Semiconductor inventory correction occurred, shows Gartner lead time analysis

February 21, 2012 — Semiconductor vendors, on average, announced weak revenue in Q4 2011, on top of a sub-seasonal Q3, indicating that the anticipated correction to chip inventory levels occurred, analyst firm Gartner Inc. reports. Based on Gartner’s inventory analysis and vendor guidance, the correction process will be largely completed by Q1 2012, as evidenced by rising trends in the lead-time index.

Figure. Selected device lead times at chip distributors. SOURCE: Gartner.

Lead times of key parts used in cellphone and tablet production will rise in early 2012, as a precursor to upward movement in orders of mobile phone and tablet semiconductors, as well as inventory through the supply chain. Gartner notes that it is still too early to tell whether this is a sustainable upward trend, only that it corresponds with their current semiconductor forecast and inventory analysis.

The average of minimum lead times hit a new low since Gartner began recording this data on December 28, 2011, and it remained flat through January 4, 2012 (the average had been trending downward since mid-October).

The lead-time index, which is more sensitive to changes in lead times across all distributors, peaked in the last week of October 2011 and began trending downward, hitting its second lowest point on December 14.

The lead-time index has risen from the low of 8.1 weeks on December 14 to 8.8 weeks as of January 18. The average of minimum lead times rose from its low of 5.4 weeks on December 28 to 6.2 weeks on January 18.

Initial 2012 numbers indicate that lead times will rise as the wireless semiconductor supply chain normalizes after the inventory correction. Manufacturers should be aware of this upward trend to avoid delays in their own processes. Within the course of one week, individual parts’ lead times have lept as much as 11 weeks.

Also read: Chip inventories contract, reversing 7 quarter trend

Manufacturers should watch for increases in demand while also watching changes to their inventory levels and lead times to best match and anticipate purchasing needs.

View Gartner’s Market Trends: Semiconductor Lead Times Tick Upward in January 2012 at

Subscribe to Solid State Technology


Easily post a comment below using your Linkedin, Twitter, Google or Facebook account. Comments won't automatically be posted to your social media accounts unless you select to share.