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2013: Gloomy year for chip, electronics markets

22 Mar 2013  | Brian Fuller

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How is the electronics supply chain going to fare this year?

As 1Q13 comes to an end, we are seeing seasonal drop-off that seems a little more extreme than usual, according to some sources. And we're hearing mixed messages about the months ahead.

Here's what we know so far.

As the Q4 numbers get rolled up, Sharon Stiefel at IHS iSuppli reports, "Among semiconductor suppliers that experienced lower inventory levels between the third and fourth quarters last year, the percentage of decrease ranged from 5 per cent to 25 per cent, resulting in chip stockpile value of $60 million to nearly $600 million being shaved off in the companies affected And while inventory climbed in some companies during the same period, the spread was smaller, with the value of the increase worth slightly north of $40 million to approximately $250 million."

In addition, days of inventory (DOI) for semiconductor suppliers declined 5 per cent—higher than the 1.5 per cent initially forecast, Stiefel noted. Inventory value in dollar terms fell more than 10 percent — much larger than the originally projected 3 per cent.

That downturn came after what Stiefel called "alarmingly high" levels of inventory in quarter three.

Semiconductor and electronics demand is forecast to be modest in 2013, but signs are mixed early in the year over whether that will be the case.

For Q4, Intel led the drop-off, down $585 million, or 11 per cent from the third quarter, as it "deployed aggressive tactics and redirected both space and equipment to 14nm lithography," Stiefel said.

Other semiconductor vendors who slipped quarter-on-quarter:

  • AMD (-$182 million or 25 per cent)
  • STMicro (-$131 million or 9 per cent)
  • Texas Instruments (-$91 million or 5 per cent)
  • ON Semiconductor (-$63 million or 10 per cent)

Gainers for the period included:

  • Qualcomm (+$247 million or 24 per cent)
  • MediaTek (+$58 million or 14 per cent)
  • NXP Semiconductors (+$44 million or 7 per cent)
  • Infineon Technologies (+$43 million or 6 per cent)
    • Dylan McGrath at EE Times reported that the world's top PC market, China, is experiencing lackluster demand, which is taking down PC forecasts.

      Avnet's monthly "Market and Technology Trends" report for February suggests nearly across-the-board pricing stability for components and reasonable lead times, with the exception of ceramic disc capacitors, which are experiencing lead times of up to 54 weeks due to capacity constraints.

      Even so, Stiefel's IHS iSuppli colleague Len Jelinek sees modest growth for semiconductors, up 6.4 percent this year to $322.30 billion. According to Jelinek, "Revenue last year had fallen to $303.02 billion, down from $310.21 billion in 2011. The projected revenue growth this year tracks with an expected 4.6 percent increase in silicon demand to shipments of 9.55 billion square inches, compared to 9.12 billion square inches last year and 9.16 billion square inches in 2011."

      - Brian Fuller

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