Book-to-bill indicates 2003 turnaround, says VLSI

January 20, 2004 – Worldwide manufacturers of semiconductor equipment wrapped up the year 2003 by posting the market’s fourth consecutive month of parity, a feat that hasn’t been accomplished in more than three years, according to VLSI Research.

December’s book-to-bill ratio was 1.16, up from 1.11 in November, 1.03 in October, and 1.09 in December 2002. Equipment manufacturers posted bookings of $3.18 billion and billings of $2.75 billion in December, up from $3.01 billion and $2.71 billion in November, $2.72 billion and $2.63 billion in October, and $2.5 billion for both categories in December 2002.

Of total billings, $1.46 billion were for wafer-processing equipment, $754 million for test and related equipment, $181 million for assembly, and $358 million for service and spares. All categories fluctuated slightly from the prior month; compared with a year ago, test and assembly were up 40% and 34% respectively, while wafer process and service and spares were down 3% and 17%. Capacity utilization held steady at 96.5% for frontend manufacturing, but continued to march past 97% for test and assembly.

A book-to-bill ratio of 1.16 means that $116 worth of new orders was received for every $100 of product billed for the month.

For ICs, the three-month average of worldwide bookings in December was $17.95 billion with billings of $16.55 billion, up from November’s revised levels of $16.47 billion and $13.27 billion, and October’s $14.56 billion and $11.5 billion. The three-month IC B:B ratio was 1.26, shattering the yearly high of 1.18 set the previous month, and nearing levels not seen in 20 months.

For the full year 2003, VLSI calculated preliminary equipment bookings of $31.66 billion, down slightly from the previous year, with a 4% increase in sales to $31.07 billion, and a B:B ratio of 1.02 compared with 1.07 in 2002. For ICs, bookings totaled $142.06 billion, up nearly 18% from 2002, with a 16% climb in units to 91.35 billion.

While bookings and sales don’t clearly show it, other factors indicated the climate changed significantly for equipment makers in 2003. First, capacity utilization rates surpassed 90% for several consecutive months, something that hasn’t happened since 2000. From January-December 2003, frontend capacity rose 23%, test increased by 17.5%, and assembly was up 14%. Another clear trend was a marked shift in global demand. Taiwan nearly doubled its consumption to 12% of the overall market, while Europe (+33%) and Japan (+18%) also increased their share. The US’ market position, however, shrunk 26% to encompass less than a fifth of global consumption — it began the year with more than a quarter of overall demand.

Looking at projections for January 2004, VLSI expects equipment bookings of $3.15 billion and billings of $2.62 billion, with a B:B of 1.20. Equipment bookings are expected to continue to rise throughout the year, topping $4.3 billion by November; sales also are projected to climb, reaching $2.9 billion by the end of the year. VLSI predicts capacity will taper off a bit in 2004, but will still remain between 91%-96%. For ICs, the firm predicts a continued rise in bookings to $18.32 billion, with nearly flat billings at $13.28 billion and a B:B of 1.28.


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