November 15, 2012 / 11:51 AM / 5 years ago

UPDATE 1-ASML sees "pretty dire" memory chip market in 2013

* Says logic chip industry will remain strong

* Says 2013 will be second-half weighted

* Confident Cymer deal will be cleared

By Paul Sandle

BARCELONA, Nov 15 (Reuters) - ASML, the leading supplier of chip-making equipment, said it expected demand in the memory sector to be weak in 2013, despite a rise in NAND memory prices in recent weeks.

Chief Financial Officer Peter Wennink told a conference organised by Morgan Stanley that the outlook for memory chips for 2013 was “a pretty dire picture”.

He said he was not counting on any uptick in NAND memory - removable cards that do not need power to hold on to data - but the company would build buffers to hedge for any potential upside.

He said, however, that demand in the logic chip industry would remain strong, adding that next year would be second-half weighted due to expansion in the 28 nanometer node and demand for equipment for the ramp-up to 20 nanometer in 2014.

Chipmakers were also on track to start producing even thinner 14 nanometer microprocessors in the next couple of years requiring less voltage to operate and therefore less power.

“There is no doubt in our minds that there is going to be any backtracking on current plans,” he said.

“We see 2013 (as) memory very weak, logic and microprocessors strong,” he said.

Demand for memory was constrained by the weak PC market, he said, and by tablet makers using memory as a price differentiator.

“The price difference between a 16-gig tablet and 32-gig tablet is $100, but the cost of the additional 16 gig is a fraction (of that),” he said.

Demand for DRAM memory would be lifted by mobile, which accounts for just over 15 percent of the market, he said, but it would be a medium-term trend.

“There will be an acceleration in DRAM in the next couple of years, but the big question is when will that turning point be?”, he said. “It is definitely not 2013. Anywhere between two and four years we hope to see something.”

DRAM represents only 2 percent of ASML’s backlog, according to Morgan Stanley analysts, reducing the downside for the company from the bleak outlook for the memory sector.

Wennink said he was confident that ASML’s plan to buy Cymer Inc, a supplier of lithography light sources used to make chips, would be cleared by competition authorities.

The Dutch company said last month that the 1.95 billion euros ($2.5 billion) deal would speed up the development of extreme ultraviolet (EUV) semiconductor lithography, which will help produce chips to power future generations of smartphones and tablet computers.

Wennink said on Thursday that ASML needed to own the U.S. group to overcome legal and contractual obstacles that were hampering attempts to develop newer, smaller chips.

“We do this for the industry (and) for the end consumer, and from a regulatory point of view that will weigh very heavily,” he said.

Shares in ASML were down 2.2 percent at 1141 GMT, underperforming a 0.8 percent weaker index of European technology companies

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