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UPDATE 2-Atlas Copco vacuums up chip demand to beat profit forecasts

(Adds detail, background, updates shares)

STOCKHOLM, April 27 (Reuters) - Swedish engineering group Atlas Copco expects near-term demand to remain high after rising demand from chip makers helped it beat quarterly earnings and order forecasts.

Atlas, which makes compressors, vacuum pumps and industrial tools, said on Tuesday that the strong order growth was mainly due to higher demand for its vacuum equipment from the semiconductor industry.

A global shortage of semiconductors, which are used in everyday products ranging from cars to computers, has squeezed capacity and driven up the cost of components of nearly all microchips, increasing the prices of final products.

Several factors including consumers stocking up on electronic products during the coronavirus pandemic and buying more cars than expected are behind the chip shortage, while auto makers are competing aggressively with the consumer electronics industry for supplies.

Order intake at Atlas, Sweden’s most valuable company by market capitalisation, rose 18% organically to a record 30.5 billion crowns, exceeding analysts’ expectations of 28.8 billion crowns.

“A large part was due to increased demand for vacuum equipment to the semiconductor industry, but all business areas achieved good growth for both equipment and service,” Atlas Chief Executive Mats Rahmstrom said in a statement.

Order intake at Atlas’ Vacuum Technique unit, rose 24%, while Compressor Technique, its biggest business, was up 2%.

Atlas reported an adjusted operating profit of 5.65 billion Swedish crowns ($672 million), up from 5.1 billion a year earlier and beating the 5.54 billion mean forecast in a Refinitiv analysts’ poll.

Shares in Atlas, which competes against U.S. Ingersoll Rand and Germany’s Pfeiffer Vacuum, were up 0.1% at 1138 GMT. They are up around 28% so far this year.

“This is a strong set of results viewed through any lens,” JP Morgan said in a note. ($1 = 8.4079 Swedish crowns) (Reporting by Helena Soderpalm; Editing by Niklas Pollard and Alexander Smith)

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