ASML net income doubles in first quarter on strong demand

Eric Auchard

(Adds outlook details; background, CFO comments)

FRANKFURT, April 19 (Reuters) - Dutch semiconductor

equipment supplier ASML on Wednesday reported a

doubling in first-quarter net income and said demand looked

healthy for the rest of 2017, aided by a surge in spending by

memory chip making customers.

Net sales grew 46 percent year over year to 1.94 billion

euros ($2.08 billion) for the first quarter, compared with

analyst expectations for 1.82 billion euros. The company said it

expects sales of 1.9-2.0 billion euros in second quarter.

"We saw strong demand in all of our industry segments,"

Chief Financial Officer Wolfgang Nickl said in a pre-recorded

company interview. "All in all, I think we are going to have a

very, very good 2017."

It reported an order backlog of 4.5 billion euros, half of

which - 2.3 billion euros - is tied to 21 of its newer,

higher-priced EUV systems. Nickl said revenue from these latest

systems would likely total between 1.0 billion and 1.2 billion

euros in 2017.

ASML pointed to evidence chipmakers are gearing up to move

beyond the testing stage and to start using its next-generation

Extreme Ultra-Violet (EUV) lithography systems in high-volume

production of the tiniest, most powerful circuitry available.

Europe's second most valuable tech company supplies chip

lithography systems to all of the world's largest chip makers,

including Intel in logic, Samsung Electronics

in memory and foundry TSMC, which makes

chips for designers with no production capacity of their own.

Nickl said memory chip customers were ready to spend on new

equipment, something that ASML was not seeing three months ago.

"Now we see quite a significant increase year over year," he

said of capital spending by memory chip makers.

Memory chip customers accounted for 47 percent of

first-quarter sales, compared to 40 percent from foundry and 13

percent from logic, or integrated device makers, it said. Just

two quarters ago, memory only contributed 16 percent of sales.

For the first-quarter, ASML posted net income of 452 million

euros, significantly higher than analysts' average forecast of

397 million euros in a Reuters poll and more than doubling

profit from 198 million euros reported in the year-ago quarter.

Gross margin edged up to 47.6 percent in the first quarter

from 47.2 percent in the final quarter of 2016. But the company

said margins for the current second quarter would fall back to

between 43 and 44 percent, reflecting product mix shifts.

ASML said earlier this year that it had almost sold out of

its newest, most expensive machines for 2017 and early 2018.

Nickl said on Wednesday that his company was planning to produce

12 EUV systems this year and "about 20 systems" for 2018.

Full EUV systems cost around 100 million euros a piece and

take up to a year to build and install.

($1 = 0.9329 euros)

(Reporting By Eric Auchard; Editing by Victoria Bryan and Jane

Merriman)