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ASML: 2011 will be another record year

13 Apr 2011

The lithography giant increases R&D spending as demand from the semiconductor industry remains strong and more EUV tools are shipped.

After recording its best-ever year in 2010, the lithography systems specialist ASML is expecting 2011 to be even better.

The Netherlands-based company, which dominates the lithography scene along with Japanese rival Nikon, has just reported revenues of €1.45 billion for the opening quarter of 2011. And although that figure is down slightly on the record-breaking closing quarter of last year, it is also close to double the revenue posted one year ago, when the semiconductor industry was still emerging from the global economic crisis of late 2008.

“A strong first quarter confirms our confidence that 2011 is expected to be another record year for ASML,” said CEO Eric Meurice, who believes that the company is on target to post revenues “clearly” in excess of €5 billion for the full year. In 2010, ASML recorded total sales of just over €4.5 billion.

That confidence comes despite the disruption caused by the Japanese earthquake and tsunami last month, and the wave of aftershocks impacting some parts of the country. “The semiconductor manufacturers are certainly showing caution in assessing the impact of the Japanese earthquake on their supply chain, as well as on the overall end-product market,” Meurice said. “Some customers have indeed re-timed a limited number of deliveries.

But, overall, Meurice believes that the wider structural demand for lithography tools in 2011 means that any schedule changes will have a limited impact on ASML’s revenue expectations for the year as a whole.

R&D boost
ASML also posted a net income of €395 million in the opening quarter of the year, again down slightly on the closing quarter of 2010. But with such strong margins, and expectations of a slight revenue increase in the second quarter, the company will again increase research and development spending, to €150 million for the quarter. That compares with €125 million a year ago.

The company’s key developmental area relates to extreme UV lithography (EUV) tools, and ASML shipped two more of its second-generation EUV scanners to customers during the latest quarter. The company has now shipped three of six scheduled orders for second-generation EUV tools, and expects to start delivering third-generation production EUV systems in the second half of 2012. ASML says it has received ten customer “commitments” for such tools.

EUV tool development has been held up in recent years by, among other things, the output power of the EUV source component. However, developments at the recent SPIE Advanced Lithography conference have begun to suggest that such problems might finally be overcome after a years of delays.

Lithography source suppliers Cymer and Gigaphoton are working to increase the output power of their EUV sources to 250 W – a level that is regarded as a benchmark for cost-effective semiconductor device production. Gigaphoton says that it expects to deliver a 250 W source to ASML in 2012.

Strong backlog and doubled dividend
At €3.3 billion, ASML’s systems backlog remains healthy, although it did decline on a sequential basis for the first time since the closing quarter of 2008. However, at that time – the nadir of the global economic slump – ASML’s backlog stood at just 50 units, compared with close to 150 units at present.

The overall message is that, while 2011 will see a much slower level of growth in the semiconductor industry compared with 2010, there is no sign of an impending “bust” cycle at present.

ASML also announced that it plans to pay a shareholder dividend of $0.40 per ordinary share for the record-breaking fiscal 2010, double the per-share figure for 2009. The company has also been busily buying back shares, and has now re-purchased 4.6 million at an average price of €30.68.

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