LOS ANGELES – Industry analysts this week are providing disparate views on the current state of chip inventory.

According to Deutsche Bank analyst Sherri Scribner, component constraints, which have nagged ESC companies throughout much of 2010, were seldom mentioned on fourth-quarter calls, as the supply chain continued to normalize.

Throughout the December quarter, lead times eased and component availability improved, especially beneficial for electronics manufacturing services providers, she says.

Due in part to an improving supply chain, ESC companies also were more measured with inventory increases in the fourth-quarter. On average, inventory grew 3% sequentially, versus 10% between the second and third quarter.

A number of ESC companies reduced inventory during the quarter (mostly EMS providers), and those companies that built inventory often did so for reasons other than a constrained supply chain, such as opportunistic purchases or ramping programs, says Scribner.

On the flip side, Daniel Yodaiken, managing director of distributor Cyclops Electronics, says many vendors are raising prices, suggesting tight inventories.

Several manufacturers have said they will increase prices starting Apr. 1, as a result of increased raw material costs globally. Purchasing components before then will help lead times before allocation and shortages hit the electronic component market unexpectedly, which is currently unpredictable, he wrote in his blog.

Finally, IHS iSuppli this week warned worldwide semiconductor inventories are at their highest level in about two-and-a-half years. The high inventories will become a big concern if chip sales growth slows down, the firm says.

“If growth is lower, the high inventories could cause oversupply in the market, causing chip prices to decline faster than normal,” says the firm’s Sharon Stiefel.

IHS iSuppli predicts chip industry revenue will grow 5.6% this year. Last year, chip revenue grew 31.8% as companies rebuilt inventories decimated by global economic turbulence in 2009, and as consumers snapped up more smartphones, tablets and other gadgets.

Since companies have borrowed much money to build factories, they have to sell as many chips as possible so they can repay loans, the firm says.

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