Chip stockpiles decline
Semiconductor suppliers are cutting back on production to reduce to reduce inventory levels
By James Carbone -- Purchasing, 4/8/2008 3:54:00 PM
The amount of surplus semiconductor inventory in the global electronics supply chain declined 14.6% from $3.4 billion in the fourth quarter of 2007 to $2.9 billion in the first quarter of 2008, according to researcher iSuppli. This follows a 21% reduction in the fourth quarter of 2007.
The drop in surplus stockpiles in the first quarter is due to a pullback in semiconductor production among suppliers, says Rosemary Farrell, an analyst for iSuppli.
“In reaction to the lackluster demand late in December, chip suppliers began throttling back on manufacturing. This allowed their customers to draw down their inventories,” says Farrell.
Chip demand was weak across all product types in the first quarter. Semiconductor suppliers seem to be taking a wait-and-see approach about demand are keeping production levels low in the first quarter, says Farrell.
Much of the excess inventory is being held by the semiconductor suppliers themselves, rather than by their OEM or contract manufacturing customers, or by electronics distributors.
The large quantity of inventory at suppliers was offset by declines elsewhere in the chain, which helped to reduce overall excess inventory in the electronics industry.
With inventory levels high at the semiconductor suppliers themselves, and with worries mounting regarding market conditions, stockpiles could begin rising again in the second quarter.
Also see: Semiconductor Report: Pricing free fall ends
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