Demand for Chips Leaps in February

The Semiconductor Industry Assn., an industry group, said Wednesday that its closely watched index of new orders for computer chips rose sharply last month.

The group said the February book-to-bill ratio, which measures the rate of new orders against shipments to fulfill old orders, rose to 1.07 from 1.00 in January.

Calling the February figure “fantastic,” Drexel Burnham Lambert analyst Michael Gumport said the ratio could reach as high as 1.20 in the coming year.

‘Appears Healthy’

Goldman Sachs computer chip analyst Rajiv Chaudri said the February figure indicates that the industry’s buildup in inventories may be over.

“(The February ratio) is a very solid number, a very high quality number. It says the inventory correction the industry was experiencing appears to be over now and end-demand for chips appears to be healthy,” Chaudri said.

Average monthly orders, for the three-month period ending in February totaled $1.24 billion, 10.6% above the figure for January, the association said.

The average billings for the three-month period were just under $1.17 billion to produce a book-to-bill ratio of 1.07.