COMMENT
“ASM again delivered a very strong quarter, with record high orders, revenue and results,” said Benjamin Loh, President and Chief Executive Officer of ASM International. “In the second quarter, revenue increased by 30% at constant currencies to €560 million, at the higher end of the guided range of €540-570 million, as our team, in close cooperation with suppliers and customers, demonstrated again solid execution in the face of continued difficult supply chain conditions.
While parts of the semiconductor end-markets, mainly PCs and smartphones, recently slowed down impacted by weakening macro-economic trends, the overall demand for wafer fab equipment continues to be strong and broad based. Our order intake surged by 73% at constant currencies to a new record high of €943 million in Q2. Our orders were boosted by robust new node spending in the logic/foundry segment and our recent wins in memory, particularly for ALD gap-fill in 3D-NAND and continued adoption of HKMG in DRAM.
R&D and SG&A further increased in Q2 as we continue to invest in the growth of our company and prepare for substantially higher expected revenue levels, evidenced by the increases in order intake. At the same time, operating profits improved by 25% and free cash flow amounted to a healthy level of €121 million in Q2.
Finally, we are very excited with the recent announcement that we reached an agreement to acquire LPE, which will add another high-growth business to ASM’s portfolio.”
OUTLOOK
Supply chain conditions have improved at a slower pace than previously projected and, as a result, are expected to remain challenging in the third quarter. For Q3, at constant currencies, we expect revenue of €570-600 million. Supported by a record high order backlog, we still project an improvement in our sales in the second half compared to the first half. Assuming some improvement in the supply situation towards the end of the year, we expect revenue in Q4 to be higher than in Q3. As supply constraints will limit the extent of the increase in our shipments in the second half, we expect our order backlog to remain at an elevated level as we exit 2022.
We remain confident to outperform the earlier communicated expectation of mid to high teens percentage increase for wafer fab equipment (WFE) spending in 2022, although it is likely that WFE growth this year will be more towards the lower end of this range due to the industry-wide supply chain constraints.
AGREEMENT TO ACQUIRE LPE
On July 18, 2022, ASM announced an agreement to acquire all outstanding shares of LPE S.p.A. (“LPE”), a manufacturer of epitaxial reactors for silicon carbide (SiC) and silicon, based in Italy. The acquisition will complement ASM’s leading position in silicon epitaxy solutions for the power electronics, analog and wafer markets with LPE’s offering of advanced SiC epitaxy tools.
ASM will finance the transaction using a combination of cash and shares, representing an enterprise value of €425 million, on a cash and debt free basis, at the date of signing. An additional amount of up to €100 million will be paid by way of an earn out based on certain performance metrics over a two-year period after the closing of the transaction. The earn outs are to be paid out exclusively in cash.
The transaction is subject to FDI and anti-trust approval in a limited number of countries and other customary closing conditions which are expected to be met by the long stop date of November 10, 2022. Further reference is made to the press release issued on July 18, 2022.