SAN FRANCISCOGlobal semiconductor inventories have declined to appropriate levels following four consecutive quarters of reductions, clearing the way for stockpile rebuilding and higher sales in the second half of the year, according to market research firm iSuppli Corp.
After declining by 2.2 percent and 6.6 percent in the third and fourth quarters of 2008, inventories at global semiconductor manufacturers plunged by 15.1 percent in the first quarter, followed by a moderate 1.5 percent in the second quarter, according to iSuppli (El Segundo, Calif.).
At the end of the second quarter, chip inventories had declined to $24.9 billion, down from the recent peak of $32.6 billion in the second quarter of 2008, according to preliminary estimates from iSuppli.
Carlo Ciriello, a financial analyst at iSuppli, said falling demand in the first half of the year prompted chip makers to quickly dial down utilization levels and cut prices on chips. Other segments of the electronics supply chain also reduced inventory, Ciriello said.
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ISuppli predicts that second-half inventories will increase modestly in unison with sequential revenue increases for the global semiconductor industry. After an 18.8 percent decline in the first quarter of 2009 and a 7.1 sequential increase in the second quarter, global semiconductor revenue will rise in the second half, in line with financial guidance from Intel Corp. and other chipmakers, the firm said. Global semiconductor revenue will increase by a vigorous 10.4 percent in the third quarter and by 4.9 percent in the fourth, according to iSuppli's latest forecast.
Several analysts are predicting a second half rebound for the chip industry after a disastrous first half of 2009. Bill McClean, president of IC Insights Inc., for example, predicted earlier this month that second half chip revenue would be up 18 percent compared to the first half.
Semiconductor inventories will rise by 5.5 percent in the third quarter and by 1 percent in the fourth to end the year at $26.5 billion, still an appropriate level for the demand, iSuppli said.
"Despite the more optimistic outlook, corporations remain apprehensive about the second half, consistently noting fragile demand," Ciriello said. "Market values have declined, and the tradeoff between raising prices and maintaining market share has commanded more management attention than usual."
Ciriello's latest report on electronics supply chain inventories is available for sale through iSuppli's website.