Chip inventories sky high--Good news for consumers

There's one heck of a lot of chips out there that need to get sold, which likely mean good deals in the future for consumers on things like TVs, iPods and PCs.

Chip inventories across the industry were valued at $4 billion dollars, according to research firm iSuppli. That's the highest year-end total since the end of 2001, and we all remember what was going on then. The industry was wallowing in a post-Internet boom hangover and once-promising companies were hawking Sun supercomputers on Ebay.

The surfeit, moreover, is pretty widespread. Except for a few products like SRAM, there are excess supplies of pretty much anything you can think of.

For the chip industry, this is bad news. Surpluses typically lead to and lower margins. But for consumers, it means lower prices on TVs and other products. Many TV manufacturers predicted that price cuts might slow down from the 27 percent declines in 2006. That could be tough to pull off and deep discounts appear to be continuing.

Still, the firm said the problem might be mopped up by the second half.