SEMI's March Book-to-Bill data for North American semiconductor equipment continues to confirm 2012 outlooks that we are in the upswing of demand and positive market sentiment, both for company revenues and for end-product demand. All good news and worth confirming after the ups and downs of 2011 which lingered into 1Q12.We discussed the importance of February's Book-to-Bill data last month, which was the first time that the ratio of bookings to billings reached parity (meaning that for every US $100 ordered, US $100 of product was billed for the month, that would be parity, or a ratio of 1.0). February broke through to parity for the first time since Fall 2010. The March 2012 three-month moving average (3MMA) ratio was 1.13, edging 0.12 higher than February (see the following graph from SEMI, and reprinted here by Solid State Technology).
The source of the imbalance from parity, ratio of 1.0, is important to understand, because when we exceed parity, we need to watch the trending in an equal fashion as when below parity. For the March data, worldwide bookings reached US $1.479 billion, 10.7% higher than February, and billings reached US $1.311 billion, 0.9% lower than February. Both bookings and billings for March 2012 are lower than March 2011, meaning there is still a shortfall compared to last year, but the strength of the billings increase underscores positive momentum.
As cited in the SEMI report, Denny McGuirk, president and CEO of SEMI explained the importance of the values, "Equipment orders continue to increase and have improved to the highest reported value since July 2011. […] The semiconductor equipment market outlook has strengthened since the beginning of the year as reflected in the increasing bookings rate."
Combining Book-to-Bill data with other industry data at the fab level, gives us important views into the supply situation for the semiconductor industry. Earlier this month, we connected some of the dots that are lending increasing confidence to the assertions of 2012 growth prospects.
On a more global level, and as first noted by EETimes here, while the North American Book-to-Bill ratios are improving and above parity, the opposite is true for the situation in Japan. As EETimes notes:
"The Semiconductor Equipment Association of Japan (SEAJ), SEMI's Japanese counterpart, reported that the book-to-bill for Japanese chip equipment vendors declined for the third straight month in March.
Japanese equipment vendors posted a book-to-bill ratio on a three-month average basis of 0.78 in March, down from 0.98 in February, according to SEAJ."
In light of the strength of the Japanese yen, some of the decline can be quickly understood. However, taken with other problems facing the Japanese manufacturing sector, for example the bankruptcy of Elpida and other concerns for some of the major Japanese companies, there are questions around the situation that continues to develop in a negative direction.
With consumer demand strengthening, especially in emerging economic markets, and the continued belief of a recovery in the US, there is still plenty of time for balance and growth to solidify for the global semiconductor industry, being lead, of course, by the intense demand for mobile devices.