The Dutch equipment maker has grown increasingly pessimistic about business this year and now doesn't expect to see any upturn before the second half of next year.

Doug Dunn, ASML's CEO, wouldn't make any estimates for the rest of this year. "The uncertainties and constantly changing dynamics in the industry make it very difficult to predict customer's order behavior." He said during the first half that "customers continually eroded their capital requirements with a sequence of cancellations and push-outs."

While the June 30 backlog looks "reasonably robust under the current market circumstances," Dunn pointed out that most of this backlog represents orders for system deliveries in 2002. "That is why we have implemented aggressive and substantial cost saving measures, including a reduction in the number of employees."

ASML had net sales of 1.02 billion euros ($875 million) for the six months ended June 30, down 24% from 1,34 billion euros ($1.52 billion) in the first half of 2000.

Total units shipped were 250 systems, including 120 lithography systems. This compares to 322 units shipped in the first half of 2000, which included 207 lithography systems. This major decline in shipments reflected the impact of the severe and sudden downturn in the chip industry that occurred in the first half.

Net income collapsed from 149 million euros ($128 million) in the first half of 2000 to a net loss of 96 million euros ($83 million) in the first half of this year. Operating income was hit not only by the decrease in volume, but by lower gross margins and increased operating costs, the company said.

Also adding to the loss was higher-than-expected merger and acquisition costs in acquiring the Silicon Valley Group (now ASML USA), which amounted to 40 million euros ($34 million). Six-month results are the combined results of ASML Europe and SVG.

ASML Europe showed a drop of 33% in sales to 648 million euros ($559 million) from 971 euros ($837 million) a year ago. The fall resulted from a 46% decline in unit sales, with 92 lithography systems sold in the first half of 2001 compared to 169 systems in the first half of 2000.

Gross margin in the first six months of 2001 was 37%, down from 40.1% in 2000. Operating profit before one-time merger-and-acquisition costs fell from 207 million euros ( 21.3% of total sales) to 13 million euros (or 2.1% of total sales).

During the first six months of 2001, ASML Europe's backlog fell from 255 systems to 188. Orders totaled 92 systems while 130 systems were shipped and 105 orders were canceled.

ASML USA (formerly Silicon Valley Group) sales for the first half amounted to 367 million euros ($316 million), about flat with last year's 364 million euros ($314 million).

System sales were 158, up from 153 a year ago. Sales of lithography systems fell 165 million euros last year to 112 million euros in the first half of 2001, a dip of 32%. Some 28 lithography systems were sold in the first half of 2001, down from 38 last year. .

ASML USA's gross margins decreased from 34.7% last year to 11.3% in the six months ended June 30. This drop was due primarily to inventory writedowns of 56 million euros ($48 million) and under-utilization cost of production facilities, especially in the lithography division. Gross margin in the lithography division was negative 18% in the fist half of 2001, compared to 36.6% for the first half of 2000.

In the first half, ASML USA received orders for 92 systems-63 for thermal and track products and 29 for lithography systems. Sales totaled 158 systems (130 thermal and track systems and 28 lithography systems), and cancellations amounted to 96 systems (73 for lithography and 23 for thermal and track products). This resulted in a drop in backlog from 282 systems (172 thermal and track and 110 lithography systems) at the start of the year to 120 systems on June 30, of which 38 were lithography systems and 82 were thermal and track products.