Semiconductor equipment sector expects smooth 2014

By Kevin Chen  /  Staff reporter

Thu, Oct 24, 2013 - Page 14

The semiconductor equipment sector’s book-to-bill ratio was below the parity level for the second consecutive month last month, but a global industry association expects continued investment by some companies will lead to smooth sailing for the sector next year.

The book-to-bill ratio is the three-month moving average of worldwide bookings and billings for North American-based semiconductor equipment manufacturers. It measures new orders against products sold each month, with a ratio of less than one showing weakness, while a ratio greater than one indicates strong demand.

“The book-to-bill ratio reflects seasonal softening and near-term deferral in capital spending in some segments of the industry,” Semiconductor Equipment and Materials International (SEMI) president and chief executive officer Denny McGuirk said in a press release on Monday. “We expect that market demand for semiconductors will drive continued capacity investment in 2014.”

In its latest report, last month’s ratio moderated to 0.97, the lowest level in the past nine months, from 0.98 in August.

SEMI’s data showed orders last month dropped 8.33 percent to US$975.3 million from August and were the lowest since April when they were US$1.17 billion.

Meanwhile, billings totaled US$1.01 billion last month, down 7.05 percent month-on-month and 13.64 percent year-on-year.

The weakening sentiment among semiconductor equipment manufacturers was in line with Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) forecast last week that its sales for this quarter would likely fall by between 9 percent and 11 percent from last quarter due to soft demand for certain high-end smartphones and inventory adjustments.

However, the world's largest wafer foundry said the impact from the low demand should be temporary as the industry's inventory for fabless customers is likely to decline significantly. TSMC chairman and chief executive officer Morris Chang (張忠謀) said he expected the inventory situation to revert to normal levels by the year's end.

Additional reporting by Lisa Wang