August 17, 2007 – Orders for semiconductor equipment from North American-based manufacturers sunk to an eight-month low in July, though sales still remain high as previous demand pushes through the pipeline — sending the B:B ratio, an indicator of healthy demand, plunging to its lowest level in more than two years.
Equipment billings (sales) tallied $1.71 billion in July, about a 3% decline from June, though still 4% higher than sales in July 2006. That’s the first month-on-month decrease since February, and the fourth month of slowing growth since an 11% spike in April.
The real story is bookings (orders), which slumped more than 10% M-M in July and about 17% Y-Y to $1.44 billion — the biggest monthly decline since Oct. 2006, and biggest Y-Y dropoff since late 2005. It’s also the first month of double-digit declines both M-M and Y-Y since January 2005. “Orders have slowed from the strong levels observed in the first part of this year,” noted Stanley Myers, president/CEO of SEMI, in a statement.
The slumping orders pushed the book-to-bill ratio (B:B) further below the parity level where it had hovered for many months, down to 0.84 — meaning $84 worth of orders were received for every $100 of product billed. Not since May 2005 has the B:B reached so low.
A decline in orders from DRAM firms (partly offset by rising NAND orders) and a slower-than-expected foundry ramp are to blame for the slowdown, while backend tools continue to show healthy demand with above-parity bookings levels and high utilization rates for both test and assembly, noted Bill Ong, analyst with American Technology Research, in a research note.
“As foundry chip unit demand (and subsequently wafer starts) continues to exhibit strength, fab tool orders will follow by year-end and into early 2008,” Ong wrote. “As long as end market demand remains steady, memory orders are generally sustainable with limited risk of a major cut, and that foundry orders are likely to snap-back.” He expects IDMs, meanwhile, will “maintain current spending levels or slightly increase their capital budget.”
North American equipment bookings, billings — July 2006-July 2007
Month…….Billings…….%M-M………%Y-Y……….Bookings……..%M-M……..% Y-Y………B:B…………
……………..(3-mo. avg.)………………………………….(3-mo.avg.)……………………………………..
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………….1436.4……..0.9%……….7.3%………..1419.6………1.5%………2.5%……..0.99
Apr’07………….1594.7……..11.0%……….10.1%………..1567.5………10.4%………-2.1%……..0.98
May’07………….1670.2……..4.7%……….15.0%………..1641.9………4.7%………1.4%……..0.98
June’07(f)……….1768.1……..5.9%……….13.5%………..1607.6……..-2.1%………-9.8%……..0.91
July’07(p)………1707.0……-3.5%……..4.2%……….1440.0…….-10.4%……-17.0%……..0.84
WaferNEWS source: SEMI