UPDATE 1-N. American chip equipment orders down in May

(Adds comments, background, table)

SAN FRANCISCO, June 19 (Reuters) - North American Manufacturers of equipment used to make semiconductors reported orders of $1.03 billion in May, down 5 percent from the previous month, industry data released on Thursday showed.

The book-to-bill ratio was 0.79 in May, meaning $79 worth of orders were received for every $100 of product shipped, Semiconductor Equipment and Materials International said in a preliminary report.

The ratio is watched as an indicator of the demand pipeline for the industry as well as for hints about chip capacity and whether the $300 billion semiconductor sector could be headed for a glut.

Orders in May also declined from the year-ago month, down 37 percent from the $1.64 billion in May 2007, SEMI said. May billings were $1.31 billion, 2 percent less than in April and 21 percent less than $1.67 billion in April 2007.

Memory chip makers in particular have seen prices plunge in the past year as Asian chipmakers have added large amounts of chip-making capacity. That excess capacity has, in turn, led them and others to pare back on equipment purchases.

"Bookings are approaching levels observed in 2005, which was the last time the semiconductor industry reported a year-over-year decline," said Stanley Myers, president and chief executive of SEMI, in a statement. "The data does not indicate a change in this trend over the next quarter."

U.S. chip equipment makers include Applied Materials Inc (AMAT.O), the world's biggest, testing tools firm KLA Tencor Corp (KLAC.O), circuitry-etching tools company Lam Research Corp LRCX.O, and Novellus Systems Inc (NVLS.O), which specializes in preparing the surface of a silicon wafer before circuits are laid down.

The SEMI book-to-bill is a ratio of three-month moving averages of worldwide bookings and billings for North America-based chip-equipment makers.

The data contained in the report was compiled by David Powell Inc, an independent financial services firm, without audit, from data submitted directly by the participants.

Billings and bookings figures are in millions of U.S. dollars.

Billings Bookings Book-to-Bill

(Three-month avg) (Three-month avg) --------------------------------------------------------------- Dec 2007 1,361.7 1,156.3 0.85 Jan 2008 1,279.3 1,141.0 0.89 Feb 2008 1,310.8 1,205.4 0.92 March 2008 1,344.9 1,165.6 0.87 April 2008 (final)1,337.3 1,090.3 0.82 May 2008 (prelim.)1,312.6 1,030.4 0.79 (Reporting by Duncan Martell; editing by Carol Bishopric)