Semiconductor Inventory Levels

Update: The original post contained a data error.
In the interest of digging deeper into the semiconductor oversupply issues, this post will begin a series of data gathering on important ratios for companies in the industry. Hopefully the process will provide insight toward the companies better (or worse) positioned to take advantage of the next upturn or weather the downturn.

Today I used Zacks Research Wizard to get the recent Cost of Goods Sold (COGS) and Inventory levels for semiconductor industry participants over the last several quarters. I made some modest limitations on the share volume and market cap, but still ended up with more than 50 names. I used trailing twelve month COGS and the average of the last five quarters (for a beginning, ending and average) of inventory to calculate Days Sales in Inventory.

The higher the inventory levels, the more likely the company will need to reduce prices, reduce production or take a write-off, all of which would reduce gross profit margin. This first pass looks merely at inventory levels and does not consider strategy or other factors. For example, a fabless company would likely own less inventory than a company that produces chips at its own facilities. In a later post I will consider the trends in inventory (although the historic data I provide below gives some of it away) to determine the companies for which inventory levels are higher than the historic norm for that particular company.

The five companies with the highest levels of inventory relative to their recent sales levels are: Microsemi (MSCC), Lattice (LSCC), Analog Devices (ADI), Micrel (MCRL) and Intersil (ISIL).

The five with the lowest levels of inventory relative to recent sales are: Amkor Tech (AMKR); Smart Modular (SMOD), Large Cap Watch List (Track at Marketocracy) member MEMC Electronics (WFR); Actions (ACTS) and Sirf Technology (SIRF).

The complete list follows.


Disclosure: William Trent has a long position in SMH.

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Topics: Actions Semiconductor (ACTS), Amkor Technology (AMKR), Analog Devices (ADI), Broadcom (BRCM), Cirrus Logic (CRUS), Formfactor (FORM), Intersil (ISIL), Lattice Semiconductor (LSCC), MCHP, MCRL, MEMC Electronic Materials (WFR), MicroSemi (MSCC), Netlogic Microsystems (NETL), SMART Modular Technologies (SMOD), Semiconductor HOLDRS (SMH), Semiconductors, SiRF Technology (SIRF), Standard Microsystems (SMSC), Stock Market | RSS

2 Comments on “Semiconductor Inventory Levels”

  1. [...] Semiconductor Inventory Levels [...]

  2. [...] Starting with the actual inventory levels, measured in days sales on hand, Intel has 87.4 days while AMD has 67.8. While the company level inventory could mask trends going on in the channel (such as Hewlett Packard’s (HPQ – Annual Report) “strategic buys“) it does potentially indicate that AMD have less need to discount inventory in the near future, and potentially better margins. [...]

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