Semiconductor Equipment Monitor
-- Semiconductor International, 2/1/2001
The composite book-to-bill ratio for North American-based semiconductor equipment manufacturers fell for the third consecutive month between October and November, 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 fairly gradual pace -- since that point.The overall November 2000 book-to-bill of 1.12 (i.e., $1.12 worth of product orders received for every $1.00 shipped) is about on par with its reading of a year earlier. But the ratio specifically for the test/assembly segment of the market has dropped sharply over the past year -- from 1.06 in November 1999 to just 0.76 during this past November. In past industry cycles, weakness in the test/assembly sub-sector of the market has often presaged weakness in the much larger front-end sector. The book-to-bill ratio for the front end (primarily wafer processing equipment) sector was still running comfortably ahead of its year-earlier reading as of last November (a ratio of 1.24 vs. 1.13 during November 1999), but was well the cyclical high point reached during spring 2000.
Overall orders to North-American-based fell by a sharp 8.5% between October and November, while shipments of orders already in the pipeline declined by a less-precipitous 5.2%.
As measured by shipments volume, the industry remained in excellent shape as we entered the final weeks of last year. Through the first eleven months of 2000, the value of semiconductor equipment shipped by North American-based manufacturers was 74.9% greater than the $13.5 billion worth of product shipped during January-November 1999. The estimated dollar value of the November 2000 shipments total was 52.9% greater than during the final month of 1999, and 59.8% above the November 1999 total. Good numbers -- on the shipments front -- all around. But it's noteworthy that the November 1999-to-November 2000 increase -- as good as it was at almost 60% -- still represented the smallest over-the-year increase recorded in any month since August of 1999.
Worldwide sales for the first nine months of last year (the availability of global numbers always lags the North-American-based data by a month or two) were more than double the total value for January-September of 1999, with equipment sales through three-quarters of 2000 running 101.3% ahead of the year-earlier pace.
There's no longer any question that industry gains will be much smaller during 2001 than in 2000. Capacity expansion will be constrained by the nascent economic slowdown, as corporate profit growth wanes and capital markets tighten. And it's difficult to make the case that much more chip manufacturing space is needed in the short-term, given the fact that worldwide consumer and business demand is leveling off and given the explosion in investment during the past eighteen months. The industry will be increasingly dependent on technology buys during 2001 and the early months of 2002 -- still not a bad foundation on which to build for future growth. Thus, although equipment sales growth will be slower this year than during 1999-2000, all signs still suggest that this will be a year of growth -- not decline -- for the industry.
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| Table 1. Equipment Sales Trends by Regional Market | ||||||||
| Billions of U.S. dollars | % Change from a year ago | |||||||
| Total | Projected | Actual | Projected | |||||
| 1998 | 1999 | 2000 | 2001 | 1998 | 1999 | 2000 | 2001 | |
| World | 21.95 | 25.50 | 46.67 | 51.11 | -20.4 | 16.2 | 83.1 | 9.5 |
| Americas | 7.62 | 7.45 | 12.13 | 13.14 | -16.5 | -2.2 | 62.8 | 8.3 |
| Japan | 4.71 | 5.52 | 8.33 | 8.55 | -30.5 | 17.3 | 50.8 | 2.7 |
| Europe | 2.91 | 3.24 | 6.20 | 7.04 | -5.1 | 11.4 | 91.8 | 13.5 |
| Asia/Pacific | 6.71 | 9.29 | 20.01 | 22.38 | -22.1 | 38.4 | 115.5 | 11.8 |
| Historical Data: SEMI | Forecast: Semiconductor International | |||||||
| Table 2. Price Trends (% Change in producer prices, June 1999-June 2000) | |
| All capital equipment for manufacturing | 0.9% |
| All semiconductor manufacturing equipment | -0.7 |
| Wafer processing equipment | -2.5 |
| Microlithography | -0.8 |
| Etch and strip | 0.0 |
| Assembly and packaging equipment | 5.9 |
| Parts for semiconductor mfg. machinery | 0.0 |
| Source: U.S. Labor Department | |
