Chip surplus to be solved by second quarter
The company believes that the inventory surplus – which reached US$1.6 billion in the third quarter of 2004 – will have been virtually eliminated by the end of the second quarter.
An iSuppli spokesman said that quick action from semiconductor companies in reducing wafer starts and cutting back on capital expenditure had prevented the chip stockpile excess from becoming as big a problem as had been feared.
"Due to these developments, we are cancelling our yellow alert for excess chip inventories. We had sounded the alert in the third quarter of 2004 after excess inventory in the supply chain jumped by 103% compared with the second quarter."
ISuppli expects semiconductor suppliers to have four days worth of chip inventory at the end of the first quarter. This is down from more than a week’s worth at the start of the fourth quarter and five days at the beginning of the first quarter.
"Given these trends, we predict that surplus inventory will be completely cleared out of the supply chain by early in the second quarter," said the spokesman.
