“2010 becoming very reminiscent of 2000, where poor inventory control, and concern over long waiting times for leading-edge equipment spelled disaster, and we ended the year with $10 billion in excess IC capacity and a shattered equipment industry that took years to claw out of the red and never fully recovered until this year.”

That’s the comment from the president of The Information Network, a US-based research firm. Is he right?

I tend to disagree. I think the inventory levels are still well in line with historical norms as baselined over the past seven years and well below the glut in 2000-01. Yes, a few big OEMs have invested large sums (a reported $100 million for Cisco) to ensure stock of certain parts, but for almost everyone else inventory is scarce. Lead times for some parts are out to 20 weeks — but Top Tier EMS companies have been upfront with Wall Street about the issue and no one can has been able to cite to me orders lost from an inability to get parts.

Instead, what’s happening is programs are getting pushed out. It doesn’t make anyone happy, but it’s far better than the alternative scenario of excessive inventories and battles over who will pay for them. That itself sets 2010 apart from 2000, in my opinion.

All supply chains have an inevitable tension. Far better for it to be taut than loose.