Semi Cyclicality Getting Wilder

Predictions of the maturity of the semiconductor industry have always been premature. In fact the industry’s cyclicality is getting wilder.

‘The cyclicality – or super-cyclicality – of spending patterns is a challenging and unique attribute of the semiconductor industry’, says SEMI, the trade body for the manufacturers of semiconductor production equipment, instancing: ‘the rapid rebound from last year’s alarming drop in equipment spending (down to less than $17 billion from a 2007 high of over $44 billion).”

The latest SEMI book-to-bill ratio is 1.23. Worldwide bookings in Q2 were 220% above Q209.

Q2 billings were $9.11 billion, 240% above Q209, and Q2 bookings were $11.68 billion, 296% above Q209.

The peaks and troughs are getting closer and steeper. “This rebound is different,” says Bill McClean, CEO of IC Insights.

Whereas in every year in the modern history of semiconductors, the largest increase in capital spending has occurred in year two of the recovery, this time it’s happening in year one.

“Unlike any other year since 1983, after two down years in capital spending, this year’s capital spending surge will be in the first year of recovery, not the second,” says McClean.

Although capital spending is expected to increase 9% in 2011, it is far less than the 93% projected for 2010.

So, far from ‘maturing’, the semiconductor industry’s ups and downs could be getting shorter-lived and more pronounced.


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