Supply and Demand Outlook for Semiconductors 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 no.

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

Disclosure: William Trent has a long position in SMH.

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One Comment on “Supply and Demand Outlook for Semiconductors Continues to Improve”

  1. [...] good news, as I see it, is that orders for semiconductor manufacturing equipment were down 22.3% in January.  Less equipment means less capacity, and even the same amount of sales generation will soak up [...]

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