Semiconductor inventory falls during Q1, outlook for demand rises: IHS

Analysts at IHS are predicting some good news for the electronics industry.

A recent briefing suggests that inventories held by semiconductor suppliers have declined significantly in the first quarter as excess stockpiles which accumulated during 2012 were cleared away. This was done in anticipation of a revival in demand for electronic expected by the second half of 2013.

According to the briefing, semiconductor inventory in the first quarter fell to $37.6 billion, down 4.6 percent from the $38.4 billion held in inventory during the fourth quarter of 2012.

The fall in inventory stocks mirrored a drop in semiconductor revenues, falling 5.1 percent, but this was in line with normal seasonal demand patterns.

"While overall chip revenue declined in the first quarter, falling inventories among chip suppliers — combined with expanding stockpiles at distributors, contract manufacturers and original equipment manufacturers (OEM) — indicate that consumer demand for electronics rose during the period," said Sharon Stiefel, analyst for semiconductor market intelligence for IHS.

"This contributed to a decline in chip inventories. At the same time, semiconductor companies maintained tight control over their manufacturing capacity, contributing to the decline in inventory."

Others in the supply chain have been increasing inventories. This includes inventories held by the smartphone and PC OEMs. Cellphone makers expanded their inventories — which includes finished products — by 7.2 percent during the quarter, while PC OEMs saw stockpiles of items such as notebook and desktop PCs growing by 6 percent.

"The rise in inventories among the various segments of the supply chain indicates the electronics industry is preparing for an increase in demand during the second half of 2013," Stiefel said.