May 19, 2006 – At its annual meeting of shareholders, ASM International NV presented a “roadmap” for its corporate strategy going forward, proclaiming it will achieve profitability in its frontend equipment business in 2007, reversing a 37 million euro loss in 2005, with strategies including moving operations to Asia, reducing R&D expenses, and tightening working capital requirements and financial controls.
ASMI noted that its frontend gross margins have lagged below peers in recent years, although sales, R&D, and costs had been in line with industry averages. The company stated it believes operational synergy between its frontend and backend businesses “is just beginning to be realized,” tied in part to the IC industry’s migration to Asia, home to ASMI’s frontend manufacturing operation in Singapore, ASM Pacific Technology.
“The industry is clearly looking for improved packaging techniques whereby the boundaries between frontend wafer processing and backend assembly and packaging technology are disappearing,” stated Arthur del Prado, ASMI president and CEO. “We believe ASMI is in an ideal position — better than any of our competitors — to support the developments in these new areas.”
ASMI execs stated that no new product lines would be created until issues with current products in development are resolved.
Investment firm Mellon HBV Alternative Strategies, a 6% owner of ASM International NV, had publicly criticized ASMI’s business strategy and called for changes, including a reduced stake in ASM PT, R&D cutbacks, and possibly an outright sale the frontend business. The group also opposed the board appointment of Chuck Del Prado, son of CEO Arthur Del Prado, as well as proposed board members Berend Brix and Van Amerongen, but all appointments were approved at the shareholder meeting.
ASMI has already taken steps to get its core frontend business areas back on track to profitability. In February of this year, the company said it would scale back its NuTool copper plating, planarization, and electrochemical mechanical deposition processes business to “a small operation” to focus on process and IP licensing to focus on licensing the technology. The early-stage technology business was purchased in March 2004 for roughly $43 million, in hopes it would accelerate development and commercialization of advanced back-end-of-line copper/low-k interconnect technologies.
The company also is consolidating the wafer-handling platforms used in its transistor capacitor product group, including atomic layer deposition (ALD) and plasma-enhanced atomic layer deposition (PEALD) acquired from South Korea’s Genitech in April 2004. The restructuring costs were projected to exceed 50 million euros, roughly four times the company’s 12 million euros in revenues over the past three quarters.