Semiconductor Equipment Monitor

Staff -- Semiconductor International, 7/1/1998

• Electronics Industry Update

The dollar value of worldwide semiconductor equipment sales fell 12.6% between January and February, following a decline of 14.5% during January. Comparing the sum of January and February sales with equipment sales for the first two months of 1997 suggests a bullish market: The dollar value of product shipped rose by a stunning 35.2% over the year. The incipient problems of the industry become more apparent in looking just a bit below the surface and in reading press reports and corporate news releases regarding order cancellations and industry layoffs. SEMI's report on sales to U.S.-based manufacturers has shown a consistently deteriorating growth trend through the first four months of 1998. The most telling statistic is the book-to-bill ratio, which fell to 0.79 in April. Front-end equipment sales have been the hardest hit, but there has also been a dramatic decline in recent months in the book-to-bill ratio for the test and assembly equipment. SEMI analysts believe that we are likely at or near the bottom of this down cycle. We are less optimistic and believe that over-the-year growth trends will continue to deteriorate, at least through the summer, although normal seasonal patterns should allow the industry some improvement in actual dollar sales of equipment. Gains will be sub-par until the economic problems of the Asia/Pacific region and the chip market have been substantially resolved.