Semiconductor Equipment Monitor
Staff -- Semiconductor International, 2/1/2003
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According the most recent survey conducted by Semiconductor Equipment and Materials International (SEMI), the total (i.e., the front-end and test/assembly equipment categories combined) book-to-bill ratio inched up from a revised level of 0.78 in October to a reading of 0.79 during November. This tells us that for every $100 worth of equipment shipped during the month, an estimated $79 worth of new orders were received by manufacturers. During November of 2001, the book-to-bill measure stood at an even-more-depressed level of 0.72. The record-low level for this important forward-looking indicator of semiconductor equipment market health — 0.44 — was registered during April of 2001.
This past November's ratio was the fifth sub-1.00 book-to-bill reading of 2002, and represented the 18th time in the past 24 months that the value of semiconductor equipment new orders had fallen short of shipments. So the encouraging market momentum that began to build during the spring and summer of 2002 had completely dissipated by the time we moved into the final weeks of last year.
Bookings rose by a slight 0.5% between October and November of 2002. Billings fared a bit worse, declining by 0.9% during November following a revised 4.3% loss the month before. The value of equipment shipped by North American manufacturers fell below the one billion dollar level for the 14th time over the past 15 months during November 2002. Nevertheless, billings to North American equipment manufacturers this past November were worth 21% more than during the same month of 2001. And the $778.6M worth of new bookings received this past November was 32% greater than the level of bookings reported during November of 2001, so there's clearly still more work in the "pipeline" now than there was a year ago — just not as much as was flowing in during the first half of 2002.
A review of sales and order data compiled by SEMI covering the world as a whole was unusually encouraging for the month of October 2002. Since this global data summary lags by a month the book-to-bill information compiled for the North American market data, we don’t yet know how overall worldwide sales trended during November. We can only hope that data for the final quarter of 2002 confirms the tentative signs that the September-October period represented an inflection point for trends in semiconductor equipment sales and orders.
The value of worldwide equipment billings during October 2002 was 34.1% higher than during the same month a year earlier. Sales to Japan were 24.2% lower this past October than in the same month of 2001, but values rose for all other regions of the world between October 2001 and October 2002. The increases ranged from 17.0% for Europe and 32.2% for North America to a stellar 128.9% for the (non-Japan) Asia-Pacific region.
The underlying trend appears poised to turn more positive (or, at least, less negative) in the months immediately ahead. That's because bookings/orders during October 2002 rose at an even-stronger rate than billings/shipments. For the world as a whole, the value of semiconductor equipment bookings was 36.1% greater this past October than during October of 2001. And all regions of the globe except Japan (-5.7%) participated in this upturn: North America (+19.0%), Europe (+82.4%), and the rest of the Asia-Pacific region (+88.8%).
With 2002 numbers so disastrously bad, of course, any sign of good news is welcome. During the first ten months of 2002, global semiconductor equipment sales were worth approximately $16.45B — about 35% less than the $25.46B worth of equipment sold worldwide during January-October of 2001.
Compared to 2001's ten-month totals, equipment sales to the Asia-Pacific market (excluding Japan) during the first ten months of last year were off by the smallest amount (-14.4%), while sales into the North American market were 32.7% lower during January-October of 2002 than over the first ten months of 2001. Much steeper equipment sales declines were recorded in both the Japanese (-53.8%) and European (-49.4%) markets during the first ten months of last year.
There's little question that the vast majority of semiconductor capital equipment purchases during 2002 were driven by the desire to upgrade technology, not to increase production capacity. Although the average capacity utilization rate among U.S. semiconductor manufacturers had moved up from 63.1% at the beginning of 2002 to 67.0% during November, it remained extremely low by any standard of historical comparison. Utilization rates of 90% or above were the monthly norm from 1998-2000. And even the industry's more modest 30-year-average capacity utilization rate of 81.8% far exceeds the current dismally low rate.
Nevertheless, as more firms become convinced of the sustainability of a global economic recovery during the first half of 2003, pressure should slowly but surely build throughout the world for investment in new more-efficient, cost-reducing, chip-making equipment and technologies. So we remain reasonably confident that the global market will "bottom out" during the early months of this year, and that we'll start to see some sequential gains (from the new — very depressed — base of activity, of course) by the early summer of 2003.
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Table 1. Equipment Sales Trends by Regional Market |
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| Billions of U.S. dollars | % Change from a year ago | |||||||
| Total | Projected | Actual | Projected | |||||
| 2000 | 2001 | 2002 | 2003 | 2000 | 2001 | 2002 | 2003 | |
| World | 28.04 | 19.25 | 23.10 | 29.47 | -41.2 | -31.3 | 20.0 | 27.7 |
| Americas | 8.18 | 5.89 | 6.44 | 7.62 | -36.8 | -27.9 | 9-2 | 18.4 |
| Japan | 7.59 | 3.73 | 4.24 | 5.15 | -17.3 | -50.9 | 13.6 | 21.6 |
| Europe | 3.82 | 2.09 | 2.38 | 2.89 | -40.7 | -45.3 | 14.0 | 21.1 |
| Asia/Pacific | 8.45 | 7.54 | 10.04 | 13.81 | -55.8 | -10.8 | 33.1 | 37.6 |
| Historical Data:
SEMI Forecast: Semiconductor International | ||||||||
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Table 2. Price Trends |
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| All capital equipment for manufacturing | 0.3% |
| All semiconductor manufacturing equipment | 1.4% |
| Source: U.S. Labor Department | |
