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Paranoia or good business practice

A fair range of electronic components are now in short supply as the semiconductor industry struggles to meet demand.

Industry watcher Malcolm Penn points the finger at semiconductor executives and their 'superficial balance sheet engineering'. Traditionally, the semiconductor industry has invested 16.75% of revenues in new capacity. Since the beginning of 2008, that figure has been substantially less and Penns says today's capacity problems are unlikely to be alleviated until 2012.

Continuing problems with the global economy means many companies - not just those in the semiconductor world - are only taking short term decisions. But it can take up to two years to get new capacity online, so the semiconductor industry needs to take long term decisions today. And it seems there is a great reluctance to do so.

Paranoia or good business practice? You decide.

Graham Pitcher

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