July book-to-bill exceeds parity level

August 22, 2003 – Worldwide manufacturers of semiconductor equipment posted a book-to-bill ratio of 1.02 in July 2003, the first time since January 2003 that the ratio has climbed above the parity level, according to VLSI Research.

Equipment manufacturers posted orders of $2.52 billion and billings of $2.47 billion in July, down from June’s revised totals of $2.81 billion and $2.76 billion. Of the total billings, $1.47 billion were for wafer processing equipment, $522 million for test and related equipment, $172 million for assembly, and $308 million for service and spares.

For chipmakers, the three-month book-to-bill ratio rose to 1.12 in July, up from 1.10 in June. Worldwide bookings rose to $12.12 billion, compared with $11.93 billion in June, while billings stayed flat at $10.82 billion. Capacity utilization rate slipped from 87.9% to 85.1% in July, but remained above 90% for sub-150nm nodes.

Due to the “traditional summer slump,” VLSI predicts the August book-to-bill for equipment makers will slide to an even 1.00, while the book-to-bill for chipmakers will dip to 1.07.

“Pricing weakness throughout the electronics food chain is preventing many chipmakers from investing in new capacity even though utilization rates are high, especially in the leading edge,” stated VLSI. “Instead, they are more focused on raising profits and improving financial metrics.”

Because of this spending lull, VLSI says its forecast for 2003 remains basically unchanged: Equipment revenues of $31.5 billion (a 6.4% increase from 2002), with IC billings of $134.2 billion (up 11.3% from 2002). For 2004, VLSI sees a robust 19% growth in equipment and 25% growth in chips, leading to “a hard upturn” extending into 2005.


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