Analysis: After slow quarter, semiconductor manufacturing equipment shows new signs of life.
For three months, beginning in July, the major index by which the U.S. semiconductor manufacturing equipment gauges its health took a dip, leaving executives in a highly cyclical industry in nail-biting mode. Since then, however, they seem to have recovered some of their composure.
At the center of this angst is SEMI’s book-to-bill ratio, which is a three-month moving average of bookings and billings for equipment makers. From a high of 1.1 in June, it dropped to 1.0 in July, then to 0.98 in August and again to 0.97 in September. A ratio of 1.0 means that for every $1 dollar received, $1 in equipment was billed.
Positive numbers are a good measurement of an industry retooling for the next node or dealing with a surge in semiconductor demand. Negative numbers are an early indicator of a dip, and depending on how low those numbers plummet, they can be indicative of a looming downturn. So the return to positive preliminary numbers—1.05 for October—is a big relief for the equipment industry.
There are plenty of reasons for a surge in equipment these days. The moves to finFETs at 16nm and 14nm, 2.5D packaging, through-silicon vias and 3D-IC, complex testing and the specter of 450mm wafers all require massive retooling. But those changes also are expensive, and foundries have been holding back on purchases in some areas until they can balance demand with investment. How quickly these changes will unfold will affect this upward trend. Still, at least for now there is good news to report.
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