Chip inventory to remain lean in Q1, says iSuppli

SAN FRANCISCO—Global semiconductor suppliers are expected to maintain lean inventory stockpiles in the first quarter in an effort to maintain profitability amid uncertain economic conditions, according to market research firm iSuppli Corp.

Days of inventory (DOI) among semiconductor suppliers is expected to decline to 68.3 by the end of the first quarter, down from 68.5 last quarter, iSuppli (El Segundo, Calif.) said. DOI was already 2.9 percent below the historical average in the fourth quarter, iSuppli said, and first quarter inventories are expected to be 6.9 percent less than the norm.

Stockpiles of inventory will be at very low levels, bordering on shortages for a few specific devices, iSuppli predicted.

DOI throughout 2010 is expected to stabilize at close to the 70-day level, iSuppli said. This tight management of inventories will help the semiconductor industry to attain double-digit percentage growth in 2010, according to iSuppli, which is currently predicting 15.4 percent growth in semiconductors in 2010 after a 12.4 percent decline in 2009.

No widespread shortages are expected in 2010, but there could be could be limited availability of NAND flash, iSuppli said.

Carlo Ciriello, an analyst with iSuppli, said through a statement that if Apple Inc. comes close to reaching its forecasted run rate for products like iPods and iPhones, there will be shortages of NAND in 2010.

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