New Orders for Computer Chips Fall Again

From Reuters

New orders for semiconductors declined again last month, a trade group reported Tuesday, reflecting continued inventory pressures for memory chips.

The Semiconductor Industry Assn. said new orders for computer chips dropped 4.5% last month to $3.9 billion, outpacing a 1.8% drop in shipments.

The group's book-to-bill ratio, a closely watched indicator of chip demand, fell for the fourth consecutive month to 0.90, meaning that for every $100 in shipments, manufacturers received $90 in new orders.

Industry experts attributed the decline in February to continued inventory pressures, particularly for large dynamic random access memory, or DRAM, chips.

Last month, the January book-to-bill jarred the markets when it came in at 0.93, a 10-year low. The SIA revised its figures for January to 0.92, indicating a steeper drop than previously thought.

Analysts said demand for semiconductors is expected to remain soft for the next few months as personal computer makers work off their inventories.

However, the SIA said demand for semiconductors is starting to stabilize.

"The semiconductor marketplace appears to be stabilizing," said Doug Andrey, director of information systems and finance for the SIA. "The new numbers suggest that the dramatic drop in January was a one-month aberration.

"Overall, we continue to expect solid growth for the semiconductor industry throughout 1996 because the global consumer demand for chip-related products--such as personal computers--is going to increase for the foreseeable future," he said.

SIA said February orders totaled $3.9 billion, down 4.5% from the previous month but up 5.7% from the year-ago period. Shipments of semiconductors fell 1.8% last month to $4.34 billion. However, that is still up 31.6% from a year ago.

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