Semiconductor Equipment Monitor

Book-to-bill ratios for North American-based semiconductor equipment manufacturers declined for the fourth consecutive month during July, according to data compiled by Semiconductor Equipment and Materials International (SEMI). The ratio is coming off an extraordinary record-high level reading of 1.46 set in March, though, so the July number ($1.23 worth of product orders received for every $1.00 shipped) remains extremely strong and indicative of a market that is still expanding at a healthy rate.

Orders to equipment manufacturers increased by a solid 2.5% between June and July, following a revised 2.9% gain the month before and increases that had averaged 8.1% during the first five months of 2000. Orders for semiconductor equipment have now increased for ten consecutive months. Shipments moved ahead at an even stronger 5.2% rate during July, though, so the ratio of new industry bookings to the level of orders being fulfilled from previous bookings fell again. Shipments had increased by 4.7% between May and June. Thus, the book-to-bill ratio continues to decline not because of a downturn in orders, but instead because the solid backlog of orders from the previous ten months pushed the July increase in the value of shipments up at an even sharper rate.

This July's shipment total was 48.7% higher than during the final month of 1999, and an exceptional 72.8% above the July 1999 total. Through the first seven months of this year, the value of semiconductor equipment shipped by North American-based manufacturers was 79.3% greater than the $7.66B worth of product shipped during January-July 1999. And at a level of $2.93B during July 2000, orders to North American semiconductor equipment manufacturers were running more than 90% above the volume of new industry bookings received during July 1999.

Worldwide sales for the first half of this year were more than double the total value for January-June of 1999. Equipment sales growth during the first half of this year was impressive across all regions of the globe. The value of semiconductor equipment sold to North American chip manufacturers was up about 60% through six months of 2000, while sales to Japan were nearly 90% higher this January-June than over the same period of 1999. However, the value of equipment sold into the European marketplace and to the rest of the world (almost exclusively to Taiwan, Korea, Singapore, and other nations in the Asia/Pacific region) was more than two-and-a-half times as high over the first six months of 2000 as during the January-June period of 1999.

We've probably reached the high point of this amazing up-cycle, but even with the inevitable slowdown in growth rates over the second half of this year, it now looks certain that worldwide global shipments will be about 50% better than during 1999 -- which itself was a solid growth year following the almost unbroken downward trend in orders and shipments from the final quarter of 1996 through the first half of last year.