Chip-equipment orders to fall 10-20% in Q4
By Mark LaPedus
Silicon Strategies
09/30/2004, 11:02 PM ET
SAN JOSE, Calif. — Orders in the semiconductor equipment sector are projected to fall by up to 20 percent in the fourth quarter of 2004, according to an industry analyst.
This week, in fact, a number of chip-equipment vendors warned of lower sales and dreaded order push-outs in the current quarter. Advanced Energy Industries Inc., ASML Holding NV, Entegris Inc. and Robotic Vision Systems Inc. separately projected weak quarters going forward. And SG Cowen Securities Corp. lowered its forecast for Agilent Technologies Inc. — again.
Generally, chip-equipment orders are projected to fall 10-to-20 percent in the fourth quarter, said Avinash Kant, an analyst with investment banking firm Adams Harkness Inc. of New York.
Following a slowdown in the backend, Kant recently said the chip-equipment book-to-bill ratio for August was below expectations. The front-end book-to-bill was 1.05 in August, up from 1.07 in July; meanwhile, the back-end was 0.80, down from the revised 0.93 figure, according to the analyst (see Sept. 20 story).
Indeed, the backend is taking a beating, especially suppliers of automatic test equipment (ATE). Credence Systems Corp. and LTX Corp. have lowered their respective quarterly forecasts. And amid an apparent slowdown in the chip packaging and test markets, SG Cowen in August reduced its forecasts for ATE rivals Agilent and Teradyne Inc. (see Aug. 30 story).
On Thursday (Sept. 29) SG Cowen lowered its estimates for Agilent — again. Agilent's test and measurement business is surprisingly robust, while its semiconductor product sector is holding its own.
Agilent's semiconductor test business is weak, however. This business is projected to realize sales of $140 million in the current quarter, down $60 million from the previous period, according to SG Cowen. In all, SG Cowen lowered Agilent's overall fiscal Q4 EPS from $0.30-to-$0.35, to $0.28.
In addition, the front-end now appears to be in limbo. Entegris enjoyed rising profits in the previous quarter but sees a down quarter ahead. "Key data point in the release was that the materials side of the business has remained steady while the equipment side of the business has been falling, in line with our expectations," Kant said.
Advanced Energy, a supplier of systems for the semiconductor equipment industry, on Wednesday (Sept. 29) lowered its forecast for the third quarter.
The company now expects third-quarter sales to be approximately $91-to-$93 million, or 15-to-16 percent lower than second quarter 2004 sales of $108.9 million, due to a general softening in demand patterns and customer order push-outs in the semiconductor and flat panel display industries. The company previously anticipated sales in the range of $103-to-$107 million for the third quarter of 2004.
"This was not a surprise; following pre-announcement by MKS Instruments two weeks ago," Kant said, referring to rival MKS. "We expect business to remain tough during the second half of 2004." |
