ASM International (Euronext:ASM) Q1 2026 Earnings Call

0:00 Yes, I think because I think last time already we mentioned that the pace of adoption customer by customer is different. There might be even a customer that might completely skip it. We don't know yet, but that's to be seen. And I think for us, based on what we see and think we know today, I think you should take into account '28 as the first year where we start to see positive contribution related to Forbes Square. Micah, maybe a little bit earlier, I don't know yet, but I would I mean, time line is still a little bit uncertain and very different from customer to customer. So yes, I think the best color I can give right now is in 2018. Understood. So, as to what Paul has mentioned here, we see a strength in memory in 2026 and also increasing for us in 2027 and beyond.

0:59 The biggest increase for us will happen really in the move into 4F2 where you have more LD layers and more also epi intensity, but also we've seen some customers putting Peri FinFET in their roadmap and with that we're working with them and we might and since we've been very prominent in our FinFET technology in logic, that we see some customer really pulling in that technology node and with that we will probably will get some more layers as customer put in their FinFET technology node.

1:44 So the biggest increase would be '28 and beyond, but also we see some increase in 2027. Understood. If I can just ask a quick follow-up as well. You've mentioned a few times the sort of pickup in three to seven nanometer transition. And I don't know if you can give any color on whether that's your largest customer or kind of more broad based? Which transition you're talking about, sorry? Three to seven. Yes, I think it's really broad based. That's really broad based. It's not only one customer, it's very broad based. Understood. Thank you. Next question is from Ruben Devos, Kepler Cheuvreux. Yes. Good afternoon. I just had one on the on Epi and HBM.

2:32 I believe you talked about significant Epi engagements with another HBM customer and expect good news this year. So of course, curious whether two months on, has anything firmed up on that additional qualification? And would that be, let's say, fully incremental to your memory plan in 2026? Okay. So to answer your question, yes, we talked about that and we are engaging with other customer on epitaxy. There's really nothing else to say right now but we'll let you know if there's any news from that point of view. It's really working with customer on a couple of customers on epitaxy and hopefully we can share some good news with you in the next investor call meeting.

3:25 Okay. And then second one, we need to just get a feel of maybe the aftermarket sales, right? I mean, you've had a stretch of very good performance in the last few quarters, again, 23% up the past quarter. Outcome based is about 25% of the mix. So it looks like, I mean, the target you said at the Investor Day of 12% CAGR is becoming more of a floor. I was curious whether you could talk a bit about, yes, the extended visibility you might have now in aftermarket sales. And I can imagine a margin uplift to realize if manage to make the transition more towards outcome based. But also besides that, are you able to sort of have the customer pay more for per tool for the servicing packaging in general?

4:17 I think that's for service market, okay. What I mentioned the service market is really good as you transition in a newer technology node because of process complexity. It's very important to a customer need more support from us and for the more advanced node and with the advanced node also we see a transition to much tighter specification on wafer to wafer and also repeatability on chamber to chamber matching and also on system to system matching.

5:03 And with that, you know, we have to provide a new solution to customer to improve the uptime and the availability. So, are very really, we think that the surface business is going to increase in the future as you transition to tighter and tighter technology node and we see that happening in the area of automation, in the area of robotics, in the area of optics and those are really the solution that we're providing our customer. So, the growth is going to be good in that part of the market. You mentioned that 12% growth, to be honest with you right now, every part of the market is growing a lot. This year, the market is growing over 20%. I mean, latest you see Gartner talking about 25%.

5:57 So everything is great. It's really just spending my time okay to make sure that we can execute on getting customers the tools in time and make sure that the availability and the execution is top notch. Thank you very much. Next question is from Tim Schulze, Rothschild and Col. Redburn. Hi, there. Thanks very much for taking my question. I had first one for Hisham, please. Just looking at the technology execution and just trying to scale maybe how much upside there is to that. If I look at your long term revenue guide, the high low range is kind of 20%, 25% between the low and the high. Obviously, of that is the strength of the cycle. Maybe part of that is also conversion of existing valuations and layer wins.

7:01 Maybe could you just share how much of that is upside potential from layer wins? So if you could just think about that in the context of your go forward revenues. And then I had a follow-up. You said the percentage, I didn't hear you well on the percentage, which percentage are you talking about, please? Yes. So if we look at your EUR 3,800,000,000 to 4,700,000,000 revenue guide, So part of that's going to be cyclical, part of that's going to be your execution in terms of technology wins. I'm just trying to think is that half off, but some kind of scale of that? Well, I mean, if you look into the business and where we are, one thing I can tell you, I'm really very excited about our technology roadmaps. I think that things are going in our direction.

7:49 If you look into logic, you see more and more layers coming in with two nanometer and also with 1.4 nanometer, ALD intensity is increasing and FP intensity is increasing and we're in share in that part of the market. If you look into memory, memory is moving more and more into FinFET, more and more in 4F squared which needs more FP, needs more ALD, so we're going to have more layers and we feel very confident about it. And if you look into logic, you look into power wafer analog, we are really, if you look at the power wafer analog, the power part of the market is the only part of the power wafer analog that's strong right now and that's being driven by data centers, power devices for data center.

8:38 If the wafer part and the analog part goes up, it's going to be even accredited to us. So, the service business is also good. In the service business, we're going more and more by automation and we really we're getting some, you know, getting into even robotics and that customers and leading customer, we're even sending them okay some robots to improve the system availability and so on. If you look into advanced packaging, that's an area that we mentioned that we have entered last year. It's a new area for us. I can tell you that we have so many, believe me, so many interaction with customer and we have to prioritize which ones to do and some customers tell them guys, maybe we don't have, we cannot really help you there.

9:30 But with the customers that we're really engaging right now, I can see that they really like to work with us as a company because we're looking into the advanced packaging to a different option. We're looking into that as, okay, what can we do to disrupt the technology? What can we do to provide a solution that's better than what it is right now? How can we put a solution, okay, to make sure that, okay, we reduce thermal, to reduce the thermal mass on advanced packages, coming with a new material that improve thermal conductivity. We're working with customer to make sure that we can seal the devices much better, so there is no moisture going into the packages.

10:26 We're working with customer to actually improve the speed of connection between one chip to the other one, working with them on some innovative photonic layers. So I'm sure that with all of this really, feel very confident where things going to go from that point of view and depending where the market is going to go, I'm very confident that we're going to at least match the WFE market growth or actually have a higher growth than WFE. It's a great time for ASM right now and I see customers really want to work with us.

11:19 I think our execution has improved. I think our competitiveness is getting even better than before. And what can I tell you, it's the best time to be in semiconductors right now? Very impressive runway. Maybe just a quick follow-up for Paul, just some housekeeping actually. You talked about rising utilization rates, but actually Q1 aftermarket sales were down sequentially. And on your guide, I think last quarter, your guidance range was plusminus 4%. This time you've widened that range to plusminus five which doesn't maybe sit that well with a sort of improving visibility. Just wondered if there's any color you could share in terms of what you're seeing. Thank you.

12:06 Yes. So actually the range is, as Cesar, I think, already referred to is related to supply chain challenges. So far, we've been able to manage it, but at the same time, we have to be on top of it to make sure that we get what we need to deliver what we need as per our customer preferred COD customer request date. So that's a little bit where the range comes from Tim. It's not so much demand, it's more what can we deliver on time given the supply chain constraints that so far are manageable again. But yes, we have to be on top of it and nothing can go wrong here. So that's what was in the aftermarket in Q1 and maybe there's some catch up in Q2?

12:56 I don't know if there's catch up in Q2. I mean, I think we had a good Q1. I think we delivered more or less what we wanted to deliver, and we will talk to the same in Q2. Great. Many thanks. Thank you, Tim. We still have a number of participants in the queue, but we are running out of time. So let's take one final question. Operator, can we have the last caller? Final question is from Javier Coronero, Morningstar Equity Research. Hi, good afternoon. Thanks for taking my question. In the interest of time, I will just ask one. So your Axos acquisition three months ago, it's a small, but I think there is a lot to unpack there when you think longer term.

13:46 So Axos is a specialized in silicon carbide processing. So I was wondering if you could explain a little bit more what's the rationale of the acquisition here. Is it like more silicon carbide content as we move into the 800 volt data center? Or is it TSMC potentially adopting silicon carbide interposers in the next few years or both? And of course, is it very early and is it small acquisitions? But do you have an estimate of what service of addressable market this acquisition could open once it is properly integrated with ASM for their ambitions? Thank you. Okay. So thank you very much for the question. So yes, we have acquired this company called Access Technology, which has which we're very excited about the acquisition in CMP.

14:40 They have a very great CMP technology and very innovative to be honest with you. And the we mentioned, we have acquired this for the advanced packaging market because advanced packaging needs more and more CMP layer, many, many, many more CMP layer, there's room for another player. Also it's a technology that's all about interfaces and I think that we have some, we do have some knowledge in interface engineering so that we will be able to really put our print there. It also, CMP helps us with our new materials that we're developing for advanced packaging that I just talked about a few minutes ago, because, I mean, you deposit the film, but also you need to CMP it, so we wanna understand what's the interaction about the material that we're depositing, the new material that we're depositing, and the CMP, because CMP also has a slurry, has a new with a slurry that means we're talking about new chemicals and so on and so forth, so it would help us also develop better materials in ALD, but at the same time also do polymerization which is extremely important for advanced packaging.

15:58 So that's really why we made that acquisition and we're working right now on developing the product for advanced packaging and it's going to increase our SAM, yes, It's going to increase our SAM and we're in the process of doing R and D and so on in this part of the market. Thank you. Okay. This concludes the Q and A. Thank you all for attending our call today. Also on behalf of Hishan and Paul.

16:44 Thank you. Goodbye. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.