ASM International (OTC:ASMIY) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
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Summary
ASM International reported Q1 2026 revenue of 863 million euros, a 16% increase year-on-year and 26% quarter-on-quarter growth, driven by strong performance in logic foundry and memory segments.
The company’s gross margin remained robust at 53.3%, supported by a favorable product mix and cost reduction initiatives, with expectations for margins to remain at the higher end of the 47-51% target range for the year.
Strategically, ASM International is focusing on AI-driven semiconductor demand, with plans to expand in advanced packaging and maintain strong momentum in advanced logic foundry and memory sales.
The company anticipates revenue growth in Q2 2026 to approximately 980 million euros, with the second half of the year expected to be stronger than the first.
Management highlighted ongoing supply chain challenges but expressed confidence in managing these issues while also benefiting from increased demand, particularly in China and the advanced logic foundry sector.
Full Transcript
Victor Barinho (Head of Investor Relations)
Thank you, operator. Good afternoon and thank you for joining our Q1 earnings call. With me today are our CEO Misha Massad and our CFO Paul Hagen. ASM issued its first quarter 2026 results yesterday at 6:00pm Central European Time. For those of you who have not yet seen the press release, it is available on our website together with our latest investor presentation. As always, we remind you that today’s conference call may contain forward looking statements in addition to historical information. For more details on risk factors relating to such forward looking statements, please refer to our press releases and financial reports, all of which are available on our website. Please also note that during this call we will refer to profitability metrics, primarily on an adjusted basis. Reconciliations to reported numbers can be found in the press release and in the investor presentation. And with that, I’ll now turn the call over to our CEO, Hisham.
Hisham
Thank you Victor and thanks to everyone for attending our first quarter 2026 results conference call. We’ll follow the usual agenda for today’s call. Paul will begin with a review of our first quarter financial results. I will then discuss market trends and our outlook, followed by the Q and A session. I will now turn it over to you, Paul.
Paul Hagen (Chief Financial Officer)
Thank you Sam and thanks everyone for joining our call today. Let me first walk you through the Q1 financial results. Our revenue in the first quarter of 2026 amounted to 863 million euro, which was at the high end of our guided range of 830 million plus or minus 4% on a constant currency basis. Revenue increased by 16% year on year and by 26% compared to Q4 2025. Equipment sales increased by 14% at constant currency and were left by ALD, Spares and Services continued to deliver very strong performance with a 23% year on year growth at constant currency. This was the result of continued expansion of our outcome based services and stronger spares demand in an environment of elevated FAB utilization rates. In terms of customer segments, revenue is led by Logic Foundry which accounted for the clear majority for the full year. Advanced Logic Foundry sales are expected to show significant growth this year, however due to quarterly phasing they were down from the very strong first quarter last year. Mature Logic Foundry for the largest part from customers in China increased compared to Q1 last year and rebounded strongly compared to the relatively low level in Q4. Memory sales showed sequential growth compared to Q4 last year and are also expected to grow significantly for the full year, mainly in dram. Sales in the memory segment were predominantly driven by applications for high performance DRAM in HBM related applications. Sales in the power analog wafer segment increased compared to the first quarter of last year, mostly in silicon based solutions, but from a low base. Gross margin in the first quarter amounted to a strong 53.3%. This was virtually unchanged compared to 53.4% in Q1 of last year up from 49.8 in Q4. Gross margin was supported by a favorable product and customer mixed including an increased sales contribution from China which rebounded strongly compared to the lower level in Q4. The gross margin also benefited from a gradual impact from cost reduction programs that we have been implementing over the past few years. We expect the gross margin to be at the higher end of the target range of 47 to 51% for the full year as GA expenses increased by 8% year on year at constant currency, mostly due to higher variable expenses, but dropped slightly as a percentage of sales, demonstrating our own growing focus on cost control. For the full year, we continue to expect as a generated percentage of sales to drop below 9%. Net RMB increased 11% year on year at constant currency. In Q1, We we continue to step up R&D investments to support customer transitions to next generation nodes and to advance our expanding pipeline of opportunities. For the full year, we intend to keep the net R&D within our target range of a low double digit percentage of revenue. Operating profit increased by a solid 21% year on year at constant currency and the operating margin reached a new record of 33.1%. If you look at the main movements below the operating line, financial results included the currency translation gain of 10 million euro in Q1.26 compared to a translation loss of 14 million in the first quarter of last year As a reminder, we hold a large part of our cash in US dollars and the related translation differences are included in our financial results. Our share of income from investments, reflecting our stake of approximately 25% in ASMPT, amounted to 7 million euros in the first quarter, up 2 million euro in the year ago period. Next the balance sheet and cash flow. ASM’s financial position remains solid and we ended the quarter with a cash position of close to a billion. Free cash flow was 48 million euros, negative, mainly reflecting a working capital outflow and a quarter marked by a sharp ramp in activity levels. Days of working Capital increased to 69 at the end of March, up from 45 at the end of December. The main driver for the increase was higher accounts receivable due to strong sales increase compared to the relatively low level in Q4 as well as back end loaded distribution of sales during the quarter. Capex amounts to 38 million Euro in the first quarter, up from 13 million in the same quarter of last year. And for the full year we expect CAPEX to be around or to be somewhat above the higher end of the guided range of 150 to 250 million Euro, with the largest part related to the construction of a new site in Scottsdale which remains on track for completion in Q1 2027. And with that I’ll turn the call back over to hichemen.
Hisham
Thank you Paul let’s now continue with the review of the market trends. The first quarter again confirmed that AI is the main driver of semiconductor demand. Customers continue to add capacity to support the ongoing expansion of AI data centers and the broader infrastructure buildout. This is keeping demand strong in the areas where we are most exposed, especially logic foundry, and we saw this demand strengthening further during the quarter. We have also noted a continuing proliferation and diversification of the AI workloads into the CPU and the power markets. For this reason we see AI driving strength in all segments of our business advanced larger quantity, mature logic foundry, memory and especially DRAM and to a lesser extent power wafer analog market. Looking ahead, our strategic view remains unchanged. As AI adoption broadens and demand continues to scale, compute capacity is increasingly the limiting factor in semiconductors. This is translating into tighter capacity needs for advanced logic foundry and memory devices, driving higher investment intensity and increasing the urgency of tool deliveries. Against this backdrop, our focus is on execution as we continue to support our customers expansion plans. The pace of demand is putting additional pressure on the supply chain, but so far we have been able to manage these rising challenges in close cooperation with both suppliers and customers reflected in the sharp step up in our quarterly sales from 700 million euro in Q4 of last year to a level approaching 1 billion euros projected for Q2. Turning now to customer segments, Logic Foundry again led our performance in Q1, supported by continued strength at the advanced nodes and a sequential rebound in mature logic foundry demand. Our view is unchanged that Logic Foundry will be a strong driver of our sales in 2026 and also going into 2027. The structural outlook for this segment remains strong AI driven compute requirement and the ongoing shift to more complex 3D device architecture and new materials continue to increase ALD and epitaxy intensity. As we progress through the year, we expect momentum to build further with ongoing capacity addition at the 2 nanometer technology node. Accounting for the largest part of advanced logic foundry sales in 2026, this first generation of GATE all around device technology is shaping up to be a large node enabling new applications in high performance computer including AI as well as advanced mobile and other leading applications. We continue to benefit from the step up in our served available market at 2 nanometer supported by a broadened position in epitaxy and sustained strong market share in ALD. In addition, we have seen a healthy uptick in demand related to the nodes from 3 nanometer to 7 nanometer driven by agentic AI. The demand is outstripping supply which has led to renewed capacity investment. Looking ahead to the industry’s next node transition to 1.4 nanometer, we expect pilot line investment to begin later this year. We are deeply engaged with key customers as they prepare for that transition and we expect the first meaningful contribution to our sales in the second half of 2026. As we have highlighted before, we expect the SAM uplift of the 1.4 nanometer to be even larger than what we saw at 2 nanometer node. At 2 nanometer the industry’s main priority was to get the first generation GATE all around architecture into high volume manufacturing. With GATE all around now in production and ramping, customers have more room to include additional performance boosters and for asm that translates into more functional layer in the transition stack to further optimize power and performance, including additional dipole layers to enable multi VT options alongside the higher SAM opportunity. We have already secured several key product penetration which supports our expectation for a higher ALD market share in the 1.4 nanometer node. Public disclosure from some leading customers suggests that the 1.4 nanometer node is designed to deliver clear improvement in performance, power efficiency and density versus today’s 2 nanometer node. This is well aligned with ever increasing AI token demand and the associated compute and power constraints in data centers. As our customers move toward high volume manufacturing in 2027 and 2028, we expect 1.4 nanometer become a meaningful driver for ASM. Next looking at memory demand in Q1 was solid with robust momentum in the most advanced DRAM technologies used in HBM related applications. Continued investment in AI infrastructure is keeping demand for high performance memory strong and supporting ongoing expansion of advanced DRAM capacity for the full year. We continue to expect healthy growth in our memory business. Looking further out, DRAM remains a meaningful and strategic opportunity for ASM from a technology perspective, our customer R and D engagement in memory continue to expand, including development work around new ALDI and epitaxy applications that support the transition to 4F Squared and PERI FinFET DRAM. As we highlighted at investor day, the transition to 4X Squared is expected to drive a step up in ALD and epitaxy intensity and expand our served available market by approximately 400 to 450 million USD based on 100k wafer start per month capacity. Turning over to power analog wafer market segment, the contribution in Q1 remained relatively low reflecting the soft market condition in broader parts of automotive and industrials. That said, we have seen some pockets of strength in selected area, particularly in power application for AI data centers. For 2026, our view is unchanged that this segment should recover gradually from a low base. We remain well positioned to benefit once demand conditions improve more broadly. Moving on to China, the increase in Q1 was largely driven by the mature logic foundry segment where we saw higher activity across a broader set of customers, reflecting improving market conditions and to a lesser extent the power analog segment. In addition, I’d like to highlight ASM’s ongoing success in winning new positions which also contributed to our strong performance in China. This demonstrated the continued competitiveness of our solution and the strength of our local team. Based on current visibility, we expect sales in China to increase for the full year with a stronger contribution in the first half. Now let’s talk about advanced packaging. As we have discussed during the investor day, we are looking into advanced packaging as another midterm growth area for asm. We believe that this market is ripe for disruptive solution in new materials and interface engineering playing into ASM strengths. We are engaged with multiple customers on advanced packaging and we are seeing some encouraging traction for our innovative solutions. That brings me to the outlook. At current currency, we project revenue to increase in Q2 2026 to 980 million Euro plus or minus 5% and we continue to expect revenue in the second half of 2026 to be higher than in the first half. As mentioned, China sales are expected to be first half weighted. This means that our other business segments are expected to strengthen from the first to the second half, including continued solid momentum in Advanced Logic Foundry, higher sales in memory, and a gradual recovery in Power analog. While it’s too early to provide specific guidance for the full year, based on our guidance in Q2 and a further increase in the second half, it should be clear that 2026 is going to be a strong year for ASM. And with that, we have finished our introduction.
Paul Hagen (Chief Financial Officer)
Thank you, Hisham. Let’s now move on to the Q&A and A session to ensure that everyone has an opportunity to participate. Please limit your questions to no more than two at a time. Operator, we are ready for the first question please.
Operator
Thank you. This is the Chorus Call conference operator we will now begin the question and answer session. Anyone who wishes to ask a question may press N1 on their touchtone telephone. To remove yourself from the question queue, please press N2. Please pick up the receiver when asking questions. Anyone who has a question may press N1 at this time. We will pause for a moment as participants are joining the queue. First question is from Andrew Gardiner, City
Andrew Gardiner (Equity Analyst)
Good afternoon, Hisham Good afternoon Paul. Thanks for taking the question. Hisham, if I could just sort of pick up on the point you were making at the end of your prepared comments there. You’re saying you will have growth in the second half of the year versus the first half, but obviously the visibility isn’t perfect to quantify it for us yet. Previously you’d been willing to talk about your performance relative to the wafers have equipment market broadly and that ASM would outperform that. Clearly WFE expectations are moving quite rapidly as well at the moment. Could you give us an update on how you see the broader market in terms of wfe and can you confirm that you will still outgrow that in 2026? Thank you.
Hisham
Thank you very much for the question. Yes, we talked about that in our previous conference call that we were going to at least perform as good as the Wafer Fab Equipment (Wafer Fab Equipment (WFE)) market or better. Yes, we have seen improvement in the WFE market. I mean we follow very closely what Gartner and VLSI talking about and we can reconfirm again that our growth in our market, in our revenue in 2026 will at least outgrow the WFE market again. So as I mentioned, we see strength in the market and our revenue is strengthening and we Are very confident that we’ll be able to at least grow, at least at the WFE market or beat that in 2026.
Andrew Gardiner (Equity Analyst)
Thank you. And just a clarifying question, the point you were making on China in the second half. So that China down second half on first half or down year on year or perhaps it’s both?
Hisham
No, I think China is really up year on year. So we talked about that. We see right now that China is lower in the second half of 2026 versus the first half of 2026 saying this and I want to repeat it again, China visibility is not the greatest and we talked about it. So. So from that point of view, if there’s anything that second half China business that we see right now might also increase eventually. But right now what we see very strongly that the second half would be a little bit lower than the first half. But again that might strengthen in the second half, we don’t know.
Andrew Gardiner (Equity Analyst)
Thank you very much. Thank you.
Operator
Next question is from Nigel Van Putten, Morgan Stanley.
Nigel Van Putten
Hi, good afternoon. I want to follow up on a previous question on China. Perhaps for the full year there is some limited visibility, but can you provide us a revenue or China revenue as a percentage of overall revenue for the first half at least and how that maybe compares to the full year 2025 when you said it’s going to be or it came in a little bit over 30%. That’s my first question.
Hisham
Hi Nigel, thank you for your question. maybe there’s a misunderstanding about the the visibility, low visibility of China right now. Our visibility for 2026 is very good. Okay. China or no China. Okay. Because you know, I mean it’s really clear everywhere in our market. Okay. So that’s why we are really confident about, about the market. If there’s anything in China, the revenue is going to increase further in second half. From where we see it right now. So. But China business has been good and we feel very confident about it.
Paul Hagen (Chief Financial Officer)
Very nice. Maybe to add what Isa was saying, what we see indeed now at this moment at least is an accelerated demand in China. We have a higher H1 expectation than H2 which might still change. We don’t know as he’s already indicated, possibly that is because of concerns on export controls. We don’t know. One thing is for sure that the overall sentiment is very good. Like in the rest of the world also AI related. That’s in itself a positive too. We also want some more layers which in itself is a positive. But yeah, there is clearly an acceleration going on which of course customers don’t tell us but which could be triggered by concerns around export controls and how that will develop further I think at this stage and nobody knows then on the full year based on everything we know today, I think the equipment revenue as a percentage of total sales will be similar to last year. But again it’s really too early to tell. So this might change because for all the reasons that were already mentioned.
Nigel Van Putten
Got it. That’s, that’s really helpful. Then now maybe switching to the advanced logic customers which I understand are providing increased visibility maybe, you know, eight quarters on a rolling basis. Question would be do you see any sort of broadening on the horizon? Sort of cleared out? The main customer remains very strong. But how are the other two doing maybe today and how do you see that developing into the second half of the year?
Hisham
Thank you. So I think, Nigel, I think we see we’re working right now with all customers in advanced node, Both at the 2 nanometer node and 1.4 nanometer node and we see that GATE all around is a technology that’s going to be adopted by more customers and we feel very confident that that’s going to be the case. Of course. Okay. Some customer have better yield or performance than the other ones but we think that GATE all around is going to be really a broad technology note and for a variety of customers.
Nigel Van Putten
Thank you very much.
Operator
Next question is from Didier Shema, bank of America.
Didier Shema
Yes, good morning, Good afternoon. Hisham and Paul, thank you for taking my question. Just a follow up actually to the previous question on the boarding of the customer base in AdvancedLogic. Obviously your largest customer is doing terrific on the two smaller ones. Is that supposedly expected to strengthen in Q2 or is that more of an H2 driver? And I’ve got a follow up. Thank you.
Hisham
Yeah, let me take that question. I think what I can say on that, I don’t want to be specific on Q1 or Q2 or Q3 when it comes down comes down to customer but what I can say is that based on current visibility that all those customers are expected to grow year on year and of course there’s a significant difference with regard to the size of the various customer and the absolute amount of growth as a result of that. But we expect all three for the, for the logic part, all three of them to grow year on year.
Didier Shema
Okay, thank you. And for my follow up for Q2, would you expect China to be up sequentially or flat or how should we
Paul Hagen (Chief Financial Officer)
think about that relative to your overall sequential growth guidance what we’ve said indeed is that for next quarter we expect 980 million euros, plus or minus 5%. We also said that for H1 we see an accelerated demand for China coming in for various reasons, what I just discussed in the call before. So I think it’s reasonable to assume that also Q2 China will be pretty good.
Didier Shema
Thank you.
Paul Hagen (Chief Financial Officer)
Should we expect therefore the gross margins in Q2 to remain at a sort of above the long term guidance given the mix, you know, that I’m not going to specifically guide on a quarterly basis for the margin, but the margin will be good so that I can say China is accretive, as you know. But also I think what is also not unimportant, I also want to highlight that, is that the other product mix that we’ve seen actually in the last few quarters has been very strong. So that also helps. And last but not least, the structural cost improvements that we’re working on, which will every year add a little bit, also play a role. But having said that, higher share of China typically is accretive. Thank you.
Didier Shema
Thank you so much. Very clear.
Operator
Next question is from Francois Bovinier, UBS.
Francois Bovinier
Thank you very much. I have a question for 2027 actually. So if we look at your 2026 growth drivers, I mean if I look at the different drivers, I don’t see much layers you know, increase in 26 as, you know, a growth driver. Because I think it’s mostly capacity. Get a. Lauren was, you know, adding a lot of capacity last year. So from a year over year point of view, you don’t have a lot of incremental layers. Now if you look at 27, it looks like you will have a lot of layers opportunity that you laid out at your capital markets day. So I was wondering if we think about this dynamic of layers increasing, is it fair to say that 27, if we assume the same capacity increase at 26, that should be a higher growth than 26. You know, you have more drivers on top of the capacity in 27 than you had in 26. Is that the right way to look at it, if you understand my question?
Paul Hagen (Chief Financial Officer)
Yeah, I think we understand your question. I think it really depends growth on the end demand from that point of view. But we as the technology node transition from 2 nanometer to 1.4 nanometer. We see the adoption of 1.4 nanometer starting in the second half of 2026 and we see the 1.4 nanometer bias to increase in 2027 for final production in 1H 2028. And with the 1.4 nanometer node there is more ALD and more EPI. And as we mentioned, you know, these ALD layers are mainly in the front end of line for performance level. And that’s where we have many more, a lot of strength and that’s where we’re going to have many more ALD la. So we are really very happy with. We’ll be very happy with the 1.4 nanometer transition because of the higher ALD intensity. Also, you know, we have more ALD layers in I think that as we mentioned in 20 in our last press release, that we are very happy to be in production, high volume production at the 2 nanometer node with Moly ALD. And with the transition to the 1.4 nanometer, we also have one, some processing layer for record layer in molybdenum. So overall the transition to 1.4 will be very, very accredited to us and will be very excited with that transition in the future. And then what we said. Yeah, go ahead, Paul. Sorry, I think he said it, but I want to make it a little bit more explicit that just for you guys to be clear that already in this year with the pilot for 1.4, which is also of course increased layers, as you know, we already see a very, very meaningful contribution of 1.4. So that’s not only in 27, but it’s already starting in 26.
Francois Bovinier
Good to know. Thank you for the call up, Paul. And maybe, you know, item you didn’t address, maybe the memory layers and maybe 2027 and then you mentioned market share higher in a 14. So can you maybe explain, you know, a bit the higher share here? I mean, is it because just your time is getting higher than the others or you just, you know, have more layer than you expected or more than that before?
Paul Hagen (Chief Financial Officer)
So the 1.4 nanometer, what’s the difference between the 1.4 nanometer node and the 2 nanometer node? So they are both GATE all around but for the 2 nanometer node that’s, that’s an architecture change. So customer didn’t want to be very aggressive in putting many functional layers. because of the change in architecture. But once we move to 1.4 they have added many goodies which we call, you know, performance layers. And those layers are really mainly ALD layers and they’re all in the front-end-of-line where we play a significant. That’s where our science is. So definitely we see more ald layers in 1.4 nanometer second thing, as you shrink, you know those. And with the gate around structure, as you shrink, those layers become much more difficult because of the 3D nature and the shrinking. And with that, you know, the LD intensity, since every layer becomes much more difficult, that also slows down the process. And with that you need more equipment from that point of view. The other thing we see is that also there is a higher epitaxy intensity going forward. So overall that’s very positive.
Francois Bovinier
Great, thank you very much.
Operator
Thanks, Francois.
Stefan Hori
Next question is from Stefan Hori, ABG Sundal Collier. Yes, hello, good afternoon. I wanted to come back on the Q2 guidance, which is about 100 million euros above what the consensus was expecting. So I’m just trying to understand what led to this acceleration, if it’s more advanced logic or memory. And if you could comment also on the, on the lead time at the moment, if they are increasing and if there is difference between the two different segments. Thank you.
Paul Hagen (Chief Financial Officer)
And I have a follow up. I think that the acceleration is happening in mainly in the 3 nanometer to 7 nanometer node in addition to the GATE all around node. So what we have seen lately is that AI-driven applications is becoming more important and with that that tends to favor using CPU instead of GPU. So this, the 3 to 7 nanometer node is really mainly aligned with CPU and we see much more demand from our customer in that node and that’s really happening super fast at this point in time. We also see strength in memory continuing. So overall the market is really strong in the leading edge. Both logic and mainly logic and foundry. That’s really the highest part of the market. Second is really also DRAM is also increasing
Stefan Hori
and about the lead time. Sorry.
Paul Hagen (Chief Financial Officer)
So regarding the lead time,, it’s. I mean lead time has increased because of the, the supply chain constraints right now. I mean the, there’s, there’s a huge demand everywhere. So yeah, the supply chain has increased and that’s really the customer specific. We’ve been able to expect that to happen. That’s why, you know, we have increased our capacity to from like 700 million per quarter in Q4 of last year to about 1 billion per quarter this year. And it’s going to continue to increase in the second half as we have mentioned.
Stefan Hori
Okay, and that’s exactly my follow up. I mean you’re going to be at at least 1 billion per quarter in the, in the second half run rate and there’s probably some additional growth coming in 2027 given what you said and what we see in the market. So at what point Will you reach capacity at your plants, especially in Singapore, requiring a capital expenditure increase?
Paul Hagen (Chief Financial Officer)
I think our manufacturing capacity can take care of our business. I think we have extended extensive manufacturing capacity in Singapore and Korea. So we’re ready for much higher volume. I think that what’s limiting, if there’s any limit, is really the supply chain that’s limiting the will be the capacity than anything else. But I think that we’ll be able to manage that in the second half. So that’s why we’re confident of increased volume in the second half of 2026.
Stefan Hori
Okay, thank you very much.
Operator
Next question is from Sandeep Deshpande, JP Morgan.
Hisham
Thank you so much for letting me on. Maybe you can give a comment on what has changed in your customer behavior versus what you had seen from your customers the last time you reported your results. Has something substantially changed, given your very strong guidance into the second quarter? And then I have a small follow up, I think that the market is really strong all over. Has there been any significant change? I think that the change that we have seen is really on the PC segment where, you know, for PC on the CPU part where you know, used to be that AI mostly driven by gpu. But we see the CPU part becoming more important than before and we see that’s the strength we see in the 3 nanometer to 7 nanometer node, which was not there. So that’s really the strength we see. It’s mainly the CPU driven part for artificial intelligence.
Sandeep Deshpande (Equity Analyst)
And then when you look at the WFE, I mean you had said 15 to 20% at last results. I mean, given your guidance for the second quarter and your indication on the second half of the year, it looks like you’re going to grow well over 20%. So what is your perception on WFE at this point for this year? And I mean despite your lower exposure in the memory market, you are growing incredibly well. And so is this mainly associated with this second half ramp with the 1.4 nanometer where your content is growing, your number of layers you have is growing very substantially. So this is essentially share gain in the WFE market.
Paul Hagen (Chief Financial Officer)
Yeah, let me take that, Sandeep. Yes, to give you a very short answer, that’s part of it, absolutely. But also basically, I think as Isma already said, but maybe in different words, we’re firing on all cylinders. Every segment of the market is growing significantly. I mean Advanced Logic Foundry, Mature Logic Foundry, memory of which in particular dram we see high growth and even powerwave analog for Power related AI data center applications from a low base, but as a percentage still, still high growth. And of course also pilots 1.4 that I started with at a decent amount for this year already.
Sandeep Deshpande (Equity Analyst)
Thank you.
Operator
Next question is from Aditya Metuku, hsbc.
Aditya Metuku
Yeah, good afternoon guys. Can you hear me? Yes, yes, thank you. Thank you for taking my questions. Firstly, I wanted to talk about 2027. I know you gave these targets of 3.9 to 4.6 billion euros top line at a 125 billion WFE number. So call it 4.2 billion midpoint. If you look at WFE numbers now, people are depending on whose numbers you take 40 to 50% higher than that 125 billion in 2027. So my first question is, should we assume that that 4.2 billion could be maybe 40 to 50% higher come 2027? What are the nuances we need to keep in mind when we think about where WFE is going and how your revenues might go in 2027. You’ve clearly talked about outperforming WFE. I presume that will continue. So just any pointers you can give around how we should think about these targets you gave at the CMD? 40% higher, 50% higher. And I’ve got a follow up.
Paul Hagen (Chief Financial Officer)
Yeah, let me take that. So indeed, I think we said 3.8 to 4.7 at CMD, where we assumed 120 billion euro dollar WFE, which today’s view is indeed significantly higher. But there’s one big difference. The assumption that we took at that time, which was somewhere September last year on the composition of the mix is very different from what we see today. So we had by far the largest part of the total wfe, basically logic foundry. While now the relative share of memory is significantly larger than what we assumed. And although we grow a lot in memory, but still our relative share of memory in our business is still relatively small. So that’s why you will not see the full benefit of that increased WFE dripping down into our numbers. Having said that, based on everything we see today, we believe that 27 will be a strong year. But adding 40 or 50%, I would not recommend you to do that. That would give some distorted figure. At the same time, it’s a very wide range. 3.8 to 4.7 is almost a billion euro range. So also even within that range, there’s still a lot of room to maneuver. And more than that, at this stage, I don’t like to say. Got it. Okay, we’ll leave 40 or 50% aside. Go with 30% then. But thank you, Paul. And just a quick follow up on the Match Act. Can you give us some color on how you’re thinking about any potential impact for you guys as you think about your China revenues? Any color you can give around how you might be affected? I know it’s hard to quantify numbers, but any qualitative color would be great. So the match act indeed is being discussed as we speak. If it will happen or not is uncertain. It might or it might not in what shape it will happen is also uncertain because at the end of the day it is important. Literally the points in the commas are very important there, especially in relation to how to interpret what is exactly restricted. We’re in of course discussion with relevant authorities as you can imagine. So it’s very hard and I would love I could give you some more color to give decent color at this stage. Obviously if something like that were to happen, it’s not a positive that might be clear. But yeah, how much? I’m really not in a position yet. It’s literally too unclear and too uncertain still on what might happen. So I don’t like to speculate on that.
Aditya Metuku
Okay, no worries. Thank you.
Operator
Thanks Hari.
Tammy Chu Berenberg
Next question is from Tammy Chu Berenberg. Hi, thank you for taking my question. So the first one is regarding your very strong short term momentum. You mentioned that just now. It’s all driven by the CPU related incremental demand. I just want to confirm that. Have you seen any from both logic and memory perspective, pulling forward, I ask you to accelerate the shipment of equipment because end market demand is coming so dramatic in the short term. So therefore it’s like a pull forward from 2027 at all.
Hisham
I think every customer wants the tools now instead of tomorrow. I think that the demand is really high and for us, you know, it’s which customer we ship to first, then the other one. So I think like we mentioned, you know, we are fully booked for this year from that point of view. We have a strong, strong, strong, strong demand in all parts of our business. Really everybody, every part of our business is very high demand. And yeah, we see customer, you know, the demand is even increasing. So I mean we, our book is full so we have to do our best to be able to, to satisfy the demand that we’re getting right now.
Tammy Chu Berenberg
Okay, thank you. And the second one is last quarter we discussed that the 1.4 nanometer is mainly driven by one customer versus others. Have been having discussion with you but still a bit distant away from pilot production, etc. I’m just wondering where is the status of those remaining customers? Are they getting closer to make the decision on pilot production or they still further down the line?
Hisham
So as we mentioned that we see we are working with all customers to the 1.4 second generation with a 1.4 nanometer technology node and we see that business strengthening in all the customer from that point of view some of them have a marginal increase and the other have a higher increase. But I’m not here want to speculate on which customer which. But we see at least marginal strength in some and a significant strength in other customers. But saying this, I think more likely, like I mentioned that the 1.4 nanometer would be more than one customer.
Tammy Chu Berenberg
Just to confirm, have you seen any progress during the quarter? All of them have moved forward or just one of them moved forward comparing to last quarter.
Hisham
Can you repeat your question please?
Tammy Chu Berenberg
So basically the timeline of the 1.4 nanometer transition last quarter you mentioned that 1 is active preparing for pilot production. Remaining 2 is still in discussion only at this stage. I’m just wondering, this is three months is after have you actually seen other customer together with a leading customer or moved forward in a timeline for 1.4 nanometer or just one customer has moved forward instead of all three of them?
Hisham
I’m going to repeat my answer. We see 1.4nm strengthening broadly with some strengthening marginally in some customers and significant increase in other customers.
Tammy Chu Berenberg
Okay, thank you.
Operator
Thank you, Tammy.
Jacob Bluestone
Next question is from Jacob Bluestone, BNP Pariba. Hi, good afternoon. Thanks for taking the question. I just wanted to come back to Adi’s question around your ability to sort of take part in growth in memory. And my question is when do you anticipate the transition to 4F squared and FinFET for the cell periphery in DRAM to impact your revenues? So is this something that would impact in 27? Is it 28 or do you think it’s further out?
Paul Hagen (Chief Financial Officer)
I can take that question, yeah. I think because I think last time already we mentioned that the pace of adoption customer by customer is different. There might be even a customer that might completely skip it. We don’t know yet, but that’s to be seen. And I think for us, based on what we see and think we know today, I think you should take into account 28 as the first year where we start to see a positive contribution related to 4F squared. might, maybe a little bit earlier, I don’t know yet. But I mean timeline is still a little bit uncertain and very different. From customer to customer. So yeah, I think the best, the best color I can give right now is in 28. So what Paul has mentioned here, you know, we see a strength in memory in 2026 also increasing for us in 2027 and beyond. The biggest increase for us will happen really in the movement to 4F squared where you have more LD layers and more also EPI intensity. But also we’ve seen some customers putting in in periphery FinFET in their mode, in their roadmap and with that we’re working with them and we might. And since you know, we’ve been very, very prominent in our Finfet technology in logic so that we see some customer really pulling in that technology node and with that we’ll probably will get some more layers as customers put in their FinFET technology node. So the biggest increase would be 28 and beyond. But also we see some increase in 2027.
Jacob Bluestone
Understood. If I just ask a quick follow up as well. You’ve mentioned a few times the sort of pickup in 327 nanometer transition and I don’t know if you can give any color on whether that’s at your largest customer or kind of more broad based. Which transition you talking about?
Paul Hagen (Chief Financial Officer)
Yeah, I think it’s really broad based. That’s really broad based. It’s not only one customer, it’s very broad based.
Jacob Bluestone
Understood, thank you.
Operator
Next question is from Ruben Davos. Kepler Schuber.
Ruben Davos
Yeah, good afternoon. I just had one on EPI in hbm. I believe you talked about significant AP engagements with another HBM customer and expect good news this year. So of course curious whether two months on has anything firmed up on that additional qualification and would that be let’s say fully incremental to your memory plan in 26?
Paul Hagen (Chief Financial Officer)
Okay, so to answer your question, yes, we talked about that and we are, we are engaging with other customer on Epitaxi. There’s really nothing else to say right now but we’ll let you know if there’s any news from that point of view. It’s really working with customer on a couple of customers on Epitaxi and hopefully we can share some good news with you in the next investor call meeting.
Ruben Davos
And then second one really to just get a feel of maybe the aftermarket sales.
Paul Hagen (Chief Financial Officer)
I mean you’ve had a stretch of very good performance in the last few quarters. Again, 23% up the past quarter. Outcome based is about 25% of the mix. So it looks like, I mean the target you set at the Investor day of 12% compound annual growth rate (CAGR) is becoming more of a floor. I was curious whether you could talk a bit about. The extended visibility you might have now in aftermarket sales. And I can imagine a margin uplift to realize if you manage to make the transition more towards outcome based. But also besides that, are you able to sort of have the customer pay more for per tool for the servicing packaging in general? I think that for. For service market. Okay, what I mentioned, the service market is really good. As you transition in a newer technology node because of process complexity, it’s very important to a customer need more support from us and for the more advanced node and with the advanced node also we see a transition to much tighter specification on wafer to wafer and also repeatability on chamber to chamber matching and also on system to system matching. And with that, you know, we have to provide new solution to customers to improve the uptime and the availability. So we are very. We think that the surface business is going to increase in the in the future as you transition to tighter and tighter technology node. And we see that happening in the area of automation, in the area of robotics, in the area of optics. And those are really the solution that we’re providing our customer. So the growth is going to be good in that part of the market. You mentioned that 12% growth. To be honest with you, right now every part of the market is growing, going a lot. You know, this year the market is going over 20%. I mean latest you see Gartner talking about 25%. So everything is great. It’s really just spending my time. Okay. To make sure that we can execute on getting customers the tools in time and make sure that the availability and the execution is top notch.
Operator
Thank you very much.
Tim Schouser
Next question is from Tim Schouser, Mallender Rothschild and Cole Redburn. Hi there. Thanks very much for taking my question first one for Hisham, please. Just looking at the technology execution and just trying to scale maybe how much upside there is to that. If I look at your long term revenue guide, the high low range is kind of 20, 25% between the low and the high. Obviously part of that is the strength of the cycle. Maybe part of that is also conversion of existing evaluations and layer wins. Maybe could you just share how much of that is upside down potential from. From layer wins. So we just think about that in the context of your go forward revenues and then had a follow up. You said the percentage. I didn’t hear you well on the percentage. Which percentage are you talking about? Yeah, so if we look at your 3.8 to 4.7 billion euro revenue guide, so part of that’s going to be cyclical, part of that’s going to be your execution in terms of technology wins. I’m just trying to think is that half, half, but some kind of scale of that.
Hisham
I mean, if you look into the business and where we are, you know, one thing I can tell you, I’m really very excited about our technology roadmap. I think that things are going in our direction. If you look into logic, you see more and more layers coming in with the, with 2 nanometer and also with 1.4 nanometer ALD intensity is increasing and FE intensity is increasing and we share in that part of the market. If you look into memory, memory is moving more and more into FinFET, more and more in 4F squared, which needs more FE, needs more LD. So we’re going to have more layers and we feel very confident about it. And if you look into logic, if you look into power wafer analog, we are really, if you look at the power wafer analog, the power part of the market is the only part of the power wave analog that’s strong right now and that’s being driven by data centers, power devices for data center. If the wafer part and the analog part goes up, it’s going to be even accredited to us. So the service business is also good. In the service business, we’re going to more, more and more automation and we really, we’re getting some, you know, getting into even robotics and that customers and leading customers. We’re even sending them, okay, some robots to improve the system availability and so on. If you look into advanced packaging, that’s an area that we mentioned that we have entered last year. It’s a new area for us, I can tell you that. You know, we have so many, believe me, so many interaction with customer. We have to prioritize which one to do. And some customers tell them, guys, we don’t have, we cannot really help you there. But with the customers that we’re really engaging right now, I can see that they really like to work with us as a company because we look into the advanced packaging to a different option. We’re looking into that as what can we do to disrupt the technology? What can we do to. To provide a solution that’s better than what it is right now? How can we put a solution, okay, to make sure that, okay, we reduce thermal. To reduce the thermal mass on advanced packages coming with a new material that improve thermal conductivity. Working with customer to make sure that we can seal the devices much better so there is no moisture going into the, in the packages. We’re working with customer to actually improve the speed of connection between one chip to the other one, working with them on some innovative photonic layers. So I’m sure that with all of this really feel very confident where things are going to go from that point of view. And depending where the market is going to go, I’m very confident that we’re going to at least match the WFE market growth or actually have a higher growth than wfe. It’s a great time for ASM right now and I see customers really want to work with us. I think our execution has improved. I think our competitiveness is getting even better than before. And what can I tell you, it’s the best time to be in semiconductors right now.
Tim Schouser
Very, very impressive Runway. Maybe just a quick follow up for Paul. Just some housekeeping. Actually you talked about rising utilization rates, but actually Q1 aftermarket sales were down sequentially and on your guide, I think last quarter your guidance range was plus minus four. This time you’ve widened that range to plus minus five, which doesn’t maybe sit that well with a sort of improving visibility. Just wondered if there’s any color you could share in terms of what you’re seeing. Thank you.
Paul Hagen (Chief Financial Officer)
Yes, so actually the range is referred to as related to supply chain challenges. So far we’ve been able to manage it, but at the same time we have to be on top of it to make sure that we get what we need to deliver what we need as per our customer preferred COD customer request date. So that’s a little bit where the range comes from, Tim. It’s not so much demand, it’s more what can we deliver on time given supply chain constraints that so far manageable again. But yeah, we have to be on top of it and nothing can go wrong there. So that’s what was in the aftermarket in Q1. And maybe there’s some catch up in Q2. I don’t know if there’s catch up in Q2. I mean I think we had a good Q1. I think we delivered more or less what we wanted to deliver and we will talk to the same in Q2.
Tim Schouser
Great, many thanks.
Operator
Thank you, Tim. We still have a number of participants in the queue, but we are running out of time. So let’s take one final question. Operator, can we have the last caller. Final question is from Javier Coronero, Morningstar Equity Research.
Javier Coronero (Equity Analyst)
Hi, good afternoon. Thanks for taking My question in the interest of time, I will just ask Juan. So your Access acquisition three months ago is small, but I think there is a lot to unpack there when you think longer term. So Axos is specialized in silicon carbide processing. So I was wondering if you could explain a little bit more what’s the rationale of the acquisition here? Is it like more silicon carbide content as we move into the 800 volt data center or is it TSMC potentially adopting silicon carbide interposers in the next few years or both? And of course it is very early and these are small acquisitions. But do you have an estimate of what serviceable, addressable market this acquisition could open once it is properly integrated with ASMs? For the. Thank you. Okay, so thank you very much for the question. So yeah, we have acquired this company called Access Technology which has which very excited about the acquisition in cmp. They have a very great CMP technology and very innovative to be honest with you. And like we mentioned, we have acquired this for the advanced packaging market because advanced packaging needs more and more CMP layer. Many, many, many more CMP layer. So there is room for another player.
Hisham
it’s a technology that’s all about interfaces and I think that we have some, we do have some knowledge in interface engineering so that we will be able to really put our print there. It also CMP helps us with our new materials that we’re developing for advanced packaging that I just talked about few minutes ago because I mean you deposit the film but also you need to CMP it. So we want to understand what’s the interaction about the material that we’re depositing, the new material that we’re depositing and the cmp, because CMP also has a slurry as a new with a slurry that means we’re talking about new chemicals and so on and so forth. So it would help us also develop better materials in ld but at the same time also do polymerization which is extremely important for advanced packaging. So that’s really why we made that acquisition. And we’re working right now on developing the product for advanced packaging. And it’s going to increase our SAM Yeah, absolutely. It’s going to increase our sand. And we’re in the process of R and D and so on in this part of the market.
Operator
Thank you. Okay, that concludes the Q and A. Thank you all for attending our call today. Also on behalf of Hisham and Paul, thank you. Goodbye
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