SEMI: North America equipment book-to-bill dips further

By Ann Steffora Mutschler, Senior Editor -- Electronic News, 10/19/2007

The contraction of the semiconductor manufacturing equipment market is continuing as evidenced by North American-based manufacturers of semiconductor equipment posting $1.23 billion in orders in September and a book-to-bill ratio of 0.81 according to the September book-to-bill report from the SEMI industry organization.

A book-to-bill of 0.81 means that $81 worth of orders was received for every $100 of product billed for the month.

The three-month average of worldwide bookings in September was $1.23 billion, marking a 10 percent drop from the final August level of $1.37 billion and 25 percent less than the $1.64 billion in orders posted in September 2006.

Billings on the three-month average in September totaled $1.51 billion, representing a 10 percent fall from the final August level of $1.68 billion and about 9 percent less than the September 2006 billings level of $1.67 billion.

Stanley T. Myers, president and CEO of SEMI noted in a statement that new equipment orders have dipped to levels last seen in late 2005 and early 2006. “We are seeing orders decline from the peak levels earlier this year, which were driven largely by strong investments in 300-mm memory capacity.”

SEMI reminded that the book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. Billings and bookings figures are in millions of U.S. dollars.

The October SEMI book-to-bill report is scheduled for publication on November 15.

At the same time, market research firm IC Insights is forecasting a surge in IC unit shipments this year.

The firm noted that recent data suggests that IC unit shipments will grow 10 percent this year, which would slightly exceed IC Insights’ original 8 percent forecast, and keep alive a streak of annual double-digit increases in IC shipments that dates back to 2002.

Driving overall industry demand and keeping IC shipments at a high level are strong shipments of DRAM, NAND flash memory, and interface, data conversion, and automotive-related analog ICs, the firm reported.

Dating back to 1980, the IC industry has twice seen periods of three consecutive years of double-digit unit growth (1982 to 1984 and 1986 to 1988), but after those three-year spurts, IC unit growth dropped off significantly, IC Insights reminded.

However, since 2002, IC unit shipments have been growing by double-digit amounts each year and there seems to be no slowdown in sight.

IC Insights says there is a very good chance that unit demand will continue to increase at least 10 percent annually over the next five to ten years as new and evolving applications in communications (cell phones) and consumer electronic systems (DTVs, handheld computing, music, gaming devices, etc.) continue to incorporate large quantities of IC units. Continuing development of emerging country markets is also helping to spur demand for IC units.

Average annual unit growth of 10 percent seems to be a lock for the industry, the firm says, and using that baseline, future IC market growth will be largely influenced by changes in the average selling price (ASP) of devices: For example, 10 percent unit growth coupled with either a +5 percent or -5 percent change in ASP yields a 10-point range of market growth of between 5 and 15 percent.

Strong annual IC unit shipment growth rates are good news for IC suppliers as factories will run at near capacity, however, continued pressure on IC ASPs may cause a prolonged period of profitless prosperity for IC suppliers, IC Insights concluded.