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Technology Stocks : Applied Materials No-Politics Thread (AMAT)
AMAT 322.51+6.1%Feb 6 9:30 AM EST
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To: Gottfried who wrote (15974)9/16/2005 8:49:44 AM
From: Proud_Infidel  Read Replies (1) of 25522
 
Warning signs seen for IC glut

EE Times
(09/16/2005 2:25 AM EDT)

SAN JOSE, Calif. — Is the IC industry headed towards another inventory “adjustment” or glut?

There are signs that the industry is moving towards that dreaded direction. Over the past ten years, IC unit shipments have registered a steady compound annual growth rate of about 9 percent, according to IC Insights Inc. (Scottsdale, Ariz.).

However, IC unit shipments began to depart from this trend line in the second quarter of 2005 — an ominous sign to some.

“IC Insights forecasts that 3Q05 IC unit shipments will reach about 10 percent above the long-term IC unit volume trend line before falling back toward the trend line in 4Q05 and even further down heading into 2006,” according to the research firm.

“There does not appear to be a precise percentage figure that defines excess IC unit volume levels that cause an inventory adjustment,” according to IC Insights. “However, a significant plus-side departure (10 percent or more) of quarterly IC unit volume shipments from the trend line, coinciding with a slowing of growth (not necessarily a decline) in one or more major electronic system categories are certainly two ‘triggers’ for an IC unit inventory adjustment.”

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