Spot mkt. starting to heat up.
August 23, 1999, Issue: 1174 EBN
Section: Independent Distribution
Spot mkt. starting to heat up
Marilyn Cohodas
With the flash-memory shortage pushing OEMs to the open market,
independent distributors are reporting brisk business in PC chipsets, tantalum
capacitors, synchronous DRAMs, and hard-disk drives for notebook PCs.
While buyers frequently turn to the open market during times of spot
shortages, high demand across all these commodity areas hasn't been seen for
some time, according to industry executives.
"It's a more broad-based shortage than we're used to," said Ken Neusaenger,
vice president of sales for independent distributor Smith & Associates,
Houston.
Leading the pack in shortfalls is flash memory, which has been spurred by
demand from the telecom and networking markets. Neusaenger attributes the
current flash crunch to a resurgence in the consumer market for cell phones
and PDAs.
Flash prices "have gone through the roof," Neusaenger said. For example,
4-Mbit devices are bearing unit prices of $3 or $4 directly from the
manufacturer, and commanding prices of $6 or $7 in the open market.
"Buyers aren't complaining. They're just paying," he said, noting even stronger
interest for 8-Mbit and 16- Mbit products.
"All the signs of a classic shortage are here," said Dan Carracino, partner and
founder of the American IC Exchange, Aliso Viejo, Calif. Carracino noted
that while major OEMs are still getting support from the factory, those in the
middle tier are feeling the rumblings of a supply problem.
"AMD is saying [the flash shortage] is a two- to three-year situation,"
Carracino said. That, in turn, is fueling suspicions that OEMs are double- or
triple-ordering to shore up their supplies for the long haul.
With lead times for tantalum capacitors running anywhere between 14 and 18
weeks, nonfranchised distributors reported that buyers in a broad range of
industries are turning to the open market for tantalum-capacitor products.
The shortage has doubled and tripled open-market prices over the past few
months, according to Smith & Associates' Neusaenger.
Another tight market is emerging in the storage arena, particularly for 2.5-inch,
4.3- and 6.4-Gbyte notebook disk drives.
Neusaenger said that over the past few months, pricing in the spot market for
larger-capacity drives has ratcheted up by as much as 20% to 30% over
factory-direct prices.
One possible explanation for this particular shortage, according to
Neusaenger, is the back-to-school rush for new products such as the iMac
power book and other laptop-computer products with faster processors and
state-of-the-art features.
Smith & Associates expects notebook drives to be in short supply until the
end of the year or the beginning of 2000, when cyclical forces cause
open-market buying to slow down after peaking in the third and fourth
quarters, according to Neusaenger.
As for the processor side of the market, Frank Cavallaro, vice president of
worldwide sales at Peabody, Mass.-based NECX Inc., said buyers are
"screaming hot" for Intel Corp.'s 440BX and 440ZX PC chipsets.
As previously reported by EBN, prices for the chipsets have spiked
dramatically, particularly those for Intel's southbridge chip, according to
Cavallaro. "The southbridge is half the money in that chipset," he said, noting
that the cost of a typical set is from $36 to $40.
NECX attributes the shortage to a supply-side problem, and the possible
difficulty in transitioning to the next-generation chipset.
Independent distributors also have seen an increasing demand for synchronous
DRAMs, specifically PC100 8x8 products, which Cavallaro said experienced
price increases from $6.05 to $7.25 in mid-July, but have been stable for
approximately the last week.
Cavallaro said the pricing irregularity could be simply a response to the
cyclical PC-build season, but notes that trends are hard to predict in the
always volatile DRAM market.
"The question is, is it going to last?" asked AICE's Carracino.
While there is an ample supply base of SDRAM manufacturers, Carracino
said that any price drop in any segment of the DRAM market is an "event."
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What's Hot In The Spot Market
- Flash memory
- PC chipsets
- 2.5-in. disk drives
- Tantalum capacitors
- Synchronous DRAM
Source: Independent distributors
Copyright © 1999 CMP Media Inc. |
