The worldwide electronics industry in the first quarter reduced its excess semiconductor inventories at a rate that was dramatically faster than expected-sending a positive signal for future chip-market growth, market research firm iSuppli says.

The value of surplus chip stockpiles in the electronics supply chain plunged to $500 million in the first quarter, down 51.5 percent from $1.03 billion in the fourth quarter of 2004, according to iSuppli. The firm previously predicted that total excess semiconductor stockpiles in the first quarter would decline by 24 percent to reach $780 million.

"The reduction of excess semiconductor inventory in the historically slow first quarter of the year is undeniably a positive development for the global chip industry," said iSuppli analyst Rosemary Farrell.

"Better-than-average sales of bellwether semiconductor products including microprocessors, Digital Signal Processors (DSPs), discrete devices, high-performance analog parts and power-management chips helped reduce excess inventories in these areas," Farrell added. (THG)