March 21, 2012 — Semiconductor days of inventory (DOI) rose 3.4%, hitting an 11-year high (since Q1 2001) of 84.1 DOI at chip suppliers in Q4 2011, but this will decline 0.5% in Q1 2012, with hopes that demand is improving, says IHS.
Excess production and slower than expected demand brought average global semiconductor stockpiles at chip suppliers up almost 3 days from Q3 to Q4 2011, shows an IHS iSuppli Inventory Market Brief report. Stockpiles will ease slightly to 83.7 DOI in Q1 2012.
Figure. Average Semiconductor DOI Held by Global Chip Suppliers. SOURCE: IHS iSuppli March 2012.
| Q1 ’10 | Q2 ’10 | Q3 ’10 | Q4 ’10 | Q1 ’11 | Q2 ’11 | Q3 ’11 | Q4 ’11 | Q1 ’12E | |
| Average No. of Days | 69.1 | 72.8 | 72.6 | 76.6 | 79.9 | 83.4 | 81.3 | 84.1 | 83.7 |
| Percentage Sequential Change | 3.8% | 5.4% | -0.3% | 5.6% | 4.2% | 4.4% | -2.5% | 3.4% | -0.5% |
Q4 was "disappointing from both a revenue as well as earnings standpoint," said Sharon Stiefel, analyst for semiconductor market intelligence at IHS. Global semiconductor revenue declined by 2.8% year-over-year, and semiconductor suppliers struggled with a capacity utilization rate to match the sluggish demand.
“Semiconductor suppliers are projecting a resumption of demand in the first quarter,” Stiefel observed. “Book-to-bill ratios are reaching parity, and global macroeconomic indicators point to a healthier outlook. These factors are raising optimism among semiconductor suppliers that better days are ahead for the industry.”
“Should semiconductor demand rise more than projected, those companies holding excess inventory could turn that to their advantage later in 2012, because they will be in a better inventory position than those that have become too lean,” Stiefel said.
An inventory correction took place, and will be largely completed by Q1 2012, as evidenced by rising trends in the lead-time index, according to Gartner Inc. Corrective actions in the supply chain have set up a possible H2 2012 snapback for semiconductors, reports FBR Capital.
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