New orders for semiconductor chips rose more than expected in October, again exceeding the number of chips shipped, the Semiconductor Industry Association said.
In an indication of continued robust demand for computer chips, the trade group’s book-to-bill ratio, a closely watched gauge, rose to 1.18 in October from a revised 1.15 in September.
The ratio had been expected to decline as sales of some computers slowed and inventories increased.
“The orders were a lot better than expected,” said analyst Jack Geraghty of CS First Boston, who said it is likely the increased demand is coming from personal-computer makers. “Since that’s the biggest single section of the market, that would be a reasonable assumption.”
The trade group’s ratio measures the strength of the chip industry in North America by comparing new orders to the number of chips shipped each month. A ratio of 1.18 means that for every $100 of orders shipped by chipmakers, they received $118 in new orders.
The book-to-bill ratio is computed using a three-month moving average and is seasonally adjusted. September’s number was revised up from 1.11.
The news was released after the close of U.S. markets. Intel Corp. stock rose $1.81 in after-hours trading to $67.75. Geraghty said other chipmakers’ stocks will probably rise Thursday as well.
There had been concern that orders were slowing after Cirrus Logic Inc. Tuesday said one of its customers had canceled orders for the company’s graphics and audio chips.
Geraghty said Wednesday’s number from the chipmakers’ trade group indicates that, rather than portending an industry-wide problem, the news about Cirrus was apparently more company-specific.
Orders in October rose 4.4 percent, to $4.9 billion from $4.69 billion in September. Orders for the month were 55.7 percent higher than the $3.15 billion reported in October 1994.
Shipments in the month rose 2.1 percent, to $4.15 billion from $4.06 billion in September. October shipments were 37 percent higher than in the year-ago month.
