The value of ICs held in inventory by chip suppliers at the end of the first quarter of 2013 was $37.6 billion, down 4.6 percent from $38.4 billion at the end of the fourth quarter of 2012, according to market analytics company IHS.
The decline is due to a resumption of demand from distributors, OEMs and contract manufacturers in anticipation of better equipment sales in the second half of 2013.
The decline in inventory in 1Q13 paralleled a sequential contraction in semiconductor revenues of 5.1 percent in line with normal seasonal demand.
However, just the chip suppliers ran down stocks so equipment companies started to ramp them. Mobile phone makers expanded their inventories by 7.2 percent during the quarter and PC OEMs expanded their backlog of notebook and desktop computers by 6 percent.
Semiconductor inventory levels at chip suppliers are expected to rise in the second quarter as they respond to positive order rates from electronics equipment manufacturers. Stockpiles for consumers of semiconductors likely will remain fairly flat, IHS said.
Quarterly inventory held by semiconductor suppliers. Source: IHS.
"The rise in inventories among the various segments of the supply chain [other than chip suppliers] indicates the electronics industry is preparing for an increase in demand during the second half of 2013," Sharon Stiefel, analyst for semiconductor market intelligence for IHS, in a statement posted at the IHS website.
Hi Peter - the most recent run of the Cowan LRA forecast model operating on April 2013's actual sales result ($23.551 billion) recently published by the WSTS projects that the sequential sales growth forecast estimate of the second half of 2013 relative to the first half of 2013 will be 7.5 percent. This result corresponds to a 1H 2013 sales forecast of $144.7 billion. Details can be found at the following URL = http://electronics.wesrch.com/paper-details/docx-EL1SE1UFQSRBA-updated-global-semiconductor-sales-and-growth-expectations-for-2013-14.
Therefore, the latest model run bears out the positive sales growth expected for 2H 2013 global semi sales, namely $155.6 billion, compared to the first half of 2013 sales expectation invoked above.
Mike Cowan (independent semiconductor market analyst / watcher and developer of the Cowan LRA Model for forecasting global semi sales)
Thanks for the update. There seem to be conflicting messages out there at there at the moment.
Signs look positive for memory ASPs which could make a big difference to global sales. But a number of market watchers are predicting a flat 2013 on global economic slowness.
In fact adding your 1H and 2H predictions puts you a bit in that camp at about $300 billion 2013 annual sales.
Maybe in 2013 the market will beat expectations for the first time in a number of years?
Thanks Peter for your "thanks." Obviously, stay "tuned" for the monthly updates of the model's "thinking" on 2013 sales and sales growth expectations as the year plays out. Moreover, the model predicts that 2014 sales and sales growth forecast estimates will be $317.9 billion and 5.8 percent, respectively. Therefore, it looks like 2014 will be a much more improved recovery year for the semiconductor industry.