The semiconductor supply chain found some breathing room in Q2 2009. Increased revenues were a reprieve from the relentless macroeconomic pressures of the past nine months. Companies ramped utilization rates, grew revenues and salvaged valuable points of gross margin. 

Semiconductor supplier inventory levels shrunk 4% in Q2, the fourth consecutive quarterly decline in inventory values. This effort, combined with distribution reducing 9% of inventory, further cleared the channel and should encourage utilization and gross margin growth in Q3 2009.

In Q2 2009, Inventory values fell 4% among semiconductor suppliers, 8% among handset OEMs, and grew 8% among PC OEMs. At the same time, revenues grew 14% for semi suppliers and handset OEMs, and fell 7% at PC OEMs.

After largely under shipping demand in Q2 (broadly speaking), inventories will reach equilibrium in Q3 2009, and likely remain at or near equilibrium through the end of the year. Further, iSuppli expects ASPs to be flat at both the component and system level.
Product redesigns - necessary to meet new lowered price points at retail – will continue, and will result in notable share shifts.