Feeds

World chip glut to hit 'marginal' levels in Q2

Research pronounces inventory correction over... almost

  • alert
  • submit to reddit

Top three mobile application threats

The chip industry's stockpile of unsold product will fall to "marginal" levels by the end of the month, market watcher iSuppli said yesterday, citing preliminary research data.

Come the close of Q2, the value of excess semiconductor inventory in the supply chain will have fallen to $500m, down 21 per cent on the $630m worth of parts left over at the end of Q1, the researcher said.

There's always some inventory in the supply chain, so the figure is never going to fall to zero, but iSuppli is confident that the "healthy market conditions" experienced by suppliers during Q2 will allow them to dispose of much of the excess.

Inventories bloomed last year, rising from Q2 2004's $800m to $1.62bn in Q3 2004. Since then, chip makers have been scaling back production, and inventories have fallen.

However, it's worth bearing in mind that the latest numbers are essentially estimates. iSuppli's preliminary figures for Q1 put the quarter's closing inventory value at $500m. In the final analysis, it rose to $630m. But even if the final figure rises about $500m, it will still be well below the year-ago quarter's figure.

Chip suppliers traditionally increase their inventories - typically calculated by the number of days' worth of stock held - during Q2 in readiness for stronger demand in Q3. However, this time suppliers are likely to decrease their days of inventory tally slightly, allowing the entire supply chain to swing closer to balance. So the inventory correction cycle comes to an end, iSuppli reckons.

"Most suppliers are expected to burn off their surplus inventory by the end of June," the researcher said. ®

Related stories

Intel guides Q2 revenue higher on mobile chip strength
Chip sales to hit $226bn this year
World chip sales continue to rise
World chip glut halved in Q1
World chip glut 'over early Q2'

Application security programs and practises

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
Microsoft: We're making ONE TRUE WINDOWS to rule us all
Enterprise, Windows still power firm's shaky money-maker
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.