State-Of-Supply Brief; June 21 2010
Overall we have seen a recent slowing in the rate of increases in lead times and de-commits in several component areas as some minor incremental capacity has been brought on-line and component suppliers have sorted out some of the double ordering that has prevailed in the past 16 to 20 weeks.
Discreet semiconductors continue to be one of the most problematic areas and one that has seen little relief. Suppliers including Diodes Inc, ST, Fairchild, NXP and most painfully ON Semi continue to struggle to meet demand. The dramatic production cuts in the fall and spring of 2008 – ’09 positioned most of these companies poorly for the coordinated global stimulus and broad economic upturn that hit certain discreet markets especially hard. Renewable energy demand, LED lighting, automotive, and LCD TV demand all outperformed expectation over the past 3 quarters driving up both real and artificial demand for certain devices such as MOSFETs and rectifiers, almost anything in a TO-223 package, and most high power applications. Although lead times are expected to remain extended and some product families will remain on allocations - especially at Vishay, ON and Infineon - price increases have been moderate and will likely remain that way for the foreseeable future.
Unlike most industry analysts, Riverwood expects lead times will likely start coming back in a bit towards the end of September as a number of factors converge to slow global demand for Discreets. In general, current lead times on Discreets are likely at a near term peak. Reduced stimulus and solar spending in Europe and seasonal considerations should dampen currently overheated renewable energy demand and moderate other green spending such as LED lighting. Consumer products will see seasonal ordering contraction beginning in September and a broad range of end-market OEMs are likely to reign in the independent demand signals they have been driving into the supply chain for the past few quarters. Semiconductor bookings on average tend to decline around 8% in September and this year will likely see a slightly larger seasonal move as well as the start of some secular adjustments. Electronic component inventories have increased dramatically over the past few months and now stand at 103.2% of the year ago level. Select back-end capacity increases in both Analog and Standard Logic will start to move lead times lower in late Q3. The process of lead time contraction in any segment generally has an impact on market psychology making broad lead-time increases less prevalent without respect to actual constraints suggesting lead time will likely begin pulling in broadly by late September 2010.
