UPDATE 1-North American chip-gear orders up 8 pct in March

April 16 (Reuters) - North American manufacturers of equipment used to make semiconductors reported orders of $278.9 million in March, up 8 percent from the previous month, industry data released on Thursday showed.

The book-to-bill ratio was 0.61 in March, meaning that $61 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 March declined 76 percent compared with a year ago, SEMI said. March billings were $455.3 million, 13 percent less than in February and 66 percent less than a year ago.

"The sharp decline in bookings levels has abated," SEMI Chief Executive Stanley Myers said. "However, the improvement in the March book to bill ratio is primarily attributed to reduced billings, and semiconductor equipment bookings remain at levels below that needed to support a healthy supply chain."

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 Bookings Book-to-Bill