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Semiconductor industry in trouble



Gartner warns of problems this quarter
Beancounters at analyst outfit Gartner have warned that semiconductor inventory levels will reach worrisome levels in the third quarter The problem is that consumer and business spending will be weaker than expected and the industry will start correcting its inventory.

Gartner analyst Gerald Van Hoy said in a statement that the the semiconductor industry entered the third quarter of 2011 with moderately high levels of inventory.

“Current levels are too high given the weakening economic sentiment, and the industry must rein in production growth and take action to reduce accumulated inventory. We expect that these actions will occur during the next few quarters with production and sell-through expected to return roughly to balance by the second quarter of 2012.”

Gartner notes that the excess inventory comes at a time when average selling prices are tracking below trend levels, with foundries seeing over capacity.
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