VLSI: Global equipment orders show an Asian flavor

February 25, 2004 – Worldwide manufacturers of semiconductors and semiconductor equipment followed up their banner year in 2003 right where they left off, showing “surprisingly strong” sales in the typically slow January period, according to VLSI Research.

The three-month average of worldwide IC bookings and billings came in slightly less than expected: $17.09 billion with billings of $12.10 billion, compared with December’s results of $17.95 billion and $16.55 billion, but up significantly from $11.50 billion and $9.11 billion in January 2003. The three-month IC B:B ratio was 1.29, higher than the previous month’s 1.26 and at a level seen just once since the spring of 2000.

Capacity utilization slid to 89.7% at the frontend, with test and assembly also down to 89.2% and 86.7%. Although overall capacities soared above 92% toward the end of 2003, January’s marks for the frontend were still about even with last year’s average.

For equipment manufacturers, bookings of $3.49 billion and billings of $2.93 billion in January 2004, compared with $3.18 billion and $2.83 billion in December 2003, and gains of 46% and 32% respectively year-on-year. Quarter on quarter, double-digit gains were seen in wafer-processing equipment (11.6%) and assembly (18.2%), while test and service fluctuated by 6%. December’s book-to-bill ratio of 1.19, up from 1.16 in December and 1.07 in January 2003, was the market’s fifth consecutive month of parity and the third straight month of year-on-year gains.

Taiwan continued to grab market share, with 12% month-on-month growth to 14.6% of global demand. Japan dipped slightly to 27.4%, but still encompasses more than a quarter of the world’s equipment orders. Demand in the US, Europe, and Korea dropped off dramatically; the US lost 37% month-on-month to 11.6% share, plummeting past Korea (-17%, 14.6% share) to be nearly level with Europe (-27%, 11.2% share). Where’s the business going? Equipment orders in “other Asia” (including China), which were at 10.4% in December, rocketed to 23.2% in January — that’s a 123% market grab in less than five weeks.

Looking ahead to February 2004, VLSI projects equipment bookings of $3.35 billion and billings of $2.86 billion, with a B:B ratio of 1.17, and another slide in frontend capacity utilization rates to 88.9%. For ICs, orders and sales are expected to continue to slide to $15.86 billion and $12.46 billion, with a B:B of 1.22.


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