Bloomberg News

ASML CEO Sees EUV Machines Reaching Improved Norms by 2017 (1)

January 22, 2014

ASML Holding NV (ASML) expects new extreme ultraviolet lithography machines to reach a production standard that satisfies all of its semiconductor-equipment customers by 2017, Chief Executive Officer Peter Wennink said.

ASML reported fourth-quarter profit that beat analysts’ estimates today and said in a statement it would boost its dividend after strong demand. ASML shares rose 7 percent at the close in Amsterdam, the most in a year, to 67.51 euros.

Europe’s largest semiconductor-equipment supplier is pushing into newer technologies, adding so-called EUV technology as sales of personal computers fall and chip production shifts to mobile phones and tablets. EUV enables the production of smaller chips while increasing capacity and speed.

“The current EUV systems are at a level that is good enough for initial production for our customers,” Wennink told a news conference. “But our customers also need stability, so they can meet economic targets.” Wennink said he expects to reach required stability levels in the second half of 2016 or in 2017.

ASML said today it had demonstrated in its own factory the capability to produce as many as 50 wafers per hour on EUV systems and that the company remains on target to deliver systems with a throughput of 70 wafers per hour this year, upgradeable to 125 wafers in 2015. Wennink said ASML’s customers don’t emphasize speed.

Expensive Machine

’’The progress on EUV is good,’’ said Robin van den Broek, an analyst at ING Bank. ’’The question is, however, how long the machines can keep up operating without any interruptions. If the machines operate for two hours and are then out of use for six hours, it would still be an expensive machine.’’

Taiwan Semiconductor Manufacturing Co. (2330), ASML’s biggest client, last week reported a 7.7 percent rise in fourth-quarter net income and said it expects 2014 sales and profit to climb at least 10 percent as demand for mobile devices offsets higher depreciation costs.

ASML’s progress with EUV may indicate that recent customer concerns have been exaggerated, said Marcel Achterberg, an analyst at Petercam SA, even as anxiety hasn’t completely abated. “A little delay isn’t a disaster,” Achterberg said.

Net income rose to 481.1 million euros ($652 million) in the last three months of 2013 from 297.7 million euros a year earlier, Veldhoven, Netherlands-based ASML said today. Analysts had predicted 416 million euros, the average of 15 estimates compiled by Bloomberg. Sales rose 81 percent to 1.85 billion euros, boosted by the takeover of light-source manufacturer Cymer Inc. in May.

Maintained Forecast

ASML said it reiterated its forecast for the first half of 2014, with expected sales of about 3 billion euros, excluding additional sales from third-generation EUV systems. The company expects net sales of about 1.4 billion euros in the first three months of 2014, falling short of the average estimate of 1.71 billion euros in a Bloomberg survey of 12 analysts. It intends to declare a dividend for 2013 of 0.61 euros per ordinary share compared with 0.53 euros for 2012, an increase of 15 percent.

Some customers with a higher appetite for risk are currently ordering EUV systems, Wennink said, and these customers may upgrade for higher productivity once the new machines are ready.

Old Systems

“Some customers need a high stability level before they replace old systems, while others want to step in now to learn,” he said in an interview.

To ensure ASML reaches the required stability levels the company has decided to boost investment in research and development. First-quarter R&D costs will increase by around 10 percent compared with the previous three months to 280 million euros. By the end of 2014 the company expects to have brought this back to about 250 million euros a quarter, Wennink said.

ASML can afford to invest more as it increased its cash and cash equivalents by about 563 million euros in 2013, in part because of strong demand at the end of the year. The remaining free cash will go to shareholders in the form of higher dividends and share buybacks, Wennink said.

To contact the reporter on this story: Elco van Groningen in Amsterdam at vangroningen@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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