Ray of hope in SEMI’s ugly B:B numbers?

Sept. 10, 2008 – The semiconductor equipment sector has been sputtering along at three- and five-year lows in terms of demand. And in case you’ve missed it, SEMI has new data to remind us.

Tracking global data with the Semiconductor Equipment Industry of Japan, SEMI says revenues for chip equipment totaled $7.83B in 2Q08, declines of -26% from 1Q08 and -29% vs. 2Q07. Orders were down -13% Q-Q to $6.99B, representing a -30% decline from a year ago. And unlike previous quarters, the numbers are ugly across the board.

Back in 1Q08 some regions seemed to be working through the downturn fairly well: China (25%) and Taiwan (18%), with Japan (5%) and even North America (3%) were well ahead of tool spending from the prior year.

But in 2Q the picture looks a lot bleaker: Every region except rest-of-world shows double-digit losses in both sales and orders. China swung from first to worst (-42%) in Q-Q sales of semiconductor tools; Taiwan spending slumped -39%, North America -32%. Compared with a year ago, both China (-61%) and Taiwan (-55%) have slashed spending by more than half, with Korea down -20%.

Another way to illustrate the industry’s swerve into the ditch: equipment billings in 1Q had actually improved 7% Q-Q, and were down just -2% Y-Y. Just one quarter later those numbers had sunk to -26% and -29%.

But there may yet be a ray of hope in all the carnage. Notice that bookings in 2Q08 actually improved Y-Y, to -13% vs. -23% in 1Q08. Customers first place their tool orders and then months (or quarters, or longer) the equipment providers record the sales, so any recovery logically will be first seen in the bookings side of the equation. Indeed, SEMI and others have said that spending should pick up again in 2009 — but for now, the questions are how low will demand go, and when in 2009 will we see a real sustainable comeback.


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