ASML sees slowdown for semiconductor industry

AMSTERDAM: Dutch electronic chip manufacturing equipment maker ASML Holding says its customers are holding back on new orders as sales of computers and mobile phones slow, joining a list of technology firms warning over weak consumer demand.

Shares in ASML, a bellwether for the European tech sector, were down 4.3 percent at 24.59 euros by 1002 GMT, making them the biggest decliner in the FTSEurofirst 300 index. The stock touched an eight-month low at the opening, when it fell as much as 8.4 percent.

"It is clear the industry is heading for a slowdown," said Victor Bareno from SNS Securites.

ASML, the world's largest maker of semiconductor lithography machines which map out electronic circuits on silicon wafers, said it still expects 2011 sales to top 5 billion euros ($7.1 billion).

The average selling price for all its new and used systems sold in the second quarter was 21.2 million euros, up from 20.4 million euros in the same period of 2010.

But Chief Executive Eric Meurice warned that second-quarter orders came in lower than expected at a total of 840 million euros for ASML's standard systems and said bookings in the third quarter would not exceed 500 million euros.

"Our customers are currently taking some time to assess the semiconductor end-demand trends for 2012 before determining their overall capacity plans, levels and timings," Meurice said.

SECTOR WOES

Other tech companies have also recently highlighted concerns about weak consumer spending, particularly in the personal computer market, pointing to slow revenue growth and worrying economic indicators including jobs numbers and rising inflation.

U.S. chip manufacturing equipment maker Applied Materials Inc on Tuesday said tough economic conditions were hurting demand. Novellus Systems Inc and Microchip Technology Inc warned of slowing sales and flat order books earlier this week.

"It looks very much like semiconductor companies are beginning to cut capital expenditure despite their bullish commentary and it heralds the beginning of our long-held concern that 2012 may be a significant down-year on 2011," said Nomura analyst Richard Windsor in a research note.

SNS analyst Bareno said that the drop in orders in the short term, especially in the foundry sector, was worse than expected, reflecting the current economic uncertainty, but does not necessarily point to a recession in 2012.

Peter Olofsen, an analyst at Kepler Capital Markets in Amsterdam, said the third-quarter bookings gave few clues as to the outlook for 2012.

Olofsen said that faltering demand for mobile phone handsets, personal computers and televisions, combined with ASML's falling order book, suggested that the foundries are reassessing their capital spending plans.

Retail sales figures for those products in September to November will provide a much clearer picture for 2012, he added.

REBOUND EXPECTED

On Wednesday ASML said it booked 840 million euros worth of systems in the second quarter.

Analysts in a Reuters poll had expected ASML to book second-quarter orders of 945 million euros, down 20 percent from a year ago, but up from 845 million euros in the first quarter.

Peter Wennink, ASML's chief financial officer, said it was normal for customers to take a pause after a period of very strong growth in 2010 and early 2011. Wennink said he expected the correction to last a few quarters and to then see a rebound, adding that the overall picture for 2012 still looked healthy.

ASML reported a second-quarter net profit of 432 million euros, up from 239 million a year ago on sales of 1.53 billion euros, in line with analysts' expectations for sales of 1.53 billion.

ASML has a global market share of around 70 percent and competes with Japan's Nikon Corp and Canon Inc . It counts Intel Corp , Samsung Electronics Co and Taiwan Semiconductor Manufacturing among its customers.