Semiconductor Equipment Monitor

The composite book-to-bill ratio for North American-based semiconductor equipment manufacturers rose slightly during May after eight consecutive months of decline, according to data compiled by Semiconductor Equipment and Materials International (SEMI). But with a reading of only 0.46, the May 2001 SEMI book-to-bill ratio is still at its second-lowest level in the history of the series. And the index rose not because of any surge in new orders for semiconductor capital equipment, but because shipments have begun to fall at an even faster rate than that for bookings. The value of equipment orders received by manufacturers was 2.6% lower in May than in April - and an extraordinary 75% below the level of May 2000. The value of May 2001 semiconductor equipment shipments was pegged at $1.51B, while new orders during the month were estimated to be worth just $704.4M. Bookings have trailed shipments for the past six months, following 24 consecutive months when new orders exceeded the value of semiconductor equipment being shipped from North-American factories. Net new orders to equipment manufacturers (after cancellations of previously reported orders have been factored in) during May 2001 were less than 30% of the level recorded during the final month of last year.

Global equipment sales totals for the first four months of 2001 remained misleadingly strong - at least given expectations for the next 6-9 months as signaled by orders trends. Global semiconductor equipment sales for January-April of 2001 were valued at a level 1.5% greater than over the first-third of 2000.

Equipment shipments to North American chipmakers during the first four months of 2001 were valued at a level 16.3% above the total for January-April of 2000. And shipments to Japan were up an even-stronger 49.5%. However, shipments of semiconductor equipment to Europe during the first four months of this year totaled $1.97B, only 3.9% more than the cumulative total for January-April of 2000. And evidence of the deepening worldwide market weakness was dramatically apparent in the numbers for the Asia-Pacific (excluding Japan) region. After more than doubling between 1999 and 2000, semiconductor equipment sales to Taiwan, South Korea, Singapore, Malaysia, and the rest of the Asia-Pacific region during the first four months of 2001 came up 28.3% short of the total for January through April of last year.

There's little question that the Asia-Pacific downturn represents just the tip of the iceberg; shipments to all regions of the world will fade quickly as we move through this year. Our preliminary forecasts for 2001 show all regions except Japan experiencing a decline in semiconductor equipment sales, with the Asian markets (the strongest growth areas during 2000 and 2001) recording the steepest drop. The global market should begin to show signs of recovery by the end of this year (although we believe that sales to Japan will be fading at that point), and that modest growth should return during 2002.