Chip price report: DRAM market defies description
9/29/2000 Trying to find an adjective to describe today's swooning memory market can be difficult, opines NECX analyst Stephen Buckler. There are plenty of opinions on short-term trends but here’s what’s certain: Intel's recent disclosure of its soft demand and excess stock position gives a good understanding at what has been driving the DRAM market. It’s also understood that spot market pricing continues to be below manufacturers’ direct prices. Open market price for the 8X8 PC100 is in the $6 range and the 16X8 is in the mid-$14 range. OEMs are finishing up contract negotiations with memory vendors, and Buckler asserts that the open market pricing weighed heavily in the outcome. He sees pricing for OEMs falling in the low $7 range for 8X8 PC100 and $14 range for 16X8 PC100.
Buckler sees demand picking up for the desktop manufacturers. However, the glut of product in the pipeline may still drive pricing downward. As excess inventory is burned off, Buckler expects to see OEM and spot pricing reach parity by late October to early November. Once this happens, we may see the prices firm up as has been forecast.
Flash market update:
In general, activity has decreased recently on memory markets with no one completely understanding why, according to NECX analyst Joe Rossino. More specifically, Rossino reports, flash activity has been painfully slow over the past week.
Rossino’s speculation is that: 1) buyers and sellers are taking a "wait-and-see" approach as the end of Q3 approaches, 2) purchasers may have overbought this past quarter, and need little or no parts for their orders, and/or 3) now is the end of the fiscal year for many operations.
Price-wise, the market has leveled off somewhat from last week for 32-Mbyte, 5-V TSOPs. Less expensive product has been bought up, leaving pricing between $36 and $55.
Storage market update:
Desktop IDE drives:
We are finally entering an exciting time in storage, says NECX analyst David Nebbia, and particularly for desktop IDE drives. The market has really taken off in the last two weeks. With the fourth quarter just upon us, Nebbia expected some increased interest and lower inventory levels. But it’s happened a month early, he says. Drives with 10-Gbyte and 15-Gbyte capacities have seen 10% price rises. PC sales are starting to rise, and most of the major retailers are already on back order. Nebbia says to look for another 5 to 10% increase in all capacities up to 30 Gbytes.
Notebook 2.5-in drives:
With the focus on the desktop market right now, don’t overlook key signs that notebook drives are heading in the same direction as IDE drives, Nebbia says. Inventory levels on the IBM 6-Gbyte and 12-Gbyte "Arches" series are getting very low; pricing is firming and rising. In addition, Hitachi is unable to ship any 12-Gbyte drives until mid-to-late October, which has forced many buyers to gain IBM, Fujitsu, and Toshiba qualification or to place orders with them for support.
SCSI drives:
Nebbia reports that there still is some increased demand in the 9-Gbyte and 18-Gbyte capacities. With so many new model numbers on the market and on their way, it’s hard to pinpoint the real shortages over the long haul, he says. Look for 36-Gbyte/68-pin and 73-Gbyte/68-pin drives to be very hot heading into the 4th quarter, as well as the 9-Gbyte, 68- and 80-pin types.
In general, the storage market has not been this active in a year, Nebbia reports. With the consolidation of distributors and with the storage manufacturers minimizing their distribution channels, the resources available to OEM are fewer. They are starting to come into the open market faster for information and for product.
CPU market update:
Even though the Intel Celeron market has fallen about 5% since he last wrote about them, NECX analyst Beau Limbocker still maintains that this family of processors is the one to watch. He admits that, in the case of the Celeron market, he was not only a little early in predicting an active marketplace, but also that he failed to anticipate the decrease in pricing literally across the board.
We're in a unique situation, says Limbocker. Never before have so many Celerons been traded by independents, yet the market has fallen. Rather than expect to see even lower pricing, his advice is to take advantage of the current market, which has bottomed out.
CPU's have always been the simplest commodity in our industry to trade in, Limbocker opines, and that’s largely due to the fact that only a few mainstream processors are active at any given time. As the transitions took place from single-edge packaging to flip chip and Katmai to Coppermine and Pentium II to III and now 4, being a fairly knowledgeable trader seemed to require quite a bit more effort.
The truth is, however, this is the simplest of all times. According to Limbocker, almost everything within any given processor family costs about the same. If the topic is Celerons, they're about $80. If it switches to Pentium IIIs, change the general pricing to about $190. Even with high-end server Xeons, this concept holds some truth.
What's interesting about this concept is the fastest core speeds are not trading at any higher volumes than slower speeds. For example, although Pentium IIIs at 650, 667, and 700 MHz all are trading at about the same dollar amount, we have sold about 40,000 667 MHz units so far this month and fewer than 20,000 700 MHz types.
Peripherals market update:
Intel's position as the leading motherboard manufacturer has been shaken lately, says NECX analyst Walter Rozovsky. About a year ago Intel made its popular BX chipset (Seattle line of motherboards) obsolete by rapidly introducing the i810, i820, and i815 chipsets. The i810 chipset was meant as a temporary solution until the more powerful chipsets hit the market. But the i820 chipset was a complete disaster, Rozovsky says. The motherboards built around this chipset (Cape Cod, Vancouver) were to use new Rambus memory modules, which are much more expensive than DIMMs. The market responded very negatively. Intel tried to install a translator from Rambus to DIMM on their Cape Cod motherboards, but finally ended up recalling all Cape Cod motherboards from the market and replacing them with Vancouver motherboards and a free 128-Mbyte Rambus module. This operation caused Intel to lose twice the cost of Cape Cod motherboards. Motherboards based on the i815 chipset suffered a similar fate, though it is somewhat easier to adapt them for use with DIMM modules. The market has currently shifted to the use of the motherboards built on VIA chipset by FIC. Also it is left with little choice as to go back to using motherboards based on the original i810 chipset (Intel's Cayman line of motherboards, and the ASUS MEW line)
Networking market update:
Many changes expected in the networking market, according to NECX analyst Mike Keegan. 3Com is introducing a new line of switches this month that may cause a shift in the market for Ethernet and fiber switching. The new parts in the Superstack family are 3C16985A, 3C16986, 3C16987, and 3C16988. They’re smaller, faster and, best of all, less costly than the previous Superstack models. In a box about the size of the Baseline series of switches, the 24-port switches will have an array of fiber ports and other upgrades that may push the other Ethernet switching manufacturers to follow suit. The next few months will tell.
The 3Com Baseline series of switches is heavily allocated. There has been an increase in demand for these as a result. Keegan has not heard that 3Com expects to be shipping soon.
Nortel backlogs have eased somewhat, Keegan reports. He’s heard that some of the allocation issues, as reported here before, on Cascade modules AL2033xxx is easing a little but demand for these at NECX is still strong. The shortage on Nortel 450T switches still continues.
3Com announced an Oct. 25 price drop on its 3C16980 switch. The old MSRP: $2,545; old direct cost: $1,527. New MSRP: $2,150; new direct cost: $1,290.
Capacitor market update:
According to NECX’s Andy Broe, the overall capacitor market remains mediocre, with low ESRs still leading the way. While overall activity is still slow, many are waiting to see what the anticipated Christmas build will bring.
Pricing on A and B case codes is running typically in the $0.20-0.25/each range, with a few exceptions. D and E cases are still the hotter parts, with pricing typically running anywhere from $0.60-1.20/each depending on the capacitance and voltage ratings.
Low-ESR capacitors continue to remain the top shelf of caps, with the new T520 series appearing on a few requisitions. The T520 is an ultra-low-ESR capacitor (no measurable ESR value) that is the new cutting edge of the capacitor world. While there is no current open market activity on this product, we do expect to see it appear within four to six months.
Ceramics demand remains strong, with more requisitions appearing in the open market than there have been in the last five to six weeks. Broe expects these to remain strong through the holiday season.
Spot prices for this article were current as of Sept. 28, 2000, US East Coast time. For more complete pricing information, contact NECX, Peabody, MA. NECX is a VerticalNet Company.
Edited by David Maliniak
Managing Editor, Electronics Web.com |
