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To: Clint E. who wrote (23003)	8/20/1999 9:00:00 PM
From: Clint E.	Respond to of 69381

Friday August 20 6:59 PM,,,Chip Equipment Stocks Fall On Monthly Data NEW YORK (Reuters) - Monthly data for North American semiconductor equipment makers showed recent momentum slowing in July, sending shares of top companies, including bellwether Applied Materials Inc. (Nasdaq:AMAT - news), lower Friday. Orders for chip equipment companies, which manufacture the hefty machinery used by semiconductor companies to make computer chips, dipped about 8 percent in July from June, according to the trade group Semiconductor Equipment and Materials International (SEMI). Analysts said the data reflects a pause in the industry's recent recovery. ''We believe the rate of acceleration in the book-to-bill should continue to slow over the next few months, as shipment momentum continues to build,'' said Mark Fitzgerald, a Merrill Lynch analyst, in a note to clients. North American-based manufacturers of semiconductor equipment received an average of $111 in orders for each $100 worth of products shipped, SEMI said. In June, the ratio of bookings to billings was $121 for each $100. Investors use the statistic as a way to gauge the industry's future financial prospects. Equipment makers include giant Applied Materials, with revenues equal to several of the next largest names in the sector, and companies like KLA-Tencor Corp., Teradyne Inc. (NYSE:TER - news) and Novellus Systems Inc. (Nasdaq:NVLS - news) They supply better-known semiconductor companies like Intel Corp. (Nasdaq:INTC - news) and Motorola Inc. (NYSE:MOT - news) with multimillion-dollar equipment that is used in the fabrication plants to make computer chips. The S&P Semiconductor Equipment stock index closed down 1.77 percent at 293.32 Friday. Applied Materials fell 1-6/16 to 63-15/16, Novellus dropped 3 to 54-7/16, while KLA fell 3/16 8 to 62-15/16 and LAM Research Corp. gave up 1/4 to 49-7/8, all on the Nasdaq stock market. Teradyne, which lists on the New York Stock Exchange, was off 1-5/16 at 64. ''The leveling 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,'' Stanley Myers, president of SEMI, said in a statement announcing the data. But analysts said the new data highlighted the divergence within the equipment-making industry between producers of wafer manufacturing and other production equipment and makers of later-stage test and assembly equipment. Fitzgerald said semiconductor unit production volumes are ''through the roof,'' boosting demand for equipment needed to assure the quality of these complex products. ''You have to test every unit, so it is really driving up demand,'' the analyst said. CS First Boston analyst Kathryn Buergert said in a note to clients that while demand for chip equipment from Taiwanese makers of cell phone memory chips is up, other computer chipmakers are digesting recent purchases of equipment. ''Sequential orders are likely to slow in H2 (1999 second half), following high activity in this cycle's initial expansion phase,'' Buergert wrote. She said the next uptick for the industry will not come until chipmakers accelerate the adoption of the next generation of microscopic equipment. S.G. Cowen analyst Tia-min Pang concurred, saying that ''Following a flattish remainder of (1999), we believe that the industry will re-accelerate in 2000.'' The three-month average of worldwide shipments in July 1999 was $1.3 billion, SEMI said in a report issued late Thursday. The figure was essentially flat with the June 1999 level but was 14 percent above the shipment level of $1.1 billion in July 1998, when the industry was still in a slump. The three-month average of bookings in July 1999 was $1.4 billion. The bookings figure was 8 percent below June 1999 but 96 percent above the July 1998 level of $718 million. The semiconductor equipment industry is notorious for its boom-and-bust cycles. Bookings in July 1999 were still about 15 percent shy of the industry's previous peak of $1.6 billion reached in November 1997, Pang noted.