SEMI: July equipment demand slows, but stable growth bodes well

August 25, 2004 – Demand for semiconductor manufacturing equipment remains strong, although clearly it’s slowing down — but don’t reach for the panic button just yet, according to SEMI.

North American-based manufacturers of semiconductor equipment reported orders of $1.61 billion in July 2004, matching the slightly revised total for June ($1.61 billion), and a 128% increase from July 2003 ($706.9 million), according to SEMI. The bookings, representing a three-month moving average, have increased sequentially 10 out of 11 months, attaining their highest level since early 2001.

Worldwide billings in July were $1.54 billion, rising slightly from June ($1.50 billion) and double the billing levels from a year ago ($785.9 million). Billings have steadily increased month-on-month for 12 consecutive months, with seven consecutive months of year-on-year growth. Through July, bookings for 2004 were $10.28 billion, up 98% from the same period in 2003; billings of $9.28 billion were 65% ahead of last year.

The book-to-bill ratio (B:B) in July was 1.05, compared with 1.07 in June and 0.90 a year ago. A B:B of 1.05 means that $105 worth of new orders were received for every $100 of product billed for the month. The B:B ratio has achieved its tenth consecutive month above parity.

While equipment demand remains at high levels, clearly it’s slowing down. Orders, which grew sequentially at an 11% clip in January, were down to just over 2% in July, while comparable sales growth over the same period has been cut from high single-digits to just a fraction of a point. The B:B ratio, which plots a balance between orders and sales, has declined seven straight months from a two-year high of 1.23. Jonathan Davis, SEMI’s VP of communications, said that the glass is still half-full. “We’re characterizing this as stable growth at very high levels,” he said. “This may well be healthy in the long term of the industry.”


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