2010.
EDA cause for concern
The EDA industry still remains a cause for concern. The EDA Consortium's Market Statistics Service (MSS) announced that the EDA industry revenue for Q1 2009 declined 10.7 percent to $1,192.1 million, compared to $1,334.2 million in Q1 2008, driven primarily by an accounting shift at one major EDA company. The four-quarter moving average declined 11.3 percent.
If you look at the last five quarters, the EDA industry has really been having it rough. Here are the numbers over the last five quarters, as per the Consortium:
* The EDA industry revenue for Q1 2008 declined 1.2 percent to $1,350.7 million compared to $1,366.8 million in Q1 2007.
* The industry revenue for Q2 2008 declined 3.7 percent to $1,357.4 million compared to $1,408.8 million in Q2 2007.
* The industry revenue for Q3 2008 declined 10.9 percent to $1,258.6 million compared to $1,412.1 million in Q3 2007.
* The industry revenue for Q4 2008 declined 17.7 percent to $1,318.7 million, compared to $1,602.7 million in Q4 2007.
Therefore, at the end of the day, what do you have? For now, the early recovery signs are more of a blip on the stats radar screen and there's still some way to go and work to be done before the global semiconductor industry can clearly proclaim full recovery!
Before I close, a word about the Indian semiconductor industry. Perhaps, it needs to start moving a bit faster and quicker than it is doing presently. Borrowing a line from Malcolm Penn, the Indian semiconductor industry surely needs to "stop waiting and watching."
I will be in conversation next with iSuppli on the chip and electronics industry forecasts. Keep watching this space, friends.
It is both, said, Malcolm Penn, chairman, founder and CEO of Future Horizons, and counselled that: "The fourth quarter market collapse was far too steep -- a severe over-reaction to last year's gross financial uncertainty -- culminating with the Lehman Brothers collapse in September. The first quarter saw this stabilise with the second quarter restocking, but there are other positive factors also in play."
Examining a bit further, here's what he further revealed. One, the memory market is seeing some signs of slow recovery. He said, "This has already started DDR3 driven!" Likewise, companies are also in the process of revising their forecasts. The reason, Penn contended, being, "The maths has changed dramatically since Jan 2009!"
According to him, factors now leading to conditions looking up in H2 2009, include the normal seasonal demand -- from a tight inventory base -- and tightening capacity. There is also a clear indication of the correction phase to rebalance over-depleted inventories having started. "This is what's driving Q2's high unit, and therefore, sales growth," he contended.
Firms advised to stop seeing and waiting!
This isn't all! Penn further counselled firms who are still in a wait-and-see mode to 'stop seeing and waiting'! Next, fabs are also looking to maximize their returns. For one, they have stopped over-investing.
Do we have enough stats from others to back up what's been happening in the global semiconductor industry? Perhaps, yes!
IC Insights stands out
First, look at IC Insights! It has stood out by pointing out in early July that H2-09 is likely to usher in strong seasonal strength for electronic system sales, a period of IC inventory replenishment, which began in 2Q09, and positive worldwide GDP growth.
IC Insights has predicted global IC market to grow +18 percent; IC foundry sales to grow +43 percent; and semiconductor capital spending to grow +28 percent in H2-09.
DDR3 driving memory recovery? Flat NAND?
Elsewhere, Converge Market Insights said that according to major DRAM manufacturers, DDR3 demand has been on the rise over the last two months and supply is limited.
This is quite in line with Future Horizons contention that there is a DDR3 driven memory recovery, albeit slow. It would be interesting to see how Q3-09 plays out.
As for NAND, according to DRAMeXchange, the NAND market may continue to show the tug-of-war status in July due to dissimilar positive and negative market factors perceived and expected by both sides. As a result, NAND Flash contract prices are likely to somewhat soften or stay flat in the short term.
Semicon equipment market to decline 52 percent in 2009!
According to SEMI, it projects 2009 semiconductor equipment sales to reach $14.14 billion as per the mid-year edition of the SEMI Capital Equipment Forecast, released by SEMI at the annual SEMICON West exposition.
The forecast indicates that, following a 31 percent market decline in 2008, the equipment market will decline another 52 percent in 2009, but will experience a rebound with annual growth of about 47 percent in 2010.
EDA cause for concern
The EDA industry still remains a cause for concern. The EDA Consortium's Market Statistics Service (MSS) announced that the EDA industry revenue for Q1 2009 declined 10.7 percent to $1,192.1 million, compared to $1,334.2 million in Q1 2008, driven primarily by an accounting shift at one major EDA company. The four-quarter moving average declined 11.3 percent.
If you look at the last five quarters, the EDA industry has really been having it rough. Here are the numbers over the last five quarters, as per the Consortium:
* The EDA industry revenue for Q1 2008 declined 1.2 percent to $1,350.7 million compared to $1,366.8 million in Q1 2007.
* The industry revenue for Q2 2008 declined 3.7 percent to $1,357.4 million compared to $1,408.8 million in Q2 2007.
* The industry revenue for Q3 2008 declined 10.9 percent to $1,258.6 million compared to $1,412.1 million in Q3 2007.
* The industry revenue for Q4 2008 declined 17.7 percent to $1,318.7 million, compared to $1,602.7 million in Q4 2007.
Therefore, at the end of the day, what do you have? For now, the early recovery signs are more of a blip on the stats radar screen and there's still some way to go and work to be done before the global semiconductor industry can clearly proclaim full recovery!
Before I close, a word about the Indian semiconductor industry. Perhaps, it needs to start moving a bit faster and quicker than it is doing presently. Borrowing a line from Malcolm Penn, the Indian semiconductor industry surely needs to "stop waiting and watching."
I will be in conversation next with iSuppli on the chip and electronics industry forecasts. Keep watching this space, friends.
Friday, 17 July 2009
Memory update: Demand for DDR3 modules remains strong, with supplies limited
USA: As per Converge Market Insights, according to the major DRAM manufacturers, DDR3 demand has been on the rise over the last two months and supply is limited.
Sources claim that all DDR3 server DIMMs (dual in-line memory modules) are going directly to the Tier 1 OEMs as quickly as they can be manufactured, with lead times being quoted as far out as the end of October.
This may not appear like a long time, but given the state of the memory market for the past two years, any talk of a lead time is big news. The lack of supply in the spot market confirms that parts are becoming scarce.
While the DDR2 market remains flat, the DDR3 market is showing signs of life. Pricing is up about 15 percent to 20 percent over the last four weeks, and while there was no change in contract for DDR2, DDR3 pricing was up about 5 percent.
Converge anticipates that the DDR3 market will continue to show activity as we head into the busier build season. The notebook and desktop modules should also see a spike in demand in the coming months. Look for supply issues to occur with UDIMMs (unbuffered DIMMs) as well.
Sources claim that all DDR3 server DIMMs (dual in-line memory modules) are going directly to the Tier 1 OEMs as quickly as they can be manufactured, with lead times being quoted as far out as the end of October.
This may not appear like a long time, but given the state of the memory market for the past two years, any talk of a lead time is big news. The lack of supply in the spot market confirms that parts are becoming scarce.
While the DDR2 market remains flat, the DDR3 market is showing signs of life. Pricing is up about 15 percent to 20 percent over the last four weeks, and while there was no change in contract for DDR2, DDR3 pricing was up about 5 percent.
Converge anticipates that the DDR3 market will continue to show activity as we head into the busier build season. The notebook and desktop modules should also see a spike in demand in the coming months. Look for supply issues to occur with UDIMMs (unbuffered DIMMs) as well.
CPU update: Xeons and AMD Opterons are drivers for cost savings
Shortages take a vacation
USA: According to Converge Market Insights, in the past, the summer months have brought not only warm weather, but shortages in the CPU market. And July has always been a busy month in the spot market.
Last year, the big Intel end-of-life desktop shortage rolled in around June and kept the market busy until the pre-Christmas season. From the Pentium 4 630s to the 925, and the E6550 to the E8400, desktop parts arriving or leaving the market drive market volume demand.
This year, there are no hiccups to report in the Intel supply chain. The E8400 is still being supported though Q4, and there’s barely a shortage whisper on other desktop parts.
It appears that Intel has confronted the trend for the time being. Currently, we’re watching the E7400-500 and E5200-300 model switch for possible signs of a shortage.
Xeons drive reductions
Xeons and AMD Opterons are the current drivers this summer for cost-saving opportunities. This is the direct result of relatively higher pricing, a long shelf life allowing excess pockets to build and many price discrepancies across regions.
The spot market is abundant, with many cost-saving opportunities in server chips, which is an unexpected situation given stalling consumer demand.
USA: According to Converge Market Insights, in the past, the summer months have brought not only warm weather, but shortages in the CPU market. And July has always been a busy month in the spot market.
Last year, the big Intel end-of-life desktop shortage rolled in around June and kept the market busy until the pre-Christmas season. From the Pentium 4 630s to the 925, and the E6550 to the E8400, desktop parts arriving or leaving the market drive market volume demand.
This year, there are no hiccups to report in the Intel supply chain. The E8400 is still being supported though Q4, and there’s barely a shortage whisper on other desktop parts.
It appears that Intel has confronted the trend for the time being. Currently, we’re watching the E7400-500 and E5200-300 model switch for possible signs of a shortage.
Xeons drive reductions
Xeons and AMD Opterons are the current drivers this summer for cost-saving opportunities. This is the direct result of relatively higher pricing, a long shelf life allowing excess pockets to build and many price discrepancies across regions.
The spot market is abundant, with many cost-saving opportunities in server chips, which is an unexpected situation given stalling consumer demand.
IC update: Shortages persist and lawsuits divide semiconductor market
USA: According to Converge Market Insights, as we head into the middle of summer, we have started to track significant increases in the amount of shortage requirements.
As reported in last month’s Market Insights, lead times have begun to stretch for many different manufacturers due to limited inventories and reduced capacity at the manufacturing fabs. TI, Altera, Freescale and Xilinx are some of the manufacturers that have been affected.
It is rumored that Xilinx is having some major delivery issues on its Virtex-5 due to lower yields at UMC. This has caused some major shortages of certain Virtex-5 chips that are in high demand. Ultimately, this supply tightness might not correct itself until September.
Another potential issue that could affect more than just the IC market is the Tessera ITC patent ruling. This ruling will affect the importation of certain BGA packages from particular suppliers: Freescale, AMD, ST Micro, Motorola and Spansion.
Supply and pricing in the United States of these particular chips could be affected, and companies building with chips in the US need to make sure they have taken the necessary steps to ensure adequate supply and firm pricing on these devices.
It will be interesting to see how this unfolds going forward and how much of an impact this will have on manufacturers.
As reported in last month’s Market Insights, lead times have begun to stretch for many different manufacturers due to limited inventories and reduced capacity at the manufacturing fabs. TI, Altera, Freescale and Xilinx are some of the manufacturers that have been affected.
It is rumored that Xilinx is having some major delivery issues on its Virtex-5 due to lower yields at UMC. This has caused some major shortages of certain Virtex-5 chips that are in high demand. Ultimately, this supply tightness might not correct itself until September.
Another potential issue that could affect more than just the IC market is the Tessera ITC patent ruling. This ruling will affect the importation of certain BGA packages from particular suppliers: Freescale, AMD, ST Micro, Motorola and Spansion.
Supply and pricing in the United States of these particular chips could be affected, and companies building with chips in the US need to make sure they have taken the necessary steps to ensure adequate supply and firm pricing on these devices.
It will be interesting to see how this unfolds going forward and how much of an impact this will have on manufacturers.
Storage update: Lower demand and excess inventory erode 500 GB 3.5" drive prices
3.5" drives
USA: According to Converge Market Insights, there has been some price erosion in 500 GB through 1TB 3.5" HDDs since our last update. This is not due to a drop in contract prices, but is a result of lower demand coupled with excess opportunities in the marketplace.
Meanwhile, demand for 160 GB, 250 GB and 400 GB has remained steady, with pricing unchanged month over month. This is true of both the SATA and IDE interface. Currently, only $2 to $3 separates the 160 GB from the 250 GB capacity.
However, the difference between the 250 GB to the 400 GB level, the price jumps over $10 to the high-$30/low-$40 range. Lastly, we are still seeing liquidity in 40 GB, 80GB and 120 GB IDE HDDs.
2.5" drives
While market analysts continue to speak about shortage and allocation when discussing the 2.5" market, we have not experienced a significant impact yet. We believe this will change in the near term, but for the July/August time frame, availability is expected to remain unchanged month over month. As stated previously, this is particularly true of, but not exclusive to, the SATA interface in the 160 GB through 320 GB range. Finally, activity in lower-capacity 2.5" IDE HDDs remains strong. This pertains to 20 GB to 80 GB capacities in both the 4200 RPM and 5400 RPM speeds. Pricing levels for these drives have not changed since our last report.
USA: According to Converge Market Insights, there has been some price erosion in 500 GB through 1TB 3.5" HDDs since our last update. This is not due to a drop in contract prices, but is a result of lower demand coupled with excess opportunities in the marketplace.
Meanwhile, demand for 160 GB, 250 GB and 400 GB has remained steady, with pricing unchanged month over month. This is true of both the SATA and IDE interface. Currently, only $2 to $3 separates the 160 GB from the 250 GB capacity.
However, the difference between the 250 GB to the 400 GB level, the price jumps over $10 to the high-$30/low-$40 range. Lastly, we are still seeing liquidity in 40 GB, 80GB and 120 GB IDE HDDs.
2.5" drives
While market analysts continue to speak about shortage and allocation when discussing the 2.5" market, we have not experienced a significant impact yet. We believe this will change in the near term, but for the July/August time frame, availability is expected to remain unchanged month over month. As stated previously, this is particularly true of, but not exclusive to, the SATA interface in the 160 GB through 320 GB range. Finally, activity in lower-capacity 2.5" IDE HDDs remains strong. This pertains to 20 GB to 80 GB capacities in both the 4200 RPM and 5400 RPM speeds. Pricing levels for these drives have not changed since our last report.
Wednesday, 17 June 2009
CPU update: Intel Atom fails to take off in the spot market
USA: According to Converge Market Insights, May was a steady month in CPU activity, with a focus toward new product launches at the Computex show in Taipei in early June.
For this edition of Market Insights, this report will focus on two differing developments in the mobile and desktop markets: the failure of the tiny Atom to take off, and the surprise resurgence of the old heavyweight desktop processor.
The Intel Atom
As the first generation of Atom processors slides into end of life, it is worth looking at its impact on the spot market. These low-cost, low-speed chips for netbook and other mobile applications arrived on the market with much fanfare but have not yet caught on to be actively traded in the open market.
Intel estimated that the Atom accounted for approximately 20 percent of its mobile processor shipments in Q1 09, while spot market contributions were at a modest 6-7 percent.
The margins from the low-cost chips, combined with the frequent need to bundle with a chipset or small board, mean that the parts are not simple to move. It is interesting to note that as of yet, AMD has no direct competing technology to the Atom. Perhaps, we will see a rise in demand as main models, such as the N270, are replaced by the N450.
Boxing clever
The month of May saw a reemergence of demand for the desktop CPU at retail. In the past, the high cost of shipping retail desktops made them an uneconomical option, as the boxes contain a heavy cooling device that dramatically raises shipping costs while eroding margins.
With the introduction of inexpensive Intel cooling fans in the spot market, Converge has been able to bundle the fans and CPUs together in kits complete with full three year warranty providing a cost-effective solution to box builders. This has resulted in a resurgence in desktop demand in the spot market, as market cost variances are once again favorable.
For this edition of Market Insights, this report will focus on two differing developments in the mobile and desktop markets: the failure of the tiny Atom to take off, and the surprise resurgence of the old heavyweight desktop processor.
The Intel Atom
As the first generation of Atom processors slides into end of life, it is worth looking at its impact on the spot market. These low-cost, low-speed chips for netbook and other mobile applications arrived on the market with much fanfare but have not yet caught on to be actively traded in the open market.
Intel estimated that the Atom accounted for approximately 20 percent of its mobile processor shipments in Q1 09, while spot market contributions were at a modest 6-7 percent.
The margins from the low-cost chips, combined with the frequent need to bundle with a chipset or small board, mean that the parts are not simple to move. It is interesting to note that as of yet, AMD has no direct competing technology to the Atom. Perhaps, we will see a rise in demand as main models, such as the N270, are replaced by the N450.
Boxing clever
The month of May saw a reemergence of demand for the desktop CPU at retail. In the past, the high cost of shipping retail desktops made them an uneconomical option, as the boxes contain a heavy cooling device that dramatically raises shipping costs while eroding margins.
With the introduction of inexpensive Intel cooling fans in the spot market, Converge has been able to bundle the fans and CPUs together in kits complete with full three year warranty providing a cost-effective solution to box builders. This has resulted in a resurgence in desktop demand in the spot market, as market cost variances are once again favorable.
Semiconductors and ICs update: Demand for military connectivity devices remains steady
USA: According to Converge Market Insights, in tracking the market, Converge does not expect any significant changes in demand over the next several months, continuing the holding pattern that the IC market has seen in recent months.
Manufacturing fabrication capacity is at the lowest it has been in a considerable amount of time, and distribution inventories have been slashed to minimal levels. However, for the second month in a row we have seen a month-over-month increase in real shortages due to these low inventory levels.
Some customers are still trying to reduce inventory levels, although the number of those doing so has decreased somewhat over the last several months. Nevertheless, there is still available inventory in the market for savvy bargain hunters.
Additionally, Converge is tracking a minor reduction in demand in some military sectors, indicating a slowing of new manufacturing over the next six to 12 months. Demand for military connectivity devices, however, appears to be unchanged, as the repair business remains steady.
Manufacturing fabrication capacity is at the lowest it has been in a considerable amount of time, and distribution inventories have been slashed to minimal levels. However, for the second month in a row we have seen a month-over-month increase in real shortages due to these low inventory levels.
Some customers are still trying to reduce inventory levels, although the number of those doing so has decreased somewhat over the last several months. Nevertheless, there is still available inventory in the market for savvy bargain hunters.
Additionally, Converge is tracking a minor reduction in demand in some military sectors, indicating a slowing of new manufacturing over the next six to 12 months. Demand for military connectivity devices, however, appears to be unchanged, as the repair business remains steady.
Wednesday, 13 May 2009
Memory update: DRAM market remains unsettled with volatile weeks ahead
USA: According to Converge Market Insights, over the last several weeks, there has been a lot of uncertainty in the memory market as DRAM manufacturers attempt to cut supply from reaching the spot market.
These tactics are intended to raise prices to justify a substantial increase in contract prices for the first half of May, which will settle 10–12 percent higher. Spot market pricing has also gone up over a two-week span. Prices for 1GB PC800 modules have risen from $9.50 to $11 and for 2GB PC800 modules from $19 to a high of $22 as of May 8.
Although there are some signs of product tightening, Converge believes that the next four to six weeks will be extremely volatile in the DRAM market. The games will continue between the DRAM manufacturers and end users as they try to gauge what the true supply situation will be heading into the next two months.
Converge believes that the next three weeks in particular could produce significant swings in the spot market for both price and supply. There is a holiday in the United States, Hong Kong and Taiwan during the last week of May, which could affect supply and demand.
Vendors may look to position themselves a little earlier than normal for the month end, which could have a negative impact on price. If that is the case, we should see more supply in the market for month’s end.
These tactics are intended to raise prices to justify a substantial increase in contract prices for the first half of May, which will settle 10–12 percent higher. Spot market pricing has also gone up over a two-week span. Prices for 1GB PC800 modules have risen from $9.50 to $11 and for 2GB PC800 modules from $19 to a high of $22 as of May 8.
Although there are some signs of product tightening, Converge believes that the next four to six weeks will be extremely volatile in the DRAM market. The games will continue between the DRAM manufacturers and end users as they try to gauge what the true supply situation will be heading into the next two months.
Converge believes that the next three weeks in particular could produce significant swings in the spot market for both price and supply. There is a holiday in the United States, Hong Kong and Taiwan during the last week of May, which could affect supply and demand.
Vendors may look to position themselves a little earlier than normal for the month end, which could have a negative impact on price. If that is the case, we should see more supply in the market for month’s end.
CPU update: Mobile shortages drive demand, while Intel Atom eludes open market
USA: According to Converge Market Insights, the CPU market in April, if viewed against previous years, could be described as being steady with a seasonal calm in demand. However, Converge remains optimistic based on signs of a potential recovery and upswing in May and is encouraged by new opportunities that exist in the marketplace.
Mobile shortages drive demand
Over the past several months, Converge has been tracking a clustering of demand around lower-priced processors. A shortage of mobile processors in the lower segment of budget CPUs resulted in increased demand for these processors on the spot market in recent weeks. T2390 and T3200 all the way up to T6600 models remain in short supply and high demand.
Rumors return of a tightening of desktop processors
Several slightly older desktop microprocessors are rumored to become in short supply in May. This list includes E2200, E2220, E5200, E7400 and E8400 processors. The E7400 and E8400, at the time of writing of this update, remain the best-selling parts at a cost savings; however, we anticipate a tightening of supply heading into the summer months, driven by the traditional phasing out of older technology.
In addition, due to a history over the past four summers of a burst of excess and obsolete shortage desktop activity, it is advisable to monitor this space carefully. Converge will monitor and report in future Market Insights updates.
Atoms are puzzling
The spot market has not fully cracked the potential of the Intel Atom market. To date, demand is present; however, a surplus of large-quantity inexpensive excess has yet to emerge. We anticipate more customers will turn to the Netbook models, as it is sure to become an increasingly important open-market segment. For the short term, demand is maintaining pricing levels in the spot market.
AMD rides again
AMD parts remain in demand in the spot market, especially for the mobile processor. In the past the Athlons, Semprons and Opterons provided good savings opportunities as AMD provided wildly differing prices, not only by region or country, but also by customer. The market has long since settled, but we do see opportunities existing in the new mobile range of Q, R and Z parts.
Mobile shortages drive demand
Over the past several months, Converge has been tracking a clustering of demand around lower-priced processors. A shortage of mobile processors in the lower segment of budget CPUs resulted in increased demand for these processors on the spot market in recent weeks. T2390 and T3200 all the way up to T6600 models remain in short supply and high demand.
Rumors return of a tightening of desktop processors
Several slightly older desktop microprocessors are rumored to become in short supply in May. This list includes E2200, E2220, E5200, E7400 and E8400 processors. The E7400 and E8400, at the time of writing of this update, remain the best-selling parts at a cost savings; however, we anticipate a tightening of supply heading into the summer months, driven by the traditional phasing out of older technology.
In addition, due to a history over the past four summers of a burst of excess and obsolete shortage desktop activity, it is advisable to monitor this space carefully. Converge will monitor and report in future Market Insights updates.
Atoms are puzzling
The spot market has not fully cracked the potential of the Intel Atom market. To date, demand is present; however, a surplus of large-quantity inexpensive excess has yet to emerge. We anticipate more customers will turn to the Netbook models, as it is sure to become an increasingly important open-market segment. For the short term, demand is maintaining pricing levels in the spot market.
AMD rides again
AMD parts remain in demand in the spot market, especially for the mobile processor. In the past the Athlons, Semprons and Opterons provided good savings opportunities as AMD provided wildly differing prices, not only by region or country, but also by customer. The market has long since settled, but we do see opportunities existing in the new mobile range of Q, R and Z parts.
ICs update: Sporadic shortages drive the market
USA: According to Converge Market Insights, there has not been any significant change to the integrated circuit (IC) market since our last Market Insights report.
Once again, we are tracking some sporadic shortages in some product lines, but nothing that is sustained over a long period. Most of these shortages are due to small upticks in demand.
With many semiconductor manufacturers cutting back on production, and less product on the shelf at franchise distributors, it is more difficult for OEMs and CEMs to quickly pick up supply to solve these spot shortages.
However, there are still plenty of cost-savings opportunities in the spot market, given some of the excess material that exists in the market. With some customers slowing down or cutting production, there are some great potential cost savings available to customers. In addition, companies with date code flexibility can certainly take full advantage of this market and the opportunities it presents.
Converge does not expect any significant changes in market conditions over the next couple of months, although some predict the market will experience an overall uptick at the end of this year.
That would certainly have a significant effect, given all the shutdowns and cutbacks by semiconductor manufacturers over the last year. Some of that optimism could be tied to what some see as the beginning of the turnaround of the global economy. For now, the market waits.
Once again, we are tracking some sporadic shortages in some product lines, but nothing that is sustained over a long period. Most of these shortages are due to small upticks in demand.
With many semiconductor manufacturers cutting back on production, and less product on the shelf at franchise distributors, it is more difficult for OEMs and CEMs to quickly pick up supply to solve these spot shortages.
However, there are still plenty of cost-savings opportunities in the spot market, given some of the excess material that exists in the market. With some customers slowing down or cutting production, there are some great potential cost savings available to customers. In addition, companies with date code flexibility can certainly take full advantage of this market and the opportunities it presents.
Converge does not expect any significant changes in market conditions over the next couple of months, although some predict the market will experience an overall uptick at the end of this year.
That would certainly have a significant effect, given all the shutdowns and cutbacks by semiconductor manufacturers over the last year. Some of that optimism could be tied to what some see as the beginning of the turnaround of the global economy. For now, the market waits.
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