Q3 analogue semiconductor inventory stockpiles to fall?

The market analyst reports that this is a result of manufacturers slashing production capacity in the light of anticipated weak demand for the rest of the year. The report states that third quarter days of inventory (doi) will go down sequentially from 96.9 days to 92.5 days, due to global economic uncertainties clouding supply chain visibility. Sharon Stiefel, analyst at IHS iSuppli, said that the lower doi reflects earlier projections that analogue suppliers will monitor inventories more closely in the second half of 2011, reducing run rates to coincide with a softer demand environment. "Unlike 2010, however, when long lead times prevailed and customers endured extended waiting periods to obtain product because of insufficient inventory in the channel, the reduced inventory levels this time are not expected to cause pain," she noted. This, said Stiefel, is because analogue inventories have climbed steadily in the last eight quarters, with stockpiles now at a level not seen since before the downturn. "With inventory replenishment completed," continued Stiefel, "lead times have sufficiently declined to acceptable wait times for customers to prevent a painful repeat of the past. And in contrast to a year ago when suppliers were caught unprepared, manufacturing capacity has become much more flexible and readily available, allowing suppliers to ramp up production quickly in case demand returns sooner than expected."