ASML raises sales outlook

ASML, the Dutch chip equipment maker, said on Wednesday it expected record sales this year as it raised forecasts by 10-15 per cent and reported buoyant orders after a strong second quarter.

The comments followed results from Intel, a key customer for ASML’s products, late on Tuesday that spurred hope for an increase in corporate information technology spending as the world’s largest chipmaker reported the best quarter in its history.

ASML said it now expected full-year sales to be 10-15 per cent higher than its previous peak in 2007 of €3.8bn as chipmakers compensate for lower investments in recent years and the chips themselves continue to shrink in size – requiring new and more sophisticated lithography tools, such as those made by ASML to etch the circuitry on to silicon.

“We are in a new mobile media and internet revolution, that is evidenced by the iPads, the iPhones that you are seeing, the netbooks, the notebooks,” Peter Wennink, chief financial officer, said.

“They all require more advanced memory chips and more advanced logic chips. That’s a technological development and that needs more advanced litho and that’s what we’re selling.”

Eric Meurice, chief executive, said the forecast of higher level of sales was expected to continue into 2011, “barring a major macroeconomic downturn”.

ASML only returned to profit in the third quarter of last year after being hit by a freeze in spending by its customers at the end of 2008, forcing it to cut jobs and costs quickly. It is now struggling to ramp up production to meet demand that has nearly tripled since last year.

Its second-quarter net profit of €239m compared with a loss of €104m a year ago and first-quarter net profit of €107m. The group said it expected third-quarter net sales of €1.1bn and research and development costs of €137m, against €125m in the second quarter.

The rise in R&D spending was due to ASML’s next big technological step change in how its machines, which sell for about €25m each, focus ever narrower beams of light on to silicon wafers. The new technology is called “extreme ultra violet” or EUV and will not hit volume production until 2012.

“Now we have to integrate three [light source] suppliers instead of one and that is why [R&D] costs are going up,” Mr Wennink said, adding that the group would deliver its first pre-production machine this year to a customer’s research and development site, ahead of the production units in 2012.