November 17, 2006 – Global demand for semiconductor manufacturing equipment fell as seasonally expected in October, but tool sales are still enjoying a brisk pace from a year ago. Meanwhile, chip orders continue to ramp up for holiday demand.

Worldwide bookings of semiconductor manufacturing equipment totaled $5.69 billion in October, a 3.1% decline from September and up only 2.8% from October 2005. After spiking 30% in September, billings (including display equipment) fell off by 17.6% to $5.15 billion, but still were 25.9% higher than a year ago. The October book-to-bill ratio (B:B) was 1.10, meaning that $110 worth of orders were received for every $100 of product billed for the month.

The most significant numbers in the report are actually from September, where VLSI removed about $1 billion from its tally of equipment orders (and ~$450 million from October). VLSI had expected orders to rise about 33% from September levels, but now reports just half that growth level. VLSI also had projected a more significant decline (-9.4%) in equipment orders in October than what ended up happening, and with better growth year-on-year (11%).

The picture for IC activity in October ended up right about as expected: $20.50 billion in orders (the first-ever month of $20 billion), up 7.3% sequentially and 6.8% year-on-year, with billings down ~21% sequentially to $17.28 billion (vs. $15.33 billion), for a B:B of 1.09. Several chip demand metrics (sales, unit shipments, ASPs) fell from their yearly peaks in September, achieved ahead of the holiday push, although orders kept rising in October.

Capacity utilization levels remained about the same, at ~96% for front-end and ~95.4% for backend. Semiconductor production slowed to 1.2% growth, to 523.8 millions of square inches (MSI), while chip capacity rose less than 1% to 546.3 MSI.

For November, VLSI projects another 2%-3% sequential decline in bookings (to $5.56 billion), while billings rebound to 3.1% growth ($5.31 billion), for a B:B of 1.05. IC orders are seen slowing down 6.3% to $19.20 billion, while sales increase 4.5% to $18.06 billion, for a B:B of 1.01, while both chip output and capacity are seen increasing >1%.