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Statistician Stan! |
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Nov 23, 2006 at 05:01 PM |
Stan Myers may be the President and CEO of SEMI but a statistician he is not. Like George Scalise over at SIA, he has the duty to comment in press releases on the various stats produced about the industry. All good stuff, but in time-honored practice it's almost a given that something good will be said about the figures, regardless of what the key aspects of the stats are actually portraying.
Of course the beauty of stats is that you can normally find something good to comment on, albeit about a minor aspect. Figures from SEMI on worldwide billings for the third quarter came out yesterday and the commentary in the press release was rather short, while Stan's comments weren't actually that related to the current figures.
Granted, it was a day before Thanksgiving, and being brief and rushing home for the Turkey could have been the priority for SEMI's statisticians. So I thought it best to actually cover the stats in a lot more detail than SEMI did.
The two charts below are drawn from the table SEMI included in the press release and prove to be very interesting!
Billings for 3Q06 were up 14 percent compared to 2Q06, which is understandable, considering that book-to-bill ratio peaked in 2Q06, and that there is always a lag in logging revenues from shipped equipment.
However, the figures (chart 1) reveal that only Japan really contributed to the 14 percent growth in the quarter, as every other region was considerably down Q-on-Q.
In fact, Japanese chip manufactures have been spending more than any other region in the last 12 months, with only Taiwan exceeding Japan on spending in 2Q05.
Though Taiwan and North America came close to matching Japan in 2Q06, Japan has been the big spender for a year to date.
Chart 1 also highlights the challenges faced by fabs in China to ramp in a slowing market with tighter access to capital. ROW is actually spending more than China, with ROW in any statistical analysis usually being the leftovers and attracting the smallest figures - but not at the moment!
China may show the biggest growth in SEMI's percentage figures but Y-on-Y figures (see chart 2) shows a very large drop in billings from 2005.
Turning attention to Korea, it would seem that the biggest drop in billings is from this region. This backs up reports earlier in the year that memory manufacturers would have a front half-year loaded CapEx plan. However, both Lam Research and, more recently, Applied Materials still believe that business from memory firms will remain strong through 2007, though admittedly with a short period of softening order levels as they go though a digestion period. Hopefully that period is short-lived, as the SEMI figures clearly show a significant level of fasting right now!
Saying that, it should be noted that Taiwanese memory firms and particularly IM Flash Technologies (Micron & Intel JV) are spending many billions as fast as they can to build a big presence in the NAND market and spread the memory regional demand levels. But as Samsung and Hynix are Korean-based and aggressive CapEx spenders, the drop-off is definitely one to watch over the next two quarters.
Taiwan foundry spending expectations didn't really materialise this year, especially considering that this was expected to fill the memory drop-off in the second half of the year. This may explain why Taiwan billings dropped off so much in the third quarter!
Stan may well have stated that the equipment industry should grow 20 percent this year, but it looks likely that this was all front half-year loaded. The trend lines I added in chart 1 highlight that both 1Q06 and 2Q06 growth was almost identical, while the growth in Q306 is significantly less and almost flat. We would expect this to possibly go into negative territory for 4Q06.
Chart 2 highlights that the projected growth in the equipment industry this year has not been across all regions. Though Japan is outperforming other regions this year, in reality the billings are lower than those recorded in 2005. North America is all down Y-on-Y as well as China, as previously mentioned.
Korea, Taiwan, Europe and ROW are the real growth regions, with Korea's spending leaping ahead from 2005.
Both charts tell me that we are not seeing a great deal of over-spending, as there would seem to be a correction taking place in the second half of the year. Memory market dynamics for 2007 look interesting as the Vista factor and NAND new application drivers are still an unknown quantity, yet these firms have fuelled equipment growth in 2006 and could do the same in 2007.
Chart 1
Chart 2
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