February 23, 2005 – For manufacturers of semiconductors and semiconductor equipment, January is typically a slow period, sandwiched between the Christmas holiday season and Asia’s Lunar New Year — and January 2005 was no different.

Worldwide orders for semiconductor manufacturing equipment in January were $3.61 billion, down 5.4% from December and 12.0% from January 2004. Billings of $4.10 billion (a 36-month average) slid 10% sequentially, but were up 14% from a year ago. Of total billings, $2.56 billion were for wafer processing equipment, $757.6 million for test and related systems, $166.1 million for assembly equipment, and $617.1 million for services and spares.

The book-to-bill ratio (B:B) improved to 0.88, up from 0.84 in December, but well off the mark of 1.12 in January 2004. A B:B of 0.88 means that $88 worth of orders were received for every $100 of product billed for the month. Front-end capacity utilization in January was 75.6%, roughly where it has been since early 4Q04.

For ICs, January billings were $13.21 billion, compared with $16.46 billion in December and $11.45 billion a year ago. Orders (a 3-month average) were $16.00 billion, up 3.7% from December but down 1.2% from January 2004. The IC B:B (also a 3-month average) was 1.06, compared with 1.00 in the previous month and 1.24 a year ago.

VLSI projects February equipment bookings will drop another 3% to $3.51 billion, with sales slipping 5% to $3.90 billion, for a B:B ratio of 0.90. Frontend capacity utilization is projected to increase slightly to 76.3%. For ICs, VLSI predicts orders of 15.44, and sales of 14.05, for a B:B of 1.06.