November 21, 2003 – Worldwide manufacturers of semiconductor equipment posted the first back-to-back months of parity this year with an October book-to-bill ratio of 1.03, maintaining September’s level of 1.03, according to VLSI.

Equipment manufacturers posted bookings of $2.70 billion and billings of $2.63 billion in October, down more than 20% from revised totals of $3.44 billion and billings of $3.34 billion in September, but better than expected — 13% and 16% above projections, respectively. Of the total billings, $1.37 billion were for wafer processing equipment, $646 million for test and related equipment, $270 million for assembly, and $340 million for service and spares. Compared with September’s revised totals, every segment was down roughly 25% except assembly, which rose 10%.

Continuing its rapid expansion, the three-month average of worldwide IC bookings reached $14.56 billion in October, up 7% from September and 20% higher than August’s results. Worldwide IC billings were at $11.5 billion in October, down from an upwardly-revised $14.8 billion in September and roughly flat compared with August. The three-month IC book-to-bill ratio matched its yearly high at 1.15, up from 1.11 in September and 1.08 in August.

Overall frontend capacity utilization reached 92.6% in September, compared with 90.2% in September and 86.3% in August — but unlike previous months, the utilization rates were above 92% at all levels, not just at sub-180nm technologies. “This indicates that the industry is running out of capacity, which may lead to severe shortages” if demand continues to rise at current rates, predicted VLSI.

VLSI embraced the figures, proclaiming that “optimism has returned to the equipment industry” — order activity has picked up beyond the “tire-kicking stage,” as customers “come looking with real budgets,” said VLSI. (One month ago, VLSI warned that growth mirroring spri! ngtime l evels was an indicator that order momentum had stalled.) A majority of announcements came from Asia, with heavy demand for backend equipment. (More on orders activity in October was reported in WaferNews, V10n47, November 24, 2003.)

As a result, VLSI has raised its 2003 forecast for the equipment industry, from $30.2 billion in revenues to $31.0 billion, a 4.2% improvement from 2002. For November, VLSI projects overall equipment bookings of $2.75 billion and billings of $2.71 billion, and a B:B of 1.01. Sales projections for 2004 also were raised by 6% to $37.7 million. For ICs, VLSI kept its 2003 projections unchanged: sales of $137.3 billion, a 14% increase from a year ago, and 2004 revenues of $167.7 billion.