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To: Tenebrous who wrote (22914)	8/20/1999 2:03:00 PM
From: BillyG	Respond to of 25960

Chip gear index eases back a bit, but recovery continues, says SEMI A service of Semiconductor Business News, CMP Media Inc. Story updated 9:15 a.m. EST/6:15 a.m., PST, 8/20/99 By J. Robert Lineback MOUNTAIN VIEW, Calif.--The 1999 recovery in chip-production equipment appears to be hitting a plateau in the summer months, based on new market figures released by the Semiconductor Equipment and Materials International (SEMI) trade group here. SEMI's book-to-bill index for North American manufacturers eased back to 1.11 in July from June's 1.21. The drop was due to an 8% decline in new orders for capital equipment in July compared to June. The book-to-bill ratio has steadily dropped since March when it hit 1.33. July's ratio of 1.11 indicates that for every $100 worth of product, semiconductor equipment suppliers were receiving $111 in orders. While SEMI's July book-to-bill continues to show chip makers increasing their spending on production systems, it also reflects that new purchases "have been selective and mostly technology driven," said Stanley Myers, president of the trade group. So far in this recovery cycle, demand for higher volumes in semiconductor production has not yet played a factor in capital spending plans. "The level of orders we're seeing at this stage of the recovery is consistent with analysts' predictions for slow and relatively steady growth in this cycle," Myers said. Earlier this week, managers at Applied Materials Inc. said they expected to see a plateau in new orders for fab equipment as chip makers digested the last spike in bookings. Applied, the world's largest supplier of chip-making gear, reported a record $1.46 billion in its fiscal third quarter, ended Aug. 1, which represented a 5% increase from $1.39 billion in the previous quarter (see Aug. 17 story). The leveling of equipment orders is occurring for a variety of reasons, according to Joseph R. Bronson, senior vice president and chief financial officer at Applied. Much of the slow down in bookings can be linked to the use of new technologies--such as copper interconnects--and device shrinks to 0.18-micron feature sizes, which require yield improvements before chip makers ramp up volumes, he told financial analysts during a conference call on Tuesday. "It is a mixed bag across the customer's space," Bronson added. Applied managers believe the plateau could last for one or two quarters, and then new orders will take off again by early next year. SEMI's three-month average of worldwide shipments in July was at $1.264 billion, essentially flat with the June's billings but 14% higher than $1.112 billion in July 1998. The three-month average for bookings in July was $1.406 billion, an 8% drop from $1.526 billion for June but a 96% increase from $718 million in July last year, which was at the low point of the slump.