A Sad Cure for Inventory Glut?

If there is a silver lining from last week’s devastating earthquake in Japan, it could be that component inventories will be dwindled, thus relieving the industry of a possible oversupply problem.

Many chipmakers and others are saying the quake will hurt their ability to produce and supply parts for one to two quarters. TI, Freescale and Toshiba are among those who have closed or reduced production at their Japanese factories.

Research firm iSuppli of late has been warning of possible overinventory situation, and no one needs reminding of the pain involved to drain an oversupply glut. As of Dec. 31, semiconductor suppliers held 83.6 days worth of inventory (DOI), up 5.5 days sequentially. The last time the DOI was this high was June 30, 2008, or just before the last semiconductor downturn, iSuppli says.

It’s just possible, however, that the forced shutdowns could ease some pricing pressure and concerns for a correction as assemblers burn through existing inventories.

This much is clear: spot prices for memory and certain other parts are bound to rise in the near-term. If Japan can’t bring its factories back online soon, they may even stay there.



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About Mike

Mike Buetow is president of the Printed Circuit Engineering Association (pcea.net). He previously was editor-in-chief of Circuits Assembly magazine, the leading publication for electronics manufacturing, and PCD&F, the leading publication for printed circuit design and fabrication. He spent 21 years as vice president and editorial director of UP Media Group, for which he oversaw all editorial and production aspects. He has more than 30 years' experience in the electronics industry, including six years at IPC, an electronics trade association, at which he was a technical projects manager and communications director. He has also held editorial positions at SMT Magazine, community newspapers and in book publishing. He is a graduate of the University of Illinois. Follow Mike on Twitter: @mikebuetow