Various key commodity component categories in the electronics supply chain now are in a state of short supply, causing prices to rise and lead times for customers to obtain some products to stretch to long as 20 weeks, according to iSuppli Corp.
Market conditions at present remain very tight for analog Integrated Circuits (IC), memory ICs with demand exceeding supply. The supply situation is even more critical for standard logic ICs and power management discretes such as low-voltage MOSFETs and tantalum capacitors, which now are experiencing shortages and effectively are on allocation status, with suppliers unable to respond to unforecasted demand.
Across the board, lead times—which in the supply chain refer to the time elapsed from the moment that a customer places an order up to the juncture that the order is received—are longer than forecasts indicated a month ago. The lead time in June is 20 weeks for discretes, 18 weeks for standard logic ICs and 14 weeks for analog ICs. In comparison, normal lead times for such products typically run to approximately 10-12 weeks. The shortest lead time to be found for any major electronic component category was in memory ICs—hovering at a relatively tame six weeks.
Overall, iSuppli’s latest price analysis reveals a deep and persistent schism between component supply and demand. Supply constraints for electronics and semiconductor components might not come as a big surprise amid the present market rebound, but because of specific market and pricing trends, the impact of the current shortfall varies by product type.
Shortages or Allocation Everywhere, with Little Relief in Sight
Among analog ICs, demand is outstripping supply, allowing manufacturers to increase Average Selling Prices (ASPs) for the last three months. Not only is the imbalance expected to persist until the end of 2010, lead times also will continue to extend and ASPs will keep trending up, iSuppli believes.
Supply also remains constrained in the case of capacitors and standard logic ICs, both of which have been swept by strong demand. For standard logic ICs, allocation is continuing for the fourth month and likely to persist until the end of the third quarter.
Similar difficulties exist in the discretes market, where supply and demand remain heavily imbalanced. Lead times—which have doubled since July 2009—continue to extend, and the unremitting combination of strong demand and capacity constraints indicates that imbalances between supply and demand will last until the end of the year.
The situation is slightly calmer on the memory IC front, where expected future demand and inventory rebuilding efforts are being balanced off by currently soft sales as well as falling prices. Nonetheless, troubling signs point to possible severe shortages in NAND flash during the third quarter, especially if suppliers are unable to achieve an optimal mix in production.