Excess Inventories Remain High, Says iSuppli
Published: 12 February 2007
by Staff
EL SEGUNDO, CA – After increasing its holdings of excess semiconductors during the first half of the year, the electronics supply chain finished 2006 with its highest level of end-of-year overstock in five years, says iSuppli.
Inventories will not begin to turn around until the second half of the year, the research firm said. According to iSuppli, $4 billion worth of excess chip inventories remain in the supply chain, topping the first quarter of 2001 ($3.9 billion). Excess inventory levels in the fourth quarter declined slightly from $4.2 billion in the third quarter. The bulk of excess inventory resides at semiconductor suppliers, the company said. Holiday sales were not enough to help start large-scale inventory reductions. Retail sales were up for flat panel televisions, MP3 players, video game consoles and notebook computers, but were offset by slow bookings at semiconductor suppliers in December. The product/market share/price battle between Intel and AMD continued to place pressure on the supply chain in December, and will persist into the second half of 2007. End-demand weakness in the fourth quarter as well as customer inventory reductions resulted in lackluster chip demand in December, says iSuppli. The firm stated that orders would begin to improve toward the end of the first quarter. However, inventories are not expected to disperse until the second half. Nevertheless, the firm does not expect the industry will suffer much.
