Semiconductor Book-to-Bill
August 20th, 2007 NW Teong
The North American semiconductor Book-to-Bill for new equipment has slumped to 0.84 in July 2007. This is one of the leading indicators we need to monitor closely if we are interested in semiconductor stocks, and for that matter stocks in the entire technology sector.
The sharp drop in this ratio is very bad for the entire semiconductor sector, as it basically indicates the bookings (i.e. sales) have slumped. As you can see from the chart below, this ratio while quite stable from Jan till June, it has fallen sharply in July. This may due partly to the slow down in US economy, what we need to do is to monitor this indicator very closely for the next few months.
Obviously, the other thing we need to take note is that, at current reading it is not too far from the lows since 2002. This happened twice and registered at about 0.77 at around end of 2002 and beginning of 2005. Just like monitoring of a trend (in this case is down trend), we would like to keep track of signals for a reversal in trend. While a continuation of a down trend is very bad for all semicon-related stocked, a reversal in this indicator will be a great cheer to those same stocks too.
An indicator not to be missed by tech investors!
Cheers! Â The Essence of Stock Investment!
Entry Filed under: Stocks
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