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Semi Equipment Numbers Up for November – Telling or not?


Interestingly, SEMI's book-to-bill ratio for North American semiconductor equipment came out here yesterday and for the first time since March and April of this year, we saw an increase in the ratio, rather than the continued slide – and that two month climb was the first since June 2010 (see here for the full historical data set from SEMI).

Book-to-bill ratios capture, at a three month moving average (3MMA) the ratio of billings (product billed) to bookings (orders received), which gives us a good indicator of health and stability levels in the industry more generally.  In the case of NA semi equipment, gauging the purchasing of equipment gives us insight to future capacity trending and CAPEX spending which can be used, loosely, to aide in demand forecasts and market stability.

That we see a slight increase of almost 0.1 (from 0.74 in October to 0.83 for November).  This movement tells us that there is some stability and positive momentum, but it is still a very tempered business situation.  Certainly the dampening effects on the PC supply chain due to the HDD shortages caused by the devastating floods in Thailand are affecting 1H12 orders and weakening demand along the PC supply chain (aside from HDD demand, of course).

However, it is important to note the roughly 5% gain in bookings (up from October's US $926.8 million to Novembers preliminary US $973.3 million).  That tells us that there is some positive outlook going forward, however, as SEMI reminds us here, we are still a far 35.7% below the November 2010 level of US $1.51 billion in orders.

With site access improving in Thailand now, and some clean up continuing, there is hope that during 2Q12 we may see an increase in equipment orders as new equipment will be necessary, manufacturers will be coming back online either in cleaned up facilities in Thailand, or perhaps expanding existing capacity at their other sites elsewhere.  There is still much news to come over the next month or so as companies make their final assessments regarding losses, ability to retool and/or rebuild, or simply shut down the severely flood-damaged sites in Thailand (see, for example, the decision by ON Semi as reported here by Reuters).

Lisa Ann Cairns, Ph.D.
Written on Friday, 16 December 2011 11:56 by Lisa Ann Cairns, Ph.D.

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