Chapter 11

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Summary
This article notifies about semiconductor suppliers who have just begun increasing chip inventories for the first time in a year. In the beginning, inventories at global semiconductor manufacturers were plunged by the decline of 15.1% in the first quarter and 1.5% in the second quarter of 2008. Later on in the year, they were declining even more by 2.2% in the third quarter and 6.6% in the fourth quarter of 2008. However, most importantly, at the end of the second quarter, inventories totalled $24.9 billion, was down from $32.6 billion in the beginning of the second quarter of 2008. Moreover, Carlo Ciriello who is the financial analyst for iSuppli Corp. stated that the falling demand in the first half of 2009 provoked a swift inventory correction among chip suppliers. This article further explains that chipmakers will currently increase inventory growing stockpiles by 5.5% in the third quarter and 1% in the fourth quarter to end this year at $26.5 billion. To simply state, this increase signifies that suppliers expect business to improve and demand for chips to grow.

Connection
The connection between chapter eleven and this article is the inventories. In chapter eleven, we learned that businesses that buy goods for the purpose of selling them at a profit are dealing in merchandise, and a merchandise business will definitely need inventory in order to put up on the market. Inventory is the key to success in a business because without inventory, where will money come in a business? However, if a business can not sell the majority of their inventory, problems will occur such as not enough cash to manoeuvre a business, or having not enough cash to buy other inventory to attract consumers. But without enough inventories, a business can not function properly, and I think that is why the semiconductor suppliers are increasing chip inventories. Although, this plan is a little risky, I believe they can overcome this dilemma.

Reflection
Businesses have to overcome many problems and risks. Take this article as an example, every quarter of the year the business is declining from as small as 1% to an enormous as 15.1% from sales. Personally, I do not think increasing chip inventories will solve this lack of sales predicament. The reason is because sales are decreasing and what happens if the sales do not improve. If this problem occurs then the business will be in a crisis which will eventually result in closing down the business. Perhaps, I am wrong, and sales will improve, which results in businesses demanding for more chip inventories just like what the manufactures are hoping for.