Try the new FT.com

December 18, 2008 8:29 am

ASML cuts outlook in severe order slump

Reuters
  • Share
  • Print
  • Clip
  • Gift Article
  • Comments

AMSTERDAM, Dec 18 - Dutch chip equipment maker ASML lowered its fourth-quarter revenue guidance on Thursday and said it would cut more than 10 per cent of its workforce due to a sharp fall in orders.

“Never before have we witnessed such a sharp and sudden fall-off in lithography system demand, triggered by an unprecedented mix of falling end-demand for semiconductors, weak memory prices and restricted access to capital for our customers,” Eric Meurice , ASML’s chief executive said in a statement.

Fourth-quarter revenue is now seen at €450m to €500m, below the €530m ($743m) forecast issued in October. ASML also expects revenue in the first six months of 2009 to be substantially lower.

“This is unprecedented ... no business model can cope with this kind of climate,” said Eric de Graaf, an analyst at Petercam, who has a “sell” rating on ASML.

Mr De Graaf noted that the company’s first-quarter revenue forecast of €180m to €250m implied sales of just three of its advanced lithography machines, given that ASML receives about €100m of service revenue a quarter.

ASML has outperformed rivals this year mostly due to orders for its most advanced, so-called immersion, machines that allow manufacturers to produce chips with ever-finer structures — a support that now appears to fall away.

Its customers are grappling with oversupply, falling memory prices and pressure to consolidate. Another problem is the increasing difficulty in finding financing for ASML’s machines that can cost as much as €30m apiece.

The Veldhoven-based company said it will shut down production facilities for four weeks, spread over the first and second quarter of 2009.

The company’s main rivals in semiconductor lithography machines are Japan’s Nikon Corp and Canon, but lithography makes up only a small part of the competitors’ activities.

© Reuters Limited. Click for restrictions

  • Share
  • Print
  • Clip
  • Gift Article
  • Comments
SHARE THIS QUOTE