Concern over semiconductor slowdown

Decline in demand for semiconductor equipment could be seasonal, or could be beginning of slowdown in world demand
Written by Matthew Broersma, Contributor

New figures from the semiconductor industry underscore a potential slowdown in the chip industry, though observers say it is too early to point to a slowdown in worldwide semiconductor demand.

Industry trade group Semiconductor Equipment and Materials International (SEMI) said the book-to-bill ratio for semiconductor equipment makers was 1.16 for September, meaning demand outstripped supply by 16 percent. That compares to a ratio of 1.23 for August.

A SEMI spokeswoman said the drop in numbers was merely seasonal, and that the figures indicate an expanding market.

Equipment sales are a way of measuring the amount of investment semiconductor manufacturers are putting into manufacturing facilities, an indication of how they think semiconductor demand will grow in the future.

The slackening of semiconductor equipment demand, along with profit troubles for such companies as Ericsson, National Semiconductor and Intel, has some analysts speaking of an industry-wide slowdown. That would be a surprise, since demand for semiconductors -- the basic building blocks of everything from mobile phones to Internet servers -- is in the midst of a cyclical boom.

Dataquest predicts semiconductor demand will remain strong through 2002, but analyst Richard Gordon said growth for the next few months may turn out to be somewhat less than anticipated. "There will be plenty more fabs [manufacturing plants] required over the next months and years," Gordon said. "What we have seen so far is more a tempering in expectations, rather than a decline in the market."

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