Are we bouncing off the bottom?

I can’t claim to cover all sectors of the economy, being mostly confined to aerospace, electronics, industrial manufacturing, and transportation. Still, I’m here to report that there seem to be glimmers of hope (and change?) in the semiconductor capital equipment market, which is currently wandering through the economic desert.

Semiconductor equipment could be seen as a “canary in a coal mine” kind of indicator. If equipment makers are seeing better business, that usually means chip makers are ordering more equipment in anticipation of improved sales.

Following the disastrous quarterly results posted last week by Applied Materials, Stifel Nicolaus stock analyst Patrick Ho on Monday morning raised the semiconductor capital equipment sector to “overweight” from “neutral,” citing a reduction in semiconductor inventory and an increase in chip maker utilization rates (how much of wafer fabrication facilities are being actively used). Ho, who tracks 15 leading stocks in capital equipment, changed his rating from “hold” to “buy” on four stocks: Cymer, Novellus Systems, Photronics, and Teradyne. He also sees Lam Research, Rudolph Technologies, and Varian Semiconductor Equipment Associates, among others, outperforming the stock market over the next 12-18 months.

Later that afternoon, Kulicke and Soffa Industries issued a statement raising its revenue outlook for the current quarter.

Not all is promising, however. Axcelis Technologies this morning reported it is trimming its global workforce by 20% due to the continued lack of new business. That’s on top of a 14% layoff at the end of last year.

Semiconductor Equipment and Materials International, the industry trade group, tomorrow afternoon will report the book-to-bill numbers for April. That ratio will likely be in the vicinity of March’s pitiful 0.61 figure, but keep an eye on those monthly numbers as the year progresses to see if this potential uptick trend is taking hold.