SAN FRANCISCO—Average days of inventory (DOI) held by semiconductor suppliers is expected to decline by 0.5 percent in the first quarter after hitting an 11-year high in the fourth quarter of 2011, according to market research firm IHS iSuppli.
Semiconductor stockpiles will dip to an estimated 83.7 DOI in the first quater, up from 84.1 DOI in the fourth quarter of 2011, thanks to rising demand for chips, according to IHS.
Sharon Stiefel, an IHS analyst for semiconductor market intelligence, said in a statement that the fourth quarter of 2011 was a disappointment from both a revenue and earnings standpoint. "Global semiconductor revenue declined by 2.8 percent compared to the fourth quarter of 2010 as customer orders declined," Stiefel said. "Meanwhile, semiconductor suppliers struggled to balance their factory utilization levels against the drop in demand, leading to the rise in semiconductor inventories."
Semiconductor inventories in the fourth quarter of 2011 were at their highest level since the first quarter of 2001, IHS said. Excess inventory can represent a challenge for the semiconductor industry, particularly in times of declining demand, causing prices to decline and resulting in factories reducing their manufacturing, the firm said.
But IHS said there are signs that conditions in the semiconductor market are improving.
"Semiconductor suppliers are projecting a resumption of demand in the first quarter," Stiefel said. "Book-to-bill ratios are reaching parity, and global macroeconomic indicators point to a healthier outlook. These factors are raising optimism among semiconductor suppliers that better days are ahead for the industry."