SEMI's book-to-bill ratio for North American of semiconductor equipment dropped to 1.08 in August from 1.11 in July. The ratio hit a peak in March at 1.33 at the start of the recover cycle, but some large fab equipment makers--such as Applied Materials Inc.--have indicated that new bookings are easing while chip manufacturers attempt to gauge the strength of semiconductor markets worldwide.

Some chip makers are also now weighing new fab projects and whether they should be set up as 300-mm or 200-mm wafer-processing facilities (see story in SBN Online Magazine). This decision and the option for greater use of third-party foundries are impacting new equipment orders, said analyst Risto Puhakka, vice president of operations at VLSI Research Inc. in San Jose.

Fab equipment suppliers and analysts are now watching damage assessments in Taiwan after Tuesday's power earthquake shut down the country's huge silicon foundry industry. While initial reports indicate that no major structural damage was sustained by Taiwan's fabs, wafer processing stopped when plants lost electrical power. Most fab managers believe it could be several days before cleanrooms and sensitive tools are fully evaluated (see Sept. 21 story).

While SEMI's book-to-bill ratio is now at the lowest point this year, it is far better than a year ago when the index was at 0.57 and at the bottom of last year's severe recession in capital spending. A ratio of 1.08 indicates that for every $100 worth of products being shipped by suppliers, $108 of new orders are being received.

The Mountain View trade group said its three-month average of worldwide shipments was $1.339 billion in August, compared to $1.343 billion in July. Bookings for equipment slipped slightly to $1.451 billion last month compared to $1.498 billion in July. Worldwide shipment of equipment by North American-based suppliers was 32% higher than August 1998, when the total was $1.012 billion. Last month's bookings were 150% higher than a year ago when new orders shrunk to $571.6 million, SEMI said.

"While the implications of the earthquake in Taiwan have yet to be fully understood, the industry macro indicators are generally looking up," said Stanley Myers, president of SEMI. "Production capacity utilization is running more than 90%, DRAM prices are firming and computer and telecom equipment sales are healthy, all of which suggest a pickup in bookings for semiconductor equipment in the fourth quarter."