Semiconductor Equipment - Berenberg Bank

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ASM International NV Small/Mid-Cap: Technology Hardware Figure 9: PE CVD market share 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Source: Gartner data 2008 2009 2010 2011 2012 AMAT ASMI Novellus /LAM 60
ASM International NV Small/Mid-Cap: Technology Hardware Key catalysts In our view, the following events could be catalysts for the stock. 5. ASMP share disposal: ASMI’s share price fell by 24% over the two months following its divestment of 12% of ASMP in March 2013. Given the market has very low expectations of further divestment in September; we believe the share price will rise if ASMI does divest more. In our opinion, ASMP was operated independently from the beginning, and there is little synergistic or strategic reason for keeping ASMP shares, given that its end-market exposure does not overlap with ASMI’s. Therefore ASMI may dispose of more ASMP shares in the next two years, if not in September 2013. 6. Order intake recovery: As a semiconductor equipment vendor, ASMI’s order level is cyclical and subject to the capex level of chip-makers. Signs of an order recovery will ultimately lead to higher revenue and profitability, and will therefore be positive for the share price. In our opinion, ASMI will see an order recovery in the next 6 to 12 months. Its front-end peers ASML, AMAT, KLA and TEL have all started to see order intake growth from the beginning of 2013. Apart from the cycle-recoverydriven order increase, ASMI’s ALD orders are likely to be fuelled by leading foundries expanding their HKMG process-adoption rate in the next two years, and tier two foundries may follow from 2014. 7. New Intel order for epitaxy product: ASMI’s epitaxy equipment previously addressed the analog and power management markets, which are highly cyclical and have a low growth rate (the analog market fell by 4.8% in 2012). In 2012, ASMI released its Intrepid XP epitaxy model that targeted the logic segment. We expect its share price to react positively if it wins market share in logic, which would give it exposure to new opportunities, such as FinFET design. AMAT dominates the global epitaxy market with an 89% market share. We believe it is unlikely that ASMI will win significant share from AMAT overnight, given that AMAT is well established with the big customers. However, ASMI may gain some small orders as the secondary supplier to Intel, with which it has a strong relationship. 61
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Semiconductor Equipment - Berenberg Bank

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