iSuppli: Chip Inventory Levels Deceptively Low

Paul Lilly

Despite reports to the contrary, market research firm iSuppli warns that semiconductor inventories are too low to sustain demand, The Wall Street Journal reports .

"When measured in terms of [days of inventory], chip supplier stockpiles for the 10 semiconductor product categories tracked by iSuppli appear to be within the range of normal seasonal equilibrium," said analyst Carlo Ciriello. "However, iSuppli believes these numbers are misleading and that the supply chain is actually leaner than current levels indicate."

iSuppli's bean counters determined that global semiconductor inventory amounted to $25.73 billion in the first quarter of 2010, up just 1 percent from $25.48 billion in the previous quarter, and barely rising to the tune of 0.2 percent from the first quarter of 2009.

The numbers are somewhat deceiving, says iSuppli. During the 69 days in the first quarter, days of inventory rose 3.2 percent from the fourth quarter and appear to be strong. But that isn't the case when factoring in both reported revenue and inventory value, as well as adjusting cost of goods. When all is said and done, the metric drops 20 percent below the seasonal average, iSuppli said.

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