Asm International ((ASMIY)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Asm International’s latest earnings call struck an upbeat tone, with management emphasizing broad-based demand, strong top-line growth, and record profitability. Executives balanced this optimism with caution over supply-chain bottlenecks, uneven China visibility, and heavier near-term spending, but insisted the company is entering a multi-year upcycle from a position of financial and technological strength.
Revenue Beat Underscores Growth Acceleration
Asm International posted Q1 revenue of EUR 863 million, landing at the high end of its EUR 830 million plus or minus 4% guidance range. Sales rose 16% year on year in constant currency and jumped 26% versus Q4 2025, signaling a clear acceleration in demand from key semiconductor customers.
Equipment, Spares and Services Power Top Line
Equipment sales grew 14% year on year in constant currency, led by continued strength in atomic layer deposition tools. Spares and services expanded even faster at 23% in constant currency, helped by outcome-based service deals and high tool utilization at customers running advanced logic and memory fabs.
Record Margins Highlight Operational Leverage
Gross margin came in at 53.3%, essentially flat versus 53.4% a year ago and sharply above the 49.8% recorded in Q4 2025. Operating profit rose 21% year on year in constant currency, driving a record operating margin of 33.1% as scale and mix more than offset higher investments.
Near-Term Outlook Remains Confidently Positive
For Q2, management guided revenue to EUR 980 million plus or minus 5%, pointing to another quarter of solid sequential growth. Executives also stated that the second half of 2026 should be stronger than the first, framing 2026 as a robust growth year as industry capex picks up.
Technology Edge at 2nm, 1.4nm and in Memory
Asm highlighted its leadership in atomic layer deposition and epitaxy, noting secured product positions at the 1.4nm node with pilot investments expected later in 2026. Advanced logic and foundry are set to be key multi-year growth engines, while DRAM and high-bandwidth memory showed sequential improvement and are expected to deliver meaningful full-year growth.
Strategic Expansion into Packaging and CMP
Management flagged progress in advanced packaging, supported by multiple new customer engagements and wins. The acquisition of Axus, a chemical mechanical polishing specialist, is designed to broaden Asm’s served market in packaging and interface engineering, adding another leg of structural growth.
Solid Balance Sheet Supports Investment Plans
The company ended the quarter with close to EUR 1 billion of cash, underscoring balance sheet resilience despite negative free cash flow. Income from its stake in ASMPT contributed EUR 7 million, up EUR 2 million year on year, while Q1 capital expenditure reached EUR 38 million as site buildout projects continued.
Free Cash Flow Hit by Working Capital Swing
Free cash flow was negative EUR 48 million in Q1, largely due to a working capital outflow rather than underlying profitability issues. Days of working capital increased to 69 from 45 at year end as accounts receivable climbed with strong, back-end loaded shipments.
Supply Chain Pressure Widening Guidance Bands
Management acknowledged rising supply-chain constraints and longer lead times across key components, which introduce uncertainty into quarterly deliveries. Reflecting this, Asm widened its Q2 revenue guidance range to plus or minus 5%, even as demand signals remained very strong.
China Strength Tempered by Policy and Timing Risks
China sales recovered in Q1 and are expected to be weighted toward the first half of the year, delivering growth versus last year. However, management warned that visibility remains limited and that the second half could be weaker in China, with potential policy actions adding another layer of risk.
Higher Operating Spend to Support Growth
Selling, general and administrative costs increased 8% year on year in constant currency, while net research and development spending rose 11%. Full-year capital expenditure is now expected to land around or somewhat above the top of the prior EUR 150 to 250 million range, pointing to elevated near-term cash needs as Asm builds capacity and technology.
Aftermarket Shows Quarterly Volatility
Despite robust year-on-year growth in the aftermarket business, management noted that aftermarket revenue declined sequentially in Q1. The company framed this as normal quarter-to-quarter variability in service activity and timing, rather than a signal of weakening end demand.
Guidance Points to Strong 2026 Trajectory
Looking ahead, Asm expects Q2 revenue of EUR 980 million plus or minus 5% and sees second-half 2026 revenue above first-half levels. For the full year, management targets gross margin at the upper end of its 47 to 51% band, SG&A below 9% of sales, net R&D in the low double digits as a share of revenue, and capital expenditure around or slightly above the prior top-end guidance.
Asm International’s earnings call painted a picture of a company riding a semiconductor upturn with strong competitive positioning and record margins. While supply-chain challenges, China uncertainty, and higher spending add some near-term noise, the core story of accelerating demand, technology leadership at advanced nodes, and upbeat 2026 guidance remains firmly intact for investors.