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.
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.
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.
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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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.
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 compensation | Bonuses | Pensions 2 | Share-based payment expenses 1 | Fringe benefits | Total | |||||||
Management Board: | ||||||||||||
C.D. del Prado | ||||||||||||
2018 | 669 | 511 | 119 | 883 | 78 | 2,260 | ||||||
2017 | 637 | 549 | 111 | 785 | 65 | 2,147 | ||||||
P.A.M. van Bommel | ||||||||||||
2018 | 426 | 257 | 89 | 437 | 37 | 1,246 | ||||||
2017 | 416 | 289 | 85 | 398 | 47 | 1,235 |
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.
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.
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 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.
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 grant | Outstanding January 1, 2018 | Granted in 2018 | Exercised in 2018 2 | Adjustments following the capital repayment 3 | Outstanding December 31, 2018 | Exercise price 4 | End date | |||||||||
C.D. del Prado 1 | 2011 | 88,450 | – | (96,328) | 7,878 | – | € 17.39 | Dec 31, 2018 | ||||||||
C.D. del Prado 1 | 2012 | 70,760 | – | – | 6,302 | 77,062 | € 21.05 | Dec 31, 2019 | ||||||||
C.D. del Prado 1 | 2013 | 75,000 | – | – | 6,680 | 81,680 | € 21.79 | Dec 31, 2020 | ||||||||
C.D. del Prado 1 | 2015 | 28,050 | – | – | 2,498 | 30,548 | € 40.62 | Apr 24, 2022 | ||||||||
C.D. del Prado 1 | 2016 | 41,589 | – | – | 3,704 | 45,293 | € 34.06 | Apr 22, 2023 | ||||||||
C.D. del Prado 1 | 2017 | 16,757 | – | – | 1,492 | 18,249 | € 47.33 | Apr 21, 2024 | ||||||||
P.A.M. van Bommel 1 | 2011 | 62,504 | – | (68,071) | 5,567 | – | € 17.39 | Dec 31, 2018 | ||||||||
P.A.M. van Bommel 1 | 2012 | 47,173 | – | – | 4,202 | 51,375 | € 21.05 | Dec 31, 2019 | ||||||||
P.A.M. van Bommel 1 | 2013 | 53,000 | – | – | 4,721 | 57,721 | € 21.79 | Dec 31, 2020 | ||||||||
P.A.M. van Bommel 1 | 2015 | 14,609 | – | – | 1,301 | 15,910 | € 40.62 | Apr 24, 2022 | ||||||||
P.A.M. van Bommel 1 | 2016 | 20,966 | – | – | 1,867 | 22,833 | € 34.06 | Apr 22, 2023 | ||||||||
P.A.M. van Bommel 1 | 2017 | 8,206 | – | – | 731 | 8,937 | € 47.33 | Apr 21, 2024 | ||||||||
Total | 527,064 | – | (164,399) | 46,943 | 409,608 |
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.
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 date | Status | Number of shares at grant date | Performance adjustment | Vested in 2018 | Adjustments following the capital repayment 1 | Outstanding December 31, 2018 | Fair value at grant date 2 | Vesting date | ||||||||||
C.D. del Prado | April 24, 2015 | Conditional | 8,544 | 1,495 | (10,039) | – | – | €43.21 | April 24, 2018 | |||||||||
C.D. del Prado | April 22, 2016 | Conditional | 11,070 | – | – | 986 | 12,056 | €31.84 | April 22, 2019 | |||||||||
C.D. del Prado | April 21, 2017 | Conditional | 11,689 | – | – | 1,041 | 12,730 | €47.52 | April 21, 2020 | |||||||||
C.D. del Prado | April 20, 2018 | Conditional | 17,302 | – | – | 1,541 | 18,843 | €45.71 | April 20, 2021 | |||||||||
P.A.M. van Bommel | April 24, 2015 | Conditional | 4,450 | 779 | (5,229) | – | – | €43.21 | April 24, 2018 | |||||||||
P.A.M. van Bommel | April 22, 2016 | Conditional | 5,581 | – | – | 497 | 6,078 | €31.84 | April 22, 2019 | |||||||||
P.A.M. van Bommel | April 21, 2017 | Conditional | 5,724 | – | – | 510 | 6,234 | €47.52 | April 21, 2020 | |||||||||
P.A.M. van Bommel | April 20, 2018 | Conditional | 8,271 | – | – | 737 | 9,008 | €45.71 | April 20, 2021 | |||||||||
Total | 72,631 | 2,274 | (15,268) | 5,312 | 64,949 |
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, | ||||
2017 | 2018 | |||
Supervisory Board: | ||||
J.C. Lobbezoo | 70.0 | 78.6 | ||
H.W. Kreutzer 1 | 52.5 | 21.4 | ||
M.C.J. van Pernis | 52.5 | 56.0 | ||
U.H.R. Schumacher | 50.0 | 53.5 | ||
S. Kahle-Galonske | 30.5 | 55.9 | ||
M.J.C. de Jong 2 | – | 34.0 | ||
TOTAL | 255.5 | 299.4 |
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.