Confounding analysts who had been looking for a figure close to July’s 1.12 – now confirmed, the Semiconductor Industry Association’s book-to-bill ratio for August plunged to 1.07; it was also the 22nd consecutive month that the ratio has been above 1.0, the longest such string since 1980, which implies that the long bull market for chips may be drawing to a close. Average monthly orders for the three months to August were down 2.3% on the July figure at $2,237m – but still a strong 37.0% higher than the figure compiled a year ago. Shipments based on the same three-month moving average were up 2.5% at $2,095 on the July figure and 38.6% up on the August 1992 figure. Actual shipments in August were up 10.7% on July at $2,052m. The ratio this time last year was 1.09, and fell to 1.07 in September before going up to 1.11 in October, since when it has stayed above 1.10 until now. But according to Dow Jones & Co, analysts had expected that booming summer business conditions held up nicely in August. At worst, they said, the ratio should show a slight weakening from July, but with overall business conditions well above normal seasonally low levels. The average estimate of four analysts surveyed by Dow Jones puts the August book-to-bill ratio at about 1.11, although one was a super-bear, going for 1.05, and the highest was 1.15. It should be a good month, said Lehman Brothers analyst Michael Gumport, the one that went for 1.15; it was Krishna Shankar of Salomon Brothers that was the bear, although he adds that even a decline to 1.05 wouldn’t indicate any fundamental slowing of semiconductor industry growth. I think it’s more a seasonal effect, he said. Mark Edelstone at Prudential Securities told Reuter he saw the ratio dropping below 1.10 but said those results should still be viewed positively as the summer months are traditionally the industry’s slowest. Deepening recession in much of Europe (you just know those figures showing a glimmer of growth in Germany are rogue ones, don’t you), has less impact on the chip industry than on many others in electronics because of the Big Three markets, North America, Japan and Europe, it is the smallest; but many chips sold in the US and Japan end up in kit sold in Europe.
