Key Chip Industry Indicator at ’96 High
The semiconductor industry’s key indicator of computer chip demand rose in September to its highest level this year, reflecting a stronger-than-expected increase in new orders.
The Semiconductor Industry Assn. said Tuesday that the North American book-to-bill ratio, which measures the value of orders against shipments, rose to 0.99 in September from a revised 0.93 in August. The ratio means manufacturers received $99 in new orders last month for every $100 in shipments.
Although industry analysts had expected the ratio to inch closer to the break-even point, most estimates averaged about 0.95.
New orders for chips rose to $3.19 billion, a 9% increase from August, and shipments edged upward to $3.22 billion, or 2.1% above August’s level.
“From any perspective, these are the most positive numbers we’ve seen all year,” Douglas Andrey, director of information systems and finance for the San Jose-based SIA, said in a statement. “The modest increase in orders for August and September suggests the 1996 slowdown in growth has bottomed out.”
The ratio, a leading indicator of future demand tallied by the industry trade group, has been improving recently, reflecting an increase in orders by personal computer makers and more stable prices for memory chips.
“People are buying PCs as if there’s no tomorrow,” said Dan Klesken, an analyst at Robertson Stephens in San Francisco. “We’re having a PC-led recovery in the chip industry.”
Analysts predicted the better-than-expected showing will send shares of key technology stocks higher today.
In after-hours trading, shares of Intel Corp., the world’s largest chip maker, rose $1.375 to $103 after falling $3.125 to $101.625 in regular trading on Nasdaq.
Prices of DRAM memory chips plummeted over the course of the year to a fraction of what they were in January. Because memory chips make up about 40% of the unit volume of semiconductors shipped in a year, their prices have had a big influence on orders and sales measured in dollars.
But since mid-September, memory chip prices have risen 30% to 50% from their lows.
The September ratio marks the highest level since December, when the index hit 1.12. A year ago it stood at 1.16.
Worldwide, the ratio rose to 0.97 in August from 0.95 in July. Global figures include Asia, Europe, North America and Japan and are one month behind North American figures. The Japan book-to-bill ratio rose above 1.0. In Europe, the ratio was 1.04.
