History has a way of repeating itself in the semiconductor industry.
AP
Silicone Chip
And it's happening again with bloated chip inventories.
So far this earnings season the I-word has been mentioned by a number of suppliers of communications chips:
PMC Sierra discussed "inventory digestion" in part of its supply channel.
LSI said it was seeing "inventory adjustments from several customers."
And NetLogic said that it saw "Cisco's contract manufacturers work down some inventory."
Those are just a few examples—and it's not just communications chip makers. As I pointed out in a piece yesterday, Macquarie analyst Shawn Webster put out a report saying that he believes there are "10 to 16 million excess processers out there somewhere."
Which gets us back to history. Industry analysts I talked with say this is what always happens when their are supply constraints as there were several quarters ago: Customers double and triple order to make sure they get supply.
Maxim Integrated Products CEO Tunc Doluca confirmed that in his company's earnings report when he said, "I'm pretty sure certain some amount of extra ordering that they're doing just to make sure they get their product."
Then there's this week's disaster du jour—Nvidia , which two quarters ago said it was leaving revenue on the table because it had more demand outstripped supply. Now the graphics chipmaker is warning business isn't what it used to be as supply outstrips demand.
My take: In chips, it appears to be back to the future, redux.
More from Herb Greenberg:
- What Earnings Are Saying About the Economy
- Medical Device Battle: Can St. Jude Bigfoot Volcano?
