Conflicting reports leave semiconductor market in uncertain state

8 12 2011

Semiconductor Equipment and Materials International (SEMI) have suggested that semiconductor manufacturing equipment could grow by 4.7% in 2011 to a total of $41.8 billion. However, they also feel that 2012 could see a decline by approximately 10.8% on that figure.

Assembly and packaging equipment is also expected to decline by approximately 12.5% to $3.4 billion.

This news follows a recent report from Gartner Inc which suggests that an industry-wide inventory correction process will have a serious impact on general sales of semiconductors.

However, in contrast to SEMI, Gartner actually anticipate that the situation will improve during 2012.

At the end of June this year, official semiconductor stockpiles with suppliers stood at 83.4 days of inventory (DOI).

This exceeds the previous record of 83.1 DOI from the first quarter of 2008.

IHS iSuppli claims the news is “raising concerns over the near-term outlook for the chip market.”

The level is 11% higher than the historical average which is usually recorded for this period.

The last major oversupply, seen in the first quarter of 2008, signalled the beginning of a 2 year downturn in the semiconductor industry.

Sharon Stiefel, semiconductor analyst at IHS, voiced her fears over what this could mean for the industry.

“For the semiconductor industry, wading into such troubling territory – reminiscent of the dark days leading into the recession – could herald the beginning of a critical inventory adjustment period.

“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.”

These conflicting reports seem to guarantee only one thing. There are likely to be uncertain times ahead for the semiconductor industry in the future.

It may be wise for companies to play their cards close to their chest until everybody is further into 2012.




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