Industry leader Intel Corp had good and bad news for investors on Tuesday. The good news was that the semiconductor industry leader managed to beat the street with its fourth-quarter earnings. The bad news was that the company planned to cut its capital expenditure commitments by about a quarter for this year. The announcement saw a sell-off in United States chip equipment makers like Novellus and Applied Materials in after-hours trading. But although it lives in the same universe, Hong Kong-listed ASM Pacific Technology, which makes the equipment for the packaging and testing of semiconductors, appeared unscathed by the news, with the stock rising 2.27 per cent yesterday. ABN Amro head of China research Michele Mak said: 'ASM has been facing that environment since the fourth quarter last year so while [Intel] is a negative, that's not completely surprising to the market as we don't see any pick-up in end [user] demand.' ASM has been holding up nicely given the dismal operating environment of late. The company briefly became the toast of the market in July when its interim results blew past analyst expectations to record a net profit of HK$135.41 million. ASM's success has come partly at the expense of rival and sector leader Kulike & Soffa (K&S). Analysts said the Pennsylvania-based K&S was running out of cash and unable to raise more given the dismal state of the equity markets. Although K&S has announced plans to ditch some parts of the business, the fortunes of the two companies have diverged. 'Kulike & Soffa is in a high debt position and the company will run out of operating cash flow soon. It means either they need to raise money from the market or go out of business,' said Dao Heng Securities analyst Pauline Lau. By contrast, ASM is cash rich, with about US$40 million on its balance sheet, and continues to generate positive cash flow. Although specific numbers do not exist, Ms Mak said ASM had been busily stealing market share from K&S by rolling out new products and taking business from clients such as Singapore's Siliconware Precision Industries. But can ASM repeat its first-half surprise with its full-year results? Ms Lau said ASM's success in the first half was partly due to the company booking a hefty sales order in the second quarter rather than the third quarter. That said, she was still bullish on the second half. 'The second half will still be better than the first because sales from the third quarter were getting better. They were down in the fourth quarter but that was still better than the first quarter so overall the second half will be better,' she said. Analysts are expecting ASM to grow earnings by 23.41 per cent for last year, and by 48.65 per cent this year, according to Thomson Financial consensus estimates. This means the stock is trading at an expensive 24 times earnings last year and a pricey 20.9 times this year's earnings. And technology spending does not look like it is ready to turn around. Although VLSI Research expects testing and assembly sales to jump 23.5 per cent this year, Intel's results suggested that visibility was still murky. 'We are doing all the right things, but what I can't tell you is when things will really start to pick up,' Intel's chief financial officer Andy Bryant said on Tuesday. As such, analysts are hesitant to recommend ASM. Ms Mak only has a 'hold' recommendation on the stock, while Rexcapital Asset Management director Alex Wong advised investors to take profits at present levels. Nomura Securities analyst Theodore Teo said that ASM, like companies such as Johnson Electric, was emerging as a global force and was in a strong position to reap the benefits when the cycle turned up again. 'It's only a matter of time before the buying comes back,' he said.