ASML may be losing proof of the recession
ASML’s performance this year more than rivals, mainly because it was the most advanced, the so-called immersion machine orders, enables the manufacturer to produce the finer structure of the chip – this is a major market of ASML.
That support may now disappear, threatening ASML’s profitability and casting doubt on its prospects, as memory chip makers face the world’s no. 1 hynix semiconductor. 2 memory chip makers, known as the worst of the industry.
Manufacturers are grappling with oversupply, falling memory prices and consolidation. Another problem is that the financing of each machine is increasingly difficult, and the cost of each machine is about 30 million euros.
Victor Bareno, analyst at SNS Securities, said: “just two months ago, the worst was still the reality of 2009.
Eric DE Graaf, analyst at Petercam, said he expected the situation to deteriorate further in the first half of 2009 and forecast a loss for the period.
ASML, the world’s largest maker of semiconductor lithography machines, has seen orders for low-end machines decline, and chipmakers have bought low-end machines to boost production.
The world’s largest memory-chip makers samsung electronics and one of the main customers of ASML, has said it will cut capital spending next year, for ASML, applied materials and other semiconductor equipment manufacturers have a negative impact.
To show difficult climate, ASML took part in a government plan, for 1100 of its 7000 employees are to reduce working hours – this program is only for those in the two months revenue fell open at least 30% of the company. The first two months.
The headquarters is located in Germany Veldhoven, company’s main rival in semiconductor lithography printing machine is Japan’s nikon and Canon, but lithographic accounts for only a small part of the competitor activities.
Don’t miss the boat
ASML’s view is that the memory chip maker, especially must follow competitors make smaller chips, because it means more chips can be on a single wafer, so that the production cost is lower, this is an advantage technology companies can’t miss it.
“You can’t just say, ‘I’m not going to shrink because of the recession.’ If it doesn’t shrink, it will lose market share right away, “ASML chief executive Eric Meurice said earlier this year before a full-blown financial crisis.
This argument may soon be challenged – the impact could be huge when the immersive system accounted for nearly 90 per cent of ASML orders in the third quarter.
“We expect ASML orders to fall by 75 per cent in the fourth quarter, to levels not seen in the past five years.” Despite the strong cost controls, the first half of 2009 will inevitably have a significant double digit loss, “said Bareno of SNS.
Mr De Graaf of Petercam says ASML customers do want to invest, but cannot estimate that 30 to 40 per cent of customers have problems accessing capital.
A large number of chipmakers can still reduce costs by using immersive machines, but acknowledge that the financing machine is a major problem and memory prices are weak, a spokesman for ASML said.
Analysts said ASML’s share price has fallen about 45 percent this year and the DJ Stoxx technology index, which is down 50 percent, may not fully reflect the dilemma.