Rising Inventory Levels a Concern for Semiconductor Industry
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NEW YORK, NY -- (Marketwire) -- 01/30/13 -- In a recent market brief, IHS iSuppli Semiconductor Inventory Insider said that semiconductor revenue is expected to decline in the first quarter of 2013 as chip inventory held by semiconductor suppliers rose to record high levels at the end of last year. The report comes a few days after chipmaker Intel Corp. gave weaker-than-expected revenue outlook for the first quarter. However, not all companies in semiconductor-integrated circuits industry are struggling as highlighted by QLogic Corp.'s third quarter results that exceeded expectations.
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In a recent market brief, IHS iSuppli Semiconductor Inventory Insider said that semiconductor revenue is expected to decline in the first quarter of 2013 as chip inventory held by semiconductor suppliers rose to record high levels at the end of last year. The report comes a few days after chipmaker Intel Corp. gave weaker-than-expected revenue outlook for the first quarter. However, not all companies in semiconductor-integrated circuits industry are struggling as highlighted by QLogic Corp.'s third quarter results that exceeded expectations.
IHS iSuppli Semiconductor Inventory Insider said in its report that inventory rose to exceedingly high levels by the end of the third quarter of 2012. As a result, overall semiconductor revenue is forecast to fall 3% in the first quarter of 2013.
The reason for rising inventory levels of course is weakness in the PC market. PC demand has been negatively impacted by the shift to mobile computing. This has hurt companies such as Intel and Advanced Micro Devices. The demand for PCs has also been negatively impacted by weakness in the global economy.
IHS iSuppli noted in its market brief that demand for semiconductor devices has typically come from new products that consumers feel compelled to purchase, however, going into the holiday season at the end of last year, no such new products generated enough momentum to overcome consumers' concerns over the economy.
Recently, Intel also gave a weaker-than-expected revenue outlook for its first quarter as the company continues to struggle with falling sales of personal computer and a shift to tablets and smartphones. For the first quarter of 2013, Intel expects revenue to be between $12.2 billion and $13.2 billion. The company forecasts gross margin to be between 56% and 60%.
For the fourth quarter of 2012, Intel reported revenue of $13.5 billion, down from $13.9 billion reported for the same period in the previous year. The company reported net income of $2.5 billion, or $0.48 per share for the fourth quarter. The company's PC Client Group revenue for the fourth quarter was $8.5 billion, down 1.5% on a sequential basis and 6% on a year-over-year basis.
Intel President and CEO Paul Otellini said that the fourth quarter played out largely as expected as the company continued to execute through a challenging environment. Otellini noted that the company made tremendous progress across business in 2012 as it entered the market for smartphones and tablets, worked with its partners to re-invent the PC and drove continued innovation and growth in the data center.
While Intel has been struggling due to the shift from PCs to mobile, not all companies in the semiconductor-integrated circuits industry are having a difficult time. Recently, QLogic reported its third quarter ended December 30, 2012 financial results, posting net revenue of $119.4 million. Simon Biddiscombe, President and CEO of QLogic, said that during the December quarter, the company delivered financial results that exceeded its expectations.
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