Thursday, March 1, 2018

2017 was a year of recovery in ALD business driven by 3DNAND according to ASMI

Today was the ASM International NV (OTCQX:ASMIY) Q4 2017 Earnings Conference Call for analysts. The call has been transcripeted by Seeking Alpha (LINK). All in all 2017 was a good year for ALD single wafer market and showed recovery from 2016.  Here is some important take aways from Peter van Bommel - CFO, during teh call:

  • Looking at the company's financial performance, 2017 was a year of recovery in our ALD business. In particular, driven by strong increases in the 3D NAND segment. 2017, we also successfully increased our addressable market in epitaxy as we rolled our first leading high volume manufacturing customer for our new Intrepid too. Initial cost related to new product launches impacted to the gross margin but we still increased our operating profits by 38% in 2017.
  • In terms of product lines, the key driver was our ALD business, at some distance followed, by Epi and PECVD. Our net sales in 2017 increased by 23% to a new record high of €737 million. Sales were led by our ALD product line, which continued to represent clearly more than half of our equipment revenue.

ASM earnings call slide (sceeen dump from Seeking Alpha LINK)

  • By industry segment, the revenue stream in the fourth quarter was led by memory customers, largely 3D NAND, followed by foundry. Looking at the roadmaps of our customers, the introduction of complex 3D devices structures and new materials and further scaling, will drive the need for more precise deposition of ultrathin and highly comfortable films. This place is the strength of ALD. And as a leader in the single wave of ALD market, our company remains well-positioned to capture the growth expected in this market.

Looking ahead the addressable market for single wafer ALD will grow according to Peter van Bommel since the advanced node share  (14, 10 and 7 nm) will grow to roughly 50% in revenue by 2020-2021 of the total wafer fab equipment spending, when ASM expect the single wafer ALD market to reach  USD 1.5 billion annual revenue (see graph below, Gartner Dec 2017).

ASM earnings call slide (sceeen dump from Seeking Alpha LINK

Not touched upon too much was the Large Batch furnace segment which is dominated by the competitors Tokyo Electron and Hitachi Kokusai. This segment is however much smaller than the single wafer ALD segement, maybe 70:30 ratio or so. The patent disagreement with the Hitachi Kokusai was briefly mentioned but nothing substantial was said since it is an ongoing issue (LINK).

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