Strong demand for power management ICs in the first half of 2010 has caught suppliers off-guard, spurring shortages and causing pricing to rise in the near term, according to iSuppli.
Suppliers now are suffering from a shortage of power semiconductors, mainly because a recovery in demand—which started in the fourth of quarter of last year—has proven to be of a greater magnitude than current operational capacity can handle, according to iSuppli, even with the rehiring of workers and the reopening of fab lines, suppliers have been caught off-guard by the resurgent demand and are unable to keep up.
Furthermore, inventory levels at distributors decreased by 1.5 days in the fourth quarter of 2009 amid strong sales—a development that induced even more demand, especially for the analog and discrete components of the market that already were in a state of shortage. The decline in inventory not only will contribute to big delays at the back end, particularly for analog suppliers, but also will serve to increase pricing, iSuppli believes.
And while prices are expected to stabilise in the second half of 2010, the shortage of commodity devices is likely to drive up ASPs in the first half, affecting buyers in the short term.
Revenue for power management semiconductors reached $6.9bn in Q1 2010, up 2.9% from $6.7bn in Q409.
Sequential growth in the first quarter is remarkable given that it is weakest period of the year for sales of semiconductors. The growth of the first quarter reflects a continuation of the expansion that started during the last three months of 2009, after the market stalled briefly in the third quarter of last year.
Growth is expected to continue in the second quarter this year, when revenue is set to rise another 7.2% to hit $7.4bn. And although a bigger upward movement occurred during the same time last year—when power management ascended 18.2% from $4.4bn to $5.2bn – Q2 2010 will deliver the most robust growth for the industry this year.
"The expansion in the first quarter of 2010 took place because of the industry’s move to fulfill order backlogs and to satisfy limited demand, both of which shrank in the wake of the economic slowdown last year," says Marijana Vukicevic, principal analyst for power management, "in contrast, growth in the second quarter will be fueled by increased activity in a number of areas utilizing power management semiconductors, including consumer electronics, wireless communications and data processing.