Hopes have been high for 2012 to be an improvement on 2011, happily, thus far, all signals continue to support this coming to fruition. Consumer confidence in the US is quietly rising alongside of industrial, manufacturing, durable goods, and automotive sales. Employment in the US is also stabilizing and improving, which of course is a significant driver to the sales and confidence increases.
Positive momentum across the value chain
Further evidence of the positive momentum being real and not a vestige of hopeful economic forecasting, is the continued climb in North American semiconductor equipment orders, or bookings, which are tracked monthly on a three-month moving average (3MMA) basis to smooth out spurious bumps and troughs. Earlier this week, SEMI released their preliminary April 2012 and final March 2012 data for N.A. equipment orders, revealing a continued positive trend for both bookings (orders) and billings (money received).
Last month, we reported that demand strength was continuing and sustaining a greater than parity level, as evidenced by the March 2012 SEMI data. March 2012 was significantly above parity, at 1.12, meaning that US $112 worth of orders were received for every $100 of product billed for that month.
April's book-to-bill ratio of 1.10 is slightly lower than March's, but this should be understood as a positive trend as we are above parity, meaning that orders are higher than billings which indicates a continued increase in orders month-over-month. While the ratio data show a slight drop, if we look at the booking (order) and billing data independently, and compare them month-over-month, the increase is significant as detailed by SEMI:
The three-month average of worldwide bookings in April 2012 was $1.60 billion. The bookings figure is 10.7 percent higher than the final March 2012 level of $1.45 billion, and is essentially flat compared to orders posted in April 2011.
The three-month average of worldwide billings in April 2012 was $1.45 billion. The billings figure is 13.0 percent more than the final March 2012 level of $1.29 billion, and is 11.0 percent less than the April 2011 billings level of $1.64 billion.
"Equipment orders in April increased to the value last reported one year ago," said Dan Tracy, senior director of Industry Research & Statistics at SEMI. "Since the last book-to-bill report, indications of increased spending have come from both the foundry and packaging subcontractor segments."
Data support market trending
As we continue to underscore, while semi equipment data might on the surface seem a bit farther afield from the spot prices or PPV of components, these data are important indicators of the strength of upstream demand and supply in the semiconductor and electronics industry globally. Noting that the book-to-bill data continue to climb for three months in a row now, and coupling this hard fact with increased spending at the fabs, industrial complexes, manufacturing lines, and importantly at the cash register by consumers and enterprises, gives us increased insight into supply and availability of components along the supply chain. In other words, when we consider data such as book-to-bill, we have confirmation of the strength of market trends from within the industry. These upstream supply chain dynamics do help us gauge where the market is going in the near-term, that insight can help to anchor present price and availability trending of components that manufacturers may be trying to procure.