INTERVIEW-Tokyo Electron sees orders stabilising
Friday December 20, 5:19 am ET
By Edmund Klamann
TOKYO, Dec 20 (Reuters) - Tokyo Electron, the world's second-largest maker of chip equipment, said on Friday its net orders this quarter would likely exceed 70 billion yen ($580 million), below last quarter but above some analysts' forecasts.
In a sign the semiconductor sector may finally be poised for recovery after a false start early this year, the company's January-March orders will likely be even with or above this quarter, and may even show a sharp increase, Tokyo Electron President Tetsuro Higashi said in an interview.
"There's a possibility they could really surge, but in any case I don't think they'll get worse. I think they'll either be flat or higher," Higashi said.
Tokyo Electron's net orders for chipmaking equipment in July-September fell 30 percent from the prior quarter to 89.3 billion yen on a non-consolidated basis.
That reversed a surge in the prior two quarters, when the market showed signs of pulling out of last year's record slump.
But the recovery was short-lived, as consumer spending on key chip-using products like personal computers and cellphones remained sluggish.
In November, Tokyo Electron forecast total new orders of 80 billion yen for the current quarter, down from last quarter's 98.1 billion yen, but did not give a figure for net orders, which subtracts the amount of cancelled orders.
Cancellations surged at the start of last year when the chip sector entered a record-breaking slump.
CANCEL THAT
Several analysts have estimated Tokyo Electron's net October-December orders in the 55 to 70 billion yen range, but Higashi felt his company could do better.
"I don't think we'll get many more cancellations, so I think we'll probably get net orders above 70 billion," he said, noting particularly brisk orders from South Korea.
He said next year would likely bring stronger chip demand, noting brisk sales growth in chip-using consumer electronics such as DVD players, flat-panel TVs and digital cameras.
He also expected the PC and cellphone markets may finally pull out of their slump in another six months.
"My own view is that this year we've seen the first sprouts of new growth," he said.
He reiterated his expectation that revenues would grow by about 10 percent in the next business year from April 1, aided by a recovery in capital spending and new products.
Analysts have projected capital spending will shrink next year at Intel Corp (NasdaqNM:INTC - News) and Taiwan's chipmakers, but Japan's chipmakers are set to boost investment after two years of sharp cutbacks, while South Korea was seen spending more, as well.
Higashi said he hopes new products will help boost his company's global market share in chipmaking equipment to 14-15 percent in the next three to five years from 11 percent now.
Several products target small-batch processing of wafers for specialised chips used in cellphones and other consumer electronics, rather than large-batch processing for standardised memory and microprocessor chips used in personal computers.
Higashi cited market research data forecasting the consumer electronics and automotive sectors would use 30 percent of the world's microchip output in 2006, up from 20 percent in 2000.
He added his company was attacking costs with a drive to cut by half the time between order placement and product delivery, which currently averages five months.
Tokyo Electron's shares ended Friday unchanged at 5,200 yen, outperforming a one percent drop in the Tokyo Stock Exchange's electrical machinery index (^IELEC.T - News). ($1=120.55 Yen) |
