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Wireless market frenzy drains RF-chip supply
By Mark LaPedus, Darrell Dunn, Jennifer Baljko Shah
Electronic Buyers' News
(01/21/00, 04:11:35 PM EDT)
The boom in the wireless- handset market is causing spot shortages of yet another key component, this time pushing out the availability of RF devices by several months.
Joining a growing list of hard-to-find parts, stocks of RF chips at several top-tier suppliers are sold out for the rest of the year, while other major vendors are unable to take new orders and are just barely serving existing customers.Even many new and second-tier RF-chip suppliers say they, too, are experiencing huge demand, although most have yet to place customers on allocation.
As the shortage rages, however, some RF-chip makers blame their inability to meet demand on a shortfall of other wireless-handset components. A lack of related parts, ranging from flash memory to surface-acoustic-wave (SAW) filters to tantalum capacitors-is crimping the supply picture for handset vendors and triggering a fallout that's affecting other component sectors.
Whatever effect such corollary factors are having, analysts indicate that demand for cell phones and other wireless-communications devices is creating an environment of allocation.
?Everybody in wireless is going to be on allocation by midyear,? said Will Strauss, an analyst at Forward Concepts Co., Tempe, Ariz. ?On the chip side, [the lack of] RF chips and flash memories is becoming a problem.?
The situation is leaving many vendors wedged between a rock and a hard place. Some of the potential demand could be coming in the form of double booking, but suppliers must also brace themselves for an unexpected surge in orders.
?There was talk that OEMs began to double order starting in the fourth quarter of last year,? said George Bechtel, an analyst at Strategies Unlimited Ltd., Mountain View, Calif. ?On the other hand, if you have a handset customer like Motorola-which is in the market-share mode-you may get caught without having enough parts.?
In response, nearly all RF-chip suppliers are expanding their fab capacities to meet the booming demand. ?There is no doubt [that RF-chip makers] could sell more if they had extra capacity,? Bechtel said.
Capacity will be a major issue for chip makers and OEMs in the coming years. Worldwide handset shipments are projected to grow from 240 million units in 1999 to 325 million units this year, reaching 600 million by 2004, according to Bechtel.
In the near term, RF devices, components that send and receive signals over a select frequency, are likely to be in even shorter supply-particularly older discrete components like transistors and diodes. ?In some cases, we're sold out [of RF-based discrete components] this year,? said Jim Cochrane, San Jose-based group marketing manager of RF Semiconductors at Infineon Technologies AG. ?We can't ramp up our capacity fast enough,? he said. ?The lead times have gone up three, four, even five months for these products.?
OEMs continue to use older-generation discrete devices, but are quickly migrating to more sophisticated RF-based chips to cut costs, according to Yvan Droinet, international product marketing manager of RF products at Philips Semiconductors in Caen, France. ?We see demand that seems unreasonable,? Droinet said. ?We're trying hard not to be in the allocation mode. But if a customer wants to increase his order by twofold, I don't think we could accommodate that.?
Even emerging players are struggling to meet demand. Having fielded RF-chip devices for only a year, Conexant Systems Inc. said it is swamped with orders.
?Our RF-chip business has grown 100% in just the last year alone,? said Dwight Decker, president and chief executive of Conexant, Newport Beach, Calif. ?If we received any more orders right now, I don't think we could keep up.? Others are in the same boat. A spokeswoman for Motorola Inc.'s Semiconductor Products Sector said the company has been experiencing ?surging demand? for a number of parts, including BiCMOS RF devices. She said SPS has been moving to increase its BiCMOS production capabilities both internally and with external foundry sources.
Motorola is not alone. Anticipating huge demand in the wireless- and broadband-chip markets, Anadigics Inc. earlier this month said it will double the capacity of its new 6-in.-wafer fab during the first half of the year. The $10 million fab expansion was moved up a quarter or two to stay ahead of the demand curve, according to Tom Lagatta, vice president of marketing at Anadigics, a GaAs-based device specialist in Warren, N.J.
?The cell-phone market is outperforming everyone's guess,? Lagatta said. ?A lot of RF manufacturers will be bringing on extra capacity. People are investing in bringing up capacity in line with or ahead of demand.?
While other RF makers are reporting supply issues, Anadigics hasn't experienced any delivery problems or shortages. Lead times have held steady at eight weeks, and its fab is running at capacity, Lagatta said.
Like Anadigics, Analog Devices Inc. is ?meeting the current strong demand and has sufficient capacity in our bipolar and BiCMOS fabs and assembly and test facilities,? said Doug Grant, business development director at the RF and Wireless Systems business unit in Norwood, Mass.
Texas Instruments Inc. is meeting demand by dedicating fab space to RF production in Dallas and Germany, and even Japan if necessary, said Sam Pritchett, RF strategic marketing manager in Dallas.
This week, TI also unveiled its new silicon-germanium-process technology for RF components. TI plans to begin shipping the SiGe-based RF chips in the third quarter, and by 2002, the company believes the new devices will be outselling its traditional BiCMOS-based RF devices, Pritchett said. |
