Smith Market Blog

Semi Equipment: A mixed story and questions about trending


With SEMI and SEAJ's latest, December Book-to-Bill reports out yesterday (for North American and Japanese semi equipment manufacturers), a little number digging is in order.  On the face of it, by comparing month-over-month ratios, there was a significant drop in December 2010 (0.90) from November 2010 (0.97); a continuation of a longer trend since the summer.  The situation for Japanese semi equipment manufacturers is parallel, although not as significant a drop in December 2010 (1.07) from November 2010 (1.09).

But the similarities end at the ratios, in some important respects.  For North American semi equipment manufacturers, December's 2010 preliminary three-month average of worldwide bookings was US$1.53 billion.  This amount represents an increase of 1.4% over November's US$1.51 billion (cf. here).  Similarly, the same billings set for the same periods for the same set of North American manufacturers also increased, but by a greater amount, December 2010 levels were US$1.70 billion up 8.7% over November's US$1.57 billion (cf. here).  Japanese semi equipment manufacturers did not see increases, rather decreases continuing since the summer also, and particularly from November 2010 to December 2010 for both billings (99,427 million yen), down 7.4% (from 107,339 million yen in Nov.), and bookings (106,833 million yen), down 8.3% (from 116,532 million yen in Nov.) (cf. here).

What does all this mean?  There's wider speculation that semi equipment is set to slow more significantly during (at least) the first half of 2011, compared to 2010.  These numbers are certainly bearing that out.  Why? Well, there's concern that demand is going to slow for many segments during the first half - we're seeing evidence for this in the still skittish economic climate, adherence to lean inventory levels, and the fact that capital investments (CAPEX) are holding at conservative levels.  Will these hypotheses for equipment slows translating into production slows come to fruition?  We'll keep watching these and related industry numbers and keep you posted.

Lisa Ann Cairns, Ph.D.
Written on Friday, 21 January 2011 11:13 by Lisa Ann Cairns, Ph.D.

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