Do you think it's time to wait for prices to drop?

[luiHS]

 
In this strange global semiconductor crisis, that we have been suffering for a couple of years (or more), since the COVID started I think. I have been seeing various stages, I don't know if you agree with me:

1.- Some components are beginning to be scarce, but nobody cares, prices remain the same.
2.- Now yes, the shortage is evident, some of us have already bought to have material to work with in the coming months.
3.- Total scarcity, small batches of components appear, but prices double or more.
4.- Speculators have stockpiled components and sell them at exorbitant prices. A microcontroller that I bought from the Chinese for 6 dollars, now they offer it to me for 150, 200 dollars a unit or even more. Panic is generalized, there is no stock of anything and thus it is not possible to work.
5.- The first stocks of material begin to appear, things are beginning to improve but prices remain very high, at least double what they were before the crisis began, but at least there is already material.
6.- What will happen and especially when?

What will be the next step, and above all, how long do we have to wait until prices normalize and we can buy at reasonable prices?

[MikeK]

When supplies shrink, vendors don't *have* to keep prices the same...Some may be doing that out of courtesy.  Basic Supply & Demand says that:

* Everything else being equal, a drop in supply results in an increase in price and an increase in supply results in a drop in price.
* Everything else being equal, a drop in demand results in a drop in price and an increase in demand results in an increase in price.

[sokoloff]

Things that have ready, drop-in substitutes (like a 0.1uF 0603 MLCC) are already back in a pretty normal pricing regime. The reason is "if you're the supplier who is the odd-man out sticking to a 10x price, you'll sell approximately zero units."

Things that don't have ready, drop-in substitutes are going to be stickier high prices for a while I think.  Each time they start to nudge down, someone will express their pent-up demand and buy a reel or a year's worth of production run to make sure they get the parts. That, coupled with no ready drop in, means these prices will drop more slowly I think (and could even take another year or more).

[thm_w]

Many threads on this, depends on the item. As mentioned above, prices for a lot of stuff is quite reasonable now. The very niche ICs, that may not even be produced, are still high in some cases.

You can see STM32F103 has a large surplus of stock now: https://octopart.com/stm32f103c8t6-stmicroelectronics-41858015?r=sp
Too bad octopart does not track prices over time.

But this puts pressure on the grey market suppliers. Why buy grey market STM32, if the distributors have lots of stock? They have to start undercutting them again. A few have already dropped the price (eg winsource), others that probably manually change their prices and its not automated at all, maybe they haven't.

And as for the consumer electronics area, GPU, CPU, SSD prices are tanking right now with low demand.

[hans]

Not buying them if you can is the only message that helps sending to MFGRs, in particular as a consumer for PC parts. E.g. for PC parts we can complain about a green company making absurdly expensive heaters, but their competitor is not that much better either with 1k$ heaters. I hear a lot from people that they will stick with what they have got, some still with 5-6 year old GPUs and 8+ year CPUs. If it still works and can run e.g. Minecraft and do simple tasks, then why bother chasing the latest tech.

But private this is at most an annoyance. An old machine is slower, but it's still there (unless it's broken). For work, it's harder as you will have projects with deadlines and shipment dates, and need to buy new parts. Higher prices may be a quick buck for manufacturers short term amid shortages.. however when manufacturer ABCDEF have high prices while manufacturer G lowers them, with surplus stock, then new designs will likely not pick much from mfgr A-F. Long term it's not great and that's the best kind of "don't buy (anything)" you can get.

The shortages with redesigns has probably also required more flexibility from designers and perhaps less 'fear' to pick another part family. If you use STM32s and they are out of stock, then a LPC, PIC32, etc. part that can do the same job will at least get stuff out the door. It may even be a wise risk spread to not base every design around 1 part. I can't speak for every company, but anecdotally I've found this to be the case.

[DiTBho]

The same applies to bicycles.
We have serious problems nowadays with components.

[NorthGuy]

I don't think the prices are going to drop. You don't get many price drops amid high inflation.

[josuah]

Compromise 1:
Some concurrents try to take advantage of the shortage and high prices insert themself onto the market with sometimes interesting, sometimes compatible parts, that could fit current or new designs.

Compromise 2:
Wait that the price drop before getting the usual very large production batches?

[peter-h]

I see lots of signs of a collapse coming.

The distis are working hard to book orders at inflated prices, and the lead times are shortening fast.

I am holding out as long as I can, and buying only what is actually needed for next few months at most.

[westfw]

We shall see.  Popular Microchip parts are saying that they'll "for sure" have delivery by Feb-2024. :-(

I never particularly thought of the available of X on the hobbyist market (from websites or distributors will to ship small quantities to "many" customers) as being indicative of the health of a manufacturer or industry, but ... it might be.  If you're a "real company" and can negotiate directly with a chip vendor to get "flows" of parts in commercial quantities, that great.  But stock at a companies "direct sales" web page means that they have both the parts and the confidence to "waste" some portion of their output in a less predictable channel...

[thm_w]

I don't think the prices are going to drop. You don't get many price drops amid high inflation.

They already have dropped massively from the peak, during high inflation.
If you are saying, no they won't drop to pre-2019 prices, well yeah, inflation increase over those prices are a given.

Anyway, unless a specific part number is being discussed, its kind of meaningless. I've already shown the data for STM32F103, maybe OP can specify their desired micro.

[luiHS]

Anyway, unless a specific part number is being discussed, its kind of meaningless. I've already shown the data for STM32F103, maybe OP can specify their desired micro.

I have been working with NXP Kinetis MK66 and MK26 until recently, but now they are out of stock and not expected to be available until late 2023.

So I am migrating everything to RT1064. And for certain video applications I want to use the STM32H747 and 757, but of these there is no stock or expected date, fortunately I bought quite a few when the crisis began. Just in case I also bought RT1024 and RT1172, but my favorite is RT1064 and it is the one I want to use from now on replacing the Kinetis MK66.

I've got quite a few RT1064's, I think I'll be able to work without problems until the end of 2023, and there are forecasts for more stock in mid 2023. No word on the STM32H747s, not even an expected availability date.

I see that NXP replenishes stocks and gives expected availability dates, which are also being met, but ST does not give any dates and the H7s I need have been out of stock for months.

[peter-h]

Yesterday I was looking at getting stock of a Microchip LAN8742.

3 years ago, last purchase, 90p, 100+. Now I am getting quotes at £1.20, 1k+ and a 1 year lead time.

I know perfectly well that the 1k will turn up early next year and the disti will have got the 1.20 Basically the way this always works (I've been in this game since 1978) is that lead times scare people, "allocation" scares people massively, and it is used to drive up prices. The chips are now arriving much sooner.

So I am going to try to get 90p and if not, will just buy what is actually needed.

I've just had this with another part. The disti achieved a 30% rise by saying "if you give us an extra £1 per chip we will secure you a reel", they got £2k extra from me this way, and it turns out they are now shipping it from stock But they are trying to hold onto the £1 extra. It is just robbery. Another disti has stock too, without the £1 extra, but they won't send me one to test, and I don't have an account with them, and with an MOQ of 5k I will lose 10k+ if they are fake. The disti is abroad so no chance of any recovery.

A big problem now is counterfeits. Half of china is making fakes now. Every chip has to be tested.

[sokoloff]

0.90 to 1.20 monetary units in 3 years isn’t far enough off the general currency debasement (or inflation if you prefer to call it that). That’s ~10% inflation applied 3x and we’ve had about 2.5 times of that generally.

[peter-h]

I don't think so; not by a very long way.

Inflation is ~10% in some areas right now, but not in semiconductors. Most prices on commodity parts are back to pre-2019 levels.

It is the single sourced parts were we are getting f****d over.

Also, the 90p 100+ price was from Farnell, which is a very high markup place (like RS, Mouser, Digikey, etc). Nobody uses these for production unless they are desperate. The 1k price from a proper disti (today at £1.20) would have been ~50p, so we are looking 50p to £1.20 2019-2022. That itself is not unusual; everybody is getting f*****d by the industry. But this will stop because it is only blind hoarding which is keeping this going. The "a" word (allocation) has always driven buyers into a frenzy, and this time we had covid into the mix.

[NorthGuy]

Also, the 90p 100+ price was from Farnell, which is a very high markup place (like RS, Mouser, Digikey, etc). Nobody uses these for production unless they are desperate.

Buy at Microchipdirect. It's cheaper. Microchip increased their prices on everything by about 20% about a year ago. That's all. I don't think their prices ever go back. DigiKey used to have same prices as Microchip, now they post much higher prices, but they have very little stock and long lead times, so their prices are not really indicative of anything, a la: "I have few chips left, I can sell them to you, but you need to pay extra".

[peter-h]

That's hilarious. Their 1k "direct" price is exactly what their disti quoted

The distis must be pissed off. But for us users it is great because distis add zero value and just cost the mfgs a margin of probably 30-50%.

[thm_w]

Anyway, unless a specific part number is being discussed, its kind of meaningless. I've already shown the data for STM32F103, maybe OP can specify their desired micro.

I have been working with NXP Kinetis MK66 and MK26 until recently, but now they are out of stock and not expected to be available until late 2023.

So I am migrating everything to RT1064. And for certain video applications I want to use the STM32H747 and 757, but of these there is no stock or expected date, fortunately I bought quite a few when the crisis began. Just in case I also bought RT1024 and RT1172, but my favorite is RT1064 and it is the one I want to use from now on replacing the Kinetis MK66.

I've got quite a few RT1064's, I think I'll be able to work without problems until the end of 2023, and there are forecasts for more stock in mid 2023. No word on the STM32H747s, not even an expected availability date.

I see that NXP replenishes stocks and gives expected availability dates, which are also being met, but ST does not give any dates and the H7s I need have been out of stock for months.

These seem like a lot more niche higher end ICs. Searching for MIMXRT1064DVL6A or MIMXRT1024CAG4B doesn't find much.
So in that case, yeah you are probably SOL until they are able to produce more.

I don't think so; not by a very long way.

Inflation is ~10% in some areas right now, but not in semiconductors. Most prices on commodity parts are back to pre-2019 levels.

UK pound is down 10% vs USD since 2019. Then add in the devaluation of the USD in that time.
Its more than 10%, doesn't matter what sector we are talking about.

[westfw]

Well, you know, I've bought up "clearance" components from the likes of Farnell/Newark, where I assume that means that they miscalculated on their purchases and are now selling them at a loss.   And I've bough LOTs of stuff from actual surplus dealers, all probably the result of someone else's misfortune.  Not to mention the dumpster's stash of parts from some abandoned project.
(and I've watched with some sadness as the surplus dealers are driven out of business by easy access to overseas and vendor-direct parts...)

So I'm not too mad if sometimes a distributor uses scarcity as an excuse to raise prices.  The actual "not available at any price till at least next year" is more worrisome.  (this sympathy does not extend to the "speculators" selling RPis and ATmega328p chips for 5x MSRP...)

[Jester]

FWIW the tempo of emails that I receive from the part speculators seems to be increasing lately probably signalling they are trying to unload their bounty before the end.

[SiliconWizard]

FWIW the tempo of emails that I receive from the part speculators seems to be increasing lately probably signalling they are trying to unload their bounty before the end.

Yeah got a few myself.

[luiHS]

There is the world of speculators and also the world of swindlers, in these times of global crisis.

Example: before the crisis I bought the Kinetis MK66 in China at 6 dollars a piece (in Europe they cost more than 20 dollars), everything was correct. Now the Chinese either tell you that there is no stock or they give you exorbitant budgets, crazy, Kinetis MK66 at 214 and 270 dollars a piece.

What would happen if I make an order (which of course I'm not going to do at those prices), possibilities:
1.- Pay and receive nothing
2.- Pay and receive counterfeits that do not work
3.- Pay and receive used chips, whether they work or not.

I already had a case of chips that were sold to me as new and were used, half of them did not work. These were LSM9DS1 accelerometers. Bought at the beginning of the crisis, expensive, at four times the usual price, but the price was still acceptable. The worst thing was discovering that they were used, put under the microscope the new ones have gold pads, but these had silver ones and it was noticeable with traces of tin, also some encapsulated ones were noticeable with wear. After installing them on a few boards for a customer, more than half of them didn't work. The Chinese supplier was and continues to be a good supplier, but the supplier that supplied my supplier in this case was not, my supplier was deceived by his supplier, and indirectly I was also deceived.

Since the crisis began I have not bought any microcontroller from the Chinese, besides being very expensive, I do not trust, I am sure that almost all of them will be used, damaged and counterfeit.

As for the speculators, I have seen it because of the buying movements in Digikey or Mouser. I remember that Digikey put up for sale a stock of 1400 pieces of the H747, I was lucky enough to receive and read an email warning of stock at 3 AM, I quickly connected the computer and placed an order for 50 units, the next day I knew they had sold the rest of the 1400 pieces, and this has also happened with the same and other microcontrollers in the worst moments of this crisis. Those purchases so fast and in large quantities in one day could only have been made by companies or speculators.

[peter-h]

FWIW the tempo of emails that I receive from the part speculators seems to be increasing lately probably signalling they are trying to unload their bounty before the end

Definitely!

Those purchases so fast and in large quantities in one day could only have been made by companies or speculators.

Yes - hoarders or speculators.

One can blame the hoarders only partly because most are fair size companies which use JIT (which is another word for a big firm screwing its small firm suppliers to keep stock for them at no charge) so they had minimal stock when the world went crazy, and now they are going crazy to build up stock of key parts without which they can't ship anything.

Will they learn that JIT is a sham? Of course not

[luiHS]

Well, the speculators continue destroying the stocks, recently 16,000 pieces of the RT1062 were put up for sale, today I am going to consult and they have all disappeared, zero stock.

How is it possible that in a matter of a few days 16,000 pieces of a microcontroller have disappeared?, from one day to the next there are none, someone has entered and bought them all, it is a very large purchase of more than 200,000 dollars.

I was about to buy this chip, but finally I opted for the RT1064 of which there was also some stock, and of which I was finally only able to get a few units, because someone also came in and bought almost all the stock.

[thm_w]

Well, the speculators continue destroying the stocks, recently 16,000 pieces of the RT1062 were put up for sale, today I am going to consult and they have all disappeared, zero stock.

How is it possible that in a matter of a few days 16,000 pieces of a microcontroller have disappeared?, from one day to the next there are none, someone has entered and bought them all, it is a very large purchase of more than 200,000 dollars.

I was about to buy this chip, but finally I opted for the RT1064 of which there was also some stock, and of which I was finally only able to get a few units, because someone also came in and bought almost all the stock.

You can have a script to watch the site and tell you once the part is in stock, then be able to buy within minutes (eg distill).
If you are really dedicated, have a purchase script too, but, that can be risky.