Thu, Aug 22, 2013 - Page 13 News List

Semiconductor book-to-bill ratio for US-based makers stays at parity last month

By Kevin Chen  /  Staff reporter

The book-to-bill ratio for North America-based makers of semiconductor equipment stayed at parity level last month, but an industry watcher said falling orders might be a sign of a trend change in coming months.

The book-to-bill ratio measures new orders against products sold each month, with a ratio of greater than one indicating strong demand, while a ratio of less than one showing weakness.

“Billings for new semiconductor manufacturing equipment continue to increase and the ratio has been at or above parity for the past seven months,” SEMI president and chief executive officer Denny McGuirk said in a press release on Tuesday.

The San Jose, California-based SEMI is a global trade association that represents the semiconductor and flat-panel display equipment and materials industries, such as Applied Materials Inc.

“However, order data moderated slightly in the July report and we will look to the month ahead to determine if this reflects a trend change,” McGuirk said.

In the semiconductor industry association’s latest report released on Tuesday, last month’s book-to-bill ratio moderated to 1.0 from 1.1 in June. Though the figure remained at the healthy level of 1.0 last month, it represented the lowest level in the past seven months.

The book-to-bill ratio is the three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. From January through June, the ratios had been above 1.0, meaning more orders coming in than products being sold each month, according to SEMI.

Yet orders last month dropped 4.6 percent from June to US$1.273 billion and was the lowest since April, when they recorded US$1.17 billion, indicating that semiconductor equipment makers were hesitant in maintaining their capital expenditures at high levels.

On Friday last week, the world’s largest supplier of chipmaking equipment, Applied Materials, gave a disappointing sales forecast amid muted semiconductor demand and a record slump in the PC market.

Moreover, wafer foundries and integrated device manufacturing companies, such as Taiwan Semiconductor Manufacturing Co (台積電), Samsung Electronics Co and other companies that make mobile phone parts, may also be waiting for smartphone demand to accelerate before they commit more of their capital spendings, analysts said.

Meanwhile, SEMI’s data showed that billings totaled US$1.269 billion last month, up 4.6 percent month-on-month and the highest so far this year. However, last month’s number remained 12 percent lower year-on-year.

Additional reporting by Bloomberg

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