Semiconductor sales are set to limp along until the end of the year, as inventory correction continues, Gartner has claimed.
After lacklustre sales and poor Q4 guidance from many vendors, Gartner expects the continued inventory correction to dampen sales for the remainder of the year before sequential growth returns in 2012.
The days of inventory (DOI) level in the semiconductor supply chain was elevated going into Q3 2011, but the corrective action will bring it back under control, the analyst said.
Peter Middleton, principal research analyst at Gartner, said: “We expect that average selling prices (ASPs) for foundry-produced components will be under pressure through the first half of 2012 because of aggressive investment in capacity made as the industry came out of the last recession.
“That investment is leading to excess capacity at the same time as concern is rising about end-market demand levels due to weak economic prospects.”
Gartner’s Index of Inventory Semiconductor Supply-chain Tracking (GIISST) moved further into the caution zone as levels reached 1.16 in Q3 2011, up from the 1.12 previously forecast in Gartner’s initial Q3 2011 update in September.
A DOI level above 1.10 indicates inflated inventories, according to the GIISST, which means a likelihood of "downward pressure" on ASPs.
Gerald van Hoy, senior research analyst at Gartner, added: “The proportion of total semiconductor inventory held by OEMs has begun to rise. However, it is still near historic lows which will help reduce the impact of an order correction on semiconductor vendor sales.”
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