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10/31/2006
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Bloated IC Inventories Seen In Q3

ISuppli's updated estimate shows that excess semiconductor inventory in the global electronics supply chain in the third quarter remained flat at the second-quarter level of $3.9 billion.

SAN JOSE, Calif. — After two quarters of ballooning semiconductor inventories in the first half of 2006, early results for the third quarter indicate that excess chip stockpiles are not going away, according to iSuppli Corp. (El Segundo, Calif.)

iSuppli's updated estimate shows excess semiconductor inventory in the global electronics supply chain in the third quarter remained flat at the second-quarter level of $3.9 billion.

''After excess inventories rose to $3.9 billion in the first half of the year, the overloaded situation in the supply chain was expected to ease slightly moving into the second half,'' said Rosemary Farrell, semiconductor inventory analyst for iSuppli, in a statement.

''However, based on reported financial results, the third quarter will end up looking much like the second quarter,'' Farrell said. ''This means that the stress on the supply chain caused by excess inventory will remain after the holidays.''

For semiconductor suppliers, the second half of the year already began with an overload of microprocessors that quickly spread across the supply chain. Typically, days of inventory (DOI) at semiconductor suppliers recede slightly moving from the second to the third quarter, according to the research firm.

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