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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (37246)	9/12/2000 9:47:23 PM
From: Proud_Infidel	Read Replies (1) \| Respond to of 70976

ASML CEO: Sees Semiconductor Boom Extended To 2003 Dow Jones Newswires By Toby Sterling Of DOW JONES NEWSWIRES AMSTERDAM -- The outlook for ASM Lithography NV (ASML) and its peers is even rosier than current market expectations, its chief executive says. The Dutch semiconductor equipment maker is already enjoying a renaissance. In the past year it has announced gains in market share, several major new client wins, and its stock price has more than tripled to around EUR43 a share. In fact, ASML has said its growth will be limited for the next year only by component shortages. But in an interview with Dow Jones Newswires, Doug Dunn cited two further reasons why the outlook is brighter still. First, the industry's current boom may extend through 2002 and beyond. Second, demand for high-margin second-generation lithography machines is stronger than expected. "There are reasons why the downturn this time will be pushed out in time, delayed and maybe less severe as a downturn: maybe just flattened out," he said. Lithography machines, used to help make the circuitry of computer chips, are considered the crucial step and limiting factor in chip production. Dunn said that with ASML and rivals Nikon Corp. (J.NIK), Canon Inc. (CANNY) and Silicon Valley Group Inc. (SVGI) all fighting for the parts needed to make a few extra machines, semiconductor makers in turn are limited in their own capacity increases. "Inadvertently, and with great sorrow, companies like ASML are causing (industry overheating) to be less severe than in past cycles," Dunn said. "There are 80 systems this year I can't ship - I regret that severely because customers want those products - but nevertheless...it is preventing the sudden overheating of supply." He estimates that at the current growth rates, the industry won't catch up with white hot demand - boosted by new products and strong world economies - until 2003. "On the demand side, it's absolutely mind-blowing, with mobile phones and handheld (wireless) devices of all types, and digital products for the consumer, whether it's DVD players, set top boxes or digital TV's." Dunn said. Dunn said that although he has capacity to build 350 to 400 systems this year, he is comfortable with analysts' estimates of around 300-330 systems. "We may have a little extra, should our suppliers be able to do their bit," he said. "I know the answer to (whether that's the case) now, you'll know it at the end of the year." Caught Out He said demand for I-line systems, used to produce semiconductors used in products with processing power just below the 'cutting edge', will remain strong throughout 2001. That's significant because their cost - around $5 million a system - is cheaper for semiconductor makers than the $7 million or so a more advanced machine costs. However, profit margins for companies like ASML are higher on the I-line machines, since the bugs have already been worked out of getting them into high-speed production. "We have certainly been surprised - caught out, let's be honest - by the resurgence of I-line," Dunn said. He said strong sales of "Deep UV" systems - the most advanced lithography systems - in the second half of 1999 had given ASML the false impression that the entire industry was about to shift to DUV. "What we hadn't recognized was there'd been so little investment for three years in semiconductors, that very few factories were ready to take DUV scanning technologies." "When the market suddenly blew up, and all the mobile phones and PC's started shipping again, what the semicon guys had to do was fill factories with existing technologies, so there was a sudden kickback flurry of demand for I-line." In ASML's current order backlog, 45% of all systems are for the I-line systems. As a result, ASML will continue selling those systems in large volumes at least throughout 2001. "Having failed once, I'm reluctant to predict again (when demand for I-Line will taper off)," he said. "Probably in 2002 we'll see it slow down again."