booktobill

Book-to-bill is a metric used in the semiconductor equipment industry to assess demand relative to supply. It compares new orders received to shipments billed in a given period, typically monthly. The ratio is usually expressed as a single number: book-to-bill = orders received divided by shipments billed.

A ratio above 1 indicates demand outpaces shipments, suggesting backlog growth and potential expansion in production capacity. A ratio below 1 signals weaker demand and a potential slowdown in orders or utilization. Because shipments can lag orders due to lead times, book-to-bill can move ahead of changes in revenue and is regarded as a leading indicator of market momentum.

Data for book-to-bill are commonly compiled by industry groups such as SEMI, which publishes a monthly Book-to-Bill Index derived from multiple manufacturers. The index may include regional and category breakdowns and is frequently used by investors, analysts, and company managers to gauge cycle strength and plan capacity and capital expenditure.

Limitations of the metric include its sensitivity to order cancellations, large one-time orders, and shipments scheduled for future periods. It does not measure profitability, pricing dynamics, or backlog quality. Additionally, differences in product mix, regional demand, and service components can distort the ratio. As such, book-to-bill is best used alongside other indicators—such as backlog, utilization, and capex trends—to form a more complete view of market conditions.