Worldwide highlights
10/01/1998
Worldwide highlights
Slow July for equipment orders. North American equipment orders for July were at their lowest level in almost four years, and the book-to-bill ratio of 0.69 is the lowest in at least seven years, according to SEMI figures. This is due to shipment rates dropping closer to order levels, and not to any expected near-term increase in bookings, which may continue to dip into the fall. North American semiconductor equipment bookings dropped to $757.3 million in July (see table), a 19% month-to-month decline, as chipmakers continued to tighten their capital spending in light of overcapacity and market uncertainty. Equipment shipments were at $1.105 billion in July. Orders were down 47% from year-ago levels, and 53% below the November 1997 peak. July shipments were down 11% from June`s revised $1.235 billion, and 15% below year-ago levels.
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World chip sales dip 1.9% in July. Worldwide chip sales fell 1.9% to $9.66 billion in July over June figures, according to the Semiconductor Industry Association. All world regions experienced sales declines: Europe slipped 3.2% to $2.2 billion from June, the Asia-Pacific region fell 3.0% to $2.19 billion, the Americas dropped 1.4% to $3.2 billion, and Japan held nearly flat down 0.1% to $2.1 billion. Worldwide sales numbers show a 17% drop from July 1997 levels. The depressed figures are evidence of the persistent overcapacity and economic issues pushing down performance in the chip market.
Two years until capital spending boom. The industry will have to wait two years for the arrival of a capital spending boom, say researchers from Dataquest. Dataquest VP and director Clark Fuhs classified 1998 as the "year of economic correction," with growth resuming in late 1999, at the earliest. Worldwide capital spending will dip 22% this year, and remain flat in 1999 at $33.0 billion, he said. In other highlights, wafer fab equipment revenues hit bottom at just under $3.5 billion. In the 4Q98, revenues should climb above the $3.5 billion level, and rise in 1Q99 to the $4 billion level and remain flat throughout 1999.
Two forecast earlier upticks. Quantitative market researcher Moshe Handelsman, president of Advanced Forecasting, Cupertino, CA, is looking for the chip market to tick up sooner rather than later. Assuming chip sales were to accelerate through the end of the year, the equipment market would likely see some order increases in the first part of 1999, with revenues picking up in the second half. Handelsman commented, "I am on the optimistic side. Now we`re at the very bottom. I don`t see a structural change in the market. School has started up again, and Christmas is coming, and there is no inventory out there."
Robert Castellano, president of The Information Network, New Tripoli, PA, says there are signs that an uptick in semiconductor sales has begun, with equipment sales likely to start rising about six months out. Castellano said, "Both long-term business and inventory correction cycles appear to be over. PC sales were up 10% in the US, 20% in Europe, and 7% worldwide. Prices of 64-Mbit SDRAMs have been flat at $9.90 since June 19, and prices of 16-Mbit SDRAMs have been flat at $2 since July 10 and up from $1.85 on June 26." He also cited rising prices for Pentium II processors. "Equipment sales generally follow 6 months later, so we project that the market for front-end processing equipment will drop a total of 9.3% in 1998, but will grow 10.4% in 1999."