AUGUST 14--After three more months of intense focus on inventory levels throughout the electronics industry, the supply chain is still awash with more than $8 billion in excess inventory, average selling prices are continuing to drop, and fab utilization continues to decrease, according to the latest iSuppli Market Intelligence Report--"Semiconductor Inventory Tracker Q3 2001--The Bottom Line: There's Improvement but Its Slower than Expected," by Greg Sheppard, iSuppli Corp. (El Segundo, CA) vice president for market intelligence services. The report is available on the Web: www.isuppli.com/reports.

"We are revising our forecast for worldwide semiconductor revenue this year downward to $147 billion--an annual decline of 28%," Sheppard said. "We see the market decline hitting bottom in the third quarter, with a further 2% downward move for revenues from the previous period and revenue growth up 4% from this low level in the last quarter of the year, thanks largely to a traditional seasonal boost from consumer purchases toward the end of the year. The reason for this gloomy forecast is quite clear--$8 billion in excess inventories continue to put a damper on unit ordering and prices," Sheppard continued.

"We expect commodity semiconductor prices to hit bottom this quarter or next and linger there until the spring of next year," Sheppard observed. "Component buyers should begin locking in long-term price contracts by the end of the year to take full advantage of the underlying glut of inventory and foundry capacity that is driving this trend."

Tue Aug 14 10:07:00 CDT 2001