CHIP-INDUSTRY BAROMETER HITS HIGHEST LEVEL SINCE '95.

Byline: Lawrence M. Fisher The New York Times

The semiconductor industry's leading indicator rebounded sharply in October, reaching its highest level since last year, a trade group reported Monday. Analysts had expected a gain, but the actual number exceeded even the most optimistic estimates.

The Semiconductor Industry Association, based in San Jose, reported a book-to-bill ratio of 1.10, up from a revised figure of 0.98 in September. The ratio compares orders with shipments, so the reading of 1.10 indicates that for every $100 worth of chips shipped, $110 was ordered. That is considered a sign that the industry is again growing.

Analysts hailed the number, which was the largest since 1.12 in December, as the harbinger of a new boom cycle for the chip industry.

The return to a reading above 1 comes after last week's announcement by Intel Corp., the world's largest semiconductor company, that its fourth-quarter results would exceed previous estimates because of a surge of orders from personal computer manufacturers.

The book-to-bill reflected ``a real acceleration of microprocessor orders, and that's Intel,'' said Jonathan Joseph, an analyst with Montgomery Securities.

But he noted that prices had firmed for D-RAM chips, or dynamic random access memory, the most common type of chips produced by many other manufacturers, which had been in oversupply much of the year. ``That's a real healthy sign that we're seeing a re-acceleration,'' Joseph said.

Chip orders in October rose to $3.74 billion, up $566 million, or 18 percent, from $3.17 billion in September, according to the trade group. Shipments also increased, to $3.39 billion, up $161 million, or 5 percent, from $3.23 billion in September.

The book-to-bill ratio has been the subject of much criticism in recent months, and the association said Monday that it would stop publishing the number at the end of the year.

In January, the trade group will begin publishing the Global Billings Report, which will reflect sales of chips worldwide; the book-to-bill covers only the markets in North and South America, which account for roughly a third of total chip sales.

``The new program will give industry observers a more accurate picture of trends in the world semiconductor market as business continues to expand and diversify,'' Thomas W. Armstrong, the association's president, said in a statement. ``Instead of focusing on book-to-bill ratios for just one major market, people will get to review sales numbers from all four major markets.''

While the addition of Japanese, Asian-Pacific and European data represents an improvement, analysts said, the new report will be subject to some of the distortions that have plagued the old one.

For one thing, the data are tabulated in dollar amounts, rather than in units, so any drops in price can indicate a decline in orders even though volume is actually increasing; such a situation occurred earlier this year.

And because the ratio is based on a three-month moving average, one unusually good or bad month skews the number for the entire period, analysts said.

Dan Niles, an analyst with Robertson, Stephens & Co., said this type of distortion explained the surprising figure for October.