Mobile Devices Keep Driving ASML
07/18/2012| 08:21am US/Eastern
--ASML posts 32% drop in second-quarter net profit
--Sees second half sales in EUR2.2 billion to EUR2.4 billion range, slightly below first half level
--CFO says 2013 " doesn't look bad."
--Booming demand for mobile devices to drive growth in months ahead
By Archibald Preuschat
AMSTERDAM--Dutch semiconductor equipment maker ASML Holding NV (>> ASML HOLDING) Wednesday said booming sales of mobile handsets and tablet PCs will ensure steady sales of its chip-making machines in the months ahead, despite a heavy drop in profit in the second quarter.
The company posted a net profit of EUR292 million ($357 million) for the three months ended June 30, down 32% from EUR432 million a year earlier hit by a weak order book at the end of last year when semiconductor companies delayed investment due to economic uncertainties.
Sales fell to EUR1.23 billion from year ago EUR1.53 billion.
The company, however, expects sales to stabilize at around EUR1.2 billion in the final two quarters of the year. Beyond that, 2013 "doesn't look bad," Chief Financial Officer Peter Wennink said.
ASML produces machines that map out electronic circuits onto silicon wafers and counts some of the world's biggest chip makers among its customers, including Intel Corp (>> Intel Corporation), Samsung Electronics Co. Ltd. (>> Samsung Electronics Co., Ltd.) of South Korea and Taiwan Semiconductor Manufacturing Co. Ltd (2230.TW,TSM).
The company is a barometer for the global semiconductor industry, signalling upturns or downturns some three to six months or so ahead of the main semiconductor industry. Silicon chip-making machines now in production at its plants will be used to make the chips powering the new generation of mobile devices hitting shelves early next year.
Growing consumer demand for small mobile devices such as smartphones, tablets and ultra thin laptops known as ultra books is forcing chipmakers to invest in new technologies to produce the high power but low energy chips that power them, the company said.
Logic chips, that drive the functionaility of mobile devices, have driven the demand for ASML tools already in the past quarters and will continue to do so until the first half of 2013, Mr. Wennink said.
In a bid to accelerate the development of new chip-making technologies, ASML is looking to forge research partnerships with its main customers.
Intel, the world's largest chipmaker and ASML's single biggest customer, said last week it will take a 15% non-voting stake in ASML for EUR2.5 billion and help fund the Dutch firm's research and development with another EUR830 million. ASML is also in talks with other big customers Samsung and Taiwan Semiconductor Manufacturing over similar partnerships.
In the three months to June, ASML booked orders worth EUR949 million, up from EUR865 million in the first quarter.
"We executed the first half as planned and expect sales to remain steady in the second half," Chief Executive Eric Meurice said.
In current quarter, ASML expects sales of EUR1.2 billion at a gross margin of around 43%, and second half sales in a EUR2.2 billion to EUR2.4 billion range.
ASML shares have gained roughly 30% so far this year, compared with an almost flat benchmark index AEX, buoyed by strong smartphone demand as well as the stock's entry into the blue-chip STOXX 50 index and the Intel deal. At 1147 GMT Tuesday shares traded 2% higher at EUR42.23.
-Write to Archibald Preuschat at email@example.com
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