By Robert N. Castellano, Ph.D, president of The Information Network.

Despite some problems on the horizon, rises in the book-to-bill ratio by North American and Japanese semiconductor equipment manufacturers is giving hope that the downturn has bottomed out.

Semiconductor Equipment and Materials International reported this week that North America-based manufacturers of semiconductor equipment posted $323.4 million in orders in June, on a three-month average basis, and a book-to-bill ratio of 0.77. The three-month average in June grew about 12% from $287.8 million in May, and was 69% lower than a year earlier.

Japan-based manufacturers of semiconductor equipment registered billings in May of 39.2 billion yen ($409.7 million). The billings figure is down 3.2% from April 2009 and down 68.7% from May 2008.

However, capital equipment expenditures as a percentage of semiconductor revenue have been dropping precipitously, as shown in the chart going back to 1995. In January 1995, 11.4% of revenue generated by semiconductor manufacturers was spent on new processing equipment. Forward to May 2009 and only 3.8% of semiconductor revenue was spent on equipment.

For all of 1995, 13.8% of semiconductor revenue was spent on equipment purchases. For 2007, a healthy year for the equipment market, 11.7% of semiconductor revenue was spent on equipment. For 2009, we forecast that semiconductor revenue will drop 26%, while we see semiconductor equipment revenue dropping 46%. The chart below clearly illustrates this difference. Capital equipment purchases from January through May 2009 were only 4.9% of semiconductor revenue.

Semiconductor equipment manufacturers, in an effort to gain one-upmanship in the market, have been increasing throughputs of their product. Fifteen years ago, 60 wafers per hour was the norm. Now, tools are on the market with a throughput twice that amount, meaning that only half the number of tools are needed to process the same number of wafers.

If you liked this article you might like

Apple's European Suppliers See Their Stocks Pop Ahead of $1000 iPhone X Reveal

Apple's iPhone 8 Is Helping Boost Micron and Other Memory Makers -- for Now

5 Big Takeaways From the Onslaught of Tech Earnings Reports

5 Key Takeaways From Recent Tech Earnings Reports