Rick Pierson, iSuppli: Key electronic components in short supply

July 5, 2010

Various key commodity electronic components now are in a state of critically short supply, causing prices to rise and delaying deliveries of parts to customers to a worrying lengths.

With demand exceeding supply, availability remains extremely tight for widely used analog Integrated Circuits (IC) and memory ICs. 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, meaning suppliers are unable to respond to un-forecasted 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 was 20 weeks for power MOSFETs and small signal transistors, and 18 weeks for bipolar power devices and rectifiers.

In comparison, normal lead times for such products typically run to approximately 10 to 12 weeks.

“When lead times enter the 20 week range, they indicate a major schism between component supply and demand,” said Rick Pierson, senior analyst for semiconductors and component price tracking at iSuppli. “Supply constraints for electronics and semiconductor components might not come as a big surprise amid the present market rebound. However, specific market and pricing trends are spurring varying degrees of short supply depending on the component market.”

Shortages or Allocation Everywhere

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, but lead times will continue to extend and ASPs will keep rising, iSuppli believes.

Supply also remains constrained for 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.