Worldwide Highlights
11/01/1996
Worldwide highlights
Chip sales rebound in September; book-to-bill hops up to 0.99. American chip sales rebounded in September, rising 9% from August levels to $3.19 billion, and the Semiconductor Industry Association`s book-to-bill ratio jumped to 0.99. The uptick moves the much-watched ratio to its highest point of the year, and may be the first real indication that the chip market is coming back from its doldrums.
The World Semiconductor Trade Statistics group said that new orders grew $265 million to $3.19 billion, while billings rose 2.1% to $3.22 billion. "From any perspective, these are the most positive numbers we`ve seen all year," commented Douglas Andrey, the SIA`s director of information systems and finance. "The modest increases in orders for August and September suggest that the 1996 slowdown in growth has bottomed out." The order level was the strongest since March.
In addition, the August book-to-bill, originally reported at 0.90, was revised upward to 0.93 as later numbers came in.
Positive trends were also reported outside North and South America. The global book-to-bill for August was pegged at 0.97, up from 0.95 in July and 0.93 in June. In Japan, WSTS reported a book-to-bill of greater than 1.0; Japan`s ratio was 1.02 in July.
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Figure 1. Total chip book-to-bill ration
While it is certainly too early to declare the downturn over, the rise in orders would seem to indicate that system manufacturers have worked through their excess inventory, and are expecting good business in the fourth quarter. In addition, spot memory prices jumped substantially in early October, indicating that supply and demand in the DRAM market have come closer to equilibrium. The October and November book-to-bill ratios will be important indicators of whether this upturn has legs or is merely a blip before a "double dip" takes place.
Chipmakers reduce capital spending. Motorola, which last year estimated calendar 1996 spending at $2 billion to $2.5 billion, now expects to spend about half that total, in response to market conditions. The company had already added a year to the construction schedule for its new fab in Richmond, VA. NEC will cut its capital outlays to under 200 billion yen ($1.8 billion) from an original estimate of 210 billion yen ($1.9 billion). Toshiba is also trimming about 10 billion yen from its capital budget, reducing it to about 170 billion yen ($1.5 billion) by postponing capacity expansions at Oita, Oita Prefecture, and Yokkaichi, Mie Prefecture. Fujitsu will cut tens of billions of yen from its estimated 200 billion yen capital budget. Mitsubishi will bump about 30 billion yen in investments into the next fiscal year.
The United States Display Consortium expects to develop research programs in several new areas of display manufacturing, and hopes to publish a roadmap of display technology needs by mid 1997. Infrastructure projects on display manufacturers` needs will include programs in cell assembly and sealing, cleaning technology, phosphor deposition, color filter plates, and additional aspects of substrate handling and driver infrastructure needs. Pending the final 1997 funding level, several additional projects will be identified over the coming year. In addition, the USDC has begun the Electronic Display Industrial Research Association of Korea, with an eye toward finding mutually beneficial methods of cooperation.
PC sales update. Developments in the personal computer market continue to be closely watched bellwethers for the near-term future of the chip industry: Compaq Computer Corp. says that there has been no change in its business outlook and that the company continues to expect a strong second half. Dataquest reported that second quarter Latin American computer sales were up 32% over year-ago levels, making it the second-fastest growing region. International Data Corp. predicted motherboard semiconductor revenues (for PCs, PDAs, and organizers) would total $32.9 billion for 1996, a slip of 4.1% from the $34.3 billion recorded in 1995, despite an increase in boards shipped and a substantial growth in their average amount of memory.
Stepper shipments. The world`s 10,000th wafer stepper probably shipped in January or February of this year, according to VLSI Research. Cumulative investment in steppers has been $17 billion, with 44.4% of all units being i-line, 34.4% g-line, and just 1.8% deep UV. As of year end 1995, step-and-scan accounted for 0.3%. For the year 1995, 5? i-line tools were the clear leader, holding 83% of a $3.2 billion market. Remarkably, 1? steppers retained a 6% market share in `95, up from just 3% in 1990.
SEMICON/West `96 attendance analyzed. With a new computerized registration system, SEMI was able to accurately analyze nonexhibitor attendance at SEMICON/West `96 this past July. The show in Silicon Valley attracted more than 8000 visitors from outside California, including more than 3000 from outside the US (Fig. 2).
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Figure 2. SEMICON/West `96 attendees by region.
The new attendance tracking system eliminated duplicate entries into the show and eliminated exhibitor personnel. Attendees were also found to be interested in both back and front end - 35% of the visitors said they had come to view front-end process equipment and materials, 24% for assembly and packaging, and 20% for test equipment.
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Modem IC market CAGR put at 31.5%. New market studies analyze the growth of the consumer electronics market, and demonstrate increased use of high-speed modems and videoconferencing, both of which bode well for semiconductor manufacturers. Dataquest reports that the worldwide consumer electronics semiconductor market grew to $24.6 billion in 1995. Toshiba emerged as the top player with revenue of nearly $3.3 billion and a 13.4% share (Table 2). International Data Corp. predicts that revenues from modem semiconductors will grow 31.5% per year compounded annually, to reach $5.4 billion by 2000.
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Figure 3. Semiconductor demand in Japan, US, and Western Europe by end use for 1995.