Semiconductor Equipment Monitor

According to the most recent survey conducted by Semiconductor Equipment and Materials International (SEMI), the book-to-bill ratio reached the relatively lofty height of 1.20 during April 2002. This tells us that for every $100 worth of equipment shipped during the month, an estimated $120 worth of new orders were received by manufacturers. During April of last year, the book-to-bill measure stood at the record-low level of 0.44.

Despite the encouraging turn, however, both shipments and new orders remained at comparatively depressed levels over the first third of this year. And the recent upturn in the book-to-bill ratio reflects primarily the fact that bookings have improved solidly and consistently over the past five months even as shipment values have treaded water. April 2002 billings -- at an estimated $821.5M -- were still marginally below the average of $824.6M for the prior six-month period.

Preliminary data for April 2002 shows bookings increasing 17.5% from their March level, following cumulative gains of about 42% during the prior four months. Billings, on the other hand, increased by only 3.0% between March and April.

The value of equipment shipped by North American manufacturers has now fallen below $1B for eight consecutive months. April 2002 billings were still 50% lower than the same month a year earlier. But the $982.0M worth of new bookings was 36% higher than the $721.3M in bookings reported during April 2001. So things are definitely looking up for the industry -- although it will be quite a while before we see strength on the shipments/billings side of things that comes close to matching the encouraging recent recovery in orders/bookings.

SEMI has also compiled global sales data covering trends for the rest of the world through March of this year (just a one-month lag from the North American market data). During the first three months of 2002, global semiconductor equipment sales were worth ~$4.05B -- ~64% less than the $11.26B worth of equipment sold worldwide during the first quarter of 2001.

Compared with January-March 2001 levels, equipment sales to the North American market during the first three months of this year were off the least severely (-50.9%), while sales into the Asia-Pacific market (excluding Japan) were 63.9% lower during January, February and March of 2002 than during the first quarter of 2001. Much steeper equipment sales declines have impacted both the Japanese (-72.4%) and European (-72.3%) markets so far in these early months of 2002.

There continues to be little demand for immediate capacity expansion on the part of chipmakers, although some deep-pocketed and/or forward-looking companies are making investments in the new technologies (involving larger wafer size and ever-more-refined density) that will make them more competitive, productive and profitable once the market turns. However, we’re still confident that the global market will bottom out during the first half of 2002, and that we’ll start to see some sequential gains (from the very depressed base) over the year’s final two quarters. The average capacity utilization rate among U.S. semiconductor manufacturers has moved up from 63.1% at the beginning of this year to 64.9% during April -- a relatively small gain off an abysmally low level, but moving in the right direction nevertheless. And as more firms become convinced of the likelihood of a global economic recovery during the second half of this year and into 2003, pressure should build throughout the world for investment in new more-efficient, cost-reducing, chipmaking equipment and technologies.