iSuppli warns that global chip library reserves are at risk

According to the latest data from market research firm IHS iSuppli, global semiconductor chip stocks reached the highest point in two and a half years in the fourth quarter of 2010; analysts believe that if the growth of the chip industry loses momentum this year, this situation may be for the industry. The development has caused difficulties.

According to the company's data, the inventory of semiconductor manufacturers has reached 83.6 inventory days as of the fourth quarter of 2010. Compared with 78.1 days in the third quarter of 2010, it increased by 5.5 days. Inventories in the second quarter of 2008 reached 84 days, and soon after the semiconductor industry fell into a downturn.

According to HIS Semiconductor Intelligence Analyst Sharon Stilfer, the current stock level is already higher than any standard. He said that the rapid increase in semiconductor inventories in the fourth quarter of last year was very much beyond the expectation that if the growth of the semiconductor industry did not meet expectations in 2011, the inflationary trend of such inventories could cause difficulties.

IHS iSuppli predicts that inventory days may fall by 2.5 days in the fourth quarter of this year; however, this forecast is based on the assumption that semiconductor manufacturers' revenue is up 5.6% from 2010. If the forecast result can be achieved, the current inventory level should be within controllable range.

However, the company warned that if the chip market grows less than expected, high inventory levels can lead to oversupply in the market. This will promote a more rapid decline in chip prices. It may further expand the scope of the semiconductor market and prolong the downturn. IHS iSuppli said that hot areas like smart phones and tablets will continue to strongly promote the development of the semiconductor market. Other areas such as the automotive and industrial markets will also have a strong boost.

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