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Semiconductor industry experiencing possible demand recovery

IHS predicts that worldwide semiconductor sales will increase over the course of this year with the ratio of inventory to sales balancing out at the same time.
Written by Rachel King, Contributor on

The global semiconductor industry could be on its way to bouncing back based on second quarter inventory numbers, according to market research firm IHS iSuppli.

Back in March, IHS analysts reported that global semiconductor inventories were expected to have declined during the first quarter of 2012. At the same time, analysts predicted that things might not be all bad going forward as they expected higher levels of demand to resume soon.

It would appear that IHS analysts have been right on that topic so far as their latest report asserts that rising semiconductor inventories for a second straight quarter have actually been thanks to higher customer demand.

Sharon Stiefel, a semiconductor inventory analyst at IHS, explained in the report that higher inventory numbers among suppliers was actually a good sign because that indicates "both the supply and demand sides of the business believe that the environment in the electronics market has turned positive."

Overall, IHS predicts that worldwide semiconductor sales will increase over the course of this year with the ratio of inventory to sales balancing out at the same time.

Nevertheless, IHS analysts warn not to get too hopeful yet because a surge in capacity to meet demand often leads to the inability to reduce production when demand slows, eventually resulting in stockpiles of extra supplies that don't get sold.

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