Chip makers have released or will lead to oversupply in the second half

A number of chip makers have seen urgent orders emerge because customers want to ensure stable supply. The news from several fabless semiconductor suppliers, access providers, IDM plants and sealers all showed that orders have soared since the earthquake hit Japan. Obviously, chip makers are trying to hoard inventory because the turmoil at the supply side has affected the entire supply chain and impacted the production of end products.

The industry has always believed that the post-earthquake recovery will take a long time. There are other unpredictable factors in such negative situations as the supply of silicon wafers, T resins, capacitors/discrete components and optical films. Factors such as power supply stability, logistics, and human capital are the reasons for the slow recovery.

However, the slow recovery can be regarded as potentially good news, as inventory consumption will bring a new wave of inventory cover effect for the second half of 2011. If the impact of the earthquake disaster in Japan proves to be limited in the near future, the industry may be at risk--because the repetitive orders that may occur at the moment will be cancelled, and the oversupply will become a big problem in the second half of 2011.