Chip Inventories Rising On Hopes of H2 Demand
The growth discussed herein doesn't reflect changes in the volatile DRAM market, and the general trend runs counter to what we've seen from the main computer OEMs. The likes of Dell and HP saw their inventories fall at the end of Q4 2010 and have replenished since. iSuppli predicts that demand will increase through the back half of 2011, as "Growth will be stimulated by market demand for popular consumer items like smartphones and tablets, as well as for perennial reliables such as PCs."
Despite early fears, it appears the Japanese earthquake of earlier this spring had a minimal impact on the semiconductor industry. IHS attributes this to the fact that manufacturer inventory levels were high enough to support production during the time it took to assess, repair, and/or outsource the production capacity that was initially disrupted. There's still some concern that wafer availability could be impacted, and there's the potential for spot supply issues; IHS notes it will continue to watch for such disruptions.
iSuppli's prediction of growing demand noted that "the U.S. housing sector as well as increased gasoline and food prices" were an exception to its positive economic forecast. Whether or not these elements will remain exceptions to a general trend is perhaps less certain than anyone would like. The recent US job report for the month of June was much more negative than Wall Street had hoped, and the US Congress continues to debate changes to the country's current debt ceiling as the default deadline moves closer.
No one is suggesting that a second major recession and/or economic crisis is looming around the corner, but the debt ceiling issue will play out in the same time frame as the traditional back-to-school season. It would scarcely be surprising if seasonal demand changes fell short of expected levels--which could, in turn, lead to a further rise in inventory levels. The traditional OEMs would be less hit by this, but a drop in demand for other devices--say, mobile phones--could leave that industry facing a rocky Q3/Q4.