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Japan's Advantest warns of third annual net loss as chip demand cools

TOKYO (Reuters) - Advantest Corp, the world's largest maker of chip testing equipment, warned it would post a net loss for a third year in a row, as demand for chips for smartphones and tablets fell short of its expectations.

The company said it expects a 2.5 billion yen ($25.3 million) net loss for the year to March and cut its operating profit forecast to zero, while it widened its projection for an industry-wide decline in chipmakers' demand for testers.

Chipmakers began drawing down inventories over the summer, as the demand outlook dimmed for both high-end smartphones in advanced economies and Chinese-made low-end models, leading to a drop in operating rates. That cut into Advantest sales.

The company expects a recovery in demand for testing equipment in the latter half of its financial year, however, as sales pick up for recently launched smartphone models.

Advantest President Haruo Matsuno saw room for more consolidation among chip equipment makers after Tuesday's news that industry leader Applied Materials agreed to acquire No. 3 Tokyo Electron. He noted tougher market conditions and the need for scale as companies spend more to meet more demanding performance requirements.

"The equipment market is no longer in a straight upward trend. I think we all share the view that circumstances are tough," he told a news conference.

But consolidation among tester makers was unlikely, he said, as that segment is already dominated by just two players - Advantest, which bought U.S. peer Verigy for $1.1 billion two years ago, and Teradyne Inc.

(Reporting by Nobuhiro Kubo; Writing by Edmund Klamann; editing by David Evans)

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