Strategically Sourcing Memory ICs in Today's Electronics Industry

Strategically Sourcing Memory ICs in Today's Electronics Industry

With its wide-ranging usage in many applications, memory ICs have been a hefty product category within the global IC market. In 2018, with price and demand increases, DRAM revenue surpassed MPU sales for the first time since the 1990s. During the first half of 2019, DRAM prices dramatically declined due to inventory adjustments and weak demand.

However, with available inventories regaining consumption plus recent global incidents, industry professionals are expecting to see memory prices increase soon. The power outage at Toshiba’s Yokkaichi factory in mid-June caused the factory, which produces 40% of the world’s NAND flash, to suspend production for several weeks. As a result, Western Digital announced an average 10-15% price increase for its flash products, effective on July 1st, 2019.

Additionally, the intensifying trade tension between Japan and South Korea is impacting the global memory IC supply. On July 4th, the Japanese government tightened exports of three chemicals used in semiconductor manufacturing to South Korea. These chemicals are critical for making OLED screens, DRAM and NAND flash components. It is reported that Samsung and SK Hynix were not able to import these materials for over a month from Japan when they only had enough inventory to last for a month and a half. While many South Korean firms are looking into alternative sources, Russia has offered to help supply certain materials. However, the two-month-long qualifying and testing period for these sensitive materials will not help this situation.

On August 28th, Japan will remove South Korea from the list of countries who enjoy minimum export controls. If the tension continues, the semiconductor industry in South Korea will face serious challenges. Considering South Korea’s Samsung and SK Hynix supplied 61% of worldwide memory chips in 2018, any production disruption will impact the global electronic industry dramatically.

In today’s complex global supply chain and rapidly changing political environment, supply chain professionals need to have a proactive mindset when planning electronic component sourcing strategies. Developing secondary suppliers for key components to diversify sources will help mitigate possible challenges when traditional brands are not readily available.

Alliance Memory, as an example, is a manufacturer of legacy memory products. They provide drop-in, pin-for-pin-compatible replacement SRAM and DRAM ICs from Micron, Samsung, Cypress, SK Hynix and other major brands. Some of their products provide alternatives to Micron’s MT41K512M16HA-125: A and MT41K512M16SN-125: A TR. As franchised distributors of Alliance Memory, America II and Advanced MP Technology are positioned to provide OEM and EMS companies with memory ICs that have shorter lead times, better price options and assurance of supply.

Moreover, as global distributors of electronic components and supply chain service providers, America II and Advanced MP Technology are positioned to help OEM and EMS companies create a proactive sourcing approach using their access to global market information and worldwide support network. The industry experience and vast resources America II and Advanced MP Technology have with their broad franchise lines, such as Transcend, Adata and Tekmos, make them valuable partners for high technology manufacturers in today’s dynamic environment.

Contact Advanced MP Technology today to speak with one of our sourcing experts about your component needs.