Semiconductor Equipment Monitor

The book-to-bill ratio for North American-based semiconductor equipment manufacturers inched up during August following four consecutive months of decline, according to data compiled by Semiconductor Equipment and Materials International (SEMI). The ratio reached a peak reading of 1.46 during March, but the August ratio of 1.24 ($1.24 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. The ratio rose moderately between July and August for front-end equipment manufacturers, but continued to weaken for makers of test and assembly equipment.

Orders to equipment manufacturers increased by a strong 3.6% between July and August, following a revised 1.7% 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 12 consecutive months. Shipments moved ahead at an only slightly less robust 2.8% rate during August. With orders rising at a marginally faster rate than shipments, the book-to-bill ratio was able to eke out a small gain for the first time since March.

The estimated dollar value of this August's shipment total was 52.6% greater than during the final month of 1999, and an exceptional 69.3% above the August 1999 total. Through the first two-thirds of this year, the value of semiconductor equipment shipped by North American-based manufacturers was 77.7% greater than the $9.10 billion worth of product shipped during January-August 1999. And at a level of $3.01 billion during August 2000, orders to North American semiconductor equipment manufacturers were running more than 92% above the volume of new industry bookings received during August 1999.

Worldwide sales for the first seven months of this year (the global numbers lag the North American-based data by a month) were more than double the total value for January-July 1999, with sales so far in 2000 running 108.8% ahead of the year-ago pace. Equipment sales growth this year has been impressive across all regions of the globe. The value of semiconductor equipment sold to North American chip manufacturers was up 70.4% through seven months of 2000, while sales to Japan were 78.4% higher this January-July than over the first seven months 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) grew at roughly twice the rate of growth in North America and Japan. Equipment sales to Europe were up 136.6% through July 2000, and sales to the rest of the world increased by 150.9% between January-July 1999 and the first seven months of this year.

We've probably reached the high point of this amazing upcycle, 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 80% better than during 1999 <\m> 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.