Why the Semi Glut Matters

This column was originally published on RealMoney on Dec. 4 at 11:21 a.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

Since early this year, I've been writing about semiconductor inventory levels, specifically how they've gone from shortage to balanced to glut over the past three or four quarters. The biggest "tell" for the shift from shortage to glut was the commentary on the many semi conference calls that I listen to each quarter. Over the past few quarters, that commentary went from "we can't keep up with demand" to "we're comfortable with inventory levels" to "some excess inventories in the channels need to be worked off."

A few readers have emailed to ask me to explain why the semi-inventory glut matters.

First, picture the same inventory glut with Hot Topic (HOTT Quote) as the end market, instead of Cisco (CSCO Quote), Motorola (MOT Quote) and Apple (AAPL Quote). ...