Third quarter chip inventories remain high

Semiconductor inventories remained high in the third quarter, according to market firm iSuppli. Inventories for global electronic companies, including AMD and Intel, are hovering at $3.9 billion dollars and could linger on until after the holiday season.

AMD and Intel are experiencing supply overages, despite a bevy of model processor models. ISuppli predicts that inventories should decrease early next year from users upgrading computers in anticipation of Windows Vista.

Companies have generally stockpiled inventory in anticipation of the Christmas shopping season, but having too much inventory generally becomes a financial burden. With new models, semiconductors stored in inventory become increasingly outdated and must be sold at a significant discount.

Much of the inventory comes from the second quarter when computer demand slowed. While general inventory remains high, CPU companies are seeing shortages of some low-end and high-end notebook processors.