Historic demand for discrete semiconductors has blown hot and cold. Traditionally, the market has grown at an astronomical rate one year, only to slow down the next. And then, after that twelve-month lull, the sales and purchase orders would pick up again.
Cyclic in nature, manufacturers and distributors alike could almost time their watches by monitoring when purchase orders landed on their desks.
However, those fluctuations between extreme peaks and troughs appear to be over. In a recent report, IC Insights forecasted that over the next five years, the market for discrete devices will be characterized by modest growth.
According to the Arizona-based research firm, sales will rise by 4.1%, from $24.6 billion in 2017 to $28.7 billion in 2022.
At face value, this shift is good news for industry buyers. If traditional surges are now a thing of the past (in the short-term at least), then so too, logic would have it, are associated price hikes and lead time increases. But that might not be the case at all as the market appears to be normalizing at a rate that’s slower than expected.
Ron Lineback, a senior market research analyst for IC Insights, said discrete unit demand increased 11% in 2017, which was “four times greater than its average growth rate over the last 20 years.”
The consequence of this is that manufacturers and distributors are still attempting to clear the backlog of orders placed within the past 18 months.
“We are seeing huge demand across all discrete product lines, including MOSFETs, rectifiers, thyristors, and IGBTs,” said Andrea Tranchida, director of marketing power and discrete devices for STMicroelectronics. And there’s no let-up in sight either.
This has led to a strange disconnect where a market expected to grow steadily is – temporarily at least – unable to cope. Demand is simultaneously slowing down and speeding up. It’s Schrödinger’s sector.
Lead times have been massively affected by this. Our research indicates that the average lead time for discrete semiconductors through franchised distribution channels is 32 weeks. This is a 20% rise since the beginning of the year.
It isn’t just STMicroelectronics that is struggling to meet demand, Lead times for Infineon, Nexperia and ON Semiconductor discretes are also on the rise.
We do expect things to stabilize as we head into 2019 though when the capacity should be in place to meet the needs of the market. But that is unlikely to provide much comfort for buyers who need to secure stock now.
With the market for discrete semiconductors evidently in flux and purchasers faced with rising lead times, we recommend that you work with independent distributors – such as Lantek – to bypass backlogs at franchise level.
For an overview of the entire industry, see below:
Electronic Component Lead Time Update: Summer 2018
The market for analog products is calm, with average lead times remaining at 15 weeks for another successive month. This does, however, mean that some long-standing issues are still causing headaches, namely the decreasing availability of high-end (both interface and op-amps) items.
It is believed that the memory sector will finally start to slow down towards the end of 2018. Contact pricing of NAND flash has decreased by 10-15% during Q2 and there are further suggestions that these may drop further in Q4 2018 and Q1 2019.
Buyers must be aware that many products are on long lead times. Particularly so for Broadcom, Toshiba and Vishay’s coupler lines, all of which are being quoted out at 22 weeks and above through franchise. Many Osram products are also on allocation, due to high demand.
Digital Signal Processors & Microcontrollers
Lead times for DSPs and MCUs are high and availability continues to be tight, causing problems and delays for buyers looking to act quickly. Lead times for DSPs are at 24 weeks and above, while lead times for MCUs have been steadily increasing for throughout 2018.
The market situation for both programmable and standard logic components has stayed the same since our June update. The sectors – Programmable and Standard – are still somewhat tense, but overall availability is okay.
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- Posted by Lantek Corporation
- On July 31, 2018