They just printed record margins on 'exceptional' China sales while admitting that party is ending—but the 2nm order book says it doesn't matter.
Thesis: ASM owns the atomic layer deposition bottleneck for the industry's two critical transitions: Gate-All-Around (logic) and HBM (memory). While the Street frets about a China fade, the order book is shifting to high-margin 2nm tools where ASM maintains >55% share. The 'normalization' in China is being offset by a structural explosion in ALD intensity at 1.8nm/2nm. This isn't a cyclical recovery; it's a node-driven monopoly.
Verdict: LONG — Conviction: HIGH
Catalyst: H2 2024 High Volume Manufacturing orders for 2nm GAA, validating the $400M/100k wafer SAM expansion.
Key Risk: Generation-Skipping Execution Risk: 2nm ramps pushing into 2025 leaves a revenue air pocket if China normalizes faster than expected.
The Tell: CFO Paul Verhagen regarding the 52.9% gross margin: 'I wish I could deliver it every quarter but I'm afraid that will not be the case.' He explicitly capped buy-side models immediately after the print.
Friction Level: MODERATE_FRICTION — The Street models a China revenue cliff crushing margins; the Order Book shows 2nm Gate-All-Around intensity filling the hole before it opens.
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