Semi Equipment Orders Declining At a Faster Rate

Includes: PSI, SMH, SOXX, XSD
by: William Trent, CFA
According to Semiconductor Equipment and Materials International [SEMI]:

North American-based manufacturers of semiconductor equipment posted $1.65 billion in orders in June 2007 (three-month average basis) and a book-to-bill ratio of 0.94 according to the June 2007 Book-to-Bill Report published today by SEMI. A book-to-bill of 0.94 means that $94 worth of orders were received for every $100 of product billed for the month.

The figures for last month were also adjusted downward, indicating that it isn’t just the forecasts that should be taken with a grain of salt. I noted last month that the tiny upturn was probably a head-fake, and believe that the order growth trend will continue to decline for the highly unscientific reason that it always does.

semi equip orders

The good news, of course, is that ordering less equipment will allow demand for semiconductors to catch back up with supply.

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

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