Component supply still tight, says iSuppli

"As iSuppli has been reporting for several months, the recovering economy has brought renewed demand," said Eric Pratt, vice president of pricing and competitive analysis at iSuppli. "However, component suppliers have yet to jump in with both feet when it comes to ramping up capacity. And he believes component manufacturers will continue to take a very conservative approach to capacity expansion. Given the ongoing vigilance among manufacturers, inventories will remain lean for the foreseeable future. One reason for the tight supply is the Days of Inventory figure at nine of the 10 supply chain nodes tracked by iSuppli remain close to historical lows. Even so, many suppliers have no qualms with their current inventory position, iSuppli claims. However, Pratt believes the conservative approach to inventory won't last and component suppliers eventually will have to be more aggressive in order to improve market share. "As demand continues to rise and global macroeconomic trends become more visible, iSuppli believes the attitude of 'do nothing' will slowly change," he added. iSuppli predicts change will occur near to the third quarter, when suppliers will look to increase their market share while maintaining the profits acquired in late 2009 and early 2010.