Price hikes, shortages hit chip market

Now, amid the upturn, there are widespread reports of component shortages in the supply chain. Many chip makers have raised select product prices. And one company, Texas Instruments Inc., is said to have raised select products prices by up to 40 percent.

''TI's parts face most serious shortages; parts shortages also exist for IR, Fairchild, On Semiconductor, Diodes, STMicro, and others,'' according to a report from FBR. ''Multi-layer ceramic capacitors (Kemet, AVX, Japanese suppliers exposed) are roundly cited as being in short supply.''

''Distribution contacts continue to note chip shortages across product lines at Broadcom,'' according to the report. ''Component tightness, but not shortages still exists for hard disk drives, Blu-ray optical disk drives, and DDR2/DDR3 memory chips.''

On the foundry side at TSMC, UMC and others, ''production queues (are) in place for 300-mm (longer queue) and 200-mm (shorter queue), though firms can jump the queue by paying more (hot lots),'' according to FBR.

Who is raising prices? Memory prices, including DRAM and NAND, are projected to jump in the second quarter, according to the report.

''We hear of discrete and other commodity price hikes of 5-10 percent,'' according to the report. ''While everyone knows TI's business is robust following its mid-quarter update, we heard the firm recently raised prices on some commodity (non-sole sourced) analog chips by 20"40 percent.''

''In short, near-term business conditions are robust, end demand appears strong, particularly in Asia where signs of a broader economic recovery are apparent, and visibility is robust through 2Q,'' according to a report from FBR.

''That said, inventories are obviously building due to unsustainably lean levels exiting 3Q '09, higher component lead times, concerns about 2H component supply, and, in some cases, OEM bullishness about likely robust 2H '10 end demand, particularly for PCs, smartphones, and corporate spending,'' according to the firm.

''Total supply chain inventories grew 5 percent sequentially in dollars in 4Q after falling 25 percent from 3Q '08 through 3Q '09,'' the report added.