Dutch chip equipment maker ASML reported first-quarter profits and sales on Wednesday that fell short of forecasts but said new orders were flowing in strongly in a booming market.
ASML is the world's largest maker of lithography machines which map out electronic circuits on silicon wafers, the heart of the chip manufacturing process.
"The upturn flickered in Q3 and caught hold in Q4 2003," said Chief Executive Doug Dunn, who is set to retire later this year.
"We've now seen three quarters of strong orders including this one. All indications suggest that orders will continue to be strong in Q2," he said.
"These are some of the most bullish comments that I've heard from him since 2002. It's good to hear him say it," said analyst Uche Orji at J.P. Morgan in London.
ASML made a first-quarter net profit of 21 million euros ($25 million), compared with a year-ago loss of 81.9 million euros and the average forecast of 24.6 million euros given in a Reuters poll of 11 analysts.
Sales rose to 453 million euros, whereas analysts had expected a rise of 60 percent to 509 million euros, but the average selling price per machine dropped 12 percent from the fourth quarter to 8.4 million euros as customers favoured older models that help them to quickly add capacity to meet urgent demand.
ASML's backlog of lithography systems on order rose to 163 as of end-March from 124 at the end of December and compared with a market forecast of 134 machines.
The total value of the backlog was 1.36 billion euros, with an average selling price of 9.6 million euros for new machines. "Sales and shipments in the first quarter were below expectations but the order book is much better than expected and the average selling price per machine which held down revenues in the first quarter is set to increase," said analyst Ewald Walraven at ING.