Japan’s equipment industry still gaining strength

March 9, 2006 – Demand for Japanese semiconductor manufacturing equipment continues to gain momentum, with consecutive months of orders that were much stronger than a year ago, according to new data from the Semiconductor Equipment Association of Japan (SEAJ).

Worldwide bookings for Japanese chipmaking equipment were 137.44 billion yen (US $1.18 billion) in January, a 9.5% decline from December but 35% higher than a year ago. The three-month average of 140.09 billion yen ($1.20 billion) is up 1.0% from December and 23.5% from January 2005, and has risen 19% in just the past five months. Backend equipment demand saw a dropoff during the month (assembly -25%, test/inspection -47%), while wafer processing orders rose 12%.

Global equipment billings totaled 122.16 billion yen ($1.05 billion), down 12.5% from December but up 11.2% from January 2005, the first double-digit year-on-year increase in more than a year. The 3-month average was 127.77 billion yen ($1.10 billion), up 9.3% sequentially and 6.2% year-on-year, and is up 13% since August.

The global book-to-bill ratio (B:B) was 1.10, vs. 1.19 in December and 0.94 a year ago, meaning that 110 yen worth of orders was received for every 100 yen of product billed for the month. The B:B has been above the parity mark of 1.0 since October.

Domestic orders for Japanese chipmaking equipment slumped nearly 20% in January to 65.99 billion yen ($567.6 million), but were almost double the demand from January 2005, displaying the third straight month of solid double-digit growth. Most of the monthly decline was due to slower orders for wafer processing and test/inspection equipment. Domestic billings in January were 74.22 billion yen ($638.4 million), down 7.8% month-on-month (due in part to a big drop in mask/reticle equipment) but up 25.4% year-on-year, and the sixth consecutive month of Y-Y growth (five of which grew by >20%). The domestic B:B was 0.96, vs. 0.94 in December and 0.81 in January 2005, climbing steadily back to parity after touching a low of 0.69 in September.

So far through fiscal 2006, global orders total 1.20 trillion yen ($10.32 billion), down 5.8% from the same period in the previous fiscal year, with 12%-13% declines in wafer processing and test/inspection equipment offsetting slight gains in other categories (although design, notably, is up 24% through the period). Global sales are down 9.1% to 1.16 trillion yen ($9.98 billion), with 11%-16% declines in wafer processing and related equipment, and slight declines everywhere else except smaller categories of design and mask/reticle equipment. Domestically, bookings are up 4.8% through fiscal 2006 to 670.44 billion yen ($5.77 billion), with small gains in wafer processing equipment offsetting 9%-17% declines in backend areas. Sales are up 5.6% to 689.90 billion yen ($5.93 billion), due to gains in wafer processing, design, and mask/reticles equipment.


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