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Chip suppliers cut inventory significantly in 4Q of 2012

Posted: 15 Mar 2013 ?? ?Print Version ?Bookmark and Share

Keywords:iSuppli? Intel? semiconductor inventory? GlobalFoundries?

According to IHS iSuppli's latest report, chip suppliers cut inventory significantly in the fourth quarter after inventories reached worrisome levels in the third quarter. Led by big reductions from Intel Corp., semiconductor inventories held by chip suppliers fell dramatically in the fourth quarter of 2012.

IHS added that the significant inventory reduction is a welcome sign after inventories reached worrisome heights in the third quarter of last year.

Sharon Stiefel, IHS' analyst for semiconductor market intelligence, stated that semiconductor companies reduced their inventories at a faster than expected rate in the fourth quarter as they moved to adjust to weakening demand. She added that many chip suppliers demonstrated great agility in their reactions to the drop in demand. No. 1 semiconductor supplier Intel Corp. was the most aggressive, cutting its stockpiles by more than half a billion dollarsthe largest decrease on a dollar basis of any chipmaker.

Days of inventory (DOI) held by chip suppliers decreased by 5 per cent in the fourth quarter compared to the third. IHS's inventory supply report had predicted inventories would decline by 1.5 per cent. Inventory value in dollar terms fell almost 5 per cent, larger than the originally projected 3 per cent, IHS said.

Semiconductor Suppliers

Figure: Quarterly Change in Inventory Levels for Semiconductor Suppliers. Source: IHS iSuppli Research, March 2013.

Among the chip suppliers that reduced inventories between the third and fourth quarters, the percentage decrease ranged from 5 to 25 per cent, IHS said. As a result, each of these companies shaved $60 million to $600 million worth of inventory off of their stockpile, according to IHS.

Some companies, however, increased inventories over the same period, IHS said. But the increase in inventories at these companies was generally smallerbetween $40 million and $250 million.

Intel (Santa Clara, Calif.) decreased its inventory stockpile by $585 million during the fourth quarter, or about 11 per cent, IHS said. Intel made aggressive moves to cut stockpiles and reduced production as it migrated to 14-nm process technology, IHS said.

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