Outlook for Semis Continues to Improve

According to Semiconductor Equipment and Materials International [SEMI]:

North American-based manufacturers of semiconductor equipment posted $1.12 billion in orders in January 2008 (three-month average basis) and a book-to-bill ratio of 0.89 according to the January 2008 Book-to-Bill Report published today by SEMI. A book-to-bill of 0.89 means that $89 worth of orders were received for every $100 of product billed for the month.The three-month average of worldwide bookings in January 2008 was $1.12 billion. The bookings figure is about three percent less than the final December 2007 level of $1.16 billion and 22 percent less than the $1.45 billion in orders posted in January 2007.

22.3%, to be exact. To me, this is good news for semiconductor manufacturers, because the demand for chips is still growing - barely. With equipment installations going down, the oversupply that currently exists will soon be absorbed, recession or not.

Disclosure: Long SMH, MXIM; wrote put options against LRCX