ASML Q1 order book eyed for chip uptick

AMSTERDAM (Reuters) - Investors will look to ASML's (ASML.AS)(ASML.O) first-quarter order book and outlook for signs the global chip sector could rebound, driven by demand for new ultra-thin PCs, futuristic flat-screen displays and smartphones when ASML reports results on Wednesday.

ASML was expected to announce fourth-quarter orders in the 650 million euro range, a Reuters poll found, but some analysts expect the company to beat these expectations due in part to the massive capital expansion plan Samsung Electronics (005930.KS) announced on Tuesday.

A bellwether for Europe's technology sector, ASML is the world's largest maker of semiconductor lithography machines, which map out electronic circuits on silicon wafers, competing with Japanese groups Canon (7751.T) and Nikon (7731.T).

ASML's lithographic machines, worth about 27 million euros each, make chips smaller, smarter, increasingly energy efficient and in greater volumes. ASML counts Samsung Electronics, Taiwan Semiconductor Manufacturing (2330.TW), and Intel (INTC.O), among its customers.

ASML's order book development is seen as a barometer for expectations of big chipmakers and the wider technology sector.

"The order intake of ASML tends to move ahead of the rest of the equipment industry, due to the relatively longer lead times and critical nature of leading edge lithography technology," said Victor Bareno, SNS Securities analyst.

"A year ago, the upswing that boosted the rest of the market in the first half of 2011, already triggered blow out orders for ASML in the fourth-quarter 2010," said Bareno.

The industry hit a slump in the middle of 2011 as demand for consumer gadgets slowed in Europe and elsewhere due to economic uncertainties, which led to a slowdown in ASML's order book in the second-half of 2011 as the industry also struggled to clear inventories of unsold chips.

Earlier this month research firm Gartner predicted that global IT spending would grow more slowly than previously expected for 2012 due to weaker economies, particularly in Europe, and floods in Thailand, which would impact hard-disk drive (HDD) production in particular.

Gartner said that due to the HDD shortages and the cautious environment for hardware spending, it also cut its PC shipment forecast.

But analysts covering ASML surveyed by Reuters don't expect cuts to 2012 capital expenditure in some parts of the technology sector to be as drastic as perhaps expected in December, driven by continued strong growth in the smartphone and tablet markets as well as the latest super-thin personal computers, called ultrabooks.

ASML's fourth-quarter sales were seen in line with analysts' expectations at 1.131 billion euros, but down significantly, or 25.6 percent from record levels in 2010. Net profit was seen at 224 million, down 45 percent from the same period in 2010.

ASML reported record-high sales, profits and bookings in the fourth-quarter 2010, due to a surge in demand for smartphones and tablet computers.

ASML chief financial officer Peter Wennink said on October 12 he would not make any predictions for ASML in 2012 and that the slowdown in the semiconductor industry, felt in the middle of 2011, was evident from ASML's fourth-quarter order book.

At the time he said customers were continuing to upgrade their technology but wouldn't be more specific other than he expected fourth-quarter orders to be above the 524 million euros in orders booked in the third quarter.

But a month later, on November 18 he told a conference that customers had started to place orders again, indicating the first signs of a sector recovery.

This echoes other industry chiefs in recent weeks who have said semiconductor orders had bottomed out, and are either not worsening or showing signs of improvement.

(Editing by Jon Loades-Carter)