Excess chip inventory keeps growing
Excess chip inventory keeps growing, says iSuppli
Surplus semiconductor inventories in the global electronics supply chain rose again in the fourth quarter of 2006, meaning that excess stockpiles are likely to linger through 2007, iSuppli predicts.Total excess chip inventory swelled to US$4.3 billion in the fourth quarter, up 4.9% from US$4.1 billion at the end of the third quarter, according to a preliminary estimate from iSuppli.
“The 4.9% increase in excess semiconductor stockpiles conforms to iSuppli’s forecast, and does not mark a significant worsening of the surplus inventory situation,” said Rosemary Farrell, analyst with iSuppli. “While rising levels of excess inventory are a concern for the global semiconductor industry in 2007, they are not sufficient to derail market growth.”
We find it difficult to reconcile that forecast with the excess capacity still coming on line.
Disclosure: William Trent has a long position in SMH.
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Editor’s Note: We received the following email from SeekingAlpha, which had republished this article.
Dear SeekingAlpha,
On your site today, William Trent has headlined his story: iSuppli’s Chip Inventory Forecast Fails To Account For Excess Capacity. http://chip.seekingalpha.com/article/24052
He repeats this statement later in his article—without providing any basis for this comment.
iSuppli Corp. feels this statement is inaccurate.
iSuppli’s Semiconductor Inventory Tracker service develops its estimates in close consultation with other iSuppli services, including our Semiconductor Manufacturing and Supply service, which is dedicated to tracking semiconductor manufacturing capacity and utilization on a worldwide basis. The issues of semiconductor inventory and capacity are closely related, so our analysts in these areas consult with each other regularly to ensure their views are consistent.
Because iSuppli covers the semiconductor and electronics industries in a broad and comprehensive fashion, our views on the impact of excess chip inventories present a complete picture of semiconductor market dynamics, including semiconductor manufacturing capacity developments.
Simply because iSuppli’s conclusions on this subject are not the same as Trent’s does not mean we have failed to account for semiconductor manufacturing capacity issues.
Regards,
Jonathan Cassell
Editorial Director and Manager, Public Relations
iSuppli Corporation
Stock Market Beat reply:
We apologize for any misrepresentation of iSupply’s views.
The title of the article was altered when republished on SeekingAlpha, and we have asked them to restore our original title. However, the last line of our original article included the statement “The problem with [iSupply’s] forecast is that it doesn’t take into account the excess capacity still coming on line.”
We have changed that line to “We find it difficult to reconcile that forecast with the excess capacity still coming on line.” We agree with Mr. Cassell that any difference between our opinions differ does not result from a lack of thoroughness on iSupply’s part. While we stand by our interpretation of the data we regret the initial choice of wording.