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IC shortages seen, but inventories grow

April 01, 2010 // Mark LaPedus, EE

IC shortages seen, but inventories grow

The IC industry is recovering, but there are also signs of growing chip inventories in the channels. VLSI Research Inc. said IC inventories reached $24.38 billion worldwide in February, a 46 percent increase from the same month in 2009.

''They are close to passing the peak set in October of 2008,'' said G.
Dan Hutcheson, CEO of VLSI, in a report . ''While alarming, VLSI does
say that current inventory-to-billings ratios are within healthy

On the other hand, there are also widespread reports of select
component shortages in the supply chain. Analog, dicretes and memories
are in tight supply.

Last week, memory was ''red hot as shortages continued to drive spot
prices through the roof. DRAM in particular, was on fire. Spot prices
for legacy parts soared by more than 20 percent amid fears that supply
will remain tight due to lack of capacity. NAND flash also had a strong
week thanks to improving demand. The good news was that MPU prices
finished the week flat, following three consecutive weeks of
declines,'' according to VLSI.

''Wafer production capacity is overheating the market and
leading to double booking,'' Hutcheson said. ''This is being compounded
by the fact that chip makers have failed to invest enough to keep
yields high as they introduce new designs based on smaller

February chip factory utilization levels were 93 percent for
the front end, 95 percent for test, and 94 percent for assembly,
according to the firm.

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