In conducting our business, we face a number of risks that may interfere with our ability to achieve our business objectives. Some of these risks relate to our operational processes, while others relate to our business environment. It is important to understand the nature of these risks and the impact they may have on our business, financial condition, and results of operations. These risks are not the only ones we face. Some risks may not yet be known to us, and certain risks that we do not currently believe to be material could become material in the future.
The significant risks currently considered relevant, potential consequences, and applicable mitigating measures can be outlined as follows:
In 2007, ASMI licensed Hitachi Kokusai Electric Inc (now called Kokusai Electric Company and hereafter referred to (including its affiliates) as Kokusai) under certain of its patents in the field of Atomic Layer Deposition. The license agreement was renewed in 2012. On August 30, 2017, ASMI initiated an arbitration with the American Arbitration Association against Kokusai for breach of the license agreement between the parties. At this point of time it is unpredictable when the arbitration will be completed but the current expectation is in the first half of 2019. Following the expiration of the parties’ patent license agreement, ASMI filed, on December 1, 2017, a suit for patent infringement against Kokusai and its US subsidiary in the US District Court for the Northern District of California. ASMI has asserted infringement of three of its patents and is seeking both an injunction and monetary damages. Kokusai filed suit on December 1, 2017 for alleged patent infringement against ASMI in the US District Court for the Northern District of California. Kokusai has asserted seven patents and also seeks an injunction and monetary damages. No specific monetary amount has been requested to date. On December 5, 2018, ASMI asserted in the same proceeding counterclaims which included infringement of three additional patents by Kokusai. On February 20, 2018, Kokusai initiated litigation in the District of Oregon asserting four patents against ASMI. Both parties have filed for Inter Partes Reviews (IPR) at the U.S. Patent and Trademark Office on the U.S. Patents asserted in the various jurisdictions. The outcomes of those IPRs are currently unknown but are anticipated to be completed in twelve to eighteen months. On September 21, 2018 ASMI filed two lawsuits in Tokyo District Court against Kokusai asserting infringement of two patents and requesting a preliminary injunction to prevent the continued infringement of our patents in Japan. On February 8, 2019 Kokusai filed seven lawsuits in Tokyo District Court against ASMI asserting infringement of nine patents in total and requesting a preliminary injunction to prevent the alleged continued infringement of their patents in Japan. ASMI will vigorously defend its position in each suit asserted by or against Kokusai. Litigation concerning intellectual property rights is complex and usually takes a protracted period of time. Therefore in connection with these lawsuits ASMI may incur substantial legal fees and costs, and it is not certain that ASMI will prevail in the suits. If ASMI would not be successful in its suits as plaintiff or as defendant, then the potential outcomes may include, without limitation, payment of significant monetary damages, injunctive relief prohibiting sales in the USA or Japan, and/or settlement involving significant costs. At this stage it is not possible to predict the outcome of the above mentioned suits, or whether other suits will be started by Kokusai. The final outcome could potentially have a material adverse effect on our business, results and financial condition.
A significant portion of our total assets is composed of our interest in ASMPT. Prior to March 2013, we owned approximately 52% of the outstanding equity of ASMPT, and the assets and operating results of ASMPT were reported by us on a consolidated basis. On March 15, 2013, we disposed of a 12% stake in ASMPT, which reduced our ownership to approximately 40% of the outstanding equity. As a result of this, ASMPT ceased to be a consolidated subsidiary as of that date and our pro rata interest in the net earnings of ASMPT is reported in our consolidated statement of profit or loss. During 2017, we disposed a stake of approximately 14% in ASMPT. As per December 31, 2018, our interest in ASMPT is 25.33%. Although ASMPT operates in the same industry as ASMI, ASMPT addresses a different segment of the industry, which may involve different market dynamics and competitive factors from time to time, as well as different business risks unique to their operations. ASMPT is a public company traded on the Hong Kong Stock Exchange.
Over the past 50 years we have grown to become a leading global supplier
of semiconductor wafer processing equipment. A company that develops
innovative process solutions for our customers, and manages itself in the best
interests of our investors, our employees, society, and other stakeholders.
Yet now is the time to enter a new era of innovation, to embark on the next
phase of growth. We understand that this requires commitment and strength
across many areas. From innovation in R&D, to advancing new technologies
and addressing new applications. From developing our people, to creating
even stronger relationships with key customers.
This is how we will take the next leap forward.
ROADMAP TO THE FUTURE
Our roadmap to the future will enable us to not only
achieve our next phase of growth, it will ensure we
can continue to help our customers achieve their
technology roadmaps for next-generation devices.
Our technology helps drive innovation, increasing the number of scientific breakthroughs, many of which are achieved from our advanced process equipment that deposits new materials with precision and productivity, positively benefiting society in sectors from healthcare and education, to transport and energy.
For semiconductor manufacturers, scaling chips
to smaller dimensions is an ongoing challenge.
Our innovations and equipment are vital in helping make many of these transitions happen.
Striving for efﬁciency ensures that our
customers get the products, services,
and results they expect. Intensifying
our focus on efﬁciency will make us a
stronger company, ready to take the
next leap forward.
We are a multinational company that
embraces diversity in every sense
of the word. With 29 different
nationalities working across the
company, we combine our talents
to drive innovation.
Achieving our ambitions takes intelligence, knowledge, skill,
determination, and dedication. And it is this combination of
qualities that we nurture in our people.
Our goal is to impact tomorrow’s generation
as positively as we’ve impacted today’s.
Making this happen takes the xtraordinary
talent of our people, who work together
to drive innovation and deliver excellence.
Collaboration is fundamental to our
continued success; from working
with our customers to optimize our
equipment and processes to enable
their technology roadmaps, to
creating partnerships on cutting-edge
research and development.
Operational excellence is one of the essential
pillars of our strategy, which enables us to provide
our customers with the high-quality, leading-edge
products and services they demand.
R&D is central to our development,
leading to new device architectures,
new materials, and new processes
that strengthen our competitive
positioning and enable our customers
to deliver the next-generation chips.
By extending our technological scope with a
more diverse product portfolio, we can help our
customers continue to advance their business
while growing our own in new market segments.
We create long-term value for our
stakeholders in a variety of ways.
From working with our customers
to develop innovative solutions, to
ensuring value creation growth
and positive investor returns.
We are committed to positively
contributing to society and
reducing our impact on the
environment. Only then can
we truly say we are helping
create more with less.
We believe sustainability takes many forms.
From developing sustainable technology
roadmaps for our customers, to creating
a sustainable living environment for all.
Safety is a front-line requirement,
which is why our ZERO HARM!
policy outlines our vision on product
safety, and our CR policy lays out
our commitment and expectations
towards health and safety.