Semi Equipment Orders Virtually Flat
According to Semiconductor Equipment and Materials International (SEMI):
North American-based manufacturers of semiconductor equipment posted $1.42 billion in orders in March 2007 (three-month average basis) and a book-to-bill ratio of 1.00 according to the March 2007 Book-to-Bill Report published today by SEMI. A book-to-bill of 1.00 means that $100 worth of orders were received for every $100 of product billed for the month.
We’ll work on the assumption that the numbers are correct this time. You can’t get much closer to flat than 2.3% year/year.
Furthermore, the year/year growth in equipment orders in March was less than the 4.2% growth in end demand for semiconductors. When the March semi sales data comes out in early May, we’ll find out if supply grew at a slower rate than demand for the first time in 15 months.
Even if that were the case, the existing orders will ensure that the industry overcapacity remains for some time. However, the stock market tends to look into the future, and supply growth at a slower rate than demand growth would have positive future implications.
Disclosure: William Trent has a long position in SMH.
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