April chip equipment demand: Keeping the faith alive

May 21, 2004 — A strong influx of orders from Applied Materials helped boost North American demand for semiconductor manufacturing equipment in April, a sign that the market isn’t quite ready to apply the brakes, according to Semiconductor Equipment and Materials International (SEMI).

North American-based manufacturers of semiconductor equipment booked $1.59 billion in April 2004, an increase of more than 15% from March’s $1.38 billion and more than double the $757 million reported in April 2003. Billings were $1.40 billion, compared with $1.27 billion in March and $840 million a year ago. Final results for March were revised upwards by 4%-5% from SEMI’s initial figures. The bookings and billings, representing a three-month average, have risen for nine consecutive months, continuing their ascent to levels last seen in 2001 as the market pulled back from its boom period.

The book-to-bill in April was 1.14, the seventh consecutive month above parity, rebounding from 1.09 in December and higher than 0.90 a year ago. A B:B of 1.14 means that $114 worth of new orders were received for every $100 of product billed for the month.

Chipmakers’ high capacity utilization levels, pegged by VLSI at 87%-89%, “are supported both by strong semiconductor unit growth and silicon wafer shipments in the first quarter,” said Stanley Myers, SEMI president and CEO.

In a report issued May 21, Needham & Co. analysts Robert Maire and Mary Konstantinidis credited strong order growth at Applied Materials (32%), whose fiscal 2Q04 ended in April, for “the unusual bounce” in bookings and sequential jump in the B:B ratio (originally projected at 1.05-1.10). The unexpected uptick in orders “underscores continuing strength in the industry,” and “repudiates those who were looking for a slowdown in orders,” they stated. “We are sure to hear the cries of ‘dead cat bounce,’ but we think that the cat is very much still alive and kicking.”


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