NEW YORK--Chip inventories dropped in the third quarter of 2003, indicating that OEMs have pushed out their "restocking" plans until the beginning of next year, according to a report from SG Cowen Securities Corp. today (November 20, 2003).
The inventory "restocking" delays, coupled with continued chip demand in the marketplace, has prompted SG Cowen to alter its IC forecast.
SG Cowen believes that the semiconductor market will grow 14 percent in 2003 over 2002. That represents the high side of its original forecast. Previously, SG Cowen projected that the IC industry would grow from 10-to-14 percent in 2003 over 2002.
But still, there are some puzzling trends in the channels. "Our most recent study indicates that inventory levels declined slightly again in the September quarter," according to SG Cowen. "Inventory as a percentage of sales for a basket of large OEMs that we track fell slightly, from 8.4 percent to 8.3 percent of sales--another 20-year low."
This is not to say that the IC and end-user markets are weak. "Our IT industry forecast is for continued modest improvement in demand, and as a result, we believe that an inventory rebuilt could occur in early 2004," according to the New York-based investment banking firm. One of the reasons for the "restocking" delay is the shift towards just-in-time manufacturing schemes, according to the report.