© franz pfluegl dreamstime.com
Electronics Production | January 29, 2013
Chip inventory at Semi suppliers at worrisome high
Chip inventory held by semiconductor suppliers reached alarmingly high levels in the third quarter of 2012 amid weak market conditions, according to an IHS iSuppli Semiconductor Inventory Insider Market Brief from information and analytics provider IHS (NYSE: IHS).
Overall semiconductor revenue declined by 0.7 percent sequentially during the fourth quarter last year. The poor results came after inventory reached exceedingly high levels by the end of the third quarter in 2012, amounting to 49.3 percent of total semiconductor revenue—more elevated than at any point since the first quarter of 2006.
Chip stockpiles among semiconductor suppliers had actually gone down during the final two quarters of 2011, showing a promising drawdown. But then inventories steadily ticked up again after that, reaching 47.5 percent of total revenue in the second quarter before hitting the current peak in the third—the latest time for which full figures are available.
Sizing the stockpiles
The inventory level being measured refers to chip stockpiles specifically in the hands of semiconductor suppliers, not to inventory throughout the electronics supply chain. Chip level at the supplier level is then compared against combined revenue from a sample of 75 semiconductor supplier companies excluding memory, which is tracked separately because of that market’s typical late results. A low inventory-to-revenue ratio is preferable, given that higher levels indicate not only unsold stockpiles but also unrealized revenue tied up with the stagnant inventory.
Demand debacle
“The uncomfortably high level of inventory among semiconductor manufacturers of nearly all stripes is a result of key demand drivers failing to materialize,” said Sharon Stiefel, analyst for semiconductor market intelligence at IHS. “Demand for semiconductor devices has typically come from new products that consumers feel compelled to purchase. But going into the holiday season last year, no such new products marshaled enough impetus to overcome consumer fears about lingering economic woes. Two months prior to Christmas, consumer purchases of electronics had grown by only 0.7 percent, the worst performance since 2008.”
Also contributing to depressed conditions was the poor performance of the industry’s data processing segment, traditionally the largest user of semiconductors. In fact, mobile PCs were projected to decline in 2012 when final figures are tallied, toppled from dominance by media tablets. Ultrabooks and other ultrathin PCs, meanwhile, did not produce the demand for semiconductors originally expected as the year progressed.
Semiconductor sectors
Despite the collective rise in inventory stockpiles, some semiconductor segments performed better than others. For instance, with feature-rich smartphones and tablets taking the place of traditional PCs among consumers and eroding PC market share, the devices were anticipated to provide the strongest demand in the final quarter of 2012.
As a result, semiconductor revenue for the wireless segment was expected to climb almost 4 percent. Semiconductor sectors benefiting from the tremendous growth of handsets and tablets included logic, analog and NAND flash memory, with those semiconductor channels refilling following strong shipments even into the beginning of this year.
The first quarter of 2013 likely will see growth in the industrial and automotive electronics segments. Other semiconductor markets, for their part, will overcome the seasonal decline normally expected at this time of year and then start to rebound around the second and third quarters. Such assumptions, however, rest on the even larger factor of the global economy, currently a volatile variable itself with no set outcome.
If global economic forecasts perform according to positive expectations, semiconductor revenue could grow by 4 percent in the second quarter and by a very solid 9 percent in the third. However, if demand evaporates, semiconductor suppliers will find themselves in a deplorable oversupply situation, which would then lead to inventory write-downs throughout the year.
VDMA: Robotics and Automation expects further growth in 2019
In 2018, the German robotics and automation sector reached the 15 billion euro mark for...
Rimac is planning a new factory - appoints new COO
Rimac Automobili has been expanding fast, doubling in size for several years. The company...
Passives drive the German component distribution market
German component distribution market (according to FBDi e.V.) experienced solid growth in 2018. The order situation is slightly weakening. Slow return to normality for passive components.
Electric motor company partners with automotive manufacturer
Electric motor company, YASA, says it has signed a long-term joint innovation agreement with...
Electric truck startup announces $700M investment round
Rivian has announced an equity investment round of USD 700 million led by Amazon. The...
Kitron completes its acquisition of API's EMS business
EMS provider Kitron announces has completed the acquisition of the EMS division of API...
Shell to acquire german battery manufacturer sonnen
Shell Overseas Investment B.V. has agreed to acquire 100% of sonnen, a manufacturer of...
Engaged & happy employees - clear drivers of growth & health for Season Group
EMS provider Season Group, is flagging a major change in its organisation, both operational and somewhat philosophical. Randy Ziegenhagel, previously VP Business Development, is moving to the new position of Global Culture Officer and...
BB Electronics expands into Eastern Europe via acquisition
Danish EMS provider BB Electronics has acquired Czech company Wendell Electronics.
UK manufacturer doubles work space in head office acquisition
Yorkshire-based Contract Production Ltd has acquired its current head office and production facilities in Pickering, expanding into a third adjoining unit as part of its expansion programme.
Aquantia and Sumitomo Electric to deliver multi-gig Ethernet connectivity to...
Sumitomo Electric Industries Ltd., based in Japan, and Silicon Valley’s Aquantia Corp. have...
Lockheed Martin opens Florida R&D center, adds jobs
Lockheed Martin has completed construction on its USD 50 million, 255,000 square foot...
UAT picks Veeco to bolster fan-out wafer-level packaging portfolio
Unisem Advanced Technologies Sdn Bhd (UAT) has purchased Veeco’s single-wafer solvent...
ESI gets Asia order for FPC laser via drilling system
Electro Scientific Industries (ESI), a division of MKS Instruments Inc. and provider of laser-based...
DMASS: 'the highest distribution sales ever reported in Europe'
DMASS reports 14.2% growth in semiconductor distribution for Q4/CY18. Smaller countries and Eastern Europe benefit over-proportionally. MOS Micro and Optoelectronics below average, says DMASS.
Merger between Widex and Sivantos receives final clearance
The European Commission has approved the merger between Sivantos (owned by EQT funds)...
Finmasi Group acquires German PCB manufacturer
On the 21st of January 2019 Finmasi Group bought 100% of the capital stock of EPN Electroprint GmbH, located in Neustadt in Thuringia region in Germany.
NCAB expands to Malaysia
NCAB Group starts the first quarter of 2019 by establishing operations in Malaysia. The...
Series A funding fuels May Mobility’s momentum
Millennium New Horizons and Cyrus Capital Partners have joined May Mobility’s...
ZAF Energy Systems Lands Strategic Investment from Wirtz...
Wirtz Manufacturing has made a strategic investment in battery developer ZAF Energy Systems...
Johnson & Johnson to acquire Auris Health for $3.4 billion
Johnson & Johnson says that its subsidiary, Ethicon, Inc., has entered into a definitive agreement to acquire surgical robotics company Auris Health, Inc. for approximately USD 3.4 billion in cash.
Most Read
Load more news