IHS ISSUES GLOBAL SEMICONDUCTOR INVENTORIES REPORT

(The following is a reformatted version of a press release
issued by IHS iSuppli and received via electronic mail. The
release was confirmed by the sender.) 
Intel Leads Unexpectedly Large Decline in Semiconductor Market
Inventory in Q4 
El Segundo, Calif. (March 13, 2013)--After reaching a worrisome
high in the third quarter of 2012, global semiconductor
inventories held by chip suppliers fell at a surprisingly fast
rate in the fourth quarter, led by dramatic reductions for
market leader Intel Corp. 
Days of Inventory (DOI) for semiconductor suppliers in the
fourth quarter declined by 5 percent compared to the third
quarter--higher than the 1.5 percent initially forecast,
according to an IHS iSuppli Supply Chain Inventory Market Brief
from information and analytics provider IHS. Meanwhile,
inventory value in dollar terms fell almost 5 percent--larger
than the originally projected 3 percent. 
“Semiconductor companies reduced their inventories at a faster-than-expected rate in the fourth quarter as they moved to adjust
to weakening demand,” said Sharon Stiefel, analyst for
semiconductor market intelligence at IHS. “Many chip suppliers
demonstrated great agility in their reactions to the drop in
demand. No. 1 semiconductor supplier Intel Corp. was the most
aggressive, cutting its stockpiles by more than half a billion
dollars--the largest decrease on a dollar basis of any
chipmaker.” 
Cutting inventories down to size 
Among semiconductor suppliers that reduced their inventory
levels between the third and fourth quarters last year, the
percentage of decrease ranged from 5 percent to 25 percent,
resulting in chip stockpile value of $60 million to nearly $600
million being shaved off in the companies affected, as shown in
the attached table. 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 the table and numbers cited in this release, memory suppliers
are excluded from DOI and inventory value calculations because
they report results much later than any other group in the
semiconductor supply chain. 
The rest of the companies covered effectively straddle the
breadth of the semiconductor chain, including those engaged in
the wireless, automotive, data processing and industrial
segments. 
Intel leads inventory liquidation 
The largest decrease in inventory value during the fourth
quarter belonged to Intel, down $585 million from the third
quarter, representing an 11 percent reduction. The company made
aggressive moves to cut stockpiles. It also reduced production
as it migrated to a new process technology: 14-nanometer
lithography. 
AMD and STMicroelectronics also experienced large inventory
declines of $182 million and $131 million, respectively, or 25
percent and 9 percent. In the case of AMD, inventory shrank for
its microprocessors as a result of an amended wafer supply
agreement with GlobalFoundries for reduced stockpiles. For its
part, STMicroelectronics cut utilization rates after exiting its
money-losing joint venture with Ericsson. 
Two other chip suppliers had notable inventory drawdowns: Texas
Instruments, down $91 million or 5 percent, due to weak end-market demand for its chips; and ON Semiconductor, down $63
million or 10 percent, as it burned bridge inventory and coped
with reduced revenue. 
Among inventory gainers, most faulted low seasonality and an
uncertain global economy for a rise in chip stockpiles.
Companies in this group included MediaTek, up $58 million or 14
percent; NXP Semiconductors, up $44 million or 7 percent; and
Infineon Technologies, up $43 million or 6 percent. 
Qualcomm bucks the trend 
The one exception among gainers that could boast of a strong
performance that was linked to an increase in chip inventory
levels was Qualcomm, up $247 million or 24 percent. Given the
strong market acceptance of its wireless chips in products like
the Apple iPhone and iPad, Qualcomm is ramping up production and
inventories in order to meet demand. 
Semiconductor suppliers will be positioning their inventories in
the first quarter this year to prepare for anticipated demand.
Inventories are expected to rise in response to slightly
positive global economic indicators as well as favorable
semiconductor and end-equipment forecasts--unless major swings
occur once more from the larger suppliers that could then end up
skewing the industry. 
For more information, please contact: 
Jonathan Cassell
Senior Manager, Editorial
jonathan.cassell@ihs.com
Direct: + 1 408 654 1714
Mobile: + 408 921 3754 
Or 
IHS Media Relations
press@ihs.com
+1 303 305 8021 
(bjh) NY 
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