China's electronics market is expected to improve in the last quarter of this year as apparently solid demand helps resolve the oversupply problems which depressed chip sales since the second quarter, a research house announced.
"Inventory woes may impact on the semiconductor sector in the third quarter, but the end-of-year outlook seems sunnier," Byron Wu, a senior China analyst with iSuppli Corp, said in a market-watch report released on Monday. iSuppli is based in El Segundo, California.
The recent increase in inventory levels, which was caused by a decline in semiconductor sales in China and overly optimistic suppliers, is expected to be resolved by the beginning of the fourth quarter, Wu said.
The research company projected earlier this year that China's total revenue from the electronics sector would grow by 12 percent year-on-year to US$185.8 billion by the end of the year.
Wu said that retailers' inventories piled up significantly in June because of slower-than-expected consumer demand. This created problems for many of China's original equipment manu-facturers which specialize in mobile phones, television sets and DVD players.
The situation also affected semiconductor suppliers and distributors, who saw significant declines in revenue in China, he said.
The research house said there are signs that an inventory correction is under way, and that it would persist throughout the third quarter.
iSuppli expects both domestic and export demand to pick up in the last quarter.
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