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Technology / AI and automation

BOOK-TO-BILL RATIO FALLS TO 0.94 AND RECESSION INTO FIRST QUARTER 1990 SEEN

The ever-bullish Semiconductor Industry Association seems to think it its duty to be as upbeat as possible about the industry at all times, so that instead of coming right out and saying that the one indicator it has educated everyone to watch, the book-to-bill ratio, fell to 0.94 in August, its lowest since last October, it spends 17 lines saying that shipments in August were a record. Shipments will of course have already figured as orders in the figures for earlier months of the year. The August figure for shipments to the US market was 15.3% up on the July figure, reaching $1,239.4m but only 0.5% up on the May figure, and only 6.6% up on the figure for a year ago. Average monthly orders for the three-month period to August were $1155.4m, 3.0% down on the July figure, 9.6% down on May and 3.9% down on the relevant figure for a year ago. The June book-to-bill figure has been revised downwards to 0.98 from the 0.99 reported in July. All of which leaves chip industry guru Moshe Handelsman to strengthen his warning of tougher times to come in tyhe chip industry. In each of the past four years, orders have turned up after the usually slow summer quarter but This year will be different, declares Dr Handelsman, who is president of Advanced Forecasting. My analyses show that IC orders in 1989 will repeat 1984’s pattern by continuing to decline during the last quarter of the year. It is the first time since 1985 that our orders forecast does not turn up in November, he notes. This time I predict orders to hover around the $950m mark he says, implying a drop of 15% on the peak reached in April this year. Based on the quantitative forecasting models we use, which employ only numeric data on economic factors and do not rely on information from the field, I expect orders decline to continue and generate a trough in the first quarter of 1990, he says. His one bright note is that his computer end-equipment leading indicator has continued to turn up during the past few months, in a pattern similar to the one it made in 1985 which announced the end of that recession.

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CBR Staff Writer

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