The market for lithography equipment is "hot and strong", and should stay that way for the rest of the year, according to kit supplier ASML.

The Dutch company added 39 orders to its backlog during the first quarter of 2004, taking the number to 163 systems, worth €1,357m.

"This is an excellent sign that the market is moving, right now, for chips that are going into DVD players and mobile phones. We shipped precisely what the customers wanted," said Doug Dunn, CEO of ASML.

"What we shipped in Q1 was backlog Q4 machines. It was today's technology, mostly going into working eight inch [200mm] fabs. Eighty per cent of the world's silicon is eight inch or smaller, and if you want to move quickly into production that's where you've got to ramp up," added Dunn.

Just over a third of ASML's order backlog is for 200mm equipment, and 13 per cent of the total orders are from China, making it a bigger market than Europe.

For 300mm technology, Japan is apparently proving a harder market: Dunn said fabs there have not cottoned on to ASML's product yet.

ASML made a net profit of €21m during the quarter, compared to a loss of €82m for the same quarter last year. Total sales for the quarter were €453m, versus €526m for the previous quarter.