ASM International A different view, Connecting the dots, Scenario analysis
In this note we provide a different view. We connect the dots by looking at the supply chain driving WFE revenues. Our analysis shows that multiple drivers are at record high levels and are likely to decrease. Therefore, future growth in the WFE market will have less tailwinds. Based on the CSS estimates, CapEx at Semi Manufacturers needs to increase or WFE forecasts will have to decrease. While we acknowledge the strong short term momentum, multiple risks are present. Our DCF based valuation results in a value of € 432 per share and thus a reduce rating. Our bull case scenario, with forecasts above the high end of the guidance, results in a DCF based valuation of € 549, supporting our Reduce recommendation.ASM International is an equipment supplier mainly to the semiconductor manufacturing industry. Co. designs, manufactures and sells equipment and services to its customers for the production of semiconductor devices, or integrated circuits. Co.'s front-end segment manufactures and sells equipment used in wafer processing, encompassing the fabrication steps in which silicon wafers are layered with semiconductor devices. Co.'s back-end segment manufactures and sells equipment and materials used in assembly and packaging, encompassing the processes in which silicon wafers are separated into individual circuits and subsequently assembled, packaged and tested.
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