EL SEGUNDO, CA -- Semiconductor suppliers' stockpiles rose in the second quarter to their highest point since early 2008, research firm IHS iSuppli said.

As of June 30, global supplier semiconductor levels, measured in days of inventory, were 83.4, up 3.5 days sequentially. The previous recent record was 83.1 DOI the first quarter 2008.

Inventories were up 11% over the historical seasonal average for the period, and close to the 11.1% mark of the first quarter 2008, right at the start of a two-year downturn in the semiconductor industry, IHS noted.

“For the semiconductor industry, wading into such potentially troubling territory — reminiscent of the dark days leading into the recession — could herald the beginning of a critical inventory adjustment period,” said Sharon Stiefel, semiconductor analyst at IHS. “The correction is likely to take place during the next few quarters and will not be completed until mid 2012. As such, it will involve suppliers making a prolonged reduction in their inventory levels to avoid dangerous oversupply situations.”

The firm lowered its third-quarter semiconductor revenue outlook due to concerns over the slowing larger economy. IHS' latest semiconductor revenue forecast calls for 2.9% growth in 2011, down from the 4.6% projected in August. Last year, revenue rose 32.4%.

The good news, tepid as it is, is that DOI are forecast to drop by more than 2% in the third quarter to 81.3 days. IHS also notes suppliers have reduced capacity utilization to cope with downsized markets. The firm forecasts 4.8% sequential growth for the industry in the quarter.

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