Excess semi inventories to surge end Q4 -iSuppli

TAIPEI, Dec 17 (Reuters) - Excess semiconductor inventories in the global electronics supply chain are likely to increase sharply through the end of the fourth quarter amid weaker sales of technology products, U.S. research firm iSuppli Corp said.

That promoted iSuppli to issue a so-called "red alert" to indicate its concern about future electronic industry production levels. It said higher stockpiles could delay the semiconductor market's recovery from the current downturn.

The value of excess semiconductor inventories is expected to balloon to $10.2 billion at the end of the fourth quarter from $3.8 billion at the end of the third quarter, iSuppli said in a statement on Tuesday.

"Production schedules have been ratcheted down during the quarter in what are mainly reactive moves, resulting in excess inventory build-up," Derek Lidow, iSuppli's president and chief executive officer, said in the statement.

iSuppli's methodology involves estimating the value of excess semiconductors throughout the electronics value chain, whether in component inventories, work in progress or as part of intermediate or finished products.

Some big semiconductor companies, including Taiwan's TSMC (2330.TW) and UMC (2303.TW), the world's two largest contract chip makers, have cut their fourth-quarter sales forecasts amid slower demand for PCs, mobile phones and flat-screen TVs.

Computer memory chip makers in Taiwan have also reduced production as they struggle with the sector's worst-ever downturn.

Last week, iSuppli forecast global spending on semiconductor manufacturing equipment would keep shrinking next year to the lowest level in six years. (US$1=T$32.7) (Reporting by Baker Li, Editing by Ken Wills)