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Chip equipment orders, shipments rose in December

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CIOL Bureau
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NEW YORK: North American makers of microchip-making equipment saw both orders

and shipments rise in December, indicating a slight improvement in the battered

sector, the industry trade group said on Tuesday.

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New orders rose about seven per cent to $652.4 million in December, from

$609.3 million in November, according to Semiconductor Equipment and Materials

International. Shipments rose to $834.9 million from $829.5 million in November,

an increase of less than one per cent.

A closely watched ratio of orders to shipments, known as the book-to-bill

ratio, was 0.78 in December, an improvement from a ratio of 0.73 in November.

The ratio indicates that $78 of new orders were received for every $100 of

products shipped in December.

Stanley Myers, president and chief executive of the trade group, said there

were signs that chip factories were busier and increasing output, especially in

the assembly and testing areas. But he also warned that chip equipment companies

remained cautious.

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"Chip and equipment companies, however, remain cautious about the

near-term outlook because of uncertainty with the overall economic

recovery," Myers said in a statement. The book-to-bill ratio topped the

expectations of Mark FitzGerald, a chip equipment analyst with Banc of America

Securities, who had expected a ratio of 0.75.

In a research note earlier Tuesday, FitzGerald said the industry was

beginning to see signs of a recovery, as chip makers place orders for advanced

equipment to increase the efficiency of their production. "We are seeing

the first evidence of a re-acceleration in technology buys after the collapse in

order following September 11th," FitzGerald said.

"But the overhang of excess capacity and a ... slowdown in chip industry

growth rates suggest to us that the slope of the recovery will likely fall well

below prior recoveries," he said. FitzGerald said he expected the monthly

book-to-bill ratio to reach 1.0 -- meaning that $100 of new orders are received

for every $100 of products shipped -- by May.

(C) Reuters Limited.

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