North American-based manufacturers of semiconductor equipment posted a book-to-bill ratio of 0.93 in July, up from 0.90 in June, according to the Semiconductor Equipment and Materials International (SEMI) trade group on Friday (August 19).

A book-to-bill of 0.93 means that $93 worth of orders were received for every $100 of product billed for the month. The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North American-based semiconductor equipment manufacturers.

The three-month average of worldwide bookings was $1.02 billion in July, down 2 percent from the revised June 2005 level of $1.04 billion and 36 percent below the $1.59 billion in orders posted in July 2004.

The three-month average of worldwide billings in July 2005 was $1.10 billion. The billings figure is 5 percent below the revised June 2005 level of $1.15 billion and 28 percent below the July 2004 billings level of $1.53 billion.

"North American providers of new semiconductor manufacturing equipment continue to post overall bookings levels in 2005 that are below those in 2004 but stronger than the prior year," said Stanley T. Myers, president and CEO of SEMI, in a statement. "The current data suggests that semiconductor manufacturers continue to remain somewhat cautious about increased capital spending as we enter the second half of the year."

In comparison, Japanese semiconductor production equipment manufacturers posted a book-to-bill ratio of 1.08 for July according to the Semiconductor Equipment Association of Japan. This was essentially flat with a book-to-bill ratio posted for June 2005 of 1.09.

The overall picture remains mixed, but one analyst is bearish, especially about 2006. Based on recent data from Applied Materials Inc. and Ultratech Inc., Bill Lu, an analyst with Piper Jaffray (Minneapolis, Minn.) is maintaining his view that capital spending will be flat in 2006.

Applied, the world's largest supplier of semiconductor equipment, this week met Wall Street’s expectations despite a down quarter in terms of sales. And the company’s outlook remains mixed amid ongoing sluggish orders from the silicon foundries and in China.

“Revenues of $1.63 billion were in line with our estimate and slightly below Street consensus,” Lu said. “EPS of $0.15, excluding one-time tax benefit of $0.08, was one cent higher than guidance of $0.12- $0.14.”

Applied’s fiscal fourth quarter guidance is “better than expected,” Lu said. “Management guided for 5-10 percent growth in F4Q05 bookings, flat to slightly down revenues, and EPS of $0.13-0.14. We were above consensus and had expected flat quarter-over-quarter bookings.”

The company also indicated bookings could be up in its first fiscal quarter of 2006. “We believe the incremental strength is coming from management's confidence in the return of foundry orders and growth from service and flat panel businesses,” he said.

But the analyst remains bearish. “Is this the start of a cycle? We do not think so,” he said. “2006 still looks relatively flat from 2005 in terms of global capital spending, and a 5-10 percent booking increase is a relatively small move following a worse-than-average decline of 5 percent in the previous quarter.”

Meanwhile, in its 8-K issued on Thursday (August 18), Ultratech did not change its guidance, but “the company did use some cautious language that clearly indicated near-term uncertainty in its business,” said Avinash Kant, who watches the fab-tool industry for investment banking firm Adams Harkness Inc. (Boston).

“The company cited likely pushouts in the advanced packaging due to ‘political events’ in Taiwan,” Kant said in a report, referring to the island’s export-control policies with China. “We believe this has to do with Taiwan not allowing its companies with offshore fabs to use ‘cutting edge’ technology [in China].”

On the laser thermal processing (LTP) market, Ultratech will realize revenues for its new tools in the fourth quarter. The company has generated sales for three-to-four tools, he said.

By: DocMemory
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