Excess semiconductor inventories in the global electronics supply chain declined to $2.5 billion in the first quarter of 2007, down 10.7% from $2.8 billion in the fourth quarter of 2006, according to a preliminary estimate from iSuppli’s Semiconductor Inventory Tracker service. Surplus inventory in the first quarter was down by a whopping 40.5% compared to $4.2 billion in the third quarter of 2006.

“The cause of the decline in excess inventory was a major reduction in production among semiconductor suppliers at the end of the third quarter of 2006,” said Rosemary Farrell, inventory analyst at iSuppli.