Semiconductor Equipment - Berenberg Bank

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.
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