The book-to-bill ratio, also called the BO/BI ratio or BB ratio, is the ratio of orders received to the total shipped and billed over a specified period such as a quarter or one month.
The metric is widely used in the semiconductor manufacturing industry, where the SME (semiconductor manufacturing equipment) book-to-bill ratio is seen as a key leading indicator of demand trends.
If the book-to-bill ratio is greater than one, it means that orders received exceeded those billed, i.e. strong demand. A ratio of less than one points to sluggish demand.
For example, if $1,200 of orders were received for every $1,000 of products shipped and billed during a period, the book-to-bill ratio was 1.20 – orders were coming in at a faster rate than deliveries and the sending of invoices.
SEMI’s book-to-bill ratio publication
The Semiconductor Equipment and Materials Institute (SEMI) publishes a monthly book-to-bill ratio, which covers three-month average bookings and billings figures for North American semiconductor equipment companies. Experts say the report is a reliable indicator of global trends in the industry.
According to a report published by SEMI on 21 July, 2015, North American semiconductor equipment manufacturers registered $1.51 billion in orders globally in June 2015 (3-month average basis) and a book-to-bill ratio of 0.98, i.e. $98 worth of orders were received for every $100 of product billed for the month.
June’s figure was 2.6% lower than in May, but 3.5% higher than in June 2015.
Denny McGuirk, president and CEO of SEMI, said:
“The June book-to-bill saw slight declines in the three-month averages for both booking and billings compared to May. Both figures, however, are above the trends reported one year ago and the first half of the year has been one of positive growth.”
Video – Book to Bill