Semiconductor-equipment stocks tumbled Wednesday after

ASML Holding

(ASML) - Get Report

, the world's third-largest semi-tool vendor, said a recovery in the chip industry is unlikely this year.

The Dutch-based company cited a slow improvement in semiconductor factory utilization as a harbinger of weak results. Shares fell 6% on the


, dragging down other equipment stocks.

Applied Materials

(AMAT) - Get Report



(KLAC) - Get Report


Novellus Systems



Lam Research

(LRCX) - Get Report

all dropped about 5%.

ASML's comments marked the start of earnings season for the equipment makers. Lam Research, the world's ninth-largest vendor of machines used to make chips, will report results after Wednesday's closing bell.

ASML is seeing the same thing analyst Avinash Kant of Adams Harkness is seeing. "They have a valid point," says Kant. "The second-half recovery scenario has been pushed out another two quarters, but stocks were anticipating an earlier recovery."

He doesn't cover ASML, but he downgraded Lam Research on Monday. "While equipment companies are still hoping for a better second half, our channel checks at their subsystems suppliers indicate no improvement in internal forecast to their suppliers over the next few months so far. On top of that, we see weaker consumer spending in the second half of 2005 due to rising interest rates and higher gas prices."

Overall, analysts expect Lam Research to earn 43 cents a share on sales of $350 million, on average, for its fiscal third quarter, according to Thomson First Call.

Adams Harkness plans on seeking investment banking business with Lam Research in the coming months.