MCU supply chain still in trouble
In the first quarter of the year, leading suppliers Atmel, Freescale, Microchip, Renesas and others reported healthy seasonal performances, all of them buoyed by a successful 2010.
But all that changed in March, when the great earthquake hit Japan. Several chipmakers were impacted, including Renesas Electronics Corp., the world's largest MCU supplier. Fujitsu Ltd and other MCU suppliers with fabs in the region were also impacted.
Japan's automotive and CE giants were also affected. In fact, Toyota and others have been hit hard by shortages of MCUs and other components, causing plant shutdowns and extended lead times for some car models.
In MCUs, Renesas has largely recovered from the quake except for its Naka fab in Japan, which represents 20 per cent of the company's MCU capacity. To date, the Naka fab has not resumed production.
Renesas' situation, coupled with depleting inventories in the channels, could cause relatively minor shortages of MCUs in the second quarter. "I don't expect ASPs to be up" in the coming months, said Steve Sanghi, Microchip Technology Inc.'s president and CEO, at the Embedded Systems Conference, but "the September quarter could be worse" in terms of obtaining MCU supply.
Indeed, Microchip and others are apparently picking up some MCU business from various OEMs—at the expense of Renesas and its misfortunes. "Microchip, as suspected, is beginning to see increased business as a result of supply disruptions as management will likely benefit from substitutions and re-designs," said analyst Doug Freedman of Gleacher & Co., in a report.
Source: Gartner Inc.
"Our view remains that visible Renesas disruptions will likely result in new opportunities and/or deepening relationships as Microchip benefits from becoming a larger supply source for MCUs globally," Freedman said. "We believe the impact will ripple through over the course of the next two to three quarters."
Simply replacing MCU parts from one supplier to another is easier said than done. "I have heard of (MCU) shortages, indeed some from Renesas," said Tom Starnes, an analyst with Objective-Analysis. "Unfortunately, re-qualifying products through different equipment and facilities takes time and effort by both vendor and OEM. Such things are normally scheduled carefully so as to not disrupt product flow."
The MCU market dropped like a rock in 2009. In 2010, the market rebounded and hit Rs.68,949.77 crore ($15.1 billion), according to Gartner Inc. The MCU market will likely exceed a value of Rs.73,059.36 crore ($16 billion) for 2011, up 9 per cent over 2010, according to Databeans Inc.