January 11, 2009 – After quickly moving to work down bloated inventories amid the onset of the 2009 industry slowdown, global semiconductor suppliers are seen with lean stockpiles heading into 1Q10, according to data from iSuppli Corp.
Chip suppliers "managed their inventories deftly during the year," reducing days-of-inventory (DOI) by nearly two weeks (18%) from 4Q08 to 4Q09 to about 68 days, notes iSuppli analyst Carlo Ciriello, in a statement. DOI actually rose slightly in 4Q09 as inventory levels dipped a little more than the historical holiday-season average, mostly attributed to restocking, what Ciriello calls "modest replenishments" and no danger of whipsawing into a surge of excess as seen in 2008.
With levels now around the 70-day equilibrium benchmark, the key now is that chip suppliers bring in sales without double-booking or overstocking, by accurately gauging demand and managing lead times, he says. Sales on a dollar basis are projected to increase "moderately" each quarter through the year, but cautiously as suppliers keep a watchful eye on lead times in a bid to support higher prices and margins. Look, therefore, for double-digit percentage growth overall in 2010: 15.4%, following 2008’s 12.4% decline. (While widespread shortages are unlikely, there could be some in NAND flash, driven by demand, Ciriello notes, especially if Apple "even comes in close to its forecasted run-rate."
Days of inventory for global semiconductor suppliers. (Source: iSuppli)