Semiconductor Equipment Monitor

Staff -- Semiconductor International, 10/1/2001

The composite book-to-bill ratio for North American-based semiconductor equipment manufacturers rose again during July - the third 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 0.67, the July 2001 SEMI book-to-bill ratio is still at an exceptionally low level - and not even half as robust as the 1.37 average ratio of shipments-to-orders that prevailed over the first six months of last year. And the index rose again during May, June and July not because there’s been any surge in new orders for semiconductor capital equipment (although orders did improve a modest 5% over the latest month), but because the value of shipments have recently been falling at an even faster rate than have bookings.

Despite the slight uptick in the value of equipment bookings placed with equipment manufacturers during July, the month’s level of new bookings was still almost 59% below the total for the first month of 2001 - and an extraordinary 74% below the level of July 2000. Reported equipment billings were down 12% over the latest month, with July 2001 shipments coming in 52% lower than in July of last year. The value of July 2001 semiconductor equipment shipments was pegged at $1.14B, while new orders during the month were estimated to be worth just $764.2M. Bookings have trailed shipments for the past eight months, following 24 consecutive months when new orders exceeded the value of semiconductor equipment being shipped from North American factories.

Global equipment sales totals for the first six months of 2001 trailed the January-June 2000 total by 16.1% (the reporting of global numbers lags the report for the North American market by a month). But the value of worldwide shipments this June was a disheartening 51.2% lower than during the same month of 2000. Given the reasonably solid level of first-quarter shipments realized by manufacturers, year-to-date global numbers (at negative 16.1%) don’t yet accurately reflect the dramatically diminished health of the semiconductor equipment market.

Equipment shipments to North American chipmakers during the first six months of 2001 were valued at a level 7.4% below the total for January-June 2000 - a modest decline of less than half the magnitude of the worldwide loss. But the total value of shipments during the second quarter of this year trailed the second quarter 2000 total by 32.3%. And although shipments to Japan were 28.5% greater during the first half of 2001 than over January-June 2000, June 2001 shipments were 22.7% lower than the June 2000 total.

Shipments of semiconductor equipment to Europe during the first six months of this year totaled just $2.56B, 12% less than the cumulative total for January-June 2000 - with this June’s shipments level 46% lower than in June 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 January-June 2001 came up 40.8% short of the total for the first six months of last year. And the value of shipments to the region this June was barely one-third the year-earlier level.

We expect shipments to all regions of the world to 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. We believe that the global market will begin to show signs of recovery by the end of this year (although sales specifically to Japan will record little, if any, improvement), however, and that modest worldwide growth should return during 2002.