SAN FRANCISCO, Aug. 18 -- Cautious forecasts and rising inventories at blue-chip electronics OEMs are reinforcing analyst views that the tech cycle growth is slowing.

In its weekly EMS Edge newsletter, Deutsche Bank said, "Although anecdotes from Dell, Cisco and Hewlett-Packard were not entirely consistent, commentary regarding near-term demand was relatively cautious in aggregate."

Furthermore, recent news from major Asian ODMs has been concerning. "Venture, Hon Hai and Compal all reported softer near-term sales, suggesting production trends are decelerating," wrote Chris Whitmore, an analyst in DB's equity research group. Hon Hai and Compal both reported growth but results fell below earlier guidance. Venture's second-quarter sales dropped 2% sequentially.

Cisco also guided for lower sequential growth and HP said demand slowed in July. Plus, both HP and Cisco reported lower inventory turns and higher inventories during the quarter.

"We remain concerned that the combination of growing inventories across the supply chain and slowing end-market growth will pressure earnings growth" for EMS firms, DB said. The firm believes growth rates peaked in the second and third quarters, and "the recent inventory build will result in disappointing second half 2004 and 2005 build rates for the EMS industry."