No sooner has the prospect of allocation been raised than the reality has started to appear. Arrow's latest lead time guidance paints a picture of long and lengthening lead-times with Micron SDRAM parts on allocation until Q1 2010 and Samsung SDRAM 'supply constrained' with DDR1 on allocation and DDR2 in 'tight supply'.
Arrow puts Data Converter lead-times at up to 26 weeks at National, up to 16 weeks at ST and up to 22 weeks at ADI; it puts Op Amp lead-times at up to 30 weeks at ADI, up to 26 weeks at National and up to 20 weeks at ST; for interface ICs (LVDS, UARTs, USB) the lead-times are quoted as: National up to 26 weeks, ST up to 20 weeks, NXP up to 26 weeks, TI up to 22 weeks and NXP up to 16 weeks; for Power Management products the quoted lead-times are: National up to 26 weeks, ST up to 26 weeks, TI up to 30 weeks and ADI up to 16 weeks.
Apparently 6,500 TI parts are on distributors' lead times of 18 weeks or more. That, effectively, means they are on allocation because people will be offering more money to get priority shipments.
At Linear Technology, CEO Lothar Maier, says: "Distributors are on allocation with our competitors' products. Our competitors are talking about longer lead times - six, ten, thirty weeks in some cases on competitors' products - their customers are worried about allocation."
Maier emphasises that this does not apply to LTC where products are all on two to four week lead times.
What made the difference between LTC and its competitors is that LTC maintained its manufacturing capacity through the downturn.
Whereas LTC's competitors were closing factories and out-sourcing manufacturing, LTC kept all its manufacturing facilities in place.
"Manufacturing was not run down, so we are in a good position to meet increasing demand", says Maier, "we kept our employee team in place, and made an enormous effort not to reduce the size of the organization."
As a result, says Maier: "We can hold lead times at two to four weeks even as times improve."
LTC's sales are increasing quite fast, with a 14% jump in sales in calendar Q3 compared to Q2, with orders increasing every month throughout the quarter. It expects a two to five per cent increase in calendar Q4 - guidance which could be characterised as cautious.
"Let the good times roll" ... it's been a long while since the industry experienced a serious chip shortage - the early 1990s to be precise - when many of today's execs and pretty much the whole of the financial industry were still in short trousers! For this to be happening so early in the recovery cycle just shows how bad the shortages will be. Forget 'Cash is King'; for the next couple of years 'Fab Capacity is King' ... please note well all you fab lite fanatics. 2010-12 will make 1993-95 seem like a period of relative stagnation. PS it's already too late now to do anything about it. It's not as if this was not predictabe either ... if the economy hadn't been hijacked by the banking low life, you'd have been reading this blog story this time last year.
When parts are allocated or lead times get extended, you need to have a trusted partner in the independent channel. America II Electronics is that partner, check our inventory www.americaii.com
That's the spirit, America II
Well Malcolm you saw it coming first, at the IFS09 forecast summary in January this year you said shortages were coming as sure as eggs are eggs and that no one could do anything about it.
Allocation is fine if you can actually get hold of the product, bill it and get paid, otherwise it is another barrier to immediate revenue.
Immediate revenue is something we all need.
ASP's may double but that is of no use without product.
Wow, it's good to finally see some allocation. Please be sure to check our web-site ( www.knightelectronics.com ) if you have issues with allocated parts. Search for parts, send rfq's, etc..
This blog erroneously states ADI lead times for converters, amplifiers, and power management products. Analog Devices maintains top service, and our lead times are short and steady. ADI has invested in its manufacturing infrastructure to keep it this way, and we maintain our supply chain to achieve lead times in the 4- to 8-week range for most products. In fact, 95% of products shipped are within the 4- to 6-week range. This Arrow "Lead Times and Pricing" chart http://www.arrowne.com/lead_times/lead_times.pdf shows ADI with current standard and stable lead times for converters and amplifiers in the 6- to 8-week range, and power management products at 6 to 10 weeks.
Those figures, Sue Martenson, came from an Arrow lead time report of early October. Glad to see they've gone down since then.
I agree with Malcom Penn. The industry execs running the show now have no clue what it was like in the 93-95 era. That's when I got my start in the distribution channel. Let me tell you inventory was gold to the distributors and they sold it to the highest bidder. Product Managers at the big distributors would point blank ask us sales people what is the customer willing to pay? If it was high enough the product manager would allocate product for immediate ship. Remaining orders would sit in the que forever.
It will happen again.
Oh and for thos "independent distributors" they are nothing more than brokers buying from the franchised distributors in most cases.