bloomberg.com
Tokyo Electron Sees Profit Surging on Demand for Chip-Making
Equipment
By Tak Kumakura
Tokyo, Feb. 4 (Bloomberg) -- Tokyo Electron Ltd. raised its
full-year profit forecast 54.5 percent on strong demand for
equipment to make semiconductors and liquid crystal displays,
especially from Taiwan and Japan.
The world's second-biggest maker of equipment to make
semiconductors said it now expects a group profit of 17 billion
yen ($158 million) for the year ending March, up from its original
forecast of 11 billion yen. It raised projected sales 9.6 percent
to 433 billion yen.
Swelling demand from foundry, or third-party chipmakers in
Taiwan, is the driving force behind the record orders at Tokyo
Electron, whose fortunes are dominated by cycles of capital
spending at the world's largest chipmakers. The biggest foundries,
Taiwan Semiconductor Manufacturing Co. and United Microelectronics
Corp., are among companies ordering more equipment to add capacity
to cope with accelerating orders from U.S. and Japanese chipmakers
keen to source chips from makers with lower production costs.
``Chip-making manufacturers are working full-time to maximize
their capacity now and they need more machines to produce chips,'
said Takashi Mimura, an analyst at Societe Generale Securities Co.
``There's a growing need for chips for use in cellular phones and
personal computers, including laptop and notebook computers.'
Tokyo Electron shares surged 1,700 yen, or 10.6 percent, to
17,700. Some 717,000 shares traded, almost one and a half times
the daily average the last six months. The earnings revision was
released while exchanges in Japan were open.
Chip Orders
Tokyo Electron, second only to Applied Materials Inc. of the
U.S. in global sales of chip equipment, said last month it
received a record 156.3 billion yen in orders in the October-
December period, quadruple the 40 billion yen in orders in the
same quarter a year earlier.
``We're expecting the trend (of outsourcing production) to
grow,' Tokyo Electron spokesman Kazuya Nanbu told Bloomberg News
last month.
Orders are rising as chipmakers such as Intel Corp., Samsung
Electronics Co. of Korea and Micron Technology Inc. of the U.S.
spend more on equipment in factories to boost production capacity.
Tokyo Electron expects orders for the January-March quarter
to total between 120 billion yen and 140 billion yen, sending
orders for the year through March 31 to a record.
Tokyo Electron shares more than tripled in 1999 on
expectations a revival in capital spending by chipmakers worldwide
will fuel a recovery in earnings for the year ending in March.
Tokyo Electron was yesterday reiterated ``buy' by analyst
Satoru Oyama at ABN Amro Securities (Japan) Ltd. |
