Semiconductor Equipment Monitor

Staff -- Semiconductor International, 11/1/2001

The composite book-to-bill ratio for North American-based semiconductor equipment manufacturers fell during August — the first “down” month, following three consecutive months of improvement. The ratio had declined for eight straight months from September of last year until this April, finally bottoming out at the record-low level of 0.44, according to data compiled by Semiconductor Equipment and Materials International (SEMI). But with a reading of only 0.61 this August, the most recent SEMI book-to-bill ratio is still off more than 50% from its year-ago reading. And this simple shipments-to-orders measure is higher now than during the spring of this year not because there’s been any surge in new orders for semiconductor capital equipment, but because the value of shipments has recently been falling at an even faster rate than have bookings. August 2001 bookings/shipments were 50% lower than the level reported during August 2000, while billings/orders were off 75% during the same period of comparison.

Reported equipment bookings were down a modest 2.5% over the latest month, while billings almost held their own, coming in just 0.2% lower in August than in July. But bookings represent the beginning of the pipeline and are a generally accurate indicator (given a normal level of cancellations over any period of time) of future industry production levels. With bookings worth $742 million this August versus almost $3 billion during August, any significant recovery in the industry is still several months in the future. Bookings have now trailed shipments for the past nine 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 seven months of 2001 trailed the January-July 2000 total by 21.9% (the reporting of global numbers lags the report for the North American market by a month). But the value of worldwide shipments this July was an even more disheartening 51.1% lower than during the same month of 2000.

Equipment shipments to North American chipmakers during the first seven months of 2001 were valued at a level 13.1% below the total for January-July 2000. Although this was a less severe decline than the worldwide trend (-21.9%), the total value of equipment shipments to the region during July 2001 trailed the July 2000 total by 41.9%.

Shipments to Japan have held up relatively better than throughout the rest of the world, but market conditions have deteriorated in recent months. Although the value of semiconductor equipment shipped to the country was 21.1% greater during the first seven months of 2001 than over January-July 2000, July 2001 shipments were 17.0% lower than the July 2000 total.

Shipments of semiconductor equipment to Europe during the first seven months of this year totaled just $2.83 billion, 19.3% less than the cumulative total for January-July 2000 — with this July’s shipments level almost 55% lower than in July 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-July 2001 came up 45.4% short of the total for the first seven months of last year. And the value of shipments to the region this July was not even one-third the year-earlier level.

In the aftermath of the terrorist attacks on New York and Washington, shaky business and consumer confidence removes any doubt that semiconductor equipment 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. We believe that the global market will begin to show signs of recovery by early next year (although sales specifically to Japan will probably be lower next year than this year), however, and that modest worldwide growth should resume during the second half of 2002.