From bad to worse: Crunching SEMI’s latest B:B numbers

by James Montgomery, News Editor, Solid State Technology

August 20, 2008 – The other shoe seems to have fallen in the semiconductor equipment industry, as chipmakers’ pullback in capital investments that has dented orders for the better part of a year has caught up to the sales side of the equation. The latest updated monthly data from SEMI shows declines in both bookings and billings that haven’t been seen since the last cyclical slump in 2003 — and even the industry’s 2001 dark age.

Bookings in July reported by North America-based manufacturers of semiconductor equipment continued to fall, now below the $1B mark to $904.8M. That’s -3.1% lower than June’s downwardly revised number (more on that in a sec) and nearly -36% lower than a year ago. Billings were down -6.2% M-M and -35.5% Y-Y to $1087.4B, for a book-to-bill ratio (B:B) of 0.83, meaning $83 worth of orders was received for every $100 worth of product billed.

Last month SEMI said June bookings fell 7.7% vs. May, their lowest point in nearly three years, with a similar trough in Y-Y billings growth. Now, though, those numbers have been ratcheted even lower: SEMI now says bookings actually sunk -11.6% M-M and -34% Y-Y, while sales were down nearly -10% M-M and -42% Y-Y. Put another way, SEMI’s final numbers for June bookings were ~4% lower than prior estimates (about $52.1M), and sales were off by more than -9% (about $95M).

The June revisions look particularly bad on the sales side. The recalculated -11.7% M-M decline is the biggest M-M plunge since September 2001. And the 9.1% decline in sales over the past two months is the harshest since a -10% drop in Dec.2002-Jan.2003.

For some perspective on how lousy the numbers have become, here are some ugly benchmarks:

– Bookings are at their lowest since October 2003, and the fourth straight month of ≥-30% Y-Y slump, tying a low-water mark from mid-2005.

– The last time bookings were below the $1B mark was the spring of 2005 (for two months); if it happens again in August that’ll be a 3-month trend not seen since late 2003.

– We’re now at 14 straight months of Y-Y order declines (49% off the peak of $1782.3M two summers ago), a string last seen in 2001-2002.

– Billings are at their lowest since August 2005; the past two months together have seen ≥-35% declines, something the industry hasn’t seen since way back in the spring of 2002.

With both bookings and sales now slumping in sync, the obvious question is when can we expect them to hit bottom and bounce (particularly on the bookings side)? “While chipmakers remain attentive to cost controls, this remains a highly cyclic industry. “Factory utilization levels, unit demand growth, and planned fab projects suggest that new investment activity will resume in 2009,” said Daniel Tracy, SEMI’s senior director of industry research and statistics, in a statement. — J.M.

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