Tool demand slips in Oct. as customers digest capacity

November 17, 2006 – Orders received by North American-based manufacturers of semiconductor equipment continued to slide from their peak in June (now 16% lower in just four months), as customers absorb capacity brought on with recent investments, according to new data from SEMI.

Chip tool orders totaled $1.50 billion in October, about 9% lower than September’s $1.64 billion. Semi equipment sales also have slid over the past couple of months, now standing at $1.57 billion, about a 6% decrease sequentially. Compared with the same period a year ago, however, chip tool demand seems robust — 37% higher for both orders and sales vs. October 2005, according to the SEMI data.

Stanley Myers, president and CEO of SEMI, noted the gradual decline over the past three months as the industry absorbs new capacity. “Total orders for semiconductor equipment have declined from the peak levels posted back in June of this year, though they are significantly higher than levels reported one year ago,” he said, in a statement.

The book-to-bill ratio (B:B) came in at 0.95, meaning that $95 worth of orders were received for every $100 of product billed for the month.

After slightly tweaking September’s numbers, SEMI now shows that the B:B actually slipped below the parity mark, and slid another couple of points in October. The group tacked on about $45 million in chip tool billings and about $15 million in orders, which tipped the B:B below parity.


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