Strong demand means better year for tool sales, says VLSI

April 19, 2006 – The first quarter of the calendar usually means a seasonal slowdown in demand for semiconductor manufacturing equipment. But this year demand remains high, and so VLSI Research Inc. has hiked its projections for the full year to double-digit growth.

Current demand for semiconductor manufacturing equipment strongly suggests that chipmakers under invested in 2005, the Santa Clara, CA-based analyst firm stated, noting that demand has been on the rise since 3Q05 (14% jump in orders) and 4Q05 (11% increase). The company says its data suggests 1Q06 suggest orders will increase another 14% sequentially, pushing equipment sales growth for all of 2006 into double digits at 13.2% (to $57.77 billion) — more than double the firm’s year-end estimate of about 6%. VLSI’s IC forecast for 2006 remains essentially unchanged, at $209.70 billion, up about 9% from 2005.

Worldwide chip tool sales were up 40%-60% sequentially in March for every equipment segment — fabrication, test, assembly, service/spares, and even display manufacturing equipment — with the biggest gains seen in the larger frontend and test segments. Total billings were $5.86 billion, basically flat with a year ago, as frontend equipment sales dipped about 3%, while other segments showed single-digit growth. Tool orders grew 38% in March to $6.74 billion, and a 64% increase from March 2005, according to VLSI’s data. The book-to-bill ratio was 1.15, compared with 1.27 in February and 0.71 a year ago — meaning that $115 worth of equipment was booked for every $100 worth of product sold during the period — representing the ninth consecutive month of B:B ratios above 1.0.

Semiconductor bookings in March were $17.38 billion, just a 2% increase from February and up 3% from March 2005. Chip sales rose 27% sequentially and 14% year-on-year to $19.87 billion.

Capacity at the end of 1Q06 was seen on the rise again, to 95% for frontend manufacturing after three months at ~91%. Test and assembly capacity were 97%-98%, and are projected to stay at those levels throughout the entire year.

For April, VLSI projects semiconductor equipment bookings will dip 5% to $6.39 billion, with a 13% decline in sales to $5.10 billion, and a B:B of 1.25.


Easily post a comment below using your Linkedin, Twitter, Google or Facebook account. Comments won't automatically be posted to your social media accounts unless you select to share.