Semiconductor suppliers hold low chip inventories
Most chipmakers have slashed inventories to get semiconductor supply more in line with demand.
Jim Carbone -- Purchasing, 8/5/2009 9:06:57 AM
Major global semiconductor suppliers are maintaining low chip inventory levels, putting them in a strong position when demand begins to recover, according to researcher iSuppli.
Of 15 semiconductor companies that have reported second-quarter results, 11 indicated that their days of inventory (DOI) during the period were at a lower level compared to their average level for the past three years. In fact, eight of the companies reported inventories lower than the average by double-digit percentages.
Inventories of semiconductor companies are now at “appropriate levels, down from previously excessive positions,” says Carlo Ciriello, financial analyst for iSuppli, who last month forecasted that chipmakers will begin building inventories 5.5% in the third quarter and about 1% in the fourth. He adds that fab utilization rates are also low, so semiconductor suppliers can ramp up production to build inventories if there is increased demand.
He says chip companies that have a DOI of 10% less than their three-year average are in optimum competitive positions as they have adjusted to lower levels of demand. That means that suppliers won’t have to reduce prices.
Among the companies that have reduced inventory levels is Intel. The world’s largest chipmaker held 64.7 DOI in the second quarter. Its three-year average DOI is 90. Samsung’s DOI was 20.7 days in the second quarter, compared to its three-year average of 25.9 days. Texas Instruments’ DOI in the second quarter was 72.6 days, compared to its average of 80.5 over the past three years.
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