El Segundo, Calif. − Semiconductor inventory declined much faster than projected in the fourth quarter of 2012, according to a report from IHS iSuppli. Intel led the stockpile reductions, lowering inventory by nearly $600 million. AMD and STMicroelectronics followed with inventory declines of $182 million and $131 million, respectively.
The percentage of decrease ranged from 5 percent to 25 percent, between the third and fourth quarter of 2012, resulting in chip stockpile value drop of $60 million to nearly $600 million at companies that lowered inventory levels, according to IHS analyst Sharon Stiefel. She also stated that some companies increased inventory by slightly higher than $40 million to approximately $250 million.
The report also finds that days of inventory (DOI) for semiconductor suppliers declined 5 percent, which is higher than the 1.5 percent initially forecast. This translated into a 10 percent drop in inventory value in dollars, compared to the original projection of three percent. Memory suppliers were excluded from the DOI and inventory value calculations.
"The earlier numbers were based on anticipated reduction of capacity utilization to draw down inventories in response to declining orders during the second half of 2012, but weaker-than-expected demand had the effect of raising the final numbers," stated Stiefel.
Stiefel said the key reason for the inventory level declines was weak end-market demand. Chip suppliers, who noted inventory increases, contributed it to low seasonality and uncertain global economy, she added.
Inventories are expected to rise due to "slightly positive global economic indicators and favorable semiconductor and end-equipment forecasts," according to IHS.