'Semicon suppliers predict high demand'

SAN FRANCISCO, USA: Anticipating higher demand from customers, semiconductor suppliers have increased their inventories for the second quarter in the first quarter itself, says a report by market research firm HIS iSuppli.

As per the findings of the report, Total chip inventory as a percentage of suppliers' revenue amounted to 50 per cent in the first quarter, up from 47.8 per cent in the fourth quarter of 2011 and from 46.1 per cent in the third quarter of 2011.

In the last two quarters, the inventory increased but there was a great difference between the increases and the implications for the market.

Sharon Stiefel, semiconductor inventory analyst at IHS said, "In the fourth quarter, inventory rose among suppliers because of uncertain macroeconomic conditions such as the sovereign debt crisis in Europe, leading to an overall decline in the worldwide demand for semiconductors.”

As per Stiefel, chip suppliers inventories rose in the fourth quarter of 2011 but customer’s chip stockpiles declined, indicating that the demand was low. Due to the higher inventory among chip suppliers in the first quarter, a better demand is expected to come. "There was an increasing level of inventory both among chip suppliers and customers, indicating that both the supply and demand sides of the business believe that the environment in the electronics market has turned positive," Stiefel said.

Even if the market conditions are improving, there are still some problems in the memory segment. The market research firm outlined that, memory chip vendors have responded to increased demand by bringing more capacity online. Another area od concern as per IHS is  the analog chip market which is highly exposed to markets like industrial communications infrastructure that tend to rebound from cyclical downturns.