SAN JOSE -- It only seemed like yesterday when the semiconductor industry was suffering from overcapacity and otherwise lackluster demand for chips. But suddenly, there are signs of spot shortages--and even price hikes--for select parts, such as DVD chips, microprocessors, and NAND-based flash memories.
Some believe that OEMs are in the double-ordering mode, causing a raft of new and sudden shortages in the marketplace. Still others believe that the spot shortages are real, following stronger-than-expected demand for consumer products and PCs.
It's unclear if the IC market is seeing a full-fledged recovery, but the reported shortages could stunt the growth rates in the industry. "Component shortages for digital still cameras and DVD recorders are negatively impacting growth for the consumer electronics application market in 2003--just when the overall electronics market was looking for a spark to ignite growth," according to a recent report from iSuppli Corp. of El Segundo, Calif.
One of the hotter products in the market includes NAND-based flash memories. Select flash-memory products based on NAND technology are currently on allocation and lead times have stretched to 10 to 12 weeks, said Rick Whittington, a semiconductor analyst for American Technology Research Inc. (ATC), a research firm in Greenwich, Conn.
It's another story for NOR-based flash-memory devices. There is still a glut of capacity for NOR parts, but prices for lower-density devices "have stopped going down," Whittington said ( see Aug. 22 story ).
Prices for NAND-based devices have also increased in the third quarter of 2003. "Based on our channel checks, we believe NAND flash pricing has increased 15 percent to 20 percent in the current quarter," according to a report issued this week from WR Hambrecht + Co. LLC of San Francisco.
"Extremely robust demand for digital cameras and USB flash drives is resulting in tight capacity for NAND flash devices for use in memory cards/drives," according to the report. "After significant price erosion in 1H:03, NAND flash prices have firmed up and are trending up in 2H:03."
Other consumer-oriented devices are also in demand. "In the digital camera market, manufacturers of CCD sensors have simply not been able to keep up with demand, as several advanced cellular handsets also use these traditional, high-resolution devices," according to iSuppli.
"To make matters worse, camera and cell phone makers are slow to shift new designs to the improved, easy-to-fab CMOS sensors, which are not in short supply and could easily meet demand," the report said.
"In the DVD player arena, a severe shortage of optical pickup units (OPUs) has developed, forcing allocation of these essential components in the supply chain," according to the report. "DVD player manufacturers must find a way to encourage OPU makers to increase investment in new capacity to solve this shortage and enable them to meet growing consumer demand."
Besides the consumer market, PCs are finally showing signs of life. Last week, Intel Corp. said it is experiencing greater-than-expected unit demand for microprocessors--and even spot shortages for parts--in what is turning out to be a surprising quarter for the chip giant ( see Aug. 22 story ).
During a conference call last week, Andy Bryant, Intel's CFO, said the company is seeing strong demand for mobile, desktop and server processor, but also warned of double-ordering in the marketplace.