The chip delivery times were cut by eight days in Decemberthe largest monthly reduction since at least 2017, showing how quickly the shortages recently plaguing the industry are disappearing.
Lead time, the gap between when a semiconductor is ordered and when it is delivered, averaged about 24 weeks in the period, according to research by Susquehanna Financial Group. The delivery times are now three weeks below all-time highs established last May, and the reduction in average wait is accelerating.
The latest survey shows that many more electronics manufacturers are focused on reducing their unused stock and are less concerned with getting enough supply. That’s a reversal of the trend of the last three years, when shortages caused throughout the economy.
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“Delivery times are now well below their cycle highs, as the worst of the supply shock is behind us”analyst Christopher Rolland wrote in a research note. “All product category lead times were shortened this month.”
Many of the companies in the $580 billion semiconductor industry have told investors they expect revenue to fall as the economy weakens and consumers put off buying. So far, the biggest declines have been in personal computers and smartphones.
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Infineon Technologies AG, a major supplier of semiconductors used by automakers, cut its lead times by 23 days, according to Susquehanna. Texas Instruments Inc., which has the largest customer list in the industry, cut its lead time by four weeks, while Microchip Technology Inc. cut it by 24 days, according to the report.
While the resulting indicators are negative for corporate earnings growth in the near term, investors looking to anticipate a return to growth may have already decided that the market has bottomed out.
he Philadelphia Stock Exchange Semiconductor Index is up more than 10% this yearafter losing more than a third of its value in 2022.
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