Semiconductor Fundamentals Should Bottom Soon - We Hope

As we anticipated, the latest semiconductor sales report suggests that supply and demand imbalances will no longer worsen, as it now seems likely that within a month or two orders for new semiconductor equipment will cease growing faster than can be supported by end demand. A few months after that, the inventory problem should start to clear up.

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That is, of course, assuming end demand stays strong. Semiconductor Industry Association President George Scalise issued some unusual cautionary words:

Scalise noted that as individual consumers drive an increasing proportion of worldwide semiconductor sales, the industry is more susceptible to fluctuations in overall economic conditions. “There are signs of slower overall economic growth and a slowing economy could impact sales of semiconductors in the coming months,” Scalise said.

Usually Scalise is (from our perspective) hopelessly upbeat. We have thrown water on his comments before. So we aren’t quite sure to make of his sudden case of the willies. It could be a contrary indicator and mean things are finally turning around. Or he could be as upbeat as normal, which would mean things are really bad.