Table: Where the Pileups Are
High-tech inventories shot up 30% in December, year-on-year. Toshiba, Matsushita Communications, TDK, and NEC have all issued profit warnings. Makers of high-end products such as flash chips used in cell phones are weathering the storm; manufacturers of low-cost hard-disk drives and memory chips are hurting.
Information technology inventories (excluding PCs) jumped 50%, year-on-year, in December. Makers of memory chips, printed circuit boards, liquid-crystal display panels, and other computer-related products are the hardest hit. With two of the world's three largest memory-chip makers based in Korea, plunging chip prices will shave billions off the country's trade surplus.
Shipments of made-to-order chip wafers have fallen 30%, year-on-year, swelling inventories. Contract manufacturers' average factory utilization has dropped from 100% last year to 70%. IT-related revenues are expected to slide 25% by March. However, PC makers could benefit if cost-conscious U.S. companies outsource more manufacturing.