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.