Inventories are turning red, casting a pall over the industry

Andrea Lati

• Order activity for semiconductor equipment extended its decline, slipping one point to 81 degrees in the second week of September
• Memory led the decline as order activity slipped to 69 degrees, which is in contraction territory
• The other largest segments, SOC Mobile and SOC Compute, held their ground at a warm 89 degrees keeping the overall order activity in positive territory
• The August data from the Taiwanese manufacturers were in line with our expectations
• It continued to show a bifurcating market environment—much like the order activity
  • TSMC had a monster August with sales soaring to an all-time high
  • While these record numbers are great for TSMC, they’re likely to fuel more excess inventories in the supply chain
• Subcons had a strong August with sales jumping 25% from a year ago, the same rate as the previous month
• On the Memory front, Nanya had an ugly month
• On the Fabless side, MediaTek sales continued to slow, increasing only 4% on yearly basis
• TechInsights’ Chip Price Performance Index pulled out of the dive
  • DRAM fell
  • NAND slipped
  • MPUs declined
• Inventories continue to build up