ASML hopes for recovery next year

ASML Holding NV, the No. 1 maker of machines that etch circuits onto semiconductors, doesn't expect a recovery in the chip industry for a year as canceled orders drove it to a first-half loss.

"As far as we can see now, the upturn will not happen before the second half of next year," ASML Chief Executive Doug Dunn said in a statement on Euronext Amsterdam.

"The outlook is pretty dramatic," said analyst Philip Scholte at Van der Hoop Effektenbank, who rates ASML shares "outperformer." "It seems a recovery in the semiconductor industry still is far off."

Slowing economic growth worldwide has hurt sales of personal computers and mobile phones, crimping demand for the chips used to power them. ASML customers STMicroelectronics NV and Royal Philips Electronics NV have cut sales forecasts.

Intel, the biggest chipmaker, on Tuesday said sales and profit fell in the second quarter.

ASML's first-half loss including one-time items was 96 million euros (US$82.5 million), or US$0.20 a share, compared with a profit of 149 million euros, or US$0.32, in the year-earlier period, the company said in a statement.

The company's shares rose as much as 2 percent to 23.8 euros after the report. They have fallen 1.6 percent this year, compared with 15 percent decline for the benchmark AEX Index, of which ASML is a member.

The Veldhoven, Netherlands-based company declined to give a forecast on 2001 earnings, saying uncertainties in the semiconductor industry "make it very difficult to predict customer's order behavior." Sales at ASML fell 24 percent in the first half to 1.02 billion euros. Including the charges, analysts surveyed by Bloomberg News had expected ASML to report a loss of 99.8 million euros in the first half.

"Under the current market circumstances, the backlog as of June 30, 2001 looks reasonably robust," CEO Dunn said. "However, the majority of that backlog represents orders for system deliveries in 2002."

Sales of equipment to make semiconductors are expected to drop 27 percent to US$35 billion this year, according to Semiconductor Equipment and Materials International.