No double ordering in the semiconductor industry | Electronics Advocate

No double ordering in the semiconductor industry

Wednesday, October 28, 2009
By Gina Roos

El Segundo, Calif. — There is no indication that chip purchasers are double booking orders despite fears that they are inflating semiconductor purchases in order to guarantee adequate supplies, reports iSuppli Corp.

This situation can occur when electronics demand rises while inventories are low, which artificially boosts sales totals that later result in a sales let downturn as orders are cancelled or scaled back, said iSuppli.

However, this doesn’t appear to be the case in late 2009, according to Carlo Ciriello, analyst, financial services, for iSuppli.

In their earnings announcements, leading semiconductor suppliers, including Texas Instruments, STMicroelectronics and Intersil, all reported they saw no signs of double-booking during the third quarter, said Ciriello. “This should give the semiconductor industry confidence that the magnitude of the current recovery accurately reflects real demand levels.”

The lack of double ordering comes amid other encouraging news for the global semiconductor industry. Global chip revenue amounted to $58.3 billion in the third quarter, up 10.6 percent from $52.8 billion in the second quarter, based on iSuppli’s preliminary forecast.

In addition, worldwide semiconductor inventories have been declining; global chip stockpiles fell 2.3 percent in the third quarter compared to the second in terms of revenue, according to iSuppli.

Ciriello says these positive factors point to continued strength in the fourth quarter and a return to annual revenue growth in 2010.

Worldwide semiconductor revenue is set to rise by 3.5 percent sequentially in the fourth quarter. However, on a year-over-year basis, revenue is expected to rise by 10.6 percent in the fourth quarter of 2009. iSuppli says the fourth quarter will mark the first quarter in 2009 that revenue has risen compared to the same period a year earlier.

Global semiconductor revenue is set to rise by 13.8 percent in 2010, following a 16.5 percent contraction in 2009, according to iSuppli’s latest research.

iSuppli’s new report, 10 Segment Q3 and Q4 Inventory Forecast, provides additional information about the electronics market and semiconductor inventories in the third and fourth quarters of 2009.

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