We Upgrade ASM International to Wide Moat and Raise Our Fair Value Estimate to EUR 635

ASM International is a provider of deposition wafer fab equipment. Despite lacking the product breadth and scale of other wafer fab equipment providers like Applied Materials or Lam Research, ASM has carved out a strong position in atomic layer deposition, the most advanced type of deposition where it enjoys more than 50% market share. ASM has done this through more than two decades of research and development, which is now paying off as semiconductor transistors adopt new 3D structures and require more atomic layers. ASM’s management knows the deposition market is its strength and has made clear it will continue reinvesting in it, both through R&D and mergers and acquisitions, and stay away from other areas where the firm might lack competitive advantages. Fabricating advanced semiconductors becomes more complicated with each new generation, so we believe firms with high focus will have an edge.