Semiconductor Equipment Monitor

-- Semiconductor International, 9/1/2001

The composite book-to-bill ratio for North American-based semiconductor equipment manufacturers rose a bit during June -- the second consecutive month of improvement following eight straight months of decline, according to data compiled by Semiconductor Equipment and Materials International (SEMI). But with a reading of only 0.54, the June 2001 SEMI book-to-bill ratio is still at an exceptionally low level. And the index rose again during June not because there's been any surge in new orders for semiconductor capital equipment, but because shipments have recently been falling at an even faster rate than that for bookings.

The value of equipment orders received by manufacturers was 1.3% lower in June than in May -- and an extraordinary 75% below the level of June 2000. Reported equipment billings were down 11.7% over the latest month, with June 2001 shipments coming in 42% lower than in June of last year. The value of June 2001 semiconductor equipment shipments was pegged at $1.31B, while new orders during the month were estimated to be worth just $704.7 million. Bookings have trailed shipments for the past seven 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 June 2001 were still less than 30% of the level recorded during the final month of last year.

Global equipment sales totals for the first five months of 2001 trailed the January-May 2000 total by a modest 6.6% (the reporting of global numbers lags the report for the North American market by a month). But the value of worldwide shipments this May was a heart-stopping 41.2% lower than during the same month of 2000. Given the reasonably solid level of first-quarter shipments realized by manufacturers, year-to-date numbers don't yet accurately reflect the dramatically diminished health of the semiconductor equipment market.

Equipment shipments to North American chipmakers during the first five months of 2001 were valued at a level 5.5% above the total for January-May 2000. And shipments to Japan were up an even stronger 39.9%. However, shipments of semiconductor equipment to Europe during the first five months of this year totaled just $2.25B, 3.6% less than the cumulative total for January-May 2000. And evidence of the deepening worldwide market weakness was even more 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 five months of 2001 came up 34.0% short of the total for January-May of last year.

We expect that shipments to all regions of the world will continue to fade as we move through the balance of this year. Our revised forecasts for 2001 show all global regions experiencing a decline in semiconductor equipment sales, with the Asia-Pacific 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 still be falling at that point), however, and that modest growth should return during 2002.

Table 1. Equipment Sales Trends by Regional Market

Table 2. Price Trends
(% Change in producer prices, June 1999-June 2000)