SAN FRANCISO— With semiconductor equipment manufacturers reporting rapid declines in orders and shipments and the world experiencing a financial crisis that is projected to further cripple already waning end-user demand for chips, analysts and equipment executives are increasingly drawing parallels between the current climate and the devastating downturn of 2000-2001.

Raj Seth, an analyst with Cowen and Co. LLC, said he believes the chip equipment sector is approaching a cycle as bad as 2001. Seth said the industry is already approaching the kind of decline, from peak to trough, seen that year.

"It's a little speculative, because we are not there yet," Seth said. "But I don't know anyone in the semiconductor space that feels differently. Hopefully we are all wrong but this feels deep and protracted."

Speaking on an analyst conference call Wednesday (Oct. 22), Lam Research Corp. President and CEO Steve Newberry drew parallels between the drop in shipments Lam experienced between 2000 and 2001 and the current decline. "I think that it would be fair to say that we're not yet in a situation that's as big a decline in systems as what we saw in that '00 to '01 timeframe, but we're getting pretty close," he said.

Newberry said Lam's shipments have declined 62 percent from the peak in June 2007. From December 2000 to December 2001, he said, shipments declined 80 percent. Lam's revenue has declined 56 percent since June 2007, he said, compared with a 65 percent dip from March 2001 to March 2002.

Last week, the fab tool trade group SEMI reported a book-to-bill ratio for North American semiconductor equipment manufacturers slipped to 0.76 in September, the lowest ratio since November 2001. A book-to-bill of 0.76 means that $76 worth of orders were received for every $100 of product billed for the month.

FBR Research analysts on Thursday cut estimates on market-leading chip equipment vendor Applied Materials Inc. based on reports from Applied's competitors (such as Lam) as well as cutbacks seen in foundry production.

Citing poor news on the macroeconomic front and evidence that the current slowdown is being driven by a decrease in end-market demand, FBR analysts wrote in a report that they "an incremental conviction that the worst of the cycle will occur in mid-[2009]."

FBR lowered estimates for Applied across the board and cut its price target for Applied's stock to $16 from $25.