November 16, 2012 – The latest monthly numbers are in for semiconductor manufacturing equipment demand, and they’re not pretty: lows in both orders and sales not seen since the last major downcycle three years ago, and the short-term comparisons continue to widen.

North America-based manufacturers of semiconductor manufacturing equipment reported bookings (orders) of just $743.2M in October, down -18% from September and roughly -20% from a year ago. Billings (sales) came in at $986.5M, off by -15% M/M and nearly -22% Y/Y. (Both are three-month moving averages.) SEMI also revised downward its September data: Bookings lowered to $912.8M (they had been $952.9M), and billings down to $1164.4M (vs. $1177.4M). The book-to-bill (B:B) came in at an anemic 0.75, meaning that $75 worth of orders came in for every $100 shipped out. (A B:B above 1.0 would indicate a good sign of more business coming in; a number below 1.0 means the opposite, and a number substantially below 1.0 and sinking for a while, well…)

Here are some chilling metrics to illustrate just how sour the market for chip tools has become as we head to the finish line of 2012. (All data is compiled from SEMI’s historical tallies dating from Jan. 1991)

• Bookings are at their lowest point since October 2009. Billings haven’t been this low since January 2010. Since peaking in May, equipment bookings have been slashed by half (-54%) and sales are off by more than a third (-36%).
• For the ten months through October, equipment orders were tracking down -8.5% from the same period in 2011 to $12.6B, and sales were down -15.7% at $13.3B.
• Bookings have declined by double-digits for five consecutive months (-11% to -18%), which hasn’t happened since the grand old days of December 2000-April 2001. Except for a single month of mathematically zero growth (April), bookings have declined Y/Y for 16 out of the past 17 months. (This might say more about the industry’s reliably brutal cyclicality than current malaise; May 2011 was the end of a 19-month period in the black, which was preceded by a 29-month trip through the doldrums.)
• The B:B ratio has been in freefall since April when it was well above the parity level (1.12) — that’s six straight months of decline, which according to SEMI’s data hasn’t happened since late 2010. (We’ve had several five-month slides in the past two years.)

Denny McGuirk, president and CEO of SEMI, labeled the environment for semiconductor industry investments as "muted" entering the final quarter of 2012, though he stated that "investments in leading-edge technologies will continue to drive spending in the near-term." The outlook for 2013 will clear up shortly as chipmakers crystallize their 2013 capex plans, he added. (Note that with about six weeks remaining, any lack of clarity into 2013 planning doesn’t exactly inspire confidence.)

SEMI will present its updated consensus forecast in conjunction with SEMICON Japan on Tuesday Dec 4 (technically it’ll be 11am local time, which is the wee hours late Monday/early Tuesday morning here in the US). One can reasonably expect some drastically different numbers from its current official forecast, issued at SEMICON West in July, which predicted an overall -2.6% decline for the year in global frontend + backend equipment. Hopefully there will be some improved clarity in these coming weeks.