The company anticipates charges of about $125 million to be taken in the second half of 2002.

As expected (see December 17 story) ASML is taking action regarding the Track and Thermal operations based in California. The company said today that the Track and Thermal segment accounted for 6% of total sales in the first half of 2002 but 60% of operating losses in the period.

ASML is trying to sell off its Thermal operations, which are based in Scotts Valley and employ 450 people. "We have decided that divestment will unlock Thermal's inherent value. ASML's focus is imaging solutions. Thermal will be better outside ASML," said Doug Dunn, president and chief executive officer of ASML, in a statement.

However, ASML decided that although the company believed in the integration of track equipment with lithography, in the case of ASML's Track operation in San Jose, which employs about 300 people, such an integration would take too long and require too much investment. The company said the Track operation is to be discontinued as off December 2002, with a related charge of about $45 million.

"The global market for semiconductor capital equipment has slumped by more than 70% in the last two years," said Dunn. He added: "Our regrettable but real requirement is to continuously calibrate our workforce to global market conditions."

ASML's main lithography operation accounted for about 94% of net sales in the first half of 2002. In this division ASML intends to reduce the workforce by 700 positions including 350 in the Netherlands. The total costs associated with this reduction are not expected to exceed about $10 million likely to be recorded in 2003, the company said.

The company is anticipating a write-down for slow-moving lithography inventory in the second half of 2002 of about $80 million. Nonetheless ASML re-iterated its guidance that it would ship about 100 lithography systems during the second half of 2002.