by James Montgomery, News Editor

June 27, 2006 – Demand for worldwide semiconductor manufacturing equipment slipped in May after a very strong two-month period, but demand for chip tools continues to be well ahead of last year’s pace heading into the seasonally strong summer months, according to data from VLSI Research Inc.

Worldwide semiconductor equipment bookings were $5.48 billion in May, down 24% from April but more than twice the $2.73 billion reported in May 2005. Billings were similarly down month-to-month (19%) to $4.85 billion, but were up 41% year-on-year. The book-to-bill ratio also slid a bit, but remained well above the parity mark at 1.20, vs. 1.27 in April and 0.84 a year ago, meaning that $120 worth of orders were received for every $100 worth of products billed during the month.

Demand slipped a little bit, but capacity utilization from all ends of the spectrum held steady, in the mid-90% range for frontend, test, and assembly capacity.

For ICs, demand continued to stay steady, with May chip orders of $17.39 billion down just 2% from May but up 14% from a year ago. Sales actually rose 8% both sequentially and year-on-year, to $15.39 billion, resulting in a B:B also holding steady above parity at 1.06. IC units rose 4% during May to $11.15 billion, a 27% increase from the same period last year.

For June, VLSI expects it will hold to historic seasonal patterns and be a very strong month across both equipment and IC markets. Equipment bookings are projected to rise 21% sequentially to $6.65 billion, with billings rising 13% to $5.19 billion, for a B:B of 1.28, tying its highest mark in eight months. IC orders are seen increasing just 1% to $17.60 billion, but sales are expected to jump 29% to a record $19.86 billion, for a B:B of 1.07. Unit shipments are also expected to hit record amounts, rising 14% sequentially to 12.68 billion units — higher than the 10% sequential increase seen in June 2004, but smaller than last year. — J.M.