iSuppli, the electronics market research outfit has been investigating inventories at US distributors. And it concludes that despite concerns of bloated semiconductor inventories at distributors, stockpiles in the channel, and in nearly all other segments of the chip supply chain remain lean.
“Concerns have been raised that a semiconductor inventory bubble appeared among distributors starting in the third quarter of 2009 that potentially could impact the expected recovery of the chip industry in 2010,” said Carlo Ciriello, an analyst with iSuppli. “However, iSuppli sees no evidence to support the claim that semiconductor inventories at distributors were higher in the third quarter of 2009 than they were at the onset of the downturn in the third quarter of 2008. In fact, iSuppli’s research indicates that inventory levels among these companies are well below the historical average.”
Distributors controlled 36.9 Days of Inventory (DOI) at the end of the third quarter of 2009, down 15 percent from 43.4 DOI for the same time in 2008, according to iSuppli. In dollar terms, distributors held $4.8 billion worth of semiconductor inventory at the conclusion of the third quarter of 2009, down 22 percent from $6.1 billion for the third quarter of 2008.
These reductions meant distributor DOI at the end of the third quarter were 17 percent less than the trailing three-year average.
iSuppli currently forecasts a small rise in inventory dollars in the fourth quarter, and DOI at distributors should continue to decline. iSuppli’s preliminary estimate for the end of the fourth quarter of 2009 puts DOI at 18.7 percent less than the three-year historical average.
The decline in distributor semiconductor inventories parallels that of the stockpile reductions among chip suppliers. DOI at semiconductor makers declined to 66.4 at the end of the third quarter of 2009, down 11 percent from 74.6 for the same time in 2008.
“Semiconductor suppliers have been maintaining tight control over inventories,” Ciriello says. “Suppliers prefer just-in-time fulfillment to capital-constraining shelf stocking. This has resulted in lower inventories throughout the electronics supply chain, including at distributors.”
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