Semi inventory projected to climb, but risk of oversupply warns analyst
1 min read
Semiconductor inventory levels may be headed into precarious oversupply territory in the third quarter, according to market research firm iSuppli. even as manufacturers try to balance a gale of gathering but opposing market forces.
Total semiconductor days of inventory (DOI) are projected to climb to 75.9days in the third quarter of 2010, up 4.8% from the seasonally adjusted average DOI for the period, as well as 1.5days more than the second quarter DOI, iSuppli's forecasts indicate.
iSuppli analyst, Sharon Stiefel, says that the total Dollar value of inventory held in the global semiconductor supply chain also continues to grow. "Inventory in the third quarter is forecasted to amount to $34.3billion, up 10.6% from the second quarter. The value of inventory has not been this high since the second quarter of 2008, when semiconductor inventories peaked at $35.4billion."
The increase in inventory DOI is thought to be in line with projected revenues for the coming quarter, posing no overt danger toward overinflating the current supply chain. Similarly, inventory Dollars, also on the upswing, will remain generally appropriate when measured against DOI.
Stiefel observed: "Nonetheless, softness in demand is being observed in some sectors, semiconductor research from iSuppli has determined, raising flags about potential trouble down the road.
"Whether that softness is an isolated event or portends a broader industry wide slowdown remains to be seen, but it is commonly believed that the industry will need to moderate inventories at the appropriate time in its growth curve in order to capture current revenue opportunities while they still exist."
iSuppli advises that should demand decline at a rate faster than initially forecasted - an entirely reasonable assumption given the slower-than-expected pace of economic recovery around the world - inventories may then be in an oversupply situation.
