Advantest H1 profit falls, lowers outlook

(Adds comments from news conference, details)

By Mayumi Negishi

TOKYO, Oct 26 (Reuters) - Advantest Corp (6857.T), the world's largest maker of microchip testers, posted a 23.8 percent drop in first-half net profit on Friday, reflecting chip makers' spending cuts on testers, and lowered its guidance for this year to below expectations.

Advantest and rival Teradyne Inc (TER.N) have been hurt as customers such as Samsung Electronics (005930.KS), system chip makers and Taiwanese foundries hold off buying top-end tester equipment, opting for cheaper testers or adapting old ones as errors made in chip production fall.

Orders fell 25.4 percent in April-September from the previous six months, prompting Advantest to lower its orders outlook for the full-year to March by 15 percent to 220 billion yen ($1.93 billion).

But Advantest President Toshio Maruyama said he expects demand for new equipment to recover from January to September, citing a shift among memory chip makers like Elpida Memory Inc 6665.t to more advanced production processes.

Chips are packing more memory into less space to enable portable and application-heavy gadgets. That will drive demand for testers of advanced DDR3-type chips, he said. DDR3 chips are faster and use less power than its predecessor dynamic random-access memory chips (DRAM), he said.

"Consumer products, not PCs, are now driving demand for a wide range of chips," Maruyama told a news conference.

For the year to next March, Advantest lowered its guidance to a net profit of 33 billion yen ($288.7 million) from a previous forecast of 42 billion yen. That compares with a market consensus of 40.6 billion yen by 21 analysts.

It reported a group net profit of 16.9 billion yen for April-September, against 22.2 billion yen the previous year. The result compares with a market estimate of 18.9 billion yen by three analysts polled by Reuters.

Shares in Advantest finished the day down 0.9 percent prior to the results announcement, while Tokyo's electrical machinery subindex .IELEC.T rose 2.1 percent.

Semiconductor makers, plagued by price falls, have been slashing spending on testers even as they keep up spending on equipment to etch and process wafers, according to industry group Semiconductor Equipment Association of Japan.

Teradyne posted a 32 percent fall in quarterly profit from a year earlier, and said it expected sales to remain weak in October-December.

Advantest shares have plunged 50 percent since January, as client chip makers suffered from falling chip prices. Teradyne has shed 16.4 percent, while Tokyo's electrical machinery subindex fell 7.1 percent.

Advantest announced a share buyback on Friday, saying it would buy as many as 5.5 million of its own shares for 20 billion yen between October 29 and Dec. 28.