Chip inventories point towards 'correction'
Mark LaPedus
EE Times
(05/12/2006 5:51 PM EDT)
SAN JOSE, Calif. — Chip inventories continue to surge and point towards a possible and dreaded “correction” in the semiconductor industry for the second half of 2006, warned an analyst .
"Our analysis of inventory at semiconductor companies suggests that inventory levels are growing in both absolute and relative terms — a trend that we believe is likely to continue throughout 2006,” said Andre Biggs, an analyst with the Susquehanna Financial Group.
“While inventory levels are far from alarming — with the potential exception of Taiwan — our thesis remains that industry output continues to be well above sustainable consumption, suggesting further inventory growth and the potential for a slowing of production in 2H ‘06," Biggs said in a report.
On a sequential basis, chip inventories climbed 3.7 percent verses a 7.5 percent decline in sales in the first quarter, causing a jump in inventory days from 69 to 75, according to the firm.
Global IDM inventories climbed 3.3 percent verses an 8 percent decline in sales in the first quarter, causing a jump in inventory days from 72 to 78, according to the firm.
U.S. fabless chip inventories climbed 11.6 percent verses a 3.4 percent increase in sales in the first quarter, causing a jump in inventory days from 60 to 64, according to the firm.
Taiwan fabless chip inventories climbed 23 percent verses an 11 percent decline in sales in the first quarter, causing a jump in inventory days from 54 to 69, according to the firm.
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