The book-to-bill ratio for North America-based makers of semiconductor equipment stood above one for the second consecutive month last month, which an industry watcher said is an indication that companies have grown more confident and plan to boost spending on equipment.
The book-to-bill ratio measures new orders against products sold each month, with a ratio greater than one indicating strong demand and a ratio of less than one showing weak demand.
“The continuing rise in equipment bookings clearly points to year-end order activity that is substantially stronger compared to one year ago,” Semiconductor Equipment and Materials International (SEMI) president and chief executive officer Denny McGuirk said in a press release on Thursday.
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.
“This trend supports the current outlook showing a rebound in equipment spending for 2014,” McGuirk said.
In the semiconductor industry association’s latest report, last month’s book-to-bill ratio advanced to 1.11 from 1.05 in October, marking the highest level since March, when the ratio was 1.14.
The report found that orders last month increased 10.1 percent month-on-month and 72.3 percent year-on-year to US$1.24 billion, and was the highest since June, when they recorded US$1.33 billion. Meanwhile, billings totaled US$1.12 billion last month, up 4 percent from the previous month and 22.4 percent higher than the prior year and the highest since July’s US$1.2 billion.
Earlier this month, SEMI projected global semiconductor companies to boost their equipment spending by 23 percent annually to US$39.46 billion next year and by another 2.38 percent in 2015 to US$40.4 billion, following an estimated decrease of 13.3 percent to US$32.02 billion this year.
The semiconductor industry association also predicted Taiwan would be the No. 1 equipment buyer for the fourth year in a row in 2015, with firms in Taiwan set to purchase US$10.19 billion worth of equipment this year, US$10.99 billion for next year and US$10.98 billion in 2015.
Among Taiwanese companies, Taiwan Semiconductor Manufacturing Co (台積電) is considering to earmark about US$10 billion on capital spending next year, slightly higher than this year’s record figure of US$9.7 billion, the world’s largest contract chipmaker said in October.
However, Siliconware Precision Industries Co (矽品精密), the world’s second-largest chip packager, is planning a lower capital expenditure for next year.
The company’s board on Thursday approved to use NT$9.6 billion (US$32.06 million) in capital spending for next year, a 41.6 percent decline from this year’s NT$16.45 billion, although the company said it remains upbeat about the global semiconductor industry next year.
Additional reporting by Lisa Wang