Outlook for chip-equipment and PC makers

According to VLSI Research Inc, the worldwide chip-equipment book-to-bill ratio hit 1.05 in August, up from 1.01 in July. North American-based manufacturers of semiconductor equipment posted a book-to-bill ratio of 1.05 in August, up from 0.93 in July, according to the Semiconductor Equipment and Materials International (SEMI), while Japanese semiconductor production equipment manufacturers posted a book-to-bill ratio of 1.08 for August, unchanged from July, according to the Semiconductor Equipment Association of Japan (SEAJ).

However, the book-to-bill ratio is projected to fall to 0.96 in September, according to VLSI Research. "The nagging question is whether high utilization rates will translate into a surge in equipment orders in 4Q '05," VLSI said, citing concerns over macroeconomic fundamentals. "With electronics soft, we could see a sharp slowing in chip production if Christmas demand doesn't materialize. Everyone is worried about gas prices, consumer debt, and the economy, which are holding back excesses."

IDC, though, expects PC demand to remain strong through 2005, with total PC shipments in the second half of 2005 now expected to reach nearly 110 million, up from the forecast of 107.2 million units in May.

Despite the mixed outlook, and the recent deterioration in electronics exports, Singapore continues to bank on electronics manufacturing and the chip industry in particular.