LyrArc Article Gist
Mastercard estimates that sales of electronics goods fell by 26% year over year from the beggining of November to December 24, 2008. Inventories of televisions, personal computers, cell phones, and other products are pilig up. Market research firm iSuppli estimates industrywide chip inventories to jump to $10.2 billion at December 2008 end from $3.8 billion in September 2008. Sandisk will half production at 2 Japanese plants for 2 weeks, and this affects Micron and Hynix as well. iSuppli estimates that the television industry has about 8 weeks of inventory. although 4-5 weeks is more normal, and sales of popular LCD sets will decline in 2009. In personal computers desktops and noteboks sales are slowing as consumers are buying the new netbooks which are smaller and cheaper selling for $300. One analyst says anything with a ticket price over $250 is slowing down in sales. What this does is create situation for price cuts and lower profits for manufacturers. And in electronics products sitting in inventory can get obsolete quickly leading to large writedowns. Generally manufacturers would prefer to stop production rather than put clearance prices for unsold inventory. Hewlett Packard shut down production for an extended period over the holidays.