Chip industry hits a decade low point

Semiconductor Equipment and Materials International, or SEMI, this week said that its April book-to-bill ratio of 0.42 is the lowest it has seen about 10 years. The San Jose, Calif., organization tracks shipments and orders worldwide for North America-based semiconductor-equipment makers.

SEMI laid the blame for the slowdown in the semiconductor industry on the economic downturn in the United States. With chipmakers fighting to reduce inventories, most have scaled back plans to add manufacturing capacity, which affects the book-to-bill ratio.

The ratio reflects a three-month moving average that compares the number of new orders placed for semiconductor-manufacturing equipment with the amount of new equipment shipped to customers. The figure of 0.42 means that for every $100 of equipment shipped during April, only $42 in new orders were received.

"The book-to-bill ratio is the lowest that the industry has posted in the past decade and reflects the sharp order decline in April 2001," said Stanley Myers, CEO of SEMI. "Cancellations of previously reported orders for semiconductor-manufacturing equipment were a significant contributor to the monthly bookings decline as worldwide chip manufacturers make adjustments to bring capacity and inventory in line with demand."

By comparison, November's ratio was a much more favorable 1.12, meaning $112 in orders received for every $100 worth of equipment shipped. Since then, however, the ratio has fallen steadily. In February, it was 0.71, and in March, 0.59.

Meanwhile, both shipments of and orders for chipmaking equipment have been down as well. The three-month average of orders, or bookings, in April was $711.8 million, 41 percent lower than March's $1.2 billion and 74 percent lower than April's $2.7 billion.

Average shipments in April accounted for $1.7 billion, a drop of 17 percent from March's $2 billion and down 15 percent from April's $1.99 billion.