Nikon Corp, the No. 2 maker of equipment used to produce semiconductors, slashed its fiscal full-year earnings forecast as customer orders fell, saying it doesn't expect to earn a profit this year.
Tokyo-based Nikon said it won't make any money in the year ending March 31 compared with its early forecast of ?10 billion in profit. Sales will likely total ?460 billion, 9.8 percent lower than the company's previous estimate.
Revenue at Nikon, which generates about half its sales from chip-making machines, is falling short of estimates because chip companies are spending less on plants and new equipment.
Chipmakers from Intel Corp to Texas Instruments Inc have been hurt this year as orders for chips powering mobile phones and computers slump and prices fall.
"Customer orders are dropping and don't show any sign of picking up this year," said Toshihisa Yamaguchi, an analyst at Sakura Friend Securities Co, who rates the shares "neutral."
"In good times or bad, Nikon always needs to brush up its technology to compete with rivals" such as ASML Holding NV.
Nikon's shares fell 13.8 percent to ?912, their biggest one-day decline in more than a year, after the company said it would revise its earnings forecast. The shares have declined about 25 percent since the beginning of the year and are one quarter their value a year ago.
To cope with lower demand, chipmakers are paring spending and delaying investments in new technology.
Micron Technology Inc, the biggest US maker of personal-computer memory chips, will reduce spending on manufacturing improvements by 44 percent in fiscal 2002, the company said in June. Micron's fiscal year began Aug. 1.
Revenue from chipmaking equipment has slumped along with semiconductor demand. Sales of chipmaking equipment fell 51 percent to US$2.27 billion in June from a year earlier, the Semiconductor Equipment Association of Japan said last week.
That's the fourth monthly decline in a row.
Sales of Japanese-made chip equipment totaled ?1.8 trillion (US$15.2 billion) in the year ended March 2001, 31 percent of worldwide sales, according to the equipment association.
At Nikon, stepper sales may fall short of the company's initial target of ?420 for the year through March 31, spokesman Yasuhiro Katagiri said last week without elaborating. Steppers are used in the chipmaking process.
Nikon had almost 37 percent of the market for steppers in 2000, making it the second biggest, the company says, citing market researcher Dataquest. ASM has a 41.4 percent share, while Canon Inc has 20.6 percent, Dataquest says.
Veldhoven, Netherlands-based ASML posted a 96 million euro loss in the first half to June 30 as its customers canceled orders.
Tokyo Electron Ltd, the second-largest maker of chipmaking equipment, last month said it posted a first-quarter loss and slashed its profit forecast for the full year to ?500 million from a ?14 billion profit forecast originally.
Advantest Corp, the biggest maker of machines to test memory chips, last month cut its net income forecast by 84 percent to ?4 billion in the year ending March 2002.
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