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To: Johnny Canuck who wrote (39748)	6/18/2003 1:32:30 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 71511

Chip gear orders drop a notch By Reuters June 17, 2003, 5:06 PM PT Chipmaking gear orders inched down in May as demand for some equipment remained sluggish, according to a trade group. Orders for semiconductor manufacturing and testing equipment from North American chip-equipment makers fell 1 percent in May from April, Semiconductor Equipment and Materials International (SEMI) said Tuesday. The three-month average of worldwide orders in May was $751 million, down from the revised April figure of $757 million and 32 percent lower than the $1.11 billion in orders in May 2002, according to the industry group. Equipment billings, or the value of chip-making gear accepted by customers and booked as revenue, was $840 million, or even with the revised April level, and 3.5 percent below May 2002 billings of $870 million. The figures indicate a ratio of orders to billings, known as the book-to-bill ratio, of 0.89, meaning that $89 worth of new orders were received for every $100 of product billed the for the month, the San Jose, Calif.-based group said. "The outlook for front-end equipment remains sluggish, suggesting a single-digit recovery this year, although some analysts remain hopeful for the possibility of 10 to 15 percent billings growth in 2003," Stanley Myers, president and chief executive of SEMI, said in a statement. Front-end chipmaking equipment is gear that etches the patterns for chips on silicon wafers and applies the different layers of metal on semiconductors. Vendors include Applied Materials, KLA-Tencor and Novellus. "Conditions are more positive for the test, assembly and packaging segment," Myers said, adding that this sector is posting "modest gains and could experience a double-digit recovery this year." Companies in this area, known as the back-end of the chipmaking process, include Teradyne and Kulicke & Soffa Industries. On June 11, the Semiconductor Industry Association (SIA) slashed its forecast of growth in global sales of semiconductors in 2003 by nearly half, citing anemic spending on information technology, the SARS (severe acute respiratory syndrome) epidemic and the war in Iraq. Sales of chips used in everything from computers to microwave ovens to automobiles will rise 10.1 percent to $154.9 billion this year, the SIA said in its midyear forecast, down sharply from its November 2002 forecast for an increase of 19.8 percent. Chip equipment companies are still seeing lower orders and profits amid the protracted slowdown in that industry. On May 29, Novellus reaffirmed its outlook for lower second-quarter bookings and earnings per share, citing weak demand due to SARS. North American chip-equipment makers account for more than half of the total world market for the multimillion-dollar equipment that chipmakers such as Intel, Samsung Electronics, Toshiba, Texas Instruments and STMicro use. Story Copyright © 2003 Reuters Limited. All rights reserved.