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Technology Stocks : ASML Holding NV

ASML 1,419

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To: Proud_Infidel who wrote (1101)	3/24/2006 2:48:34 PM
From: niek	Read Replies (2) of 43191

Fabtech blog 3/24/2006 ASML lithography revenues double those of Nikon. Simply looking at the new "Top Ten" equipment supplier's league table issued by VLSI Research for 2005, it would not be wrong to think nothing has changed from the 2004 rankings. Indeed it is as static as you can get except for KLA-Tencor moving up one spot to fourth in the rankings. However there is something of significance in the revenue figures VLSI Research collated in respect to ASML and Nikon. ASML posted revenues of $3.160 billion US dollars in 2005 and remains the third largest equipment supplier in the world. Nikon however is recorded to have had revenues of $1.566 billion US dollars, highlighting that ASML's revenues were double those of its nearest rival in the lithography tool sector. Although the market research company highlighted that Nikon posted the highest sales growth within the Top Ten, the gulf between the two lithography suppliers sticks out like a sore thumb! Back in 2002 ASML achieved the same feat over Nikon but in 2003 the gap narrowed only to see the gap widen again in 2004. What this highlights is that Nikon has yet to be able to respond to ASML's leadership in the past two years but why? A standard response from Nikon over market share issues is that it feels it is the market leader because it sells more lithography tools on a unit basis than ASML and has a much larger installed base. Although VLSI has yet to release lithography unit numbers for 2005 our industry checks indicate that on a unit basis Nikon may not have the edge on that anymore! But the real issue is surely the large revenue gap between the two rivals. This can partially be explained by the fact that ASML's ASP's are higher than Nikon's due to the higher sales tag and more business coming from DUV tools. This though doesn't fill the billion dollar plus gap. What is apparent and thanks to some friends in the financial analyst sector data received clearly shows that ASML is shipping a much larger number of 193nm ArF tools than Nikon. The ASP's coupled to unit sales of these advanced tools goes further along the way in explaining the revenue gap. It should be noted that the figures I have are not fool-proof and we will all have to wait for the VLSI unit figures to come out to be sure of the 193nm tool disparities. But this is not the complete picture! It has to be said that with the cost of immersion lithography tools hovering around the $26 million dollar mark it doesn't take many units to boost sales revenues. ASML shipped 13 immersion tools in 2005 and could be shipping up to 25 this year. Nikon hadn't shipped any in 2005. This must surely be where the significant difference in revenues is found! Nikon of course will be shipping immersion tools this year and could claw back some lost revenue but ASML looks like it is on a roll with the number of immersion tools it plans to ship this year, which could mean the revenue gap remains large.

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