October 21, 2005 – Both sides of the semiconductor equipment and IC demand coin are showing improvement as the industry ramps up to meet projected holiday demand, according to data from VLSI Research Inc.
Worldwide bookings for semiconductor manufacturing equipment topped $4.61 billion in September, a 9.4% jump from August and 19.9% higher than a year ago — the first year-on-year increase in eight months. Bookings have held above $4.2 billion for four straight months. Billings in September amounted to $4.49 billion, a 13.9% increase from August, as the test sector posted a 2005-best $982.9 million in equipment sales. September’s chip tool sales were 12.7% lower than a year ago. The book-to-bill ratio (B:B) for equipment was 1.03, vs. 1.07 in August and 0.75 in September 2004 — meaning that $103 worth of orders were received for every $100 worth of product billed for the month — representing the first three-month streak above parity in more than a year.
Through September, equipment orders this year totaled $36.67 billion, down 15.4% vs. $43.37 billion worth of orders posted during the same period a year ago. Chip sales from Jan.-Sept. totaled $38.19 billion, a 5.2% decline from Jan.-Sept. 2004.
Sales of ICs in September ramped according to seasonal norms, up 18.7% month-on-month to $18.84 billion, a 3.8% increase from September 2004. IC bookings also rose during the month, up 1.0% from August and 11.9% from a year ago to $16.41 billion. The IC B:B remained above parity for the ninth straight month at 1.01, vs. 1.03 in August and 0.95 in Sept. 2004. For the year through September, IC sales rose 6.5% vs. the same period a year ago to $140.9 billion, while orders rose 2.9% to $145.4 billion.
Looking at monthly manufacturing trends, utilization rates continued to press upward, now at yearly highs of 96% in frontend manufacturing and 98%-99% in assembly and test, vs. levels of 94%-96% in August. Chip consumption stayed basically flat across all regions, with a single percentage point increase in Korea and an equal decrease for China.
As the market enters the final quarter, VLSI sees October equipment orders slipping 1.5% to $4.54 billion, sales down 7.9% to $4.13 billion, for a B:B of 1.10. IC sales are projected to dip 20.1% to $15.41 billion, reflecting a seasonal slowdown following the holiday sales push, while IC orders continue to rise, up 9.0% to $17.88 billion, for a B:B of 1.07. VLSI projects utilization rates will remain stable in October at 96%-98%, before slipping to 94%-96% in November, and back down to ~90% by the end of the year. — J.M.