The semiconductor market should brace for a flood of excess inventory that could further depress sales in 2009 as equipment manufacturers across the high-tech industry severely slash component demand amid a downturn in end demand, according to a market research firm.
Total industry chip inventory in the current quarter could rocket up to $10.2 billion, up 168 percent from $3.8 billion in the third quarter and more than quadruple the 2007 year-end level of $2.3 billion, according to El Segundo, Calif.-based iSuppli Corp.
Such a dramatic increase in inventory could add to the pressures facing the semiconductor industry where many companies have had to ratchet down sales forecast as the weakening global economy force consumers and corporate IT equipment buyers to either delay or cancel purchases.
"The near-tripling of excess semiconductor inventory throughout the electronics supply chain in the fourth quarter will significantly extend the time necessary for the semiconductor industry and contract manufacturer to benefit from any recovery in demand," iSuppli said in a statement. "It also will wipe out several additional percentage points of growth from the semiconductor industry in 2009."
Already, research firms have sharply scaled back their sales forecast for the semiconductor industry with the latest data showing negative growth and perhaps the sharpest sales decline in the market history. Gartner Inc., for instance, is predicting semiconductor sales in 2009 will drop a steep 16.3 percent, to $219.2 billion from an estimated $261.9 billion in 2008.
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