Semiconductor Equipment Monitor

Staff -- Semiconductor International, 6/1/2002

The composite book-to-bill ratio for North American-based semiconductor equipment manufacturers rose above parity for the first time since November 2000 during March 2002, according to the most recent survey conducted by Semiconductor Equipment and Materials International (SEMI). At a level of 1.04, the book-to-bill ratio for this March tells us that for every $100 worth of equipment shipped during the month, an estimated $104 worth of new orders were received by manufacturers. During March of last year, the book-to-bill measure stood at an abysmally low level of 0.59.

Despite the encouraging turn, however, both shipments and new orders remained at depressed levels over the first quarter of this year. And the recent upturn in the book-to-bill ratio reflects primarily the fact that bookings have improved modestly but steadily over the past four months even as shipment values have stagnated at a very low level. March 2002 billings – at an estimated $808.1M – were still slightly below the $813.6M monthly average for November 2001 through February 2002.

Preliminary data for March 2002 shows bookings increasing 13.8% from their February level, following cumulative gains of about 25% during the prior three months. Billings, on the other hand, actually declined by a slight 1.2% between February and March.

The value of equipment shipped by North American manufacturers has now fallen below $1B for seven consecutive months. March 2002 billings were still 60% lower than the same month a year earlier, while new bookings were "only" 30% lower than the total reported for March 2001. Still a bleak picture, to be sure, but with the order trend now leading the shipment trend by a substantial amount, there’s clear evidence that the industry’s fortunes have at least bottomed out.

SEMI has also compiled global sales data covering trends for the rest of the world through February of this year. During the first two months of 2002, global semiconductor equipment sales were worth ~$2.36B – only about one-third as much as the $7.29B worth of equipment sold worldwide during January and February 2001.

Compared to January-February 2001 levels, equipment sales to the North American market during the first two months of this year were off the least severely (-48.6%), while sales to Japan were off the most (-78.1%). Through this February, year-to-date equipment sales to European chip manufacturers were 69.8% lower than a year earlier, while sales into the Asia-Pacific market (excluding Japan) were 72.3% lower during January and February 2002 than during the first two months of 2001.

There appears to be some momentum building on the technology "buy" side of the market during these early months of 2002 – but little or no demand for immediate capacity expansion. This is understandable, since the continued glut of global chipmaking capacity and depressed corporate profits simply won’t support enough new investment to push equipment sales higher this year. However, the market will bottom out during the first half of 2002, and we should start to see some sequential gains (from the very depressed base) over the year’s final two quarters. And, as more firms become convinced of the likelihood of a worldwide economic recovery during the second half of this year and into 2003, pressure should build for investment in new more-efficient, cost-reducing, chipmaking equipment and technologies.