March 21, 2005

Are semiconductor companies guilty of 'channel stuffing'?

Author: Melanie Hollands

I have my suspicions about channel stuffing by some of the larger
technology vendors; which doesnât come as a surprise considering the
excess inventory downstream in semiconductor components. (This column
Melanie Hollands

began writing about the growing chip inventory and its likely
repercussions
on Sept. 3, 2004.)
Notice that after all the vendors made the top-line (i.e., revenue)
numbers in recent quarters the distribution partners all guided
slightly lower for future quarter top-lines. Incentives seem to be
popular to stimulate sales.

Channel stuffing is essentially a sarcastic term that can be used after
the fact when re-stocking of shelves occurs ahead of a slow-down in
sell-through. I've spoken with 12 vendors in the past three days and
the general, collective takeaway: Everyone is doing everything they can
to push product through the channel. This would seem to go hand-in-hand
with the top-line (i.e., revenue) guide-down that distributors gave in
earlier weeks.

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