¡§Excess semiconductor inventory in the electronics supply chain remained in negative territory in the fourth quarter of 2005, with stockpiles coming up short by a total of $726 million during the period,¡¨ said iSuppli Corp. analyst Rosemary Farrell in a statement. ¡§Exceptionally strong seasonal sales in the final quarter of 2005 left the semiconductor supply chain underweight.¡¨

iSuppli previously expected semiconductor stockpiles to be only $300 million short of the optimal level in the fourth quarter. In other words, semiconductor inventories are $400 million short of minimum target levels in the first quarter, according to iSuppli.

Days of inventory (DOI) at semiconductor suppliers remain higher than target levels. Preliminary estimates indicate that the chip suppliers this month are holding DOI amounting to 3.5 days more than target levels, down slightly from the 3.7 days reported in February.

¡§However, semiconductor suppliers typically increase DOI in the first quarter compared to fourth-quarter levels,¡¨ according to the research firm. ¡§Despite the replenishment of inventory coffers at chip customers, suppliers will edge up their inventory on hand as well. But due to their cautious approach, suppliers are on track to add only slightly more than one extra day of inventory during the quarter.¡¨

By: DocMemory
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