Dutch semiconductor-equipment maker ASML Holding NV (ASML.AE) Wednesday got the European tech earnings season off to a strong start, posting record third quarter sales as major global chip companies invest in capacity growth and the latest chip making equipment.

ASML, the world's largest maker of multi-million dollar lithography systems that map out electronic circuits on silicon wafers, said net profit was EUR268.5 million in the quarter ended Sept. 30, sharply up from EUR20 million in the same period a year earlier when demand fell as customers trimmed stocks and manufacturers adjusted production capacity as a result of the global economic slump.

ASML reiterated Wednesday that it expects full-year sales to be 10% to 15% above the historical peak reached in 2007, and that it has orders to ship eight of its latest chip making machines from 2012 that will help its customers ramp up production.

ASML's report comes after Intel Corp. (INTC), one of its major customers, on Tuesday posted a 59% jump in third-quarter earnings and issued upbeat comments about technology spending, allaying fears of a sharp slowdown in computer demand.

ASML's Chief Financial Officer Peter Wennink said that although some tech companies cut their guidance in recent weeks, ASML's customers have very positive cash flow and are making both strategic investments in the latest lithography tools and capacity investments because there is the expectation that the industry will still grow next year.

"Our customers need to develop new products for their customers, and if they want to do that, they need new lithography tools," said Wennink. "They have the profits, they have the cash, they will invest."

ASML, reported its best quarter ever, beating expectations, with third-quarter sales more than doubled to EUR1.78 billion from EUR555 million in the same quarter a year ago and up from EUR1.07 billion in the second quarter. It expects fourth-quarter sales of around EUR1.3 billion. Wennink, in a video interview on the firm's website Wednesday confirmed 2010 sales will be "historic, around EUR4.3 billion."

In July, ASML said that, barring a macro-economic downturn, its 2010 sales momentum is expected to continue through into 2011. "We will end 2010 with a record backlog. That is a good starting point, 2011 has the potential to be another growth year," Wennink said Wednesday.

ASML, which has a global market share of around 70% and competes with Canon Inc. (CAJ) and Nikon Corp. (NINOY), said it booked EUR1.3 billion worth of systems in the third quarter of this year, and expects bookings in the fourth quarter to exceed the third quarter level.

"This expectation of strong and continuous structural demand for our products, notwithstanding mixed signals of less bullish growth of personal computer demand and memory price declines, is supported by the current sustained bit growth trends for DRAM and flash memory chips as well as the continued strategic investments by all foundry chip manufacturers," said Eric Meurice, chief executive of the Veldhoven, Netherlands-based company.

Analysts were also upbeat about the company's prospects.

The company should post even higher sales and earnings per share in 2011 than it will in 2010, said Jefferies analyst Lee Simpson, who has a buy rating and a EUR25 target on the stock.

At 1021 GMT, ASML was the biggest gainer in Amsterdam , trading up 3.2%, or EUR0.70 higher, at EUR22.80 in a broadly higher AEX market.

ASML, whose equipment makes flash memory chips used in smartphones, digital cameras and computers, counts Intel, Samsung Electronics Co. Ltd. (SSNHY) and Taiwan Semiconductor Manufacturing Co.(2330.TW) among its customers.

-By Roberta B. Cowan; Dow Jones Newswires; +3120-571-5200; roberta.cowan@dowjones.com
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