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The semiconductor sector received mixed news on Wednesday. Sales of equipment used to make chips were down again, but orders were up.

Figures from industry bodies in Japan and North America showed that the sector has yet to make its long-awaited recovery, but indications for its longer-term future are positive.

According to the Semiconductor Equipment Association of Japan, global sales of equipment used to make semiconductors fell for the sixteenth straight month in June. It said that the total amount of sales for the month amounted to $1.85 billion, which was an 18 per cent drop compared to June 2001. However, this slump was the smallest in percentage terms since March of last year.

The organisation also said that orders, which become sales about six months after they are received, have started to increase as chipmakers begin preparing for increased demand for their products.

Meanwhile, Semiconductor Equipment and Materials International (SEMI) reported that North American-based manufacturers of semiconductor equipment had orders worth $1.15 billion in July 2002.

The $1.15 billion is a three-month average of worldwide bookings during the month. And although it represents a two percent fall from the month previously, it is a 50 percent increase from the $769 million in orders posted in July 2001.

In addition, SEMI said that North American companies in the sector had a book-to-bill ratio of 1.16. This means that $116 worth of new orders was received for every $100 of product billed for the month.

According to SEMI, the three-month average of worldwide billings in July 2002 was $995 million, which was seven percent above the figure for June 2002, but 17 percent below the July 2001 billings level of $1.19 billion.

"The July bookings data likely reflects renewed questions about the robustness of the economic recovery and the prospects for the consumption of electronic goods," said Dan Tracy, director of industry research and statistics for SEMI.

"The data is consistent with recent announcements of reduced capital spending plans by some global chipmakers and supports the consensus of industry analysts projecting market recovery in 2003," he said.

Worldwide sales of chipmaking equipment have been falling over the last two years. According to SEMI, during the period, sales peaked in September 2000 at $5 billion for that month. However, there has been a dramatic slump since then.

Although the fall in equipment sales is largely due to the poor state of actual semiconductor sales, it may also have to do with semiconductor manufacturers using their current machinery more efficiently.

According to Semiconductor International Capacity Statistics (Sicas), capacity utilisation at semiconductor manufacturers around the world rose to an average 86.4 percent in the second quarter from a slightly revised 77.3 percent in the first quarter.

Most chipmakers are profitable if capacity utilisation is above 70 percent, analysts said.

However, the rise is not expected to last and analysts expect capacity utilisation in the third quarter to fall to around 70 percent. © ENN

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