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ASMI moves to save front-end equipment biz

Posted: 30 Apr 2008 ?? ?Print Version ?Bookmark and Share

Keywords:front-end production line? foundry equipment maker? fab tools?

Under pressure from its shareholders, ASM International N.V. has disclosed details of its plan to achieve operating profit for its troubled front-end equipment business. This includes some product divestments and a new platform strategy.

As part of the move to cut costs, ASMI of the Netherlands also plans to close its head office in Bilthoven and move to Almere, a city and municipality in Flevoland, the Netherlands. The company also plans to shift its front-end production to Singapore, of which ASMI has invested since 2004.

No layoffs were announced. But also as part of the plan, the fab-tool maker said it plans to divest its rapid thermal processing (RTP) and NP product lines.

The company also said that all single-wafer applications and product lines will migrate to one single product platform by 2010. All single-wafer products will use the same front-end module by 2009.

The company is under pressure to change its operations. Investment firm Hermes Focus Asset Managementwhich wants to break up ASMIhas been pushing for new board members at the fab-tool vendor.

ASMI consists of two businesses. It has a 53.1 percent stake in a back-end equipment operation, dubbed ASM Pacific Technology.

War with Applied
The problem resides within its loss-ridden, front-end business, of which it owns a 100 percent stake. In the late 1990s, the evolution of the front-end business was ''seriously damaged'' by a protracted patent dispute with Applied Materials Inc., which led to costs of approximately $120 million for the company.

At the same time, ASMI was forced to spend heavily to retool the front-end business, the company said. More recently, the company has been hit by a slowdown and shareholder pressures to break up the company into two parts.

Monday's announcement focuses on the actions the company is taking to meet its target of achieving peer-group profitability in the front-end business in 2009. As part of its preliminary 2008 first quarter results for the front-end, the company announced an improved net earnings break-even level.

Although the market is forecast to decline in the short-term, ASMI expects to outperform it rivals in its current segments: PE-CVD; TP-ALD, CP-ALD and Epi.

''In the front-end business, we continue to make good progress decreasing cost levels and improving profitability, despite the challenging operating environment,'' said Chuck del Prado, chief executive of ASMI, in a statement. ''The changes we are making to the focus, organisation and culture of the company will propel growth and transform the cost structure of the front-end business and pay further benefits when market conditions start to improve.''

- Mark LaPedus
EE Times

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