NewPoints Market Insights

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November 3, 2020

The Aftermath of the AKM Fire is Still Playing Out in the Market

Customers of AKM are continuing to have immense struggles getting ahold of material. As of now, AKM has told customers they do not have a firm timeline, and they should look to re-engineer their platforms. Unfortunately, that is a 6-9 month process, which is too long to not ship goods. The result is that product currently available in the open market is disappearing by the hour and is demanding huge premiums. Additionally, AKM supplies raw materials to companies that make crystal oscillators, so they are starting to feel the squeeze as well. Companies like TXC, Taitien, Siward, Jauch Quartz, NDK are all waiting to see what raw materials they will be able to use. As of yet, no answers are coming out of AKM.

GDDR5 and GDDR6 Continue to be a Bright Spot in the Memory Market

Overall, the current memory market is very soft. Pricing continues to drop across the board for DIMMs and DRAM components. However, the demand for graphics is still hot, with the new gaming consoles coming out and ever-increasing demand for gaming laptops and crypto-mining. We are seeing direct pricing remain relatively consistent, but reports are manufacturers are way behind on delivery, which is forcing spot market activity. Currently, we are experiencing pricing that is 30-40% above current direct cost.

Substrate Supply Threatening the Processor Market

The growth of the CPU and GPU market is pushing well beyond the capacity of substrate manufacturers. Currently, there are only a handful of suppliers that provide substrate, and the capacity is at its limit. Companies like Intel, AMD, and Nvidia are vying for the supply. Intel is already the biggest consumer and is more willing to pay premiums to assure supply. This leaves AMD in a tough spot as they fight for market share. Expect shortages on all AMD desktop, mobile and server processors in 2021 as the lack of material starts to catch up to their production pace.

Manufacturers are Utilizing Component Hubs to Combat Constant Shortages Across the Board

Over the past few years, the market has experienced continued shortages on many components ranging from MLCCs and resistors – to processors and graphics cards. The unpredictability of the supply has caused some customers to take advantage of programs that firms like NewPower provide. We have global component hubs for many customers that allow them to guarantee continuity of supply and consistent pricing with products that can ship the same day. Reach out to your NewPower account manager if you would like to discuss this or any other supply chain solution.

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