Japan's Tokyo Electron Ltd said quarterly orders for its tools to make semiconductors and flat panel displays recovered to near year-earlier levels as logic and memory chip makers start investing.

Tokyo Electron, the world's No.2 supplier of machines used to make microchips after Applied Materials Inc, said on Thursday that orders were 83 billion yen ($931.5 million) in July-September, nearly double from the previous quarter's 48.7 billion yen.

It was the third straight quarter-on-quarter rise in the firm's orders, and was 92 percent of Tokyo Electron's orders a year earlier.

We were surprised at the pace of orders from both foundries and memory chip makers, spokesman Kazuya Nanbu said. We don't know if this momentum will continue, but so far, orders show no sign of losing steam yet.

Taiwan and Singapore foundries and South Korean memory makers placed orders, he said.

The chip sector is emerging from a prolonged slump, prompting the largest and strongest to scramble to invest in new technologies.

South Korean memory chip makers Samsung Electronics Co and Hynix Semiconductor Inc have been pulling ahead of smaller rivals in investment in smaller chips.

Taiwan's TSMC, the world's biggest contract chip maker, is also ramping up production of new chips using more efficient technology.

Quarterly orders at Tokyo Electron for tools used to make semiconductors were about 83 billion yen, up 70 percent from the previous quarter and almost flat from a year earlier.

Generation-6 panel making equipment from China helped boost the firm's orders for display-making gear to 14 billion yen, up tenfold from the previous quarter, and two-thirds what orders were a year earlier.

Orders for machines to make solar cells stood at zero. Tokyo Electron is in a supply agreement with Sharp Corp on solar cell making equipment.

Its shares closed up 5 percent before the announcement at 5,710 yen, outperforming Tokyo's electrical machinery index .IELEC.T, which rose 2.2 percent. (Reporting by Mayumi Negishi; Editing by Edwina Gibbs)

Japan Electronics