Semi Inventory Pileup Still In Its Early Stages

by: William Trent, CFA

Semiconductor research firm iSuppli has said that third-quarter inventories remain high. According to Tom’s Hardware Guide:

Semiconductor inventories remained high in the third quarter, according to market firm iSuppli. Inventories for global electronic companies, including AMD (NASDAQ:AMD) and Intel (NASDAQ:INTC), are hovering at $3.9 billion dollars and could linger on until after the holiday season. AMD and Intel are experiencing supply overages, despite a bevy of model processor models. iSuppli predicts that inventories should decrease early next year from users upgrading computers in anticipation of Windows Vista.

The thing is, all of that excess manufacturing capacity we’ve been talking about is just now starting to get installed (we track growth in orders as a leading indicator). So far from remaining high - we think the pileup is in its early stages.