In the fourth quarter of last year, global semiconductor stocks rose to a two-and-a-half year high

According to a study by IHS iSuppli, inventory in the hands of global semiconductor suppliers in the fourth quarter of 2010 increased to a two-and-a-half year high. If the growth of the chip industry this year is weakened, this may cause trouble.

As of the end of the fourth quarter of 2010, the semiconductor supplier's inventory days (DOI) was 83.6 days, an increase of 5.5 days or 7% from the 78.1 days in the third quarter. This set the highest level since the second quarter of 2008, when the DOI was 84 days, and soon after the semiconductor industry began to decline.

Measured by any standard, the current inventory levels are high, indicating that controlling chip inventory is not easy, despite the enormous efforts made by semiconductor suppliers. In the fourth quarter of last year, semiconductor inventories rose sharply, contrary to expectations, but only 2011 semiconductor industry growth rate is lower than expected, and higher inventory will constitute a problem.

IHS iSuppli Corporation previously forecast that DOI will decrease by 2.5 days in the fourth quarter of last year, but the actual situation is an increase of 5.5 days. Currently, IHS iSuppli Corp. predicts that global semiconductor sales will increase by 5.6% in 2011 after 31.8% growth in 2010. If this forecast can be achieved, the current inventory level can still handle.

However, if the actual growth rate is lower than forecast, higher inventory may lead to excess supply in the market and chip prices will fall faster than normal. This may exacerbate the extent and duration of the decline or slowdown in the semiconductor market.

Popular areas such as smart phones and media tablets continue to bring strong growth to the semiconductor industry. In addition, in other areas such as automotive and industrial applications, although visibility is usually not high, chip sales are also encouraging.

The figure shows IHS iSuppli's estimate for global semiconductor DOI for each quarter of 2007-2010.