Nikon profit up; strong yen, rival hit outlook

By Mayumi Negishi

TOKYO (Reuters) - Japan's Nikon Corp (7731.T: Quote, Profile, Research, Stock Buzz) said its quarterly operating profit rose 48 percent thanks to sales of advanced cameras and chip-making equipment, but it predicted a fall in operating profit this year.

A strong yen is taking a toll on Nikon's camera business, even as the company faces increasing competition on its home turf from Netherlands-based rival ASML (ASML.AS: Quote, Profile, Research, Stock Buzz) in chip steppers, machines that print circuitry on silicon wafers.

For the year that began in April, Nikon forecast that operating profit would fall 3.8 percent to 130 billion yen ($1.3 billion), while analysts predict an average 143.9 billion yen.

A strong yen will cut profit by 20 billion yen, Chief Financial Officer Ichiro Terato told reporters.

Nikon, the world's No.2 maker of steppers, expects new chip stepper shipments to drop to 112 units this year, down 23 percent from 2007/8, while shipments of LCD steppers are forecast to rise to 68 units this year from 45.

"Competition is extremely stiff, while the business climate for chip makers remains severe," Terato said. "But our throughput (processing capacity) issues have been resolved and I don't think we will lose market share."

Nikon and market leader ASML are battling in Japan for business from chipmakers such as Toshiba Corp (6502.T: Quote, Profile, Research, Stock Buzz) and Elpida Memory Inc (6665.T: Quote, Profile, Research, Stock Buzz) with their newest products called immersion steppers, even as severe chip price falls are weakening clients' appetite for new gear.

Immersion steppers are multi-million dollar machines that use purified water between the lens and the silicon wafer to project finer details on a chip.  Continued...