Oct. 22 (Bloomberg) -- Tokyo Electron Ltd., the world’s second-largest maker of semiconductor equipment, reported a narrower first-half loss than forecast, citing improving demand for chip gear and cost reductions.

The net loss was 16.1 billion yen ($176 million) in the six months ended Sept. 30, 38 percent less than the 26 billion yen deficit the company projected in July, Tokyo Electron said in a preliminary earnings statement today. It’s scheduled to report final earnings on Oct. 30. The result compares with 17.4 billion yen profit a year earlier.

The Tokyo-based company, bigger rival Applied Materials Inc., and Advantest Corp., the largest maker of memory-chip testers, are reporting signs of a recovery as customers increase bookings. Tokyo Electron this month said orders for chip and flat- panel gear, an indicator of future sales, almost doubled in the July-to-September quarter, from the previous period.

First-half sales fell 49 percent to 153.8 billion yen, beating the company’s 144 billion yen forecast, Tokyo Electron said. The operating loss, or revenue minus the cost of goods sold and administrative expenses, was 21.6 billion yen, compared with the outlook for a 36 billion yen deficit and 26.3 billion yen profit a year earlier.

Tokyo Electron fell 0.7 percent to close at 5,640 yen on the Tokyo Stock Exchange before the announcement. The shares have gained 82 percent this year, outperforming a 16 percent advance by the benchmark Nikkei 225 Stock Average.

Second-Quarter Earnings

The net loss in the three months ended Sept. 30 was 5.06 billion yen, compared with a 4.51 billion yen profit a year earlier, according to Bloomberg calculations. The operating deficit was 7.21 billion yen, compared with a 4.85 billion yen profit, as revenue fell 42 percent to 84.9 billion yen.

Orders for machines that make semiconductors and flat-panel displays climbed 94 percent to 97 billion yen in the three months ended Sept. 30, from the previous quarter, Tokyo Electron said earlier this month. Bookings declined 8.1 percent from a year earlier.

Bookings at Santa Clara, California-based Applied Materials will rise in the current quarter, which ends in October, from the previous three months, the company said on Aug. 11, without providing figures. Advantest’s President Haruo Matsuno last month forecast the Tokyo-based company’s orders will climb in the October-December period from a year earlier.

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net.

Last Updated: October 22, 2009 04:27 EDT