Nikon Corp., ASML and Carl Zeiss have signed a Memorandum of Understanding relating to a "comprehensive" settlement of all legal proceedings over patents for lithography equipment and digital cameras.

The Memorandum of Understanding is a binding agreement that concerns all pending disputes between Nikon, ASML and Zeiss in Europe, Japan and the United States, including at the U. S. International Trade Commission. The three companies expect to execute a definitive settlement and cross-license agreement and dismiss all legal proceedings between the parties in February 2019.

The terms of the Memorandum include a payment to Nikon by ASML and Zeiss of a total of EUR 150 million (approximately 19.0 billion Japanese Yen). Furthermore, the cross-license agreement contemplated by the Memorandum includes mutual royalty payments of 0.8% over the sales of immersion lithography systems for 10 years from the signature date of the parties’ definitive agreement.

ASML Cuts Sales Forecast

In related news, ASML, Europe’s largest semiconductor equipment maker, forecast first-quarter sales below expectations, mainly due to a fire at a strategic supplier.

ASML Chief Executive Officer Peter Wennink said that the mobile phone market “is not where I believe the biggest growth areas of the semiconductor market is," saying he instead sees growth in server parks, cloud and data processing in the cloud.

The company predicts sales of 2.1 billion euros ($2.4 billion) for the first quarter.

A fire at a key supplier of electronics components and modules, Prodrive, damaged inventory. ASML expects first-quarter sales to be adversely impacted by roughly 300 million euros.

This should be recovered in the second quarter, with the remainder expected to be recovered in the second half of 2019, ASML said.

ASML forecasts a gross margin of about 40 percent in the first quarter of the year, trailing the average estimate for 47.3 percent.

Over Q4, ASML said it received five new orders for its latest lithography machines.

"Our fourth-quarter sales came in above expectations to wrap up a record 2018 in terms of sales and profitability. The past year was also crucially successful in terms of technology innovation, fueling our growth in the coming years. During Q4, we received five EUV orders. We have customer demand for 30 EUV systems in 2019 and these shipments will include the first volume production systems to DRAM memory customers. We expect that chips produced on our EUV scanners will start to become available to consumers and enterprises in 2019," said ASML President and Chief Executive Officer Peter Wennink.

"With regards to the markets that we serve, our customers responded late in Q4 to slowing demand in their end-markets by delaying deliveries of some of our litho systems from the first half of 2019 into the second half, in order to balance supply and demand. For the full year, the Logic segment is expected to be the growth driver, remaining on track to invest strongly in technology transitions and production capacity for our customers' most advanced nodes, which will drive demand for our EUV and immersion systems. In addition, we continue to see solid demand for shipments to China."

ASML has already announced the NXE:3400C, specified at 170 wafers per hour and with >90 percent availability. The system will be available to ASML's customers in the second half of 2019.