The acquisition of PLX Technology by Avago is still a very unsettled situation with many variables. Customers still face delivery and pricing concerns as available stock continues to shrink in the market. Rumors abound in the industry of additional prices increases, ranging anywhere from 20 to 100 percent, fueling bigger concerns for both buyers and designers. This uncertainty is being felt throughout the supply chain from authorized distributors to the independent channel, all the way through to the customers.
PLX Technology has been an industry leader with a highly differentiated product portfolio of PCI Express switches and bridges, as well as USB and storage controllers. Most, if not all, of their products are unique, sole-sourced solutions where alternate sourcing is difficult. Thus, when lead times soared to 16 to 22+ weeks with significant price increases after the acquisition by Avago, probability was high that it would impact customer production schedules and possibly jeopardize year-end revenues.
Supply availability became much more restricted through what was left of its franchised channel and "no bid" probably became the phrase of the day for new requirements. Currently, supply continues to be increasingly restricted as Avago has yet to clearly announce their supply chain plans moving forward. In many cases, existing customer backlog is in danger of being pushed out or cancelled altogether due to extending lead times and significant price increases, possibly leaving customers in danger of missing Q4 production schedules and year-end revenue.
Even if authorized and independent distributors are able to support orders, factory lead times from Avago range between 16 to 22 weeks. To ensure supply to meet production schedules, purchasers should consider the independent channel and look for distributors that offer a traceable inventory position on PLX Technology production with a replenishment program.
Buyers also need to keep an eye on deliveries for several other semiconductor lines including Altera and Microchip. Ramp-up for Q4 holiday production for smart consumer products is the main driver for the extended lead times. Altera’s lead times for its EPCSxxx family is running at 16 weeks, while deliveries for many of the EPC1xxx and EPC4xxx devices are at 12 to 13 weeks. Lead times for Altera EPM3xxx parts are at 14 weeks, while the MAX II portfolio (MAX240, MAX570, MAX1270) range between 14 to 16 weeks.
Microchip lead times also are still causing havoc. They are not showing any relief from the current 20+ week lead times for the 32-bit PIC32Fxxx families. Additionally, lead times for Microchip 8-bit PIC18Fxxx families are fluctuating between 12 to 18 weeks.
Although memory device lead times stabilized a bit in October, buyers of memory products still need to keep a close watch on deliveries. Mobile DRAM demand continues to grow and inventory is starting to become scarcer as lead times start to stretch by an additional two to four weeks. SSD prices continue to decline as more and more consumers fight for the highest densities at the lowest prices.
Lead times continue to be a factor for DDR3, particularly for low-voltage DDR3x16. Lead times are running at 16 weeks upon confirmation of orders. DDR2 lead times are in the eight to 10-week range, while NAND flash orders are holding steady at four to six weeks.
Looking back on October's activity levels for DDR2 and DDR3 it appears that manufacturers are ramping production for a final push to meet 2014 year-end numbers.
John McKay is the director of purchasing at America II Electronics. In his current role, John oversees the company’s purchasing department and is responsible for the enhancement and growth of America II’s sourcing capabilities. John started his career with America II in 1991, working five years in OEM sales and 15 years as a sales manager. In 2012 he was promoted to business development manager. In this role he was able to execute global solutions through business development by implementing supplier technologies with customers’ evolving demands, while overcoming inter-company barriers to successfully improve efficiencies and profit for the company and its customers.