Excess semiconductor inventories in the global electronics supply chain declined to $2.5 billion in the first quarter, down 10.7% from the fourth quarter, the firm says. Surplus inventory in the first quarter was down by 40.5% compared to $4.2 billion in the third quarter 2006. Suppliers reportedly are carrying the bulk of the excess chip inventory in the supply chain. As a group, they ended the first quarter holding more than one week’s worth of excess supply. Elevated inventory also lingered at EMS providers and at some OEMs. To rebalance elevated stockpiles in the supply chain, distributors and OEMs delayed shipments in the first quarter, causing their inventories to decline. An upward trend in purchasing on top of the reductions at the end of 2006 helped reduce inventory levels in the first quarter to a larger degree than expected. The reduction exceeded iSuppli’s previous forecast of a decline to $3.2 billion in surplus semiconductor stockpiles in the first quarter of 2007.

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