Asm International ((ASMIY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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During the recent earnings call, ASM International conveyed a mixed sentiment, balancing between strong financial performance and notable challenges. The company reported robust revenue growth and a solid gross margin, primarily driven by increased equipment sales and strategic advancements in new areas. However, the call also highlighted significant hurdles, such as a decline in order intake, market difficulties in China, and ongoing weaknesses in certain segments. Despite these challenges, ASM maintains a positive long-term outlook, with increased financial targets set for 2030.
Revenue Growth
ASM International reported a commendable revenue growth in the third quarter of 2025, reaching EUR 800 million. This represents an 8% increase year-on-year at constant currency, largely fueled by a 10% rise in equipment sales. This growth underscores the company’s ability to capitalize on market opportunities and expand its market presence.
Strong Gross Margin
The company maintained a strong gross margin of 51.9%, an improvement from 49.4% in the same quarter last year. This increase reflects ASM’s effective cost management and strategic pricing decisions, contributing to its overall financial health.
Positive Cash Flow
ASM reported a positive free cash flow of EUR 239 million in Q3, excluding earn-outs, and EUR 628 million for the first nine months. This healthy cash flow position enables the company to invest in growth initiatives and navigate market uncertainties.
New Wins in Advanced Packaging
The company achieved significant new wins in advanced packaging, particularly in Epi and ALD dipole and work function-related layers in DRAM HBM. These advancements are expected to ramp up in 2026 and 2027, positioning ASM for future growth in these high-demand areas.
Increased 2030 Financial Targets
ASM has raised its financial targets for 2030, aiming for a gross margin between 47% and 51% and revenue growth to exceed EUR 5.7 billion. This ambitious outlook reflects the company’s confidence in its strategic direction and market potential.
Decrease in Orders
The earnings call revealed a decrease in new orders, amounting to EUR 637 million, a 7% decline compared to both the second quarter and the same quarter last year. This decline highlights the challenges ASM faces in sustaining its order pipeline amidst market volatility.
China Market Challenges
ASM is experiencing significant challenges in the Chinese market, with a notable drop in bookings and an expected decline in sales in the second half of the year compared to the first half. This situation underscores the geopolitical and economic complexities impacting the company’s operations in China.
Memory Sales Decline
The company reported a decline in memory sales compared to the third quarter of last year, primarily due to reduced sales from Chinese customers. This trend reflects broader market dynamics and the impact of geopolitical tensions on ASM’s business.
Uncertainty in Power/Analog/Wafer Segment
ASM continues to face uncertainty in the power/analog/wafer segment, with weak market conditions persisting and no immediate signs of recovery. This ongoing challenge requires strategic adjustments to mitigate its impact on the company’s performance.
Impact of Export Controls
Recent export restrictions have further impacted ASM’s sales projections, adding another layer of complexity to its market strategy. The company is navigating these challenges while seeking to minimize their impact on its long-term growth plans.
Forward-Looking Guidance
Looking ahead, ASM International provided forward-looking guidance with several key metrics and trends. The company expects revenue for Q4 2025 to range between EUR 630 million and EUR 660 million, with full-year revenue growth anticipated to be close to 10% at constant currencies. Despite a projected double-digit decline in China sales, ASM projects revenue growth in 2026, driven by advanced logic/foundry and DRAM markets. The company aims for revenue to exceed EUR 5.7 billion by 2030, with a CAGR of at least 12% from 2024 to 2030, and has raised its gross margin target to 47%-51%.
In summary, ASM International’s earnings call painted a picture of resilience and strategic foresight amidst a challenging market landscape. While the company faces significant hurdles, particularly in China and certain segments, its strong financial performance and ambitious long-term targets underscore its commitment to growth and innovation. Investors and market watchers will be keen to see how ASM navigates these challenges and capitalizes on emerging opportunities.