Semiconductor Sales Up, but for How Long?

Robert C. Pini

North American makers of semiconductor equipment are seeing a steady rise in their worldwide bookings of new sales, according to figures compiled by Semiconductor Equipment and Materials International. The monthly reports of book-to-bill ratios climbed from 0.75 last October to 1.30 as of March, which means that $130 in new orders came in for each $100 worth of products shipped.

Some photonics companies are experiencing the upswing. RVSI Acuity in Canton, Mass., reported a 1.10 book-to-bill ratio for the quarter ended Dec. 31, said Neal Sanders, the company's vice president. "The December quarter represents the first positive indication that the tide is coming back in," he said.

Sanders cautioned that stronger sales of photonics technologies would trail the market until chip makers feel the need to expand capacity or make technology changes. "If I have the capacity to inspect a million semiconductors, that capacity is in place regardless of the number of orders coming in," Sanders said, adding that the book-to-bill ratio is still a leading indicator.

Susan Conway, investor relations manager at Cognex Corp. in Natick, Mass., reported that the company's bookings are "way up" over the previous quarter. "We're cautiously optimistic about this area and are seeing the beginning of a pickup but don't believe it's across-the-board sustained," she said.

Des Bradley, vice president of finance and chief financial officer at GSI Lumonics Inc. in Kanata, Ontario, Canada, agreed with the mixed outlook. "We're seeing some signs of improvement, but it's not like we've seen any sustainable trend," he said. "The industry has to get up to fuller capacity before they start buying equipment." The meaning of a book-to-bill ratio, he noted, depends on how far up or down sales were at the starting point.

In this case, sales are coming from a trough in 1998 that most in the industry would rather forget. Semiconductor Equipment and Materials International reported that worldwide shipments fell 21 percent last year, with the worst declines in Korea, Japan and North America.