14 DAY TRIAL // Likely not wanting to suffer anything along the lines of what oversupply did to the DRAM industry, chip manufacturers reduced their global inventories during the fourth quarter of 2012.
That means they cut production capacity and did not stockpile on processors to the same extent as they otherwise would have.
As such, the days of inventory (DOI) for semiconductor suppliers in the fourth quarter fell by 5% compared to the third quarter.
One might say that isn't so much, but they would be overlooking the initial forecast of a mere 1.5%. And with inventory value also dropping 5% in dollar terms (versus projected 3%), it all makes for a rather demoralizing picture.
And that was just an average. The percentage of decrease for semiconductor suppliers was of 25% in some cases.
Intel performed an 11% reduction, while AMD and STMicroelectronics experienced an inventory decline of 25% and 9%, respectively.
"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 was the most aggressive, cutting its stockpiles by more than half a billion dollars - the largest decrease on a dollar basis of any chipmaker."
Check out a table of the quarterly change in inventory levels on the left. As we said, Intel is first, AMD is second, STM is third, then Texas Instruments is on fourth place, followed by all the others.
The marketing changes are a direct result of weakening PC demand and overall decline of interest in traditional electronic devices. They are also a preventive measure, as IT players do their best to avoid suffering irreparable financial damage by losing grasp of the supply-demand balance.
