Semi Equipment Order Downturn Unlikely To Be Just One Month

by: William Trent, CFA

According to trade group Semiconductor Equipment and Materials International [SEMI]:

“Bookings and billings remain at levels above a year ago, and there is relative equilibrium in the book-to-bill ratio, which has remained very near parity for half of a year,” said Stanley T. Myers, president and CEO of SEMI. “We are surveying member companies and will issue a new consensus forecast outlook for capital equipment next month during SEMICON West.”

If the industry group is to be believed, the one-month semiconductor equipment sales decline in April will mark the shortest semi equipment contraction in history. Which is a big part of the reason why I don’t believe it.

semi equipment orders

The other part is that I’m hearing about more and more order pushouts of exactly the type I have been predicting here for over a year.

Don’t get me wrong - I think this is exactly what their customers need to be doing, which is why I have taken a neutral to bullish outlook toward the semiconductor stocks.

Disclosure: author has a short position in SMH put options at time of publication.