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Analysts Warns of High Levels of Chip Inventories

By - Source: IHS | B 28 comments

Market research firm IHS is ringing the alarm bells for the chip industry as semiconductor inventories have risen to levels not seen since early 2008, the beginning stages of the economic downturn.

"Global supplier semiconductor stockpiles at the end of the second quarter stood at an unusually elevated 83.4 Days of Inventory (DOI)," IHS said in a press release. This is, in fact higher than the 83.1 DOI in the first quarter of 2008.

According to the market research firm, the Q2 value jumped from 79.9 days in Q1 and is the first in twelve quarters to climb above 80 again. IHS also noted that the Q2 level as 11 percent above historical seasonal averages.

"For the semiconductor industry, wading into such potentially troubling territory - reminiscent of the dark days leading into the recession- could herald the beginning of a critical inventory adjustment period," said Sharon Stiefel, semiconductor analyst at IHS. "The correction is likely to take place during the next few quarters and will not be completed until mid-2012. As such, it will involve suppliers making a prolonged reduction in their inventory levels to avoid dangerous oversupply situations."

IHS also said that it is reducing revenue forecasts for the third quarter as "various indicators point to a stalling economy." Instead of a previously expected growth of 4.6 percent, the new forecast sees 2.9 percent growth in 2011, which is down from 32.4 percent in 2010.

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  • 25 Hide
    aftcomet , October 13, 2011 3:20 AM
    I'll help you with that. Let's have a fire sale.
  • 20 Hide
    southernshark , October 13, 2011 3:41 AM
    bear95I'm guessing part of it is due to people stalling till BD. The (unfortunate) results are out and I think this will no longer be a problem.



    I doubt it. AMD is a small player and its top end products are even smaller. Inventory buildups like this imply low demand in all segments of the industry. 98 percent of computer buyers have no clue what Bulldozer was, and only 25 percent of those people cared.
  • 12 Hide
    southernshark , October 13, 2011 3:42 AM
    I mean 25 percent of the 2 percent cared.... so .5 percent cared.
Other Comments
  • 25 Hide
    aftcomet , October 13, 2011 3:20 AM
    I'll help you with that. Let's have a fire sale.
  • -3 Hide
    Anonymous , October 13, 2011 3:30 AM
    I'm guessing part of it is due to people stalling till BD. The (unfortunate) results are out and I think this will no longer be a problem.
  • 4 Hide
    davewolfgang , October 13, 2011 3:41 AM
    SALE!!!!!

    But yeah bear95...I see Intel's flying off the shelves even faster now.
  • 20 Hide
    southernshark , October 13, 2011 3:41 AM
    bear95I'm guessing part of it is due to people stalling till BD. The (unfortunate) results are out and I think this will no longer be a problem.



    I doubt it. AMD is a small player and its top end products are even smaller. Inventory buildups like this imply low demand in all segments of the industry. 98 percent of computer buyers have no clue what Bulldozer was, and only 25 percent of those people cared.
  • 12 Hide
    southernshark , October 13, 2011 3:42 AM
    I mean 25 percent of the 2 percent cared.... so .5 percent cared.
  • 11 Hide
    velocityg4 , October 13, 2011 3:56 AM
    Given that anything better than a Core Duo or Athlon X2 with 2GB RAM will do just about anything 95%+ of users want and quickly. It is not surprising that sales remain slow. Heck a Pentium 4 and 1GB of RAM in XP is plenty for the majority of people.

    With Windows 8 being streamlined to work well on 1GB of RAM and an ARM or Atom CPU it does not bode well for the hardware industry.
  • 3 Hide
    bak0n , October 13, 2011 4:15 AM
    Just get out the Southern Island GPU's and I'll do my part in eating up the access inventory!
  • 3 Hide
    buzznut , October 13, 2011 4:22 AM
    aftcometI'll help you with that. Let's have a fire sale.

    Sounds good to me. I hope this will help drive BD prices down. They are overpriced as is.
  • 2 Hide
    dalauder , October 13, 2011 5:02 AM
    So there should be both RAM and CPU firesales coming up? I'm now expecting to hear about high GPU inventories. Considering how much this high inventory "problem" has been dropping RAM prices lately, I'm excited!
  • 3 Hide
    ojas , October 13, 2011 5:23 AM
    i don't know why but i'm having a feeling that this is the second time i've read this on tom's in the last month...oh...
    *sees who's written it*
    ...never mind...
  • 7 Hide
    alidan , October 13, 2011 5:26 AM
    velocityg4Given that anything better than a Core Duo or Athlon X2 with 2GB RAM will do just about anything 95%+ of users want and quickly. It is not surprising that sales remain slow. Heck a Pentium 4 and 1GB of RAM in XP is plenty for the majority of people.With Windows 8 being streamlined to work well on 1GB of RAM and an ARM or Atom CPU it does not bode well for the hardware industry.


    a p4 can barely run the internet anymore, till 2 years ago i was still using one, and anything flash spiked that thing to 100%


    also, i want to wait till windows 8 till i reserve full judgement of bulldozer, granted im not in the market for a cpu yet, as my 955black will probably remain in my system till either the motherboard dies and i cant get a replacement that fits my 955, or something SHOCKINGLY fast comes about.

    currently we are talking at most about 20-30% difference, and this in on operations that take less than a minute to complete. if the operations were more along the lines of an hour to encode music, or the like, than yea, i may go for a better cpu
  • 1 Hide
    cookoy , October 13, 2011 8:15 AM
    still no compelling reason for a need to upgrade. Maybe if IBM released a scaled-down version of its Watson software that won in Jeopardy then we will have a need of a lot of those current overstocked chips.
  • 2 Hide
    eddieroolz , October 13, 2011 8:51 AM
    Slash $100 off processors and I'll help move the inventories a bit :) 
  • 0 Hide
    cats_Paw , October 13, 2011 9:42 AM
    Soon, very soon my intel friend :D .
  • 2 Hide
    goatsetung , October 13, 2011 10:07 AM
    southernshark AMD is a small player and its top end products are even smaller.


    I read somewhere AMD has ~20% overall worldwide market share (higher for desktops, lower for servers, etc). That's a very big player, even if not the biggest.
  • 3 Hide
    goatsetung , October 13, 2011 10:10 AM
    Anyway, we need AMD to keep Intel prices down.

    Personally I tend to favor AMD because of their favorable price/performance ratio in the price segments I'm interested in - that is, CPU:s that are fast enough to run pretty much anything you throw at them, but aren't top of the line and therefore several hundred percent more expensive.
  • 0 Hide
    billybobser , October 13, 2011 10:18 AM
    copy paste story from not so long ago.

    Since supply is clearly outstripping demand, where are the price cuts in cpus?
  • 5 Hide
    dfusco , October 13, 2011 10:30 AM
    I feel no need to upgrade my i7-860, 6 GB RAM rig. Neither SB or BD offer a compelling upgrade. So I'll be going at least 2-3 years without upgrading which is unusual for me.
  • 1 Hide
    DigitalKilla_FL , October 13, 2011 11:55 AM
    The US and the world economy is still in a slump. PC's, Tablets & Phones can already do all the things they are being used for. Why are people going to waste money to get a machine that will only do things incrementally faster?

    I will drop a few hundred dollars on upgrades if it was like 50% or double the speed of what we have today. But I have to agree with everyone else on here, BULLDOZER IS AN EPIC FAIL!!!

    I will be buying an Intel (2600K?) chip and the best GPU to play BF3 though.

    IMHO the best investment I could make right now would be an SSD or maybe even a pair, that would be a nice speed boost :) 
  • -5 Hide
    nebun , October 13, 2011 12:21 PM
    AMD is dying a slow death....they just can't compete with intel and nvidia and still make a reasonable profit
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