We See ASM Outpacing the Weak Equipment Market in 2023 Thanks to ALD Demand; Raising FVE to EUR 300

ASM International reported fourth-quarter results ahead of management’s guidance, as the firm benefited from robust demand for its atomic layer deposition, or ALD, equipment from logic and foundry customers. These tools are critical in leading-edge process technologies that feature multiple patterning and will be increasingly critical in future inflections such as gate-all-around transistors. During the quarter, the firm closed its acquisition of LPE, which sells silicon carbide epitaxy tools for power applications. We like this deal for ASM as it expands its epitaxy portfolio to a promising market. Based on the increasing use of silicon carbide devices within electric vehicles, management sees demand for LPE’s epitaxy tools growing at a 25% CAGR from 2021 to 2025. We are raising our fair value estimate to EUR 300 per share from EUR 280 per share as we increase our outlook for no-moat ASM in 2023. Shares look fairly valued at current levels.