Intel and pals shrink their semis by $600m as demand droops

PC processor stocks cut, 4G mobile chips soar


Semiconductor factories hit the brakes to avoid heaps of unwanted chips piling up after demand for components shrank.

Bean counter iSuppli reckons the major manufacturers acted swiftly to prevent expensive backlogs of baked silicon forming: the average number of days between producing inventory and selling it declined five per cent. The value of the inventory piles also fell five per cent, or $600m, from Q3 to Q4 of 2012, we're told.

"Semiconductor companies reduced their inventories at a faster-than-expected rate in the fourth quarter as they moved to adjust to weakening demand," said iSuppli analyst Sharon Stiefel.

Intel was the biggest slasher in the final three months of last year, according to iSuppli: it held $585m fewer chips in Q4 than in the previous quarter, a drop of eleven per cent sequentially. It cut stockpiles and reduced output as it shifted to crafting chips with a 14nm process size, a mind-bending complex job compared to previous processor generations.

The drop in stock held by Intel follows a slowdown in Intel-compatible consumer PCs sales that caught out the global supply chain and forced many major vendors to write down ageing kit. Demand for Windows 8 hardware barely outstripped supply.

The rest of the semiconductor market followed suit in Q4 of 2012: AMD's chip stocks dropped by $182m in consecutive quarters. STMicroelectronics, Texas Instruments and On Semiconductor also recorded steep declines in inventory, down $131m, $91m and $63m respectively.

One tech giant that bucked the trend was Qualcomm - its 4G mobile broadband chips are used in Apple iPhones and iPad and many other applications. Qualcomm's inventory pile went up $247m, or 24 per cent, on the previous quarter. iSuppli expects a slight upward swing in output across the board in Q1 of 2013 in "response to slightly positive global economic indicators as well as favourable semiconductor and end-equipment forecasts". ®


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