Worldwide highlights

05/01/1998

Worldwide highlights

January equipment book-to-bill softens. January market indicators for the capital equipment and IC markets are showing definite softness, reflecting difficult market conditions sparked by Asian financial problems and continued DRAM price declines. SEMI`s North American capital equipment bookings and sales for January were $1.382 billion, down 10% from December`s $1.531 billion, but up 24% from a year ago. Shipments were $1.465 billion, down 5% from December`s $1.536 billion and up 42% from last year. The resulting book-to-bill is 0.94.

Near-term chip recession unlikely. Although the world chip market has shown some signs of softness in late 1997 and early 1998, the underlying market indicators suggest that a near-term recession is unlikely, and that an upswing in chip sales should arrive in the second quarter, according to quantitative analyst Moshe Handelsman, president of Advanced Forecasting Inc., Cupertino, CA, and developer of the Advanced IC Bookings Indicator. Handelsman cites positive leading indicators for electronic system sales, and continued robust IC unit demand as favorable signs. Handelsman believes the current "softness" is a result of uncertainty regarding several Asian economies coupled with over-capacity that dampens memory average selling prices.

Leadframe industry report. Rose Associates, Los Altos, CA, has completed the first phase of a comprehensive overview of the leadframe industry, which comprises the second-largest semiconductor materials sector with $3.8 billion in annual sales, trailing only silicon wafers. There has been virtually no consolidation over the years - 46 companies were in the business in 1977, and there are 50 today, with the top five accounting for just 40% of the total. One recent issue is the advent of fully palladium-plated frames; these are said to provide a cost advantage of up to 20% over solder-plated frames. But a recent rise in palladium prices may have an effect on the marketplace. Phase II of the study, which will examine products and pricing, is expected to be out in June. For more details, see the March issue of Rose Associates` Electronic Materials Report newsletter.

Chip sales dip in January. Worldwide semiconductor sales in January declined a sharp 4.5% over December levels, according to a report from the Semiconductor Industry Association. All geographic regions declined, and the Asia-Pacific and Japanese sectors were especially hard hit (see table). This is the second consecutive month-to-month decline; December`s results were 5.2% below November`s. The trend is indicative of the market weakness being reported by major chip companies, and suggests that additional softness may still lie ahead.

According to the SIA`s monthly Global Sales Report, world chip sales were $10.97 billion in January, compared with $11.48 billion in December. This is still 2.9% above January 1997`s $10.66 billion, but is the lowest monthly figure recorded since March 1997. January 1996, by contrast, had sales of $12.79 billion.