Gartner's Dataquest Semiconductor Inventory Index (DASI) has moved to just inside the "caution zone" (1.10-1.20) after spending four straight quarters at the "severe excess" level (1.21 and higher), Gartner said Monday (Oct. 5). But analysts warned that the DASI Index will not stabilize until at least 2010, when Gartner forecasts that the semiconductor industry will return to growth.

The DASI Index is meant to provide an aggregate view of the inventory health of the semiconductor industry by assessing normal inventory levels throughout the supply chain and comparing them with current levels to evaluate industry trends. The index gauges the normal inventory level at each stage of production that will allow for a smooth flow of products and management of the production process without inventory shortages or surpluses.

"While some industries are experiencing a fundamental demand-side recovery, other industries are benefiting from a reduction in inventory simply because of their continued conservative efforts in keeping the supply chain lean," said Gerald Van Hoy, senior research analyst at Gartner, in a statement. "Concerns of possible shortages in inventory seem to be premature, but inventory should continue to be monitored, especially in large-scale markets, such as PCs and cellular phones."

Though chip industry revenue has been growing recently, it will not be enough to overcome the declines seen the early part of this year, Van Hoy said. Gartner Gartner (Stamford, Conn.) continues to "express cautious optimism" for the immediate future and predicts that the market will return to growth in 2010 and 2011.

"The decrease in demand has been severe, yet the response in absolute inventory levels has been more in tune with the change in demand," Van Hoy said. "In the current situation, we see a very different pattern of response and inventory management, with the percentage differences between revenue and inventory much tighter than during the crisis in 2001 and 2002."