IHS: Chip inventories declined in Q3, Q4

SAN FRANCISCO—Chip inventories held by semiconductor suppliers declined for the first time in eight quarters in the third quarter of 2011 as the industry moved to cut production to reduce oversupply, according to market research firm IHS iSuppli, which estimates that inventories fell further in the fourth quarter.

According to the IHS iSuppli Inventory Insider report, semiconductor stockpiles stood at 81 days of inventory (DOI) in the third quarter, down about 2.5 percent from 83 DOI in the second quarter.

The DOI level had been rising steadily since the third quarter of 2009, when it stood at just 65 days, according to IHS. At that point, stockpiles were relatively low because chip production had been reduced during the dark days of the global recession, the firm said.

Since then, inventory DOI had been creeping up, partly to make up for depleted stocks and also to cope with growing demand as strength returned to the supply chain, according to IHS. But amid signs of weakening growth in the semiconductor market, the rise in inventory had generated concerns.

IHS estimates that global semiconductor revenue increased by just 1.9 percent in 2011 compared to 2010. The firm originally forecast that semiconductor sales would rise by about 7 percent in 2011.



IHS: Chip inventories declined in Q3, Q4