November 19, 2010 - Good news: September numbers for semiconductor equipment demand were a little bit better than originally thought. Bad news: October numbers are worse. More bad news: It's now pretty clear that we're on the downslope of the peak in chip tool demand.
Inside SEMI's October statistics:
- Bookings were $1.65B, the industry's first three-month sequential decline since early 2009. Orders are now close to May levels. Billings were $1.61B, barely flat (0.7%) from September; technically that's an 18th consecutive month of rising, but it's also fourth straight months of ≤4% sales growth, and nine out of 10 in the single digits.
- Both orders and sales remain well above the same period a year ago, but falling noticeably: now ~111% and 134%, instead of the nearly 200% in August. The further we pull away from the downturn, of course, the closer those Y/Y comparisons will come to normalcy -- and eventually we'll be comparing them on the upside, too. Still, the bookings are above the average figure from 2006-2007, noted SEMI president/CEO Stanley Myers, in a statement.
- Perhaps the most glaring indicator of slowing demand, the book-to-bill: is officially below the parity mark at 0.98, the first time that's happened since July 2009 -- meaning fewer orders ($98 worth) were received for every $100 billed. The B:B spent the past 15 months above the 1.0 parity mark, many of them in the "teens" and "twenties" range (1.13-1.23). Generally speaking, sales trail orders by six months or more (litho tools closer to a year, some say), so look for this downward tumble in bookings to eventually be reflected in the sales column.
- With September numbers in, we can calculate prelim. 3Q10 totals: $5.27B in bookings and $4.63B in billings, growth of 12% and 13% respectively -- but well below the 25%-33% Q/Q growth in 2Q10.
SEMI's September numbers were retroactively improved by about 2% (adding roughly $35B) for both billings and bookings; that tweaked up the M/M comparisons to about 3.6% for billings (vs. 1.3%) and -9.1% for bookings (vs. -11%).
While acknowledging "a hesitation in new orders," Myers noted that the waning demand for chipmaking tools merely "reflects seasonal softening and near-term respite in capital spending in some segments of the industry."
In Japan, the downward slide was even more pronounced -- October sales of chip tools slipped about -4% to ¥107.56B ($1.29B), and orders slid nearly -6% to ¥120.41B ($1.44B), according to the SEAJ's monthly statistics. The faster decline in orders, though, kept the book-to-bill ratio above parity at 1.12.