Semiconductor Equipment Monitor

The value of February 2001 semiconductor equipment shipments was pegged at $2.35B, while new orders during the month were estimated to be worth $1.80B. Bookings have trailed shipments for the past three months, following 24 consecutive months when new orders exceeded the value of semiconductor equipment being shipped from North-American factories.

The February book-to-bill specifically for the test/assembly segment of the market was unchanged from its revised 0.69 reading of the month before. The ratio for this segment of the market has been below the break-even point since last summer. Weakness in the front-end equipment segment is more recent -- but the downturn has been swift and steep. As recently as the final month of 2000, the book-to-bill ratio for front-end equipment showed orders exceeding shipments by 7%; this February, orders trailed shipments by 22%.

Overall orders to equipment manufacturers fell by a relatively modest 3.8% between January and February, following a giant 21% loss during the previous month. Since there's still a fair amount of work in the pipeline because of the strong orders volume recorded during the second half of last year, the value of product shipments actually increased by 1% during the second month of 2001.

Despite plummeting orders late in the year, the year 2000 as a whole was still a very good one for the semiconductor equipment industry. The estimated value of worldwide sales last year was $48.39 billion, an increase of 89.8% over the 1999 total. Sales had increased by a solid, but much less impressive, 16.2% between 1998 and 1999.

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 76.5% from the 1999 sales level, while sales to Japan were 67.0% higher over January-December 2000 than through the twelve months 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) more than doubled between 1999 and 2000. Equipment sales to Europe were up 104.7% during the past year, and sales to the rest of the world (i.e., Asia/Pacific) increased by 108.8% between 1999 and 2000.

Global equipment sales numbers for January 2001 remained surprisingly strong -- except for last year's fastest-growing market, Asia/Pacific (excluding Japan). This January's equipment shipments to North American chip makers were valued at a level 67.3% above the January 2000 total, and shipments to Europe were 36.6% greater this January than last January. Sales to Japan skyrocketed, with the $1.30 billion worth of equipment moving into the country dwarfing the $500 million level of a year earlier. But sales to the rest of the Asia/Pacific market plummeted from the levels reached over the second half of 2000; January 2001 equipment sales to the region eked out just a 3.1% gain over the January 2000 total.

Shipments to all regions of the world will fade quickly as we move through this year. And our preliminary forecasts for 2001 show all regions except Japan experiencing a decline in semiconductor equipment sales, with the Asian markets (the strongest growth areas during 2000 and 2001) recording the steepest drop. The global market should begin to show signs of recovery by the end of this year (although we believe that sales to Japan will be fading at that point), and growth -- albeit modest -- should return during 2002.