Semiconductor Equipment Monitor

-- Semiconductor International, 1/1/2001

The composite book-to-bill ratio for North American-based semiconductor equipment manufacturers did not change between September and October, according to data compiled by Semiconductor Equipment and Materials International (SEMI). After reaching a peak reading of 1.46 during March 2000, the ratio has been trending generally downward -albeit at a very gradual pace -since that point.

The overall book-to-bill of 1.17 (i.e., $1.17 worth of product orders received for every $1.00 shipped) remains healthy enough by most standards. But there is some reason to be concerned about the fact that the ratio for the test/assembly segment of the market has dropped so precipitously in recent months. Analysts at SEMI have pointed out that weakness in the test/assembly subsector of the market has often presaged weakness in the much larger front-end sector. The book-to-bill ratio for the assembly/test sector has fallen well below the break-even point of 1.00 during the most recent two months, and stood at only 0.81 during October.

Overall orders to equipment manufacturers increased by a strong 5.4% between September and October, following an uncharacteristic 3.4% loss the month before. The analysts at SEMI attribute the relative weakness in orders during the four months leading up to the October rebound as, quite possibly, just a "seasonal pause." Time will tell if this is an overly optimistic assessment of the state of the market, but the recent weakness in test/assembly orders suggests that there might be something more at work here, and that we could be seeing the early stages of at least a modest pullback in semiconductor equipment sales.

Regardless of the murky outlook for the future, current market conditions remain outstanding. The estimated dollar value of the October 2000 shipments total was 62.3% greater than during the final month of 1999, and an exceptional 74.7% above the October 1999 total. Through the first 10 months of 2000, the value of semiconductor equipment shipped by North American-based manufacturers was 76.9% greater than the $12 billion worth of product shipped during January-October 1999. And at a level of $3.04 billion during October 2000, orders to North American semiconductor equipment manufacturers were running more than 89% above the volume of new industry bookings received during October of 1999.

Worldwide sales for the first nine 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-September of 1999, with sales through three-quarters of 2000 running 101.3% ahead of the year-earlier pace. Equipment sales growth during 2000 was exceptional across all regions of the globe. The value of semiconductor equipment sold to North American chip manufacturers was up 74.4% through nine months of 2000, while sales to Japan were 69.5% higher over January-September 2000 than over the first three-quarters of 1999. And 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 more than twice the rate of growth in North America and Japan. Equipment sales to Europe were up 116.0% through September 2000, and sales to the rest of the world increased by 138.7% between January-September 1999 and the first nine months of 2000.