May 23, 2007 – Heavier capex in 1Q from several large IDMs helped push up sales as well as orders for semiconductor manufacturing equipment from North America-based suppliers, according to the latest monthly data from SEMI.
Billings in April came in just a hair under $1.60 billion, up 11.3% vs. March and 10.4% higher than April 2006. Orders were about the same level at $1.595 billion, up 12.4% month-on-month but down a fraction (-0.5%) from a year ago. The book-to-bill ratio was an even-parity 1.0, meaning that $100 worth of orders were received for every $100 of product billed for the month.
In a research note, Bill Ong, analyst with American Technology research, noted that frontend equipment bookings and shipments outpaced demand for backend tools: 12%-13% sequential growth vs. 7%-8% for backend. Memory firms are still driving the industry, and DRAM capacity pullbacks are being offset by pickup in flash capacity, and though some memory orders have been pushed out into 2H07 (the latest rumor points to Samsung) “a modest return” of foundry investments has dampened overall declines, he noted, adding that fluctuations in quarterly bookings merely reflect varied process tool lead times.
“End market demand and the memory bit demand and supply imbalances will ultimately drive capital spending needs near-term,” Ong wrote, but he believes the bookings climate will improve for frontend tool suppliers with a seasonal recovery in chip unit demand and foundry re-ordering. Meanwhile, backend toolmakers, who wallowed in a trough in 2H06, “have started to see modest signs of strength near-term as test and assembly utilization rates are increasing.”
Stanley Myers, SEMI president/CEO, said in a statement that “Updated figures also show relative equilibrium of orders and shipments over the past few months, reflecting continued market stability for North American providers of chip making equipment.” That’s just about word-for-word the same comments he made last month, after SEMI unexpectedly updated its data to fix inaccuracies, ultimately showing that actual levels of demand in both January and February were significantly lower than previously estimates, off by as much as 10%-15%.
On a quarterly basis, SEMI says overall worldwide equipment billings reached $10.75 billion, up 4% sequentially and 12% year-on-year, though bookings growth was mixed (-5% Q-Q, +6% Y-Y). Korea showed particular strength in sales, up 39% both Q-Q and Y-Y, and China also impressed with 31% Q-Q and 71% Y-Y growth. Most other regions saw flat to single-digit declines Q-Q, while Y-Y growth by region was a mixed bag.
Of particular note is the continued slide of demand from Europe: just $780 million in tool sales in 1Q07, -10% Q-Q and -16% Y-Y. And with Chinese demand continuing to surge, Europe finds itself in serious danger of finally hitting bottom, becoming the smallest worldwide market for global chip tools — only $130 million ahead of China (a 20% gap), vs. a 2.4x gap ($540 million) just one year ago.
Ong noted in his research note that frontend equipment “appears to be stabilizing” while backend tools are “showing signs of a recovery.” Sustainability of memory orders and end-market demand remains a concern, he wrote, but a decline in bookings in 1Q07 was less severe than in previous cycles, suggesting equipment companies have become better at managing their capacities and staying profitable. “We continue to expect the aggregate bookings to improve in 2H07 with foundry orders returning and offsetting the memory order pause,” he wrote.
North American equipment bookings, billings — Apr 2006-Apr 2007
Month…….Billings…….%M-M………%Y-Y……….Bookings……..%M-M……..% Y-Y………B:B…………
……………..(3-mo. avg.)………………………………….(3-mo.avg.)……………………………………..
Apr’06…………..1448.5…….8.2%……..16.9%……….1602.4…….15.7%…….60.4%……..1.11
May’06………….1452.6…….0.3%……..19.8%……….1619.0……..1.0%…….59.5%……..1.11
June’06………..1557.4…….7.2%……..35.2%……….1782.3…….10.1%…….71.7%……..1.14
July’06…………..1637.9…….5.2%……..51.9%……….1734.6…….-2.7%…….72.2%……..1.06
Aug’06…………..1742.8…….6.4%……..65.1%……….1729.7…….-0.3%…….69.6%……..0.99
Sep’06…………..1672.8……-4.0%……..53.7%……….1639.2…….-5.2%…….66.6%……..0.98
Oct’06…………..1562.9……-6.6%……..36.4%……….1468.6……-10.4%…….34.3%……..0.94
Nov’06…………..1486.1……-4.9%……..26.0%……….1426.5…….-2.8%…….30.5%……..0.96
Dec’06…………..1482.3……-0.2%……..21.1%……….1497.2……..5.0%…….31.0%……..1.01
Jan’07…………..1448.0……-2.3%……..15.0%……….1445.8…….-3.4%…….17.9%……..1.00
Feb’07………….1423.0……-1.3%……..11.3%……….1398.1…….-3.1%……..8.3%……..0.98
Mar’07(f)……….1436.4……..0.9%……….7.3%………..1419.6………1.5%………2.5%……..0.99
Apr’07(p)………1598.5……11.3%……..10.4%……….1595.2…….12.4%……-0.5%……..1.00
WaferNEWS source: SEMI
Worldwide semiconductor equipment billings, 1Q06-1Q07
(Revenues in US $M)
Region………………..1Q07………………..vs. 4Q06 (%)………………..vs. 1Q06 (%)
Europe……………………0.78………………..0.86 (-10%)………………..0.92 (-16%)
China……………………..0.65………………..0.50 ( 31%)………………..0.38 (71%)
Japan……………………..2.27………………..2.29 ( -1%)………………..2.33 (-3%)
North America…………1.79……………….1.92 (-7%)…………………..1.80 (0%)
Korea……………………..2.47………………..1.78 (39%)………………..1.77 (39%)
Taiwan……………………2.01………………..2.10 (-4%)………………..1.59 (26%)
ROW……………………….0.79………………..0.89 (-12%)………………..0.79 (0%)
TOTAL……………………10.75……………..10.34 (4%)…………………..9.58 (12%)