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Hoarding worries hit electronics industry

Posted: 30 Mar 2011 ?? ?Print Version ?Bookmark and Share

Keywords:package? test? fables? Japan earthquake?

Hoarding could prolong the instability experienced by the electronics supply chain following the earthquake that hit Japan earlier this month, according to an analyst with The Hongkong and Shanghai Banking Corp. Ltd (HSBC).

"Recent checks confirm multiple chipmakers seeing rush orders as customers seek to ensure stable supply," analyst Steven Pelayo said in a report. "Checks with multiple semiconductor fabless, distributors, IDMs, and package/test suppliers all suggest order activity has been robust since the earthquake in Japan. Clearly, chipmakers are attempting to hoard inventory given increased risk of supply side dislocations up and down the entire food chain, impacting end product availability."

According to Pelayo, a slow recovery from the quake was initially seen as a welcome development, as it would help purge inventory and lead to another round of restocking in the second half of 2011. "However, while strong order activity may be good for near-term demand, we now have to worry that days-of-inventory may build on the already five quarters of increases since the late 2H '09 trough. If the earthquake impact proves more limited, there is a risk that the likely double-bookings happening today are canceled and excess supplies turn out to be a problem in 2H '11," Pelayo said.

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