Las Vegas, Nov. 12 -- The mood was cautious among the 40 companies that presented at Deutsche Bank's annual semiconductor conference in Las Vegas over the past two days.

 

Among a generally subdued mood, most companies view the current soft patch as only a mid-cycle correction resulting from an inventory hiccup. Positive anecdotes came from Xilinx, suggesting that its business in China has improved over the past month, and Micrel, whose POS from distribution in October was flat to up month-on-month.  On the other hand, National Semiconductor and Atmel were cautious (Atmel has not seen a pickup in Q4 orders).

 

Avnet senior VP and CFO Ray Sadowski fielded several questions after his presentation, mostly on inventory. After seeing inventory increase 12% over the past two quarters (while sales fell 1%), the company plans to reduce inventory over the next several months. Sadowski seemed confident that fundamentals would improve by the March or June quarter.

 

According to DB, distribution industry fundamentals will likely deteriorate in the near-term. Slowing end-market demand, deteriorating commodity prices and more aggressive pricing among distributors will make it difficult for companies to demonstrate even modest margin expansion over the next six to 12 months. 

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