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Tech Industry

Study: Chipmakers struggle to meet rising demand

Demand for equipment used to make computer chips continues to outpace supply, according to an industry trade group report.

Demand for equipment used to make computer chips continued to outpace supply in April, according to new figures released by an industry trade group.

Semiconductor Equipment and Materials International (SEMI) reported a preliminary book-to-bill ratio of 1.42 for April. That means U.S. companies received $142 in orders for each $100 worth of semiconductor products shipped.

"Strong chip demand worldwide and new (fabrication) activity, especially in the Asia Pacific region, are fueling a sustained expansion of the semiconductor equipment sector," said Stanley Myers, president of SEMI, in a statement.

The April results mark a slight retreat from previous months: The book-to-bill ratio was 1.44 in February and 1.45 in March. Nevertheless, the April ratio reflects strong demand compared with a year ago, when the industry was just entering a cyclical upturn.

The three-month average of orders received in April 2000 was $2.7 billion, 94 percent above the $1.4 billion posted the year before. The three-month average of worldwide shipments in April 2000 was $1.9 billion, 76 percent above the shipments level of $1.1 billion in April 1999.

"This confirms a trend," said semiconductor analyst David Wu of ABN Amro. "Business is booming, and we knew that."

The Philadelphia semiconductor index fell 72.92, or almost 8 percent, to 869.74 today, led by Rambus, which closed down $20.25, or 12 percent, to $150.63.

Shares in other chip companies also dropped. KLA-Tencor fell $5.56 to $46.50, and Intel dropped $8.50 to $109.88. Teradyne dipped $9.13 to $75.38, and Applied Materials declined $7.44 to $71.88.