Over the course of 50 years we have grown to become a global company that develops innovative solutions for our customers, and manages the best interests of our investors, our employees, society and other stakeholders. Read on to discover what we achieved in 2018.

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About

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The demand for smaller, faster and cheaper semiconductor chips continues to rise, driven by advancements in cloud computing, artificial intelligence, smartphones and the Internet of Things.

MEETING DEMAND

Our technology is the first step towards making it all possible, as our R&D investment in new materials, new products and new processes means we can help our customers develop their technology roadmap, and further extend Moore’s Law.

CREATING RESULTS

In 2018, this led to the introduction of the Synergis ALD tool, which leverages the core technologies from our Pulsar and EmerALD ALD products for high productivity thermal ALD applications. The new Synergis tool allows us to address more ALD applications and therefore increases our served market. Together with our other products and services, this contributed to our strong financial results, which included:

  • net sales of €818 million;
  • bookings of €942 million;
  • operating result of €124 million; and
  • operating cash flow of €137 million.

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Strategy & business

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We operate in a fast-paced industry that continues to reshape the world, and our innovative technology enables the semiconductor industry to achieve advancements in computing, communications, energy, transportation, medicine and beyond.
To ensure that we can continue to make a difference to our customers, employees, and company stakeholders, in 2018 we concentrated on the following three key elements of our strategy.

INNOVATIVE STRENGTH

In addition to our fundamental R&D efforts, we continuously expand and deepen our strategic cooperation with key customers, suppliers, chemical manufacturers, and research institutes. This approach enables us to remain innovative and swiftly meet the changing demands of our customers.

LEADERSHIP IN DEPOSITION

We are a key player in the deposition equipment segments for ALD and epitaxy, and a focused niche player for PECVD and vertical furnaces. As a leader in the segment, ALD has turned into a key growth driver for our business, from which we support virtually all of the leading customers in the semiconductor industry. Our newest ALD tool, Synergis, is designed to address a wide range of existing and new ALD applications, effectively increasing the market we serve.

OPERATIONAL EXCELLENCE

In addition to our internal optimization programs, we are working with our suppliers to improve fundamental quality through statistical methods and process controls. In addition to addressing the technology needs of our customers, we also focus on further increasing equipment throughput and equipment reliability, thereby lowering the cost per wafer of our wafer processing systems.

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Performance review

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In 2018, we achieved revenue growth of 11% reaching a record high revenue of €818 million, with sales increasing mainly in the logic, DRAM and analog segments. By industry segment, our 2018 revenue stream was led by memory, closely followed by the logic and foundry segments.

MULTIPLE PRODUCT LINES

While our ALD product lines continued to be our key sales driver in 2018, accounting for more than half of total equipment revenue, our other product lines also contributed strongly. In our epitaxy product line we increased sales, following the strong growth we achieved in 2017, and we saw additional sales increases in PECVD and vertical furnaces.

MARKET GROWTH

Our industry experienced continued growth in 2018, with worldwide semiconductor industry sales increasing by around 14%. This was driven by high memory prices and broad-based electronics demand for cloud services, mobile devices, automotive and industrial applications. These drivers helped the wafer fab equipment market grow by around 10% in 2018.

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Governance

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Our 2018 sales grew to record levels, reaching €818 million. ALD continued to be the key driver, although the other product lines also made a strong contribution.
We benefited from a further increase in wafer fab equipment spending following the very strong market growth in 2017. Our operating profit increased to €124.3 million from €113.2 million in 2017, while the operating profit margin remained stable.

OTHER DEVELOPMENTS

New bookings increased by 22% in 2018 to €942 million, with equipment bookings for ASMI as a whole led by logic, followed by foundry and then memory. Total research and development (R&D) expenses, excluding impairment charges, decreased by 1% in 2018 compared to 2017, mainly as a result of higher capitalization of development expenses.

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Financial statements

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Our 2018 sales grew to record levels, reaching €818 million. ALD continued to be the key driver, although the other product lines also made a strong contribution.
We benefited from a further increase in wafer fab equipment spending following the very strong market growth in 2017. Our operating profit increased to €124.3 million from €113.2 million in 2017, while the operating profit margin remained stable.

OTHER DEVELOPMENTS

New bookings increased by 22% in 2018 to €942 million, with equipment bookings for ASMI as a whole led by logic, followed by foundry and then memory. Total research and development (R&D) expenses, excluding impairment charges, decreased by 1% in 2018 compared to 2017, mainly as a result of higher capitalization of development expenses.

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Other Information

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During 2018, we returned approximately €607 million to shareholders in the form of dividends, share buybacks and the capital return. This was up from €281 million in 2017 and €140 million in 2016.
Over the 2010-2018 period, we returned more than €1.6 billion to the financial markets through dividends, share buybacks, return of capital, and buyback of convertible bonds.

SHAREHOLDER DIVIDEND

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DELIVERING RESULTS

In 2018, we paid a dividend of €0.80 per common share and we will propose to the forthcoming AGM to declare a dividend of €1.00 per share for 2019. The proposed 2019 dividend will mark the ninth consecutive year that we have paid a dividend.

NOTE 25. BOARD REMUNERATION

The remuneration of members of the Management Board has been determined by the Supervisory Board.

During 2018, the Company considered the members of the Management Board and the Supervisory Board to be the key management personnel. Total remuneration for key management personnel in 2018 amounts to €3,806 (2017: €3,637).

The following table sets information concerning all remuneration from the Company (including its subsidiaries) for services in all capacities to all current members of the Management Board of the Company:

 Base compensationBonusesPensions 2Share-based payment expenses 1Fringe benefitsTotal
Management Board:
C.D. del Prado
2018669511119883782,260
2017637549111785652,147
P.A.M. van Bommel
201842625789437371,246
201741628985398471,235
  1. These amounts represent the vesting expenses related to the financial year.
  2. Including pension compensation due to maximum pensionable salary of €105, C.D. del Prado €92 (2017: €88), P.A.M. van Bommel €65 (2017: €63).

SHORT-TERM INCENTIVE (CASH BONUS)

Each year, a short-term incentive can be earned, based on achieving specific challenging targets. These targets are for 75% based on company financial targets and for 25% based on non-financial targets. The on-target bonus percentage for the CEO is 100% of base salary, with a maximum pay-out of 150% of base salary. The on-target bonus percentage for the other members of the Management Board is 75% of base salary, with a maximum pay-out of 125% of base salary. For the year 2018, the Management Board partially met the company financial targets and met the non-financial targets.

LONG-TERM INCENTIVE (STOCK OPTIONS/PERFORMANCE SHARES)

The members of the Management Board are eligible to receive stock options and performance shares under the ASMI 2014 long-term incentive plan for members of the Management Board in order to focus on the long-term interest of the company. Stock options vest after three years subject to continued employment and expire after seven years. Performance shares vest after three years subject to meeting certain conditions. The members of the Management Board are required to hold the vested performance shares for an additional two years; however, they are allowed to sell a part of the unconditional shares after three years for tax purposes. The next grant of stock options and restricted shares will take place in April 2019.

PENSION ARRANGEMENT

As of 2015, the members of the Management Board no longer participate in the industry wide pension fund. They are offered participation in a defined contribution plan for their salary up to €105,075. For their salary above €105,075, the members of the Management Board are compensated with an amount equal to the employer pension contribution. The members of the Management Board have the option to participate in a net pension plan offered by the company or to have the compensation paid out in cash.

FRINGE BENEFITS

Fringe benefits cover compensation related to the use of a (company) car, a representation and expense allowance, social security premium and premium for health and disability insurance.

OUTSTANDING OPTIONS

The following table shows the outstanding options to purchase ASMI common shares held by current members of the Management Board, and changes in such holdings during 2018:

 Year of grantOutstanding January 1, 2018Granted in 2018Exercised in 2018 2Adjustments following the capital repayment 3Outstanding December 31, 2018Exercise price 4End date
C.D. del Prado 1201188,450(96,328)7,878€ 17.39Dec 31, 2018
C.D. del Prado 1201270,7606,30277,062€ 21.05Dec 31, 2019
C.D. del Prado 1201375,0006,68081,680€ 21.79Dec 31, 2020
C.D. del Prado 1201528,0502,49830,548€ 40.62Apr 24, 2022
C.D. del Prado 1201641,5893,70445,293€ 34.06Apr 22, 2023
C.D. del Prado 1201716,7571,49218,249€ 47.33Apr 21, 2024
P.A.M. van Bommel 1201162,504(68,071)5,567€ 17.39Dec 31, 2018
P.A.M. van Bommel 1201247,1734,20251,375€ 21.05Dec 31, 2019
P.A.M. van Bommel 1201353,0004,72157,721€ 21.79Dec 31, 2020
P.A.M. van Bommel 1201514,6091,30115,910€ 40.62Apr 24, 2022
P.A.M. van Bommel 1201620,9661,86722,833€ 34.06Apr 22, 2023
P.A.M. van Bommel 120178,2067318,937€ 47.33Apr 21, 2024
Total527,064(164,399)46,943409,608
  1. Options are granted for a term of seven years and become exercisable after a three-year vesting period.
  2. Options of C.D. del Prado were exercised on December 3, 2018 at a share price of €39.44 and options of P.A.M. van Bommel were exercised on December 4, 2018 at a share price of €38.19.
  3. Following the sale of a 14% share of ASMPT in 2017, a capital repayment of €4 per common share was effectuated on August 10, 2018. As a result of this capital repayment the underlying value of ASMI option holders was diluted. The Management Board of ASMI and the Supervisory Board of ASMI decided to apply a theoretical adjustment ratio of 0.91821713 to the outstanding options granted to employees including members of the Management Board as determined based on the specific rules issued and applied by NYSE Liffe. These specific rules issued by NYSE Liffe are similar to the adjustment ratio as applied to traded securities that are also not entitled to receive the capital repayment. Under these rules a theoretical adjustment ratio was determined based on the value and the effective date of the capital repayment and this ratio was applied to adjust the original number of the options and the original exercise price of the outstanding options.
  4. Exercise price adjusted for capital repayment.

In 2018, 164,399 options to purchase ASMI common shares were exercised and 164,399 treasury shares were sold for the exercise of these options.

OUTSTANDING PERFORMANCE SHARES

The following table shows the outstanding performance shares granted to members of the Management Board in 2018 and held by members of the Management Board per December 31, 2018:

Grant dateStatusNumber of shares at grant datePerformance adjustmentVested in 2018Adjustments following the capital repayment 1Outstanding December 31, 2018Fair value at grant date 2Vesting date
C.D. del PradoApril 24, 2015Conditional8,5441,495(10,039)€43.21April 24, 2018
C.D. del PradoApril 22, 2016Conditional11,07098612,056€31.84April 22, 2019
C.D. del PradoApril 21, 2017Conditional11,6891,04112,730€47.52April 21, 2020
C.D. del PradoApril 20, 2018Conditional17,3021,54118,843€45.71April 20, 2021
P.A.M. van BommelApril 24, 2015Conditional4,450779(5,229)€43.21April 24, 2018
P.A.M. van BommelApril 22, 2016Conditional5,5814976,078€31.84April 22, 2019
P.A.M. van BommelApril 21, 2017Conditional5,7245106,234€47.52April 21, 2020
P.A.M. van BommelApril 20, 2018Conditional8,2717379,008€45.71April 20, 2021
Total72,6312,274(15,268)5,31264,949
  1. Following the sale of a 14% share of ASMPT in 2017, a capital repayment of €4 per common share was effectuated on August 10, 2018. As a result of this capital repayment the underlying value of ASMI unvested share holders was diluted. The Management Board of ASMI and the Supervisory Board of ASMI decided to apply a theoretical adjustment ratio of 0.91821713 to the outstanding performance and restricted shares granted to employees including members of the Management Board as determined based on the specific rules issued and applied by NYSE Liffe. These specific rules issued by NYSE Liffe are similar to the adjustment ratio as applied to traded securities that are also not entitled to receive the capital repayment. Under these rules a theoretical adjustment ratio was determined based on the value and the effective date of the capital repayment and this ratio was applied to adjust the original number of the performance and restricted shares.
  2. Fair value adjusted for capital repayment.

The shares will become unconditional after three years, depending on the achievement of predetermined targets. The financial targets to be achieved are measured over a three-year performance period and relate to a sales growth compared to market and an average EBIT percentage performance measure. The Management Board members will hold the unconditional shares for at least an additional two years; however, they are allowed to sell a part of the unconditional shares after three years for tax purposes.

The following table sets forth information concerning all remuneration (base compensation, no bonuses or pensions were paid) from the Company (including its subsidiaries) for services in all capacities to all current and former members of the Supervisory Board of the Company:

 Year ended December 31,
 20172018
Supervisory Board:
J.C. Lobbezoo70.078.6
H.W. Kreutzer 152.521.4
M.C.J. van Pernis52.556.0
U.H.R. Schumacher50.053.5
S. Kahle-Galonske30.555.9
M.J.C. de Jong 234.0
TOTAL255.5299.4
  1. Period January 1 to May 28, 2018
  2. Period as of May 28, 2018

The remuneration of members of the Supervisory Board has been determined by the 2018 Annual General Meeting of Shareholders.

No stock options or performance shares have been granted to members of the Supervisory Board.

 

TAKING THE NEXT LEAP FORWARD

Over the past 50 years we have grown to become a leading global supplier
of semiconductor wafer processing equipment. A company that develops
innovative process solutions for our customers, and manages itself in the best
interests of our investors, our employees, society, and other stakeholders.

Yet now is the time to enter a new era of innovation, to embark on the next
phase of growth. We understand that this requires commitment and strength
across many areas. From innovation in R&D, to advancing new technologies
and addressing new applications. From developing our people, to creating
even stronger relationships with key customers.

This is how we will take the next leap forward.

The

Of new materials

R

i

s

e

ROADMAP TO THE FUTURE

Our roadmap to the future will enable us to not only
achieve our next phase of growth, it will ensure we
can continue to help our customers achieve their
technology roadmaps for next-generation devices.

INNOVATION

Our technology helps drive innovation, increasing the number of scientific breakthroughs, many of which are achieved from our advanced process equipment that deposits new materials with precision and productivity, positively benefiting society in sectors from healthcare and education, to transport and energy.

SCALING

For semiconductor manufacturers, scaling chips
to smaller dimensions is an ongoing challenge.
Our innovations and equipment are vital in helping make many of these transitions happen.

EFFICIENCY

Striving for efficiency ensures that our
customers get the products, services,
and results they expect. Intensifying
our focus on efficiency will make us a
stronger company, ready to take the
next leap forward.

The

That
matters

m

i

x

Multinational

We are a multinational company that
embraces diversity in every sense
of the word. With 29 different
nationalities working across the
company, we combine our talents
to drive innovation.

INTELLIGENCE

Achieving our ambitions takes intelligence, knowledge, skill,
determination, and dedication. And it is this combination of
qualities that we nurture in our people.

XTRAORDINARY

Our goal is to impact tomorrow’s generation
as positively as we’ve impacted today’s.
Making this happen takes the xtraordinary
talent of our people, who work together
to drive innovation and deliver excellence.

Expanding the

c

o

r

e

COLLABORATION

Collaboration is fundamental to our
continued success; from working
with our customers to optimize our
equipment and processes to enable
their technology roadmaps, to
creating partnerships on cutting-edge
research and development.

OPERATIONAL EXCELLENCE

Operational excellence is one of the essential
pillars of our strategy, which enables us to provide
our customers with the high-quality, leading-edge
products and services they demand.

R&D

R&D is central to our development,
leading to new device architectures,
new materials, and new processes
that strengthen our competitive
positioning and enable our customers
to deliver the next-generation chips.

Extending

By extending our technological scope with a
more diverse product portfolio, we can help our
customers continue to advance their business
while growing our own in new market segments.

Moore with

l

e

s

s

LONG-TERM VALUE

We create long-term value for our
stakeholders in a variety of ways.
From working with our customers
to develop innovative solutions, to
ensuring value creation growth
and positive investor returns.

ENVIRONMENT

We are committed to positively
contributing to society and
reducing our impact on the
environment. Only then can
we truly say we are helping
create more with less.

SUSTAINABILITY

We believe sustainability takes many forms.
From developing sustainable technology
roadmaps for our customers, to creating
a sustainable living environment for all.

SAFETY

Safety is a front-line requirement,
which is why our ZERO HARM!
policy outlines our vision on product
safety, and our CR policy lays out
our commitment and expectations
towards health and safety.