Semiconductor Equipment Monitor

Worldwide equipment sales fell 14.5% between December and January. This in itself is not worrisome, since normal seasonal buying patterns show subdued demand at the beginning of new years. Comparing January sales to January 1997 sales, we see a healthy 33.5% growth. The January over-the-year gain, as good as it was, was the lowest year-to-year growth in five months. SEMI's report on sales to U.S.-based manufacturers showed the lower growth trend continuing through March, when the book-to-bill ratio fell to a disturbing 0.80. Regionally, the over-the-year growth trend for sales to Europe turned encouragingly stronger in January. Sales to the other three regions of the world weakened only slightly to North America, but much more significantly to Japan and the Asia/Pacific region. Evidence of weakening demand for semiconductor equipment is contained in the government's report on price trends. For the past two years, semiconductor equipment prices have been rising much faster than prices of other kinds of capital equipment. This is still true on an over-the-year basis. However, between February and March, while overall capital equipment prices inched up 0.1%, semiconductor manufacturing equipment prices dropped by 0.3% on average. The combination of weaker overall demand and increasing price competition from imports will likely keep average semiconductor equipment prices from rising much during 1998.

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