SEMI B:B head-fake? More like a drop-kick

Oct. 17, 2008 – Pulling apart SEMI’s monthly numbers is getting to be a depressing task, as things keep getting uglier and uglier. The latest benchmarks from September: A 7-year low in the B:B, and a stretch of monthly slides not seen in more than a decade. And one bad-news streak is off the charts.

A month ago we suggested there might be a ray of hope in SEMI’s August numbers, which while still in the dumps at least showed a slowing of “negative growth” in bookings and billings. Now? We’d like to take a mulligan on that one, thanks.

A quick summary of September’s chip tool wasteland:

– Preliminary bookings (a three-month average) came in at ~$753.6M, down a whopping -13% vs. August, -39% vs. Sept. 2007, and -58% off the peak of two summers ago (was -50% in August). In terms of dollars, that’s a low since August 2003 (was: September 2003), and below the $1B mark for four straight months, a trend not seen since late 2003.

– We’re now at six straight months of ≥-30% Y-Y slumps. Five straight last happened in mid-2005 — but for six we have to go all the way back to mid-1996. (There have been a number of lousy streaks since then, but not six months in a row.)

– We’re also at 16 straight months of Y-Y order declines. Fifteen straight months equaled a streak from the Dark Age of 2001-2002…but sixteen? SEMI’s numbers go back to 1991, and we can’t find this happening before.

– Billings finally sunk below the $1B mark ($990.0M, -7% M-M, -36% Y-Y) for the first time in almost five years (December 2003). It’s been four straight months of ≥-35% declines Y-Y, not seen since the spring of 2002.

– The book-to-bill ratio (B:B) sunk to 0.76, meaning $76 worth of orders was received for every $100 worth of product billed. That low ratio hasn’t been seen since November 2001.

In a statement, SEMI president/CEO Stanley Myers admitted that two factors are combining to wallop the equipment industry right now: continued decline in capex spending, and now the global economic whipsaws, which have many worried about impact on overall consumer electronics spending. “Clearly, concern over these larger economic issues is restraining any immediate capacity investment plans,” he notes in a statement.

We already knew capex was lousy this year, and expectations are being lowered for 2009 as well. Throw the recent macroeconomic mess in the mix, and it’s likely these numbers are going to get quite a bit worse before they get better.

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