Chip sales indicator falls to 5-year low; a semiconductor selloff is expected

Article Abstract:

The semiconductor bill-to-book ratio for the three-month period ending Mar 1996 drops to 0.80, the lowest it has been since 1991, reflecting decreasing demand for PCs and lower chip prices. The ratio, calculated by the Semiconductor Industry Assn, indicates that semiconductor vendors received only $80 in orders for every $100 worth of product shipped during the period. The ratio is well below the final 0.89 ratio for Feb 1996. In Mar 1996, semiconductor orders fell 12.5% to $3.33 billion, down from the $3.81 billion worth of chips ordered in Feb 1996. Shipments also decreased in Mar 1996, reaching only $4.16 billion, 3.1% below the $4.29 billion in shipments for Feb 1996. Analysts say that there is a vast oversupply of chips, attributable in part to stockpiling by PC vendors who expected to see sales increase dramatically following the release of Microsoft's Windows 95, but the increase never materialized.

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A failing indicator? Semiconductor stock prices advance despite drop in key industry gauge

Article Abstract:

Semiconductor stocks unexpectedly rebound in heavy trading the day after the Semiconductor Industry Assn announces a book-to-bill ratio of 0.80 for the three-month period ending Mar 1996. The ratio is the lowest ever to occur since the indicator was instituted in 1987, and analysts are puzzled by the stock's strong performance. Traditionally, semiconductor stocks follow the indicator, moving up or down as it rises or falls. However, beginning in 1995, chip stocks broke out of the pattern, occasionally closing down despite an increase in the ratio. Some analysts speculate that the 1996 rebound occurred because investors were betting that the industry had hit its lowest possible point. Others contend that the industry is too diverse to be judged by a single indictor, since chips can be found in products ranging from PCs to microwave ovens, each of which has its own business cycle.

Securities, Stock

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Key semiconductor index falls for 2d month

Article Abstract:

The Semiconductor Industry Association announces a bill-to-book ratio of 0.90 for the three months ending Feb 1996, a sign that chip orders continue to slow. Falling chip prices contribute to the decline, since a 4MB DRAM chip that cost $14 in Dec 1995 costs about $7 in Mar 1996. The Feb bill-to-book ratio is in line with industry expectations, but it is lower than the 0.92 ratio in Jan 1996. The ratio illustrates the difference between orders and shipped products, with the 0.90 ratio indicating that $90 in orders were placed for every $100 in product shipped. The Association says that the industry seems to be leveling off after a steep Jan 1996 decline, when orders fell 16.8% below Dec 1995 orders. In Feb 1996, orders totaled $3.9 million, up 5.7% from the orders placed in Feb 1995, but 4.5% below the $4.08 billion in orders in Jan 1996.

Industry trend, Market trend/market analysis

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