Gartner warns of rising chip inventories
Global inventories of semiconductors, the building blocks of electronic devices,
spiked in the fourth quarter due to lackluster fourth quarter gadget sales and
lower expectations for sales in the first quarter, Gartner said Monday.
The market researcher's chip inventory index rose to 1.16 in the fourth quarter,
compared to 1.04 in the third quarter of last year. The figure is designed to
assess normal chip inventory levels throughout the global technology supply
chain.
The report comes amid growing worries over the health of the U.S. and global
economies. Last Friday, the U.S. Labor Department said employers cut 63,000
jobs in February, the second straight month of declines. Some analysts interpreted
the data as proof that the U.S. is in a recession.
For the global technology industry, a U.S. recession could send demand for
electronics products into a decline, especially if economic troubles spread
to other countries.
Gartner's inventory report highlights potential problems in the chip industry.
Rising inventories are a sign orders are falling or being cancelled, and that
chip makers need to slow production to stave off a glut.
Chip makers should reduce inventories as a cautionary measure against further
troubling economic and financial news, Gartner said. The company expects its
inventory index to remain in the "caution zone" in the first quarter
of this year and possibly the second quarter, according to Gerald Van Hoy, analyst
at Gartner, in the company's Semiconductor DQ Monday Report.
IDG News Service
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