SAN JOSE, Calif. - There appears to be a sudden slowdown in the cell-phone, LCD, LED, PC and other product segments-a trend that impacts chip makers.
And chip inventories are on the rise. Regarding the growing chip inventories and IC lull, one analyst drew a simple conclusion: Don't worry.
''We believe that the market is overly bearish'' with negative news, such as slowing PC builds, threat of slowing wafer starts and pull-in of lead-times, said analyst Doug Freedman of Gleacher & Co., in a report.
''Q2 inventory data across the electronics supply chain illustrates that
supply is appropriately catching demand. We feel that inventory levels are now more appropriately aligned with end-market demand, which was necessary given the level of under-shipment across many end-markets since 2H CY09,''he said.
There is good and bad news. ''Our analysis of Q2 inventories illustrates that total supply chain inventory days increased 10 percent quarter-over-quarter to 39.1 days (verses the five-year seasonal average of plus 3 percent),'' he said. ''In large part, the elevated levels were most evident across downstream retailers and distributors, where days are at five-year seasonal peak levels,reflecting softer end-demand.''
There are other mixed signals. ''Lastly, while storage/HDD was up materially (up 6 days to 37.6), we note that Marvell's recent commentary on inventory correction leaves us bullish looking ahead. Meanwhile, upstream inventories (61.2 days, only 2 percent above 5-year seasonal trough) continue to run lean as component distributors, analog semis, discretes and passives/connectors are at seasonal trough levels,'' he said.
I think that we got into this situation from a demand spike at the start of the global recovery (led by Asia) which some people took to be the 'new normal'. The spike was sustained as recovery came to Europe and North America. Things are just settling down, no need to panic.
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