Electronics Production | October 26, 2004

Excess chip inventory continue to rise

The amount of excess semiconductor inventory in the electronics supply chain continued to rise in the third quarter, despite rapid moves by chip suppliers to trim production to adjust to slowing demand, according to preliminary findings from iSuppli Corp.’s Semiconductor Inventory Tracker service.
Although inventories remain low by historical standards, the bloated stockpiles dragged on many semiconductor suppliers’ third-quarter results. Chipmakers have expressed confidence that the excess inventories will be eaten up by the end of 2004, or by early in the first quarter of 2005. However, iSuppli continues to believe that the excess inventories should be a cause for concern for the semiconductor industry and we are maintaining our “yellow alert” for chip stockpiles.

The amount of surplus semiconductor inventory in the supply chain rose to $1.1 billion in the third quarter, up $311 million, or 38 percent, from $829 million in the second quarter, based on preliminary findings from iSuppli’s Semiconductor Inventory Tracker service. iSuppli previously had predicted that inventory levels would remain essentially flat in the third quarter.

The increases in inventories occurred in all regions and across most product segments.

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