With SEMI's January Book-to-Bill Report out yesterday, one might initially be concerned by the continued slide in the ratio since late summer 2010. Analysts are seeing the 0.85 book-to-bill ratio not as part of a long slide that has included four straight months of below parity ratios (meaning a value less than 1), but rather a sign of continued strength and balancing prior to a 're-acceleration.'
As Stanley T. Myers, president and CEO of SEMI, noted, "Industry spending remains solid at the start of the year and we are encouraged by the strength in capital expenditure plans announced over the past month."
What this means is that January is typically a slower month, but the 2011 bookings orders, while down 2.9% month-over-month from December 2010 (at US $1.54 billion), are 30.3% above the year-over-year results from January 2010. Billings figures are even more astounding when compared year-over-year to January 2010, up 88%! Month-over-month, billings are up 2.5% for January 2011 over December 2010 (at US $1.803 billion).
Okay, so the drop in the book-to-bill ratio is not as ominous as one might think at first glance (when put into perspective compared to both last year and last month) but is it enough to warrant "encouraging" views of a "re-acceleration" in the semi market?
The encouraging views of the semi market are coming from beyond these numbers; the increase in CAPEX at the foundry level and for semi equipment globally is the actual source of good news. As EETimes cited from Barclays Capital recent report, "We continue to see positive trends for semi equipment extending into 2012, led by an ongoing foundry arms race supported by increased capital intensity at the next nodes, NAND likely edging higher, and DRAM re-accelerating into 2012 as well."
The drivers for these positive views? The presently sustained and increasing demand for smart phones and tablets (smart wireless devices (SWD)). The demand for the ICs supporting the SWD market has pushed utilization rates into the high 90-percentiles for the top foundries and increasing to 100% going into 2Q11. The worry on the horizon? Will the consumer and enterprise demand for all the new smart phones and tablets sizzle or fizzle?