Demand in the global market for integrated circuit products is showing signs of weakening, the US-based Semiconductor Equipment and Materials Institute (SEMI) reported on Friday.

The book-to-bill ratio in the North American semiconductor industry last month fell to 0.99 from April’s 1.04, dropping for the second consecutive month and shrinking below 1 for the first time this year.

A book-to-bill ratio of higher than 1 indicates that demand is higher than supply, while under 1 signals weakening demand.

The SEMI data are usually followed closely by investors and analysts worldwide as an important indicator of the performance of and outlook for the global semiconductor industry.

The data showed that North America-based manufacturers of semiconductor equipment received US$1.56 billion worth of orders worldwide last month on a three-month average basis, down 0.8 percent from April, but 11 percent higher year-on-year.

Those manufacturers shipped US$1.57 billion worth of products last month, an increase of 3.7 percent from the previous month and 11.6 percent year-on-year, according to the data.

With orders on the decline, last month’s book-to-bill ratio fell to 0.99, which means that for every US$99 worth of orders received, US$100 worth of products were billed, SEMI said.

Despite the fall in the book-to-bill ratio, SEMI said, orders and shipments in the industry remained relatively high last month.

Analysts said that due to a fall in the book-to-bill ratio, local semiconductor stocks are likely to face some downward pressure when the local equity market reopens today after a three-day weekend.

There have been concerns that second-quarter inventory adjustments in the global IC industry will extended into the third quarter, which is usually is a peak season for the industry.

Some semiconductor firms are cautious about the third-quarter market outlook, but not Taiwan Semiconductor Manufacturing Co (TSMC, ???), the world’s largest contract chipmaker.

At is annual general meeting on June 9, TSMC said that it would have a better second half following its inventory adjustments.

By: DocMemory
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