Advanced Nodes And Epitaxy Will Drive Semiconductor Development

Key Takeaways

• Leadership in advanced deposition technologies and strong customer relationships enable sustained market share, robust margins, and resilience to industry cycles.
  
• Expansion in services, manufacturing capacity, and localized production supports recurring revenue, operational flexibility, and protection against geopolitical risks.
  
• Revenue growth and margins are threatened by China risks, customer concentration, currency headwinds, and weakness in several end markets despite strength in advanced segments.

Catalysts

Engages in the research, development, manufacture, marketing, and servicing of equipment and materials used to produce semiconductor devices in Europe, the United States, and Asia.

• The ramp-up of advanced nodes (2nm and 1.4nm gate-all-around) in logic/foundry, driven by accelerating AI and high-performance computing needs, is structurally expanding ASM International's served available market and increasing deposition intensity, directly supporting above-industry revenue growth and resilient orders.
  
• Next-generation DRAM technologies required for high-bandwidth memory (HBM) in AI-centric and cloud applications are driving rising content per device and increased ALD/epi tool requirements, positioning ASM to benefit from a multi-year capital spending upcycle, with substantial positive implications for long-term revenue and margin leverage.
  
• Technological leadership in ALD and epitaxy, coupled with strong customer engagement across all leading-edge customers, underpins durable market share and pricing power as more complex nanosheet and 3D device structures proliferate, enabling ASM to sustain higher net margins despite industry cyclicality.
  
• Record growth in the spares and services business-powered by an expanding installed base and high-value outcome-based services-creates recurring, higher-margin revenue streams that improve earnings stability and offset hardware order volatility.
  
• Strategic expansion of manufacturing capacity and localized production (e.g., new Arizona facility) is increasing operational flexibility to address both surging North American investment in semiconductor onshoring and potential trade/tariff issues, supporting both revenue growth and margin protection against geopolitical uncertainty.

ASM International Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming ASM International's revenue will grow by 13.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 15.4% today to 24.3% in 3 years time.
• Analysts expect earnings to reach €1.1 billion (and earnings per share of €23.0) by about July 2028, up from €483.8 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €1.2 billion in earnings, and the most bearish expecting €782.2 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 33.3x on those 2028 earnings, down from 45.6x today. This future PE is lower than the current PE for the GB Semiconductor industry at 51.0x.
• Analysts expect the number of shares outstanding to decline by 0.22% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.01%, as per the Simply Wall St company report.

ASM International Future Earnings Per Share Growth

Risks

• Heightened uncertainty and lower visibility in China-driven by export controls, potential new tariffs, and the emergence of local competitors in commodity ALD and epi-pose the risk of gradually shrinking China revenues and order intake, impacting ASM's overall top-line growth and addressable market.
  
• The company's order intake has trended lower in the most recent quarters and the book-to-bill ratio is projected to stay below 1 in the near term; if this trend persists without recovery, it could signal softening demand or normalization after previous strong periods, leading to revenue pressure in 2026 and beyond.
  
• The large dependency on a handful of leading-edge logic/foundry customers (for nodes like 2nm and 1.4nm) makes ASM vulnerable to any delays, changes, or competitive losses at these customers; if one or more key customers pull back, it is not certain that others have sufficient capacity or will step in rapidly, potentially leaving revenue and earnings exposed.
  
• Currency fluctuations, specifically euro/U.S. dollar movements, have been material-recent dollar weakness has negatively affected revenues and gross margins; with ~80%+ of revenue in dollars but some costs in euros, further sustained dollar depreciation would compress reported results and margin performance.
  
• Ongoing strength in advanced segments (AI, HBM, GAA) is contrasted by cyclical or structural weakness in other segments like power/analog/wafer and immature memory (3D NAND); if these weaker markets take longer than anticipated to recover or if secular trends disappoint, ASM's ability to sustain high top-line growth and margin expansion could be at risk.

Valuation

• The analysts have a consensus price target of €609.85 for ASM International based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €760.0, and the most bearish reporting a price target of just €445.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €4.6 billion, earnings will come to €1.1 billion, and it would be trading on a PE ratio of 33.3x, assuming you use a discount rate of 8.0%.
  
• Given the current share price of €450.9, the analyst price target of €609.85 is 26.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.