Good afternoon, ladies and gentlemen. Welcome to this shareholders meeting of today, Monday, the 22nd of May, 2017. I will start shortly in English. However, the rest of the meeting will be in Dutch, except for the presentation of the CEO at agenda number two, and also the presentations at agenda number thirteen of Eumedion and Uncertain will be in English. There will be a simultaneous translation, and anybody who does not understand Dutch can take the earphones and listen to what is being discussed. Questions can be taken and can be asked in English, but the answer then will be in Dutch or English. Please do not feel in any way hampered by asking questions in English if you don't speak Dutch.
We will start with some announcements, and my first request to you all is to sign the attendance list, and I take it that you all did so before entering. And if you wish to take the floor, do mention your name, please. The meeting was convened in a legally valid way, in accordance with Article 6-13 of the Articles of Association, and the meeting was announced on the website on 10 April 2017. The convocation and the agenda, with the explanatory notes and translations thereof in English, were placed on the website of the company on that same date.
In that convocation, it was stated that the complete agenda and explanatory notes, and annexes, and the statutes of 2016, are for everyone's inspection at the office of the company and at ABN AMRO Bank in Amsterdam. The US proxy card was also posted on the website on 10 April 2017, and in accordance with the law, the record date is 24th April 2017. Special guests today are Messrs. Rob Krogveld. Hi, Rob. He's here on behalf of KPMG Accountants NV, and the civil law notary, Ruth van der Burgh, who will draw up the notarial records of the meeting in accordance with Article 26, point 2, of the Articles of Association of the company.
The record of the meeting will, in accordance with the recommendation IV.3.10 of the Dutch Corporate Governance Code, be put on the website as a draft within three months, and shareholders will have a period of three months to respond to these draft minutes. As you will have noted, all members of both the management board, Mr. del Prado and Mr. van Bommel, and the members of the supervisory board, Mr. van Pernis, Mr. Schumacher, Mr. Kreutzer, they are all present here today. Also present today is Mrs. Stefanie Kahle-Galonske, who we wish to nominate for the membership of the supervisory board. As I just told you, the meeting will be conducted in Dutch. Only the presentation of the CEO is in English, and his slides will also be in English.
But as I mentioned, there is simultaneous translation, and as you know, you may put your questions in English or in Dutch regarding his presentation. We have a live webcast in both English and in Dutch, and that covers the whole meeting, and it is available on the website of the company. Shareholders who are not present here today may listen in to what is being discussed. The results of the voting items will, after the voting on the item in question, be placed on the website of the company within 15 days. It is possible that the number of abstentions, as projected in the room after the voting on the agenda item in question, will slightly deviate from the number of abstentions that you will find on the website after the meeting.
This slight discrepancy may arise because the non-voting, for some technical reasons, will not be able to be deemed an abstention until after the meeting. Those of you who leave the room during the meeting are requested to go to the registration desk. The voting card will be taken from you and will be given back to you after you return to the desk. This is for registration purposes of the represented capital during the meeting. I give you some instructions regarding the voting. Those of you who wish to vote as a proxy must have registered as such prior to the meeting with the registry, the registration desk. There is electronic voting with the use of voting pads, and prior to the adoption of the financial statements, agenda item four, we will have a test vote, a dry run.
And finally, I'd like to ask you all to switch off your mobile phones, or on mute, in order that we will not be disturbed during the meeting by all those very interesting and fun ringtones. And then, I'd like to continue with agenda item two, which is the report on the financial year 2016. This item is a discussion item, and our CEO, Chuck del Prado, will give a presentation, followed by questions and a discussion. And Chuck, the floor is yours.
Thank you, Jan. Welcome to all of you. Thank you for joining us at the 2017 AGM of ASM International. Welcome here to people in Amsterdam, but of course, also the people on the webcast. Before we start the presentation, I would like to refer to our cautionary notice statement, which is now on the screen. In the past, we've always we always were referring to this as a so-called safe harbor statement. But since we have changed from U.S. GAAP to IFRS, we now call it cautionary notice statement. Okay, we would like to provide you with an update on the company in the following way. So as you can see, we have five chapters.
First of all, how was the semiconductor capital spending in last year? Subsequently, we will address ASMI's results in 2016. And the results, initially, in that part of the presentation focused on the financials, including an overview on shareholder return, followed by an overview on the corporate responsibility in 2016. And then, subsequently, we will share with you the product and business highlights in 2016. And then we will close the overview with a market outlook and conclusions. Well, okay, probably went too far now. Okay. All right, so let's now start with reviewing the semiconductor capital spending in 2016. All right.
To our company's front-end operations, the most relevant capital spending is the so-called wafer fab equipment segment, WFE segment of the industry. This slide shows to you the spending on wafer fab equipment in the time frame from 2011 until including last year. It includes WFE, so wafer fab equipment. It includes, besides deposition, the segment in which ASM operates. It also includes lithography, the segment that ASML operates in. It includes etch, it includes metrology, how you measure the performance on the wafer, and a few more segments. What you see in orange is the foundry segment contribution, in gray, the logic segment contribution, and memory in blue. Memory consists of DRAM and NAND.
Okay, so the WFE market increased strongly in 2016 by, as you can see, 11%. And in looking at the different industry segments, memory was again the strongest segment in 2016. That was also the case in 2015. But mostly due to NAND, which grew by 48%, driven by so-called 3D NAND. DRAM, compared to 2015, was down about 20% in 2016. And logic was up about 8%, and foundry spending was up about 11%. Both logic and foundry were driven by an initial ramp in the 10 nm technology node. Finally, spending in the second half of the year was stronger than in the first half of the year.
All right, so now let's review ASMI's 2016 results within the just discussed industry environment. So, okay, so let's start with reviewing ASMI's let's say key highlights last year. ASMI's sales, first of all, decreased by 11% in 2016. The sales decrease was caused by a drop of the single wafer ALD market in last year. After three consecutive years of strong double-digit growth of this so-called single wafer ALD market, and ALD standing for atomic layer deposition, this market contracted in 2016. A strong increase in logic and foundry in 2016 could not offset the declines that the single wafer ALD market experienced in memory in 2016.
In memory, we saw lower demand in DRAM, which was still a strong market driver in 2015. Yeah, and secondly, in 2016, the industry went through a rapid transition in NAND, from planar NAND to the so-called 3D NAND. And in 3D NAND, the early device generation hardly required single-wafer ALD. So the combination of a slowdown in DRAM across the board and transition in 2D from 2D to 3D NAND, initially, triggered lower single-wafer ALD demand for the market as a whole in 2016. That is currently changing. We won our first customers in NAND in 2016. And as of Q3 of last year, order momentum started to build.
Looking at the calendar and fiscal year 2017, 3D NAND is expected to be a meaningful driver, not only to the single-wafer ALD market, but also to ASML specifically. Combined with continued strength in logic foundry, 2017 will again be a year of clear growth of the single-wafer ALD market. That is our belief. Despite the drop in 2016 sales, we managed to keep gross margins stable at 44%. The solid performance reflects the positive impact from the programs that we implemented over the last several years to further improve the efficiency and flexibility of our manufacturing and supply chain operations. As a consequence, we have reduced the fixed cost element of our cost of goods sold.
Operating expenses remained under control. SG&A expenses, for instance, were 5% lower, while our R&D expenses increased to facilitate the opportunities that come across this year, which were mainly ALD and epitaxy related. So the effect of lower net profits for ASMI was partly offset by a recovery in the profit contribution from ASMPT in 2016. Free cash flow was EUR 31 million last year. Besides the low results, the cash flow was also impacted by the higher sales in the second part of Q4, causing higher working capital requirements at the end of the year.
Finally, we continue to deliver on our commitment to return excess cash to the market to the amount of EUR 140 million in 2016. So let's now look at ASMI's P&L in a little bit more detail. On the left column, it shows 2016 and 2015. The orange is 2015, the red is 2016. The right-hand columns show results on a quarterly basis, up to including Q1 of this year. On the right-hand side, you see Q1 of this year.
What it shows is that quarterly sales were relatively stable for the first three quarters of 2016, and in Q4, sales really picked up to a high level of EUR 173 million. For the full year, sales dropped by 11%, as addressed before, underperforming the wafer fab equipment market, which increased by 11%, as we addressed on the former slide. Gross margins continued to be steady at the level of 44% in each of the quarters of 2016. The quarterly variations within the year were mainly explained by mix differences.
Our target remains to run operations at a gross margin percentage with level of low- to mid-40s%, barring a market downturn, for which the target is high, the high 30s level. Operating expenses were under control. SG&A was down 5%. Total R&D increased slightly by 2%, which was the balance of an increase in 2015. So EBIT margin decreased from 17% to 14%, and mainly due to lower sales. From 17% to 14%, and mainly due to lower sales. And the net result of ASMPT attributable to ASMI strongly increased again from EUR 35 million to EUR 65 million, thanks to a strong recovery in the results of ASMPT.
The reported net results of ASMI remained impacted by so-called PPA related to the deconsolidation of ASMPT in 2013, as many of you will know. Tax was EUR 2 million negative in 2016, compared to EUR 5 million positive in 2015. The effective tax rate is still very low due to R&D tax credits in mainly the Korean market, and compensable tax losses from the past in the Netherlands, for which no deferred tax asset was recognized. In Q1 2017, so on the full right-hand side, sales dropped compared to Q4, but this is fully explained by timing differences. The order intake and backlog increased strongly in Q1.
But sales-wise, this was more reflected; it will be more reflected in the Q2 full quarter, on which we will formally report in July of this year. Gross margins remained relatively stable in Q1 of this year. Net results was impacted by currency translation effects in the financial results, and a loss of EUR 7 million in Q1 versus a gain of EUR 19 million in Q4. Since a dollar company, ASMI keeps a big part of its cash in US dollars. Okay, so looking at our balance sheet, this slide will take a lot shorter than the former slide. ASMI remains debt-free. Balance sheet continues to be very solid.
The drop in the cash position reflects the EUR 140 million cash spent on share buybacks and dividends. And investments in associates reflect the approximately 39% share in PT at the end of the respective periods. And the fluctuation in the value of PT is mainly related to currency movements. The equity position of ASMI further strengthened in 2016. And finally, the slide shows that in Q1 of this year, cash remained stable, which was the balance of a positive free cash flow mainly offset by share buybacks. This graph shows our working capital, both in euros as in days, top part in value euros, bottom part in days.
After major reductions in 2013 and 2014, we have been able to maintain working capital at a relatively low level, reflecting a continued focus on capital efficiency. And in Q4, our working capital did increase, and while the quality and the underlying level of working capital remained healthy, this increase was impacted by the back half-weighted character of sales in the first quarter of last year, as well as a rise in inventories in anticipation of increasing shipments in the first half of this year. At the end of 2016, days of working capital amounted to 82, up from 69 days at the end of 2015. And at the end of Q1, days of working capital increased to 86 days.
Okay, on the cash flow of the company, in 2016, our cash flow dropped due to lower profitability, which in turn was a result of lower sales. And, it was also caused due to a substantial outflow for working capital, as just discussed. As mentioned earlier, the outflow for working capital was mainly explained by the increase in working capital in Q4 of last year, due to the phasing of sales and anticipation of higher shipments in the first half of this year. Capitalization of development assets and capital spending remained relatively steady. Dividends received from ASMPT dropped, reflecting the lower profits of ASMPT in 2015. We continued our share buybacks. In combination with dividends, we returned, as we touched on briefly in the earlier slides, we returned EUR 140 million a year.
Free cash flow turned positive again to a level of EUR 20 million, as working capital decreased as expected. So this shows the historic performance of net sales, which are the orange bars, and EBIT, which is the gray line. It shows that, despite the dip in 2016, the period since 2010, because it shows all the way from the left, from 2010, has been very successful for the company. The last six years, we grew our sales with a CAGR, so compound annual growth rate, of 11%, compared to a compound annual growth rate of 2% for the wafer fab equipment market in total.
Since 2010, we increased the EBIT margin from single digits, 8% in 2010, to a solid double digit, 17% in 2015, 14% in 2016, while at the same time stepping up our R&D investments in a significant way. Looking at sales in 2016, logic foundry customers were the key driver, as the 10-nanometer transition drove substantial higher revenue. On the other hand, memory dropped substantially. Memory was the largest segment in 2015, especially DRAM, but we also had decent revenue still from planar NAND. Sales dropped again in Q1 of this year, but we're at a higher end. But we ended up at a higher end of our guidance, the guidance we earlier on gave to the market. The sales drop in Q1 is explained by the phasing of shipments to customers.
The underlying demand trend actually improved again in Q1, illustrated by strong bookings, and this is expected to continue in Q2, as we also showed in our guidance that we gave to the market last month. Looking at the historic bookings and backlog, bookings shown in gray, and the backlog, the orange line, for ASMI. While bookings were at a decent level in the first half of 2016, we started 2016 with a substantially lower order backlog than in 2015. Bookings dropped further in Q3, mainly due to phasing, and picked up strongly in Q4 of last year. For the full year, bookings increased by slightly 2%.
At the end of 2016, our backlog was 23% higher versus the end of 2015. In terms of customer segments, bookings in 2016 were clearly led by Logic Foundry customers. In Q1 of last year, bookings picked up in the Logic segment, driven by the 10-nanometer technology node, followed by Foundry in Q2, also driven by 10-nanometer investments, which remained strong throughout the rest of 2016. Similar to sales, this is in sharp contrast to 2015, and so also on the booking side, when memory was the key driver behind bookings. Memory bookings dropped meaningfully early in 2016, reflecting the lower investments in DRAM.
As we also touched on when we talked about the industry as a whole, and a sharp drop in planar NAND, as a result of the 2D to 3D NAND transition that we talked about in the industry a few slides ago. In Q3, we booked the first HVM, so high volume manufacturing orders for 3D NAND, which further increased in Q4 and also in Q1 of this year. Combined with continued strength in Logic Foundry, both our order intake and backlog reached new record highs in Q1 of this year. So order backlog again reached already a high in Q4 last year, but another record high in Q1, and the same our our backlog.
So let's now in the next few slides provide you some color on ASMI's performance in terms of three things: in terms of shareholder remuneration, secondly, total shareholder return, and thirdly, implied value of front-end. So long-term sustainable shareholder value creation is a key priority for ASMI and for ASMI's management. We have proposed a stable dividend of EUR 0.70 per share for your approval today. This is the seventh consecutive year that we pay a significant dividend, and it reflects our policy to pay a sustainable dividend. Which means that we aim for a dividend that we can sustain over time and through the cycle. ASMI remains also committed to use excess cash for the benefits of our shareholders.
Last year, we completed our second EUR 100 million share buyback program, and we announced a third one last October in 2016. This was initially for an amount of EUR 50 million, but last March, so this March, we increased that to a size of EUR 100 million. As of last week, we completed 61%, or an amount of EUR 61 million of this program, which equals to about 1.2 million shares. And by the way, this is also updated on our website on a weekly basis. Since November 2014, we bought back a total of approximately 6.6 million shares, or 10% of the total issued share capital. Currently, we hold approximately 4.5 million shares in treasury.
As this more than sufficiently covers commitments for employee stock options and share programs, we are proposing the cancellation of 1.5 million treasury shares for your approval today. In 2016, we spent, as we addressed earlier, EUR 140 million on share buybacks and dividends, up from EUR 116 million in 2015. Since 2010, we have returned in total, and I will spell it, 800, eight hundred million euro in cash, in different forms to the financial markets. Eight hundred million euro since 2010. On top of which, which we will also discuss later, we intend to use the proceeds of the recent reduction of our stake in ASMPT, for a new share buyback program.
Looking at ASMI, so this is the second angle, so that announced on the last slide. Looking at ASMI's total shareholder return in 2015, 2014, 2015, versus Applied, Lam and ASML, some of our competitors slash colleagues in the market. And then it shows it measured by looking at the historical performance of the share price, dividend payouts, and redistribution of capital. And if you look at the graph, you can see the total shareholder return over the last two years amounted to almost 60%, basically in line with the peers. Below Lam, but relatively in line with Applied Materials and above ASML. So third angle, the implied value.
The implied value of our consolidated business, that's being the difference between the ASMI market cap minus the market cap value of our ASMPT stake, corrected for excess cash. That's the way we calculate it, and that implied value has been stable around the EUR 1 billion level in the last two years. Taking a longer-term view, it is up substantially compared to around -EUR 400 million to -EUR 500 million five years ago, in the months before the announcement of the study at the AGM of 2012. So again, five years ago, -EUR 400 million to -EUR 500 million, now around EUR 1 billion positive. Apart from driving a positive share return, this development also means that front-end has become a meaningful driver of the ASMI share price.
As we have stated many times in the past, and we would like to reconfirm again today, further driving the implied value remains an important commitment for the company and for the company's management. So as you all know, late April this year, ASMI's shareholding in ASMPT was reduced from 39%-34%. As a reminder for some of you, in 2013, we reduced our stake in ASMPT from 52%-40%, so that was when we basically deconsolidated. And this was aimed to improve the Front-end implied value. The deconsolidation of Back-end was targeted to increase the focus in the market on the Front-end results. At the same time, that step allowed us to maintain a significant stake, which strategically served us well by ensuring continued financial strength and stability of our company.
Combined with an improving front-end performance, this step brought the negative implied value from EUR 400 million to EUR 500 million negative, as we just discussed, to that EUR 1 billion positive, as discussed in the previous slide. In the last two years, the implied value was stable, did not improve further. When we discussed our Q4 earnings, early March, we have clearly stated that the board was not satisfied with this stable development, that this development did not reflect the underlying value of front-end. We took this into account in our latest strategic review and decided that a 5% stake sale and using the proceeds to buy back ASMI shares was the best step as part of our commitment to drive long-term shareholder value creation, long-term shareholder value creation. With a 34% stake, we believe this strategic element of financial strength and stability is still safeguarded.
Let us now briefly address the return on our 39% shareholding in ASMPT last year. Total sales as reported by ASMPT increased by 10% to HKD 14 billion, or $1.8 billion, in 2016. Sales of the Back-end equipment increased by 23% last year. Apart from a recovery in the overall Back-end market, ASMPT did well in specific market segments, such as equipment for CMOS image sensors. A few more segments, and we'll touch on that on the next slide. Sales of SMT solutions dropped by 4% for the full year, but returned to growth in the second half of the year. ASMPT increased gross margins from approximately 36%-37.6%, in 2016. Momentum in the first part of 2017 has continued to be strong.
In Q1, as you see on the right-hand side, Q1 of this year, revenue increased 31% year-on-year, gross margin by nearly 700 basis points year-on-year, and adjusted net profit by 312%. With regards to ASMPT, overall, their overall business, our view is that they are well on track. The revenue of $1.8 billion in 2016 was split between Back-end equipment, representing slightly more than half of revenues, followed by 36% in SMT solutions, and 13%, 13%, in materials. In both Back-end equipment and SMT, ASMPT is the number one market leader. In materials, ASMPT holds the number four position in the lead frame market. The company has the broadest presence in the market, in the main, in the mainstream volume markets, but also in specific niches.
In LED and CMOS image sensor, for instance, ASMPT has a very strong market share. Both segments have been doing well in recent periods. LED, driven by general lighting and large display panels. CIS, driven by a trend of increasing number of cameras and higher quality of cameras in the newest high-end smartphones, and increased use of cameras in, for instance, automotive. We believe also this 3D sensing will further drive the demand for ASMPT's CIS solutions. After losing some market share in 2012 in back-end equipment, the company has fully regained this share in the last few years, and now has a number one position in most of the segments in which it is active. The SMT Solutions business has been successful.
Since the acquisition in 2011, ASMPT has consistently outperformed the SMT market. So SMT stands for surface mount technology. Since the acquisition in 2011, they have consistently outperformed the SMT market as a whole, almost doubling its market share by expanding in Asia and in the smartphone supply chain. In 2015, it has overtaken the number one position in the market from Panasonic. In the last several years, ASMPT stepped up its focus on innovation. R&D investments has more than doubled since 2010. ASMPT spends about 10% of its investments, just 10% of its equipment revenue on R&D, and these investments are now paying off.
The company has a strong portfolio in advanced packaging, with a broad offering in, for instance, wafer level, as well as panel level, fan-out solutions, and a number one position in thermal compression bonding. Next to internal developments, ASMPT has also been building a strong track record in acquisitions. In SMT, of course, where the acquisition of the SMT, Siemens SMT's activity in 2011 was the start for ASMPT in this market. Followed by the acquisition of DEK, a couple of years ago, which further broadened ASMPT's presence. In back-end equipment and materials, ASMPT also did some M&A, which broadened its presence to laser dicing and advanced substrate materials. And last, addressing the last bullet, structural steps also ASMPT took to strengthen its manufacturing model.
That has paid off significantly. Compared to a historically vertically integrated, backward integrated model, it is now outsourcing about 30% and is making more use of subcontractors to deal with seasonal swings in demand. The cost base has been restructured. Headcount in China is, for instance, downsized to a level of to the level of around 2,009. In SMT, the company is moving more of the sourcing and manufacturing to the Asian environment. All this has contributed to solid margin improvements, almost 38% in the full year of 2016, and further improving in the first half of 2017. Very importantly, a more stable development in margins we can see at ASMPT.
In short, we believe ASMPT has the right strategy in place for long-term value creation. Execution is strong, and the company is executing well against its long-term strategic targets, demonstrated by the solid financial results it is delivering. In the next few slides, we present a summary of the company's status on corporate responsibility, as we have done consistently over the last couple of years. Now, this year, we published our third annual corporate responsibility report, and we want to share the highlights of our progress in this area with you on this slide.
First of all, the transparency benchmark scoring of our 2016 CR report showed an improvement from a score of 58 out of 200 in 2015 to 126 out of 200 in last year. We were honored to receive a Key Customer Recognition Award, in which our safety leadership was a key factor. We set also last year, five—we set 5-year goals for further improvement of our environmental performance and are already making progress against these goals, as reported. We further strengthened our structural control of labor hours for manufacturing and service delivery to make sure that our hourly people are working at a responsible and sustainable level.
In our supply chain, 90% of our defined critical suppliers acknowledged their commitments to our supplier code of conduct. Looking at health and safety, in last year, our safety results continued to be positive. Following three consecutive years of significant improvement, our 2016 injury rate and recordable injury rates, so the RCR, remained consistent from 2015 at a lower level. We further strengthened our product safety by design team by hiring a recognized industry leader. So we hired an industry leader to really boost our focus on product safety by design.
And we hired that person in late last year to lead our global programs and set objectives for strong further progress in this year and the years to come. And we are continuously identifying and reducing key safety risks across our organization to improve safety for all our employees and, of course, customers also. And as part of that, we recently completed, for example, our engineering lab and manufacturing safety surveys. And those surveys will help drive further improvement opportunities in 2017 and beyond. And benchmarking shows that our safety program and performance are among the best in our industry. But we never, of course, should be satisfied and we can rest in our journey to achieve and ultimately sustain zero harm.
So with regard to this the third and final slide on corporate responsibility. With regard to our environmental initiatives, in 2016, we began a new five-year environmental improvement target cycle. Our environmental improvement targets continue to align well with overall industry standards and within our technology sector. We made strong progress in 2016, in this first year of this 2016 to 2020 target cycle. First, please note on the upper left-hand side, the greenhouse gas and water consumption are normalized to R&D investments. The greenhouse gas 4.4% reduction compared to versus 2015 baseline, towards a 5% reduction targets. That's where we are.
It's for water consumption we achieved a 6.7% reduction from the 2015 baseline towards a 10% reduction target. Our landfill diversion continues to increase annually, up to 72% in last year, towards our greater than 90%, 90% target. However, despite these one-time improvements, progress must be further improved and sustained, of course, most important towards 2020, to meet these ultimate five-year targets. All right, so let's now look at ASM's products and business highlights. So this slide shows you an overview of ASM's products. Within wafer fab equipment, ASM focuses, as we touched on briefly in the beginning, on so-called deposition equipment. So building thin films to really build the chip.
Deposition of thin films on a chip. This deposition equipment market is about $8 billion in size last year, as estimated by Gartner, one of the market research firms. Many deposition steps are critical for the extension of our device-related technology, our customer device-related technology nodes. So as we go to smaller geometries, we go to more advanced technology nodes, and then quite a few deposition steps become more and more critical, especially ALD steps, atomic layer deposition, which is, you know, the sweet spot for this company. ASM's Pulsar XP ALD product, which is shown on the lower left-hand side, for high-K gates, is qualified by nearly all logic and foundry manufacturers. ASM's Emerald XP is used in the logic foundry market for metal gate related applications.
ASM, ASMI's XP8 ALD tool, which is shown on the upper right-hand side, is used by memory, logic, and foundry customers for high-volume manufacturing for space-certified double cutting, for liner films, and several other applications. Many new layers are emerging for our ALD tools, which we will address a bit more in the upcoming slides. In epitaxy, which is shown on the upper left-hand side, we recently won new business for advanced node CMOS transistor applications from a leading foundry customer, who we announced it as part of our Q1 results. This is the direct result of extensive R&D investments on our Intrepid products, with the aim to expand our presence in the overall Epi market.
We are also focused on epitaxial films for logic devices for quite some time, which is growing—which is also growing due to power management devices for mobile products and, for instance, automotive. The epi total available market in 2016 was around $600 million. In PECVD, which is shown on the upper right-hand side also, it's XP8 for ALD and PECVD. It's the same platform, basically, that is being used, only different reactor chambers. In PECVD, we are a leader in so-called extreme low-k films, an advanced but relatively small part of the PECVD market. We are pursuing new PECVD opportunities based on our high productivity XP8 platform. Again, the platform is common for both plasma ALD and plasma CVD, so we can build on that.
And final, and last but not least, our vertical furnace is known as a low cost of ownership, workhorse, workhorse tool in selected markets and applications. Most recently, vertical furnace growth has come from more and more applications, such as sensors for the automotive sector. Okay, so what are the headlines since the last AGM last year? First of all, the single wafer ALD market showed a drop in 2016. We discussed that earlier. And it showed a drop in 2016 after three consecutive years of double-digit growth, and market outperformance. The single wafer ALD market drop was caused by memory weakness.
Well, DRAM was weak across the board, and in the course of the year, it became clear that significant new investments in new ALD tools for the transition to the 1X node were pushed out, which led to weaker than expected development of the overall single wafer market. ASM, at the same time, although there was a weak environment for demand in 2016 in DRAM, remains very well positioned to benefit once customers, DRAM customers, start to invest again in new capacity. Which is not expected to be very strong in the short term. As we stated, we expect the DRAM market only to go through a modest recovery in 2016 - or in 2017.
So for NAND flash, 2016 was, as expected, a transition year for the ALD market. ALD demand for multiple patterning in planar NAND, which was still a healthy driver for our business in 2015, largely disappeared in last year, as most investments went to 3D NAND, where multiple patterning is not needed due to larger line width structures. At the same time, the need for new patterning, single wafer ALD application, was limited still in this phase of the 3D NAND transition. As customers transition to more complex, higher stack devices, we believe the single wafer ALD market demand will increase step by step. And first significant PTOR selections, so process tool of record selections, took place last year.
As a result, in the third quarter and in the fourth quarter of 2016, we booked 2 orders in for 3D NAND, and further accelerating these 3D NAND tool orders further accelerated going into Q1 of this year. As the customers where we have been selected ramp HVM this year, so high volume this year, we expect a significant double-digit increase in our 3D NAND-related sales in 2017. So it's a big difference compared to 2016. 3D NAND did not contribute that much to our revenue in 2016. In 2017, that is changing in a significant way. In logic foundry, we substantially increased our share of wallet during 2016.
Single wafer ALD is a key enabling technology for the so-called transition that we went through in logic foundry from 16, 14 to the 10 nanometer node. Compared to the previous 14, 16 nanometer node, the number of single wafer ALD layers has increased significantly. We believe we have strategically strengthened our position, have strategically strengthened our position with leading customers in logic foundry during the year. In foundry, our revenue increased significantly, north of 50% year-on-year to a new record high and well above previous levels for the foundry segment. On February 23, 2017, ASM received a Supplier Excellence Award as one of 5 equipment suppliers from TSMC, equipment and technology.
This follows. It's the first time in the history of the company that we received this kind of an award from TSMC. This follows with the so-called Intel PQS Award from Intel Corporation that we received, also for the first time, in March of last year. Our increased R&D investments in EPI begin to bear fruit, as we were selected for high volume by a top foundry customer for a mainstream CMOS EPI application. The first order intake was received in Q1.... All right, this slide shows our revenue, how our revenue is divided among the top 10 customers. First of all, among the top three, and then the other, so the orange is top three, and the gray part is the top four to top 10 customers.
Customers as, yeah, ranked in terms of capital spending. It shows that the top that the top 10 share was about 80% over the last years. Spending by the top three slightly increased to a bit more than 50%. This was mainly driven by the logic foundry segment, that this happened. In 2016, we continued to have all the top 10 players in our industry, as ranked by capital spending, as high-volume customers for our ALD products. And the first time we achieved this, you know, this high-volume engagement, with the complete top 10, was in 2015. All right, ALD. So following...
So looking at, specifically the single wafer ALD market, for 2017, we expect, as we touched on briefly before, a clear improvement in this part of the market, driven by a substantial double-digit increase in 3D NAND contribution and by continued strength in the logic foundry segment, through further 10-nanometer ramp in that segment, as well as early 7-nanometer investments. Longer term, we continue to expect healthy growth for ALD, which is expected to grow at a faster rate than the wafer fab equipment market as a whole. We forecast the single wafer ALD market to reach a size of $1.5 billion by 2021. Last year, we still expected the market to reach $1.5 billion by 2019.
Our updated forecast is mainly explained by lower expectations from the DRAM segment, as we touched on before. DRAM went through a more than unexpected slowdown. Still, our updated forecast implies a solid double-digit growth path for the coming years. Logic foundry expected to remain a strong contributor. And looking over a multi-period of time, in the transition from 14, 16 to 10, and subsequently to the 7-nanometer node, we expect the single wafer ALD served available market in logic foundry to more than double in total. Taking a longer-term view, we also see 3D NAND as an important driver behind the expected double-digit growth of the overall single wafer ALD market in the coming years. General drivers, to conclude this slide, are the introduction of new materials and complex chip architectures, such as advanced FinFET technology, that are all crucial enablers of so-called Moore's Law.
This plays to the strengths of ALD, as more highly precise and conformal film deposition is required for the critical steps, process steps in leading-edge semiconductor manufacturing. Okay, we get to the final part of our item two presentation, young, so, and dear audience. Let's now finish the presentation by looking at the market outlook. So with regards to the key drivers, applications that that should keep fueling the growth of semiconductors and semiconductor equipment. It is an overview made by Gartner, that we have used before, and so to some of you should show look more familiar. This shows, this slide shows a big, big part of the semiconductor sales, broken down by key end product segments, and forecasted towards 2021.
Traditional desktop and notebook PCs continue the declining trend, as this shows, and as do tablets. Also, mobile PCs and hybrid tablets are growing. So, the key driver for growth, according to Gartner, is mobility. So mobility, representing by smartphones and ultra-mobile computing devices, in particularly in emerging markets, where basic smartphones are major devices. While volume growth is moderating, the semiconductor content per smartphone is still on the rise. The growth of users of mobile devices will also serve to drive the growth of communication, cloud, and server infrastructure. Another significant growth application is solid-state drives, so-called SSDs, which drive flash memory growth. You know, we talked about 3D NAND. SSD was up 20% in 2016, and long-term, five-year compound annual growth rate is about 15%.
Some traditional categories are now key growth drivers. So traditional categories such as automotive, industrial electronics, and servers. Another emerging major category for semiconductor devices is so-called Internet of Things. And the Internet van dingen, ik geloof dat wel de vertaling is. Mijn Engels is beter dan mijn Nederlands, dus ik kan beter-
...My English is actually better than Dutch, so I've got to stick with Dutch. I'm sorry.
For the Internet of Things, which is driving the growth within many of the categories in the chart, including communication, industrial, automotive, and service. So Internet of Things, the sensors and so on, on a product level in society, they drive a lot of data traffic in some of the areas that we are showing here. That's what was meant with my earlier comment. Gartner estimates that by 2020, the IoT will encompass between 25-30 billion devices. An exploding number of connected devices will also create a massive increase in data, which will need a support infrastructure to process and store it. These end market trends are likely to create a growing demand for more advanced semiconductor devices.
Manufacturing of these advanced devices is expected to require leading-edge processing tools, including ALD, which bodes well for our industry and for this company. Okay, 3 more slides. Looking at the outlook for the wafer fab equipment market according to Gartner. This slide shows the wafer fab equipment market forecast broken down by technology node. Yeah, it's somewhat of an eye chart, but what you do see is that the higher categories of the bar chart, so the blue part is 22 nanometer. The gray part on top, or the white to gray part on top is 14 nanometer. Then green is 10, and then or purple, orange, or what is it? Rose or so, the color on top is 7 nanometer. Pink or rose. It's 7 nanometer and below.
And the key thing is, it's the more advanced nodes are really the sweet spot for ASML. So for 2017, Gartner expects another year of solid growth in the wafer fab equipment market, 9% growth. Looking at the different segments, it is expected that the spending in logic foundry segment will be healthy in 2017 due to continued transition to the 10 nanometer and early 7 nanometer investments. As far as DRAM sector is concerned, market watchers expect a recovery in spending in 2018 following the low spending in 2016, which appears to have helped cause somewhat of an undercapacity situation.
DRAM makers were investing in 2X capacity and 1X DRAM technology, appearing in the 20 nanometer, 22 nanometer node in this chart. NAND flash spending is forecasted to be up again in 2017, with the majority of spending in on 3D NAND. 3D NAND spending appears in the 45 nanometer node in the chart. It's somewhat funny, but it shows up in the 45 nanometer node, but it is, in terms of ALD, it is a very advanced application, so that is somewhat confusing. So you have to look at the advanced nodes, 22 nanometer and beyond, but some of the growth in 45 nanometer is also relevant to ALD from a 3D NAND point of view.
And 3D NAND spending in single wafer ALD is significantly growing in the course of this year based on non-patterning applications. And it's very important. While ALD spending in planar NAND in the past was primarily driven by patterning applications. Okay, taking a longer-term view, in 2017, 2018, the relative and absolute contribution, now I get to the colors, contribution of the advanced nodes is going to increase, driving growth for the WFE market as a whole, according to these estimates of Gartner. New nodes, these new nodes are the sweet spot for ALD and to a certain extent, also for EPI. This is why we believe ASML is strongly positioned for these advanced nodes.
Overall strong growth in spending on these advanced nodes, combined with a growing number of ALD steps as the new nodes are expected to drive continued healthy growth for the ALD market in the coming years. All right. Our short-term company financial outlook based on all this for Q2, as indicated in our Q1 2017 press release of last month, is that, first of all, based on our current backlog and our current visibility, for Q2, we expect sales levels of between EUR 180 million and EUR 200 million, midpoint of EUR 190 million on a currency comparable level. And the order intake in Q2 is expected to remain at a high level.
It was EUR 204 million in Q1, and it is expected to remain at a level between EUR 190 million and EUR 210 million, also on a currency comparable level. So that's the short-term financial outlook. Okay, final slide. This all brings me to some concluding and summarizing remarks on behalf of the company. First of all, due to a drop in the Single Wafer ALD market, our revenue decreased by 11% in 2016. At the same time, as we discussed for 2017, a clear improvement in Single Wafer ALD market is expected. Secondly, gross margins are stable at 44%.
Operating expenses were under control. And, so and also strategic achievements during the year were, first of all, strong expansion of our position, our share of wallet in logic foundry, among the logic foundry customers. Secondly, first HVM high volume orders in the 3D NAND segment, of which we all will benefit strongly in 2017, much more than in 2016. And the first steps were made in mainstream CMOS epi market, as we just discussed, a $600 million market. Further progress was made in on corporate responsibility. Our transparency benchmark score more than doubled year-on-year.
Finally, the company believes to be well-positioned for an increased number of ALD applications in the next technology nodes, in Single Wafer ALD market that is believed to grow to a size of approximately $1.5 billion by 2020-2021. That was my introduction. Thank you for your attention here in Amsterdam and in the webcast.
Thank you, Chuck, for this presentation.
Thank you, Chuck, for that very extensive and elaborate presentation. And then I'd like to give the floor to anyone who would like to ask questions or make comments in regard to what you've just heard, the presentation that Chuck made just now. I think us Dutch can be rightly proud at ASMI, which is an incredibly inventive company, and in view of the fact that an increasing number of patents are granted, I think they are truly on the right track. But I have a couple questions. And first of all, how high a percentage of patents applied for are actually granted? How many granted patents are actually used, and would not it be lucrative to have some patents licensed for others? Because you can get a lot of licensing fees in that way. And then, Moore's Law, is it going to continue ad infinitum?
I can't imagine that it would, but I think, yes, it has proved to be true up to this point. I read something about Photonics technology. Is that something very different, or is it also interesting for ASMI? Photonics. And then, the back end, has ASMI anything to say in that company? Because you still have a small part in PT now. You mean PT, right? Yes. In PT, we still have a small stake now, well, smaller than before. And is that still... does that still have any interference with that company? Do we still have any interference or control, or is it doing it at its own strength, and do we simply rejoice in its success? And then finally, ASMI is a wonderful, beautiful company. Was there ever a rich purchaser who knocked on your door to try and take it over?
Because I think this would be a beautiful bride if somebody proposed a marriage partner. Thank you. And incidentally, usually it isn't the mother that would knock on the door to wed a daughter or son, it would be the father. But neither a father nor a mother has knocked on our door to offer marriage on behalf of his or her daughter or son, so I may reassure you. You asked us a number of questions, in particular in the area of patents and technology, and I think the most tactical guy on this side of the table is definitely Chuck. And so I'd ask Chuck, please, to give the answer concerning patents and how we might use them maybe to license, give licenses. As I understand it, we do, in fact, give licenses and receive license fee income.
And then the photonics branch that you mentioned, photonics, I'll respond to that. I'm not a pure technician, of course, but as far as I know or what is told, what I'm told, Moore's Law continues to continue, and that partly depends, of course, also on the equipment that is being used. You know, the sky is the limit. It seems ASMI equipment is an important link in many of these things, but Chuck may tell you more. Chuck, please. All right. As to IP, intellectual property, the first question about patents, how large a percentage of things do we ask for patents for? How many do we get?
Well, a substantial percentage of patent applications are actually successful, and we have a very solid patent application screening process, because many proposals are made on an annual basis, and we do make stringent selections for quality, of course, of any given proposal, possible filing, and we also look at the possible impact. And if we compare ourselves in terms of IP with some of our competitors, then maybe in the numbers we are not the highest. We don't have the same numbers of filings. Some of our competitors, for example, also have other products that they supply, and so the total number of applications may be higher. But we look at the impact of IP, and that is the way that we gauge this. What is the value in terms of the impact of a filing?
They are often very high for our patents, and so that seems to be a strength of the company. Well, if you look at how many patents are successful, if you look at that, well, yes, a large number are actually used. Actually, also used to make sure that you have a growing IP portfolio as a defensive instrument, which is also very important in this industry. Then you asked about licensing. Well, in two areas. Historically, you see that in the past we gave some batch ALD licenses. A number of ALD patents that we licensed for batch ALD, so not single wafer processes, where after there is one wafer at a time that is being processed per reactor, but batches. So for those batches, we licensed patents in the past, but not recently.
Incidentally, we also give licenses in the area of spares, and they are very specific components in our tool, which the client simply uses great numbers of and would like to stimulate a third party to make those spare parts for us. We outsource it, if you will, so that we don't have to do it ourselves, and then we just give them a license on our IP so that they can produce those spare parts for us. But I think it's more a royalty agreement in that, in such a case. Okay, so this is in the area of your first question, and then your Moore's Law question. Well, Jan has already said something about it. What an interesting question and a recurring one. I think if you go back 10 years, there are plenty of examples of people who said it's gonna stop here.
They said it 20 years ago as well, but it hasn't stopped yet, has it? And you keep reading about EUV. ASML is doing EUV as well. That is, lithography terminology, and, that can help to bring the industry further where it concerns going to smaller and smaller geometries. However, for deposition, if that EUV would really happen, if we just assume that, then from a lithography standpoint, if that makes it possible to go to smaller geometries, there will be growing demand for very advanced deposition, equipment that can actually place and deposit these very fine, geometries. And so that would be very good for ALD and be very good for ASMI. So I think we have to keep our excellent position in the market. And can you give us some example of a 3D product?
I know it's important, but in what equipment do I find that? Well, important question. 3D or three-dimensional is really used in two parts of the semiconductor world. It is used for the heart of the smartphone, for example, because that has a microprocessor in it, but also the heart of a PC, which really does all the calculating power. And there are transistors there that have 2D, so-called FinFET structures, or use those 3D FinFET structures, and that is for, for example, in the logic part of semiconductors. And now there is also 3D NAND, and that is 3D used in memory chips. And they, for example, ensure that in PCs - well, in the past, in a PC, for example, you had these magnetic disks, right? That could turn around, that would turn around.
But increasingly you see that, they are, solid state now, because the magnetic, disk has been replaced by chips that can store so much more information, so many more data. They become increasingly smaller and even need less battery power, consume less battery power. So that is partly thanks to more advanced ALD technology. At first call, we had planar NAND, but increasingly we use 3D NAND also, and in particular in a bigger server environment, for example. So there are examples in both, sectors, both logic and memory, where 3D technology is being used. And then you spoke of, photonics. Well, this is not something that is all that up to date at this point. It's not immediately urgent, and there's not been a rich parent yet, I think, proposing marriage for son or daughter. Jan answered that.
And then PT, have we any control in PT? Have we still any say in ASE? Have we any control in PT? Have we still any say in ASMPT? Oh, I think so. Peter van Bommel and I are both on the board of PT, and so we're directly involved in any strategic decisions there, the strategic planning and the reviews that they present. We're not immediately involved in the day-to-day running of that business, but any strategic decision made, we would be part of and involved in as board members. And naturally, there are other ways in which we have an influence there. But you don't help with technology there? Because, you know, you know, saying yes or no is one thing, but the way you're working here today, you probably can't work like that with them.
You can't tell them that you have an idea, and they must implement it. No, no, it's simply in, in the area of R&D, there is limited overlap between the two companies, obviously. Anybody else would like to ask a question? Good afternoon, ladies and gentlemen. My name is Robert Frake of We Connection, and we do, we deal in investor relations. And ASMI is a beautiful company, a type of family company, which fits the trading mentality of the Netherlands very well. And according to Deutsche Bank and ING, the share is very much undervalued. EUR 65 would be the target, easily reachable, they say, for the share. So if we would move towards that with gusto, it means the company is worth some EUR 500 million extra. And my question is: how will the two boards manage to get there?
In addition, in the Netherlands, we have beautiful companies, high-tech companies, and protective structures, I think, are very important there. Henk Kamp, our minister, is working on this, and wouldn't it be great if ASMI could make a contribution to it? Because there is that club, Eminence, who are, you know, sort of, little birds that have been pushed out of the nest by an invader who simply wants to get more profit. It's not what we like in the Netherlands, is it? We like long-term commitment. We would like to such investors to go and invest in other countries. Of course, companies could be taken over when they're not well secured. Existing passwords may be taken over or stolen or used, and perhaps you could develop something so that things may become more personalized.
It's not just for governments and companies that love internet, but also the mob and criminals think it's a wonderful growth market, the Internet of Things. And then there is Silicon Valley, and there is China, and there are hefty investments in both. How may we keep up in the Netherlands? Because these are truly mega investments. What might ASMI do with NXP, ASML, and Philips so that we can keep up? Your corporate identity is not all that consistent, is it? And what a shame that is, because after all, if you communicate, you have to be consistent. Let me give you two examples. You showed us a lovely video with smart cars and Tesla just before, but if I look at your head office, at the headquarters, there is a Porsche Cayenne. I don't know who it belongs to. You might tell me.
But we had Dieselgate, so if you're in favor of Tesla, why not drive Tesla and make sure that that is communicated worldwide? In addition, LEVs are on the way, light electric vehicles, they are coming, and the Birò, for example, is an example of that. A tank is only EUR 1, so that's 1 kilometer an hour, fuel-wise. And there's the Urbee, of course, in Amsterdam. There is the electric bike that you share. EUR 1 per hour, EUR 5 a day, costs even lower and perhaps useful in Almere. And then, of course, we were looking to your headquarters, the solar panels, but I looked at Google Earth, and you don't have any. Wouldn't it be great if next year your roof at headquarters is full of solar panels? And then there is your local responsibility. ASMI has a local responsibility.
At five meters, there's an Upfall shower company, which is the most conservative shower. You can save a lot of water and gas by using it. It got the innovation award this year. Wouldn't it be great if you could help with the development of the placing of, well, you know, the introduction of that shower? Will you? Is my question.
So we'll try and answer most of your questions, but I have to tell you, three of the gentlemen behind this table drive a Porsche Cayenne, so there you go. But one of us has a hybrid, so you know, progress is being made by us. You put a couple of questions regarding the share price and the defense rules or defense measures, and a question on, specific technologies, such as, safeguards against IoT, IoT rather, and solar panels, innovations, and local showers and stuff like that. ASM is an equipment company, and, these type of new innovations is being developed by the semiconductor chip.
... companies, they make the chip with the ASM equipment. So in some cases, it is not ASM that is leading in these specific technological developments. Chuck, may I ask you to answer questions regarding the defense measures, the share price, and maybe Peter can assist you there? Okay, thank you for your questions, sir. First, it was that 65 EUR for the share, and we are pleased that there are analysts in this industry that have put price targets which are well above the current share price. And why are we happy? We are happy because they acknowledge that there is great potential for the company. And, you know, the best way to work towards that, because you said, "How are you going to do this?" The best way is to just continue consistently. We are very focused as a company.
We focus on ALD, and we now have our first successes in EPI, and these are very difficult technologies with very high entry barriers. We have built up top relationships in the past five years with the top 10 companies, and that is how we got a good insight into their ALD programs. We have good relationships, we have good turnovers. We know what these clients need, what they want, because we took our time to build up the strong relationships, and we will keep on doing that. And then, as a result, there will be value creation. We really strongly believe in this. This is an answer to your first question. Your second question was to do with Minister Kamp, Henk Kamp, and some investors in this company. I see this rather than an observation on your part.
It's a bit difficult for me to answer that, and I do not think you asked for an answer. All I'd like to say in answer to this is your comments. We are happy with the interest, with the fact that the significance of this type of industry is being recognized in this country, and we realize increasingly more that we are a sober country with sober characters. We do not express ourselves too much, but we sometimes do have to stand up and make sure that we will retain these companies, retain these industries for this country. That's all I can say to what you said regarding this. It's important to acknowledge this and to deal with it carefully. And then, that safeguarding oil security, Jan already said we do not produce those things, but there is equipment that we produce for internet security.
It can be used, and there are many more opportunities for solutions these days, many more than 10 years ago, and 10 years ago. That is what we focus on. We listen very carefully what they need so that we can develop the right products for them. Silicon Valley and China, you mentioned. Can we keep up? Well, we can keep up very well. We compete every day, every night with Silicon Valley. Some of our competitors are in Japan, some in Korea, some in America, Silicon Valley. We've been competing for many years, and apparently, we're doing something right because we give them a hard time. We regularly do give them a hard time. China. China is developing very quickly, and the government is very committed to this, very committed to have good semiconductor business there.
And our contribution to China, the top line, is limited, but next year, for instance, there will be double-digit percentages of growth there, because we are really working hard on our infrastructure and our networks. All those new companies that are being incorporated there, we invest in talents in China. As we speak, right now, because there's huge potential in that country for the longer term. And you said something, the Internet of Things. Also, in China, there are opportunities for this. There are certain specific configurations of our equipment that focus completely on Internet of Things. Not always the most advanced, but competitive cost-wise for markets such as China. That was all I wanted to say about China. And then, the fleet of cars.
I've heard what you said, and we do have a corporate responsibility, and we're working hard on that, and we do have a responsibility, and we will manage by that increasingly more. We will manage by that increasingly more. And then you said something about solar panels. Solar panels. In Almere, I see a lot more rain than sun, unfortunately. We do have a branch in Phoenix. There's a lot more sun there. There's sun almost throughout the year. This is one of the sites where we really look into solar panels. No guarantees, mind you, but we're looking into possibilities there for solar... Yes, my name is Hans de Jager, and I represent the Investors for Sustainable Development. I hear people going, "Ahhh," in the room. First of all, I wish to compliment you on your annual report.
You've already said that you made some improvements, and, and we appreciate this. The industry benchmark, for instance, we're happy with that. You have some goals, CO2 emission goals, for instance, and you gave some examples regarding what you did. You mentioned Phoenix and possibly solar panels. Well, an air conditioning that is 20 years old is quite obsolete and needs to be replaced, and you must have made great strides. I fully agree with you is the answer, if you look at it from that point of view. But there is so much more focus these days on these types of things, and it's not because a unit, air conditioning unit, is 20 years old, that we have these ideas, but we see this around the world. Yes, I'm really happy that you're doing something towards this. Well, Mr. de Jager, your questions, please. Innovation has given great yield.
You showed us the video, but it also has some additional effects, not always positive, I must say. We just talked about solar panels. When we look at the climate, I do take it that you acknowledge that climate change is quite a serious problem. In your annual report, there's nothing much or at all about Paris and the sustainable development goals. These goals are a little bit more strict than yours. How are you going to take up your responsibility regarding what's been agreed on in Paris? My second question is to do with your suppliers. You've indicated that they have done self-assessment surveys, 90% of them, that is. Question is always, you know, they can write things down, but is it true? How will you check whether they actually meet the agreements in there?
My final question: in 2015, the UN countries have come to agreement regarding sustainable goals. In your report, there's not much attention for this. Are you going to report on this next year, in the next annual report? That was my final question. Well, thank you, sir. Chuck, would you please answer these questions? Yes, says Chuck. It is indeed true that we did not explicitly mention the agreements made in Paris, that we referred to that. You're quite right there. However, we did include it, the Paris Agreement, in our target setting for the greenhouse gas emissions. We did do that, sir, and to this end, we use the science-based target method. I'm sure that you are familiar with this. This is a worldwide cooperation between parties.
In April this year, we promised to set these targets, and our targets and methods were shared with this body. That is the first step, the first step towards making this a little bit more explicit. So that is where we stand. Maybe I may respond to this, says the gentleman in the audience. I understand what you're saying, but Paris is not about efficiency targets, but absolute targets, whereas you mentioned the efficiency targets. There may be a difference between the two. Well, yes. Yes. Yes, you're right. Yeah, I understand what you're saying. It's the 30% that Paris mentions. I, I do realize that, and we have the targets as we have them because we are a growing company. ALD, as an activity, is growing all the time. However, let me put it this way, I heard what you said.
I'll take it on board, and we'll work on this. I understand that you say efficiency targets, but if we look at the consequences for the world, that's not based on efficiency. Thank you, sir. I hear you. Your second question is regarding the self-assessment surveys for suppliers. We've made steps, especially with our critical suppliers. We had the first self-assessment surveys in 2016. We'll do it again in 2017. And what we really achieved is awareness. If you were to ask me to give you a specific action list as a result of those self-assessment surveys, I will not be able to show you that today.
That's a bit of homework that we still need to do... In 2017, based on the second round of survey, surveys with our critical suppliers, we really must have a specific action list and timelines, and, you know, this is what we have to do, and we haven't reached that stage yet. That is, you know, my transparent answer. But I understand that you will report on this by 2018? Well, whether we will report on it, I, I cannot say, but I'll take your request on board, and I think that we will give you a little bit more transparency on this between now and the next AGM. Your third question pertained to the UN, the initiatives for 17 UN, for sustainable development goals. That's what you referred to, to the sustainable development goals. We haven't really got any specific plan yet that is linked to these SDGs.
There are some sub-targets, sub-goals that we are working on, as you well know, but we do not have a comprehensive plan in which we can indicate what our contribution is going to be per specific area. So I think that we should talk about this within the company in-house. I understand that it is your wish that we will report on this, but I do not think that we will be ready for that by next year, because there's a lot that we need to do. However, I can tell you that during our discussions, we will determine what our priorities will be. But there are a few things that you are already doing, and you could quite simply include them in a bigger plan. So maybe you should start with that.
That's relatively little work, so you've taken some steps already. I understand that you are saying that, yes, we should include it. Okay, we'll look at that. Thank you for your question, sir. Would anybody else like to ask questions on the report, on the presentation? A couple of times it's been mentioned already today, and I have a question regarding 3D for DRAM. And my second question is also connected to this, because you say that in 2016, there was quite a shift from planar to 3D. Can you indicate to me what the percentage of turnover was for 2016 or 2015? Give us a comparison, please, so that we have more of a quantitative picture. So what do you mean, the distribution between... Okay, NAND, 3D, and planar. My third question is regarding your own sales, the front-end figures.
What is the subdivision between front-end and back-end? And you said that regarding the technology, well, it's quite a big definition. So can you please tell me something more about what is being developed with ASMPT? And my final comment, it is not a question. I say you should have a good look at the units that you use. On page 32, for instance, you use the wrong case. It's upper case, where it should be lower case, with kilowatt hours, and it's lower case, where it should be upper case. So have a look at that, please. You are a technological company, a technology company, so please look at this. Well, sir, thank you so much for your advice regarding upper case and lower case, and we will have a good look at that for next year's annual report and the printing thereof.
I do not quite understand your question regarding back end. Oh, do you mean. Well, you know, back end is PT, but the PT figures we no longer consolidate. So I'm not quite sure what you meant with back end. Well, it's more to do with the front-end activities. In your annual report, you give a brief explanation of the division, you know, the percentages. And I may have understood this incorrectly. So, you know, I just want to know the breakdown between the two. Okay, Chuck, I think that you are, again, the person who has to answer these questions. I would. So first of all, DRAM, the development of new nodes, the 3D structures.
Well, I can tell you, DRAM, DRAM can continue with the 2D nodes as is for quite some time, but then we'll have to look at other structures, device structures, and whether that's going to be 3D, I'm not sure yet, but there will possibly have to be a new structure because, you know-
...There will be an end to this structure. It will take a few years, however, so that's my reply to that question. And then the breakdown between revenues of 3D and planar in 2014 and in 2015, planar made a great contribution, not just to the single wafer ALD market, but to the ASMI turnover. And in 2016, planar NAND was virtually nil. From one moment to the next, there was just nothing. The investments of our clients, all of a sudden were-- they, they switched their investments, or not really switched, but they just changed from 2D to 3D all of a sudden. And the single wafer ALD market needed a little bit more time to position itself for the 3D NAND market.
And for this year, 3D NAND, for the single wafer ALD market, with double-digit percentages, there will be an increase, which we also expect for next year. And also for us, our all product revenue, all products together in 3D, I think, will be bigger in NAND than in planar NAND in 2015. I think that's a clear indication. And front-end, Then front-end and front-end of line and back-end of line, and both, for other people in the room, let me say that we see the latter more as device formation. So that is the formation, assembly, if you like, of transistors or the electronic component itself. And the connections, the metal connectors between the various, devices, called back-end of line. And historically seen, a company, is in the – the company is strongest in the device structure itself.
So I think across the board, in front-end of line, well, I you know, say sort of off the top of my head, but I think it's correct, although we don't see it from day to day, but I think turnover there is a little stronger than in back-end of line. Well, historically, it's been so. However, in back-end of line, things are moving. And that's that. And an immediate example in device, well, I can't really answer that, but I'm happy to ask other people, and I'll give you a little more about this later on. And I think your final question was already answered. Thank you for your questions. Thank you for your answers. And in view of the time, I'll allow one more question. Mr. Burgers, please.
Chairman, good afternoon, ladies and gentlemen.
Hello, and thank you for that extensive and clear presentation. I have only one question, and this concerns the presentation of Mr. Del Prado about the most recent development, the selling of the 5% stake in PT and the shares therein. Because I would quote what you said on the slide, in addition to the current buyback program. But what has been said now is that also in the longer term, you think you're going to do this for a large sum. That is important also for, the next presentation. The penultimate slide was so interesting because now you say prospects for ASMI are good, and obviously what Gartner shows, not so much for this, but definitely for the next year, are impressive. But as we all know, they are only prognoses, and prognoses are bound to change.
However, I'm curious to know from you the timing of that additional buyback plan. EUR 250 million, did you say? And that is substantial. And it means that that sum, as long as it's not being used, I take it, is in cash, right? And we all know that cash doesn't give any interest now, so you can't get a profit on that. So could you tell us something about the timetable? Because let's assume that it is true that Gartner is only partly right, then it might make sense and be useful to have a buyback program accelerated, to speak in the words of Chuck del Prado, to step it up. So I was wondering whether that is a theme that is also- It's a significant question, and it's also an important consideration for us.
You know, we're in the middle of this current buyback program, and like Chuck said, we did 61%, so 39% to go. And as I'm sure you've seen, the EUR 50 million, the first EUR 50 million were bought back in a reasonably short time and were withdrawn from the market. And there are a couple of factors that play an important role in this. We want to do it as quickly as we can, but we think it's impossible to have money that you don't get any interest on, to make the least possible use of it. And on the other hand, it depends on what the daily trading of the shares is, because in our conditions, we've already said that no more than 20 or 25% of the daily traded shares should be bought in by ourselves.
We don't want to drive up the share price. So it has our constant attention. We want to keep looking at how we might do this in the fastest possible way, but also under economic conditions that are attractive to all the shareholders.
Okay, and then also in view of the time, again, I would like to stop the discussion about item on the agenda two, and let's then move to item three. And item three concerns the execution of the remuneration policy in 2016. And in accordance with Section 135, sub 5A of Book 2 of the Dutch Civil Code, the execution of the remuneration policy during the year 2016 is discussed on the basis of the information provided by the company on pages 151-153 of the Statutory Annual Report for 2016.
And if you have any questions that remain, then please feel free to put them or to make any comments. Mr. van Pernis is the chairman of our Compensation Committee. He will attempt to answer any questions that you may have on this point. So any comments or questions about our implementation of the remuneration policy? This is also described in the Statutory Annual Report. Would anyone like the floor, or were we crystal clear throughout? And so we may leave this as said. Well, I see we seem to have been clear, and I thank you for your understanding. And let's go to item 4, which concerns the adoption of Annual Accounts 2016. Our Annual Accounts 2016 was made and also audited by the outside accountant or auditor for KPMG, and this is Mr.
Krogveld of KPMG, and he is given the opportunity to give you a short explanation of how his audit was done. Have you any questions, perhaps, in response to his presentation, then, we'll give you the opportunity then, and you can ask Mr. Krogveld direct. Rob?
Good afternoon, and thank you, Jan. Good afternoon, ladies and gentlemen. Rob Krogveld is my name, and yes, I am the outside auditor of ASMI. I'm here with my colleague, Philip Takken, who's in the back of the room there and is raising his hand. I'm happy to give you a short explanation on what we have audited and our opinion. Of course, that opinion is also included in page 166 et seq. of the annual report, so you can read the details there.
We looked at consolidated and non-consolidated annual reports, and, of course, the end of what we've done culminates in our unqualified, I should say, audit opinion. And what it means, let me clarify what it means. It means that the financials give a true and fair view of the financial position of ASMI, and that also the report has no material errors and is in concordance with the data. Let me say something about how we approach the audit. There are always a number of elements that are very important. A risk analysis is very important for us, and so at the beginning of the audit, we do a risk analysis of the financial statements, and as team, we do that on the basis of earlier experience that we've had with the company, but we also simply take cognizance of what happened in the year.
We do the assessment of the company, and naturally, we coordinate it also with the audit committee. In practice, what it means is that we pay extra attention to the somewhat larger entries in the financial statements, and we look at entries that are eligible to a few more management estimations. They're a little more subjective, and another important basis for our audit is materiality. That's a key audit matter. We look at materiality and determine it based on the scope, the turnover in the financial statements, and the profit and prognosticized profit. The materiality that is being used in 2016 was EUR 5 million, which equals that of 2015 and is about 3.6% of the result before tax.
Besides that materiality, incidentally, we also look at all the adjustments, control adjustments over EUR 250,000 to both the boards. We have a top-down approach in our audits, so very much beforehand, we look at what would be the most efficient way to do it. Some are done centrally, and others in decentralized fashion. Because of the way ASMI is set up, we do quite a bit of our work in central fashion, so in Singapore also. Apart from that, we use both local auditors, and they are generally of other offices and branches of KPMG. Now, there is a single spot in the world where we use a different firm, and that is at ASMPT in Hong Kong, and that's a specific part of the audit, of course. We visit annually there.
I was there myself this year, and we do an elaborate review of their work papers, and even in the planning phase, we go through the planning they have and through the various assessments and estimations that they make. So that's important.... In addition, in our audit, we use a number of specialists that support us, who support us. IT is very important, for example, so we have a fairly strongly driven IT approach, and we have appraisal specialists, tax specialists, and where necessary, forensic specialists to assist us. With our work, we check some 96% of turnover and 99% of total assets, and that is fairly comparable with what we did last year. We see those numbers as high, because in our preparation, there's a minimum of around 75%. We're well over that, but that is also the way in which ASMI is set up.
And then key audit matters, finally, there are a number of things that are ever so interesting for us, and we report them to CFO and CEO, ASMI, but naturally, we'll also discuss them with the audit committee. This year, the main things of key audit matters were revenue recognition, ASMPT's contribution and the estimation thereof, tax position, and development costs. And details of how we audit all these matters and our main findings as well may be found in our unqualified audit opinion. And last year, we had one more key audit matter. That was the first year transitional audit, but now we're in our second year, so that is no longer relevant.
So this is what I wanted to tell you in this brief presentation, and naturally, I'm very happy to answer any question or, you know, hear any comments you have to make. Thank you, Rob. And in response to this presentation and explanation of Rob Krogveld of KPMG, do you have any questions? Oh, I think—I see that he was very clear. Ah, no, no, there's one person. Yes, I'm sorry. Never mind. The Chairman and I have questions, both of the two boards and of KPMG, but let me start asking you something, if that's all right. First of all, the deterioration of the liabilities position, was that caused purely by the timing that you had mentioned in the context of working capital, or are there any other reasons for that?
What struck me also is that the downturn is mainly in Korea, for example. Can you give me an idea of what the background is? Then in the financials, 2015, you made a mistake in the non-consolidated figures, which you corrected for this year. Question is, when and by whom was that error discovered, and what lessons have you learned from this? That is also bridging the gap to a question to the auditor. You seem not to have paid attention to that correction in your audit opinion or in the presentation just now. Why didn't you mention it? A final question for Mr. Krogveld as well, you said that you gave instructions to the accountant of A, ASMPT.
To what extent, as an auditor of ASMI, which is a big minority shareholder, are you in a position to give instructions to the auditor for ASMPT? Okay, I'll ask Peter van Bommel to ask the first two questions and the deterioration of the position there. Well, the deterioration of well, sales outstanding is a timing issue and no more than that. In the— For receivables or dubious receivables, the sums that we've had to, you know, book away has been less than EUR 1 million, and what we also see now is that there are really no provisions in our books for receivables that are never gonna get paid.
Where we saw that in the fourth quarter of last year, there was a really strong increase of turnover, mainly in the final weeks, and that has led to the higher position there. But then if you see what happened in the first quarter of 2017, of course, it's come down. Those money have actually come in, those receivables. The downturn in turnover in Japan and South Korea has to do with what was mentioned before. The switch from planar NAND to 3D NAND is a memory solution, obviously, whereas perhaps you know, Koreans and Japanese are very, very strong. And so that switch that we mentioned before with less turnover in 2016 in that NAND section because of that switch also explains the downturn in turnover.
I'm sorry, DRAM getting back in the market was another important factor. Interpreter, apologize. We did not quite hear this extra comment. Peter, you tell us there was a mistake made in 2015. Peter or this shareholder says that we've made a mistake. Ah, well, I will readily answer that question. No, no, I wanted the board to answer it as well, please. Why don't I do it first, says the auditor, and you can add to what I say, perhaps, Peter. Indeed, we made a correction in the non-consolidated financials in order to reclass, where the overall result therefore did not change. And my experience is that reclasses for users of the financial statements are not that interesting. And in addition, what we always see is that the non-consolidated financials don't get as much attention as the consolidated ones.
So, you know, combining these two factors, we did not think it was all that exciting or relevant to pay a lot of attention to it. It's not that we wanted to disguise anything, but we had to sort of, sort of choose what were more important subjects for our audience to listen to today. Ah, and let me say something else, says Mr. van Bommel. Yes, it was a difference in interpretation that we had made, and when we had another discussion with the auditors, this led to our wanting to follow their interpretation in the end. And because it was only a reclassification or reclass, we followed the path as indicated just now by our outside auditor. And a second question, says the auditor, which was another really good one, "How does it work?" You tell her, you said.
Well, in practice, how it works, we do a lot of business in these audits with the other Big Four companies. This is about ASMPT, I think, the auditor there. You know, sometimes we turn out to be auditing the parent and somebody else, the ASMPT. And, you know, sometimes it's the other way around. And what we agree together within the Big Four accounting firms is that we do give instructions, we do discuss matters together, but there are the common professional rules that are applicable overall are simply honored and respected also by us in those contacts.
Thank you, Rob. I hope all your answers have been—all your questions have been answered. And nobody else wants the floor, I see.
And then, of course, the adoption of the annual report is a voting issue, so this is the first time in this meeting that we are going to ask you to cast your votes. But let me first announce to you that of the total issued share capital of 59.351 million shares, 43,320,000, rounded down, are there as votes and represented in votes here today, and that is some 73%, approximately, of the issued shares that are present and represented here today. And then, before we take a vote formally, as per usual, let's do a trial run, a dry run, simply to ascertain that the whole procedure works and the technology works. And this is your question for the trial vote: Will Ajax win the final of the Europa League next Wednesday?
Well, I would ask that as supporter of PSV, which is the club at Eindhoven, and my colleague interpreter is from Eindhoven. She is happy. You've all been given a handheld voting unit, this little voting pad that you see. If there's any problem using it, then just raise your hand and somebody will assist you. If you want to vote in favor, then press 1. If you want to vote against, press 2. If you wish to abstain from voting, press 3. Without further ado, let's start the system, and I will ask you to cast your vote in respect to this very first trial question about Ajax Soccer Club. The vote is closed, ladies and gentlemen. We can see the results on the screen. Ah! It's a close call.
In favor or who think that they will win, it's just a little over 50%, against a little over 49% who think Ajax will not win the final. But, well... And there are even a few abstentions. I think this safely shows that it is likely that Ajax is going to win, but probably only by one point, which is good for us and which would be good for PSV now next year. So let's take the formal vote then. And the formal vote is on the adoption of the annual accounts 2016. And you've seen how it works now, right? So let's vote now. You may cast your votes for or against, or you can abstain by pressing three, and these are the final seconds. And now the vote is closed. So it's a fact, 99.999% in favor.
It's been adopted, and we move to item five, which is the adoption of the dividend proposal. You saw in the agenda that a proposal was made for a dividend of EUR 0.70 per ordinary share. And is there anybody who wants to ask a question about this? Yes, please.
... I represent VEB. On page 174 of the annual report, it says that there is a proposal to add the result to the profits that were reserved. So I'm not quite sure what that means. Could you please tell me what went possibly wrong, if anything went wrong? Okay, we have to look on that particular page. Page 174, you said? Okay, we'll have a look. Mid page. Oh, you really read this properly, didn't you? Word for word. Or is it the appendix? May I get back to you after the meeting on this, sir? Okay, fine. But what we wish to propose is to distribute €0.70 per ordinary slash common share, and if there are no, no further questions... Yes, there is a question over there. Hello, sir. My name is Heyman, and I'm a private shareholder from The Hague.
And I'd like to ask you whether you would consider for next year to make us choose which dividend we want, because there is an advantage in that. If the prospects for ASMI are so wonderful and so great, then it would be much better to have a choice between a cash dividend and a dividend in shares. I'm sure that you have some shareholders abroad, and it is really difficult for them to get the paid dividend tax back from the tax authorities. So if you live in France, the dividend is paid, and you have to pay tax on that, and you have to try and get it back, and you have to do it via the computer in French. Virtually impossible. So really, it is very good for people to have the option. They may decide which is the best of the two. Thank you, sir.
Peter, would you like to comment on this? "Well, we will bear that in mind, sir," and says Mr. Del Prado, Mr. Van Bommel, "We have a share buyback program, so it is not very logical to work with an optional dividend, option between shares and cash. We will look into the possibilities to oblige you in this matter." Thank you. "Okay," says the Chair. Let's vote on the proposal on the dividend, the dividend proposal. As you know, one is for, two is against, and three is abstention. You may now vote. Do cast your votes. Okay, and we can now see on the screen that 99.9998% voted in favor, and thereby, this proposal has been adopted. Thank you. Let's continue with agenda item six. This is the discharge of the members of the management board.
We propose this discharge, and I wonder whether you have any comments. Do you have any questions? Would you like to take the floor? Good afternoon. My name is Frank Peters. I'm a lawyer, and I represent Eminence Capital at this meeting. Eminence holds almost 10% of the shares in your company, and I want to give a voting statement. We vote against the discharge of the members of the management board. We will also vote against the discharge of the members of the supervisory board, and we will explain this in more detail at agenda item 13, but I already wish to inform you of our intentions at the moment. Yes, we've read this in one of the national newspapers. We read what you were intending to do, but still, thank you for your comment. Any other comments? Any other questions?
If not, I'd like you to vote on agenda item six, which is the discharge of the members of the management board, and you may now cast your votes. We have nearly closed the voting, and yes, it is now closed. You may no longer cast your vote, and 83.7%, 83.8, rounded up, has voted in favor, and 16.2% voted against. This means that the discharge of the members of the management board has been adopted by the AGM, which means that we may continue with agenda item seven, which is the discharge of the members of the supervisory board. And again, we've heard from Mr. Peters how he will vote on behalf of the shareholders that he represents. Would anyone else like to put a question? No. Okay, let's vote on this.
One, if you are for, two, if you are against, and three, if you wish to abstain from voting. Do please vote now. You can no longer cast your vote. And this result shows that 86.4% voted in favor, 13 point almost 6% against. So the discharge of the members of the supervisory board has been adopted by the meeting, which brings us to agenda item 8, the composition of the supervisory board. This, again, is a voting item. There are two items, and they're both voting items, 8A, and we have item 8B. But first, 8A, which is the appointment of Mrs. S. Kahle-Galonske to the supervisory board.
In accordance with Article 22.3 of the Articles of Association in Section 2133 of the Dutch Civil Code, the supervisory board has drawn up a binding nomination to appoint Mrs. Kahle as a member of the supervisory board. This will be for two years, excuse the interpreter, for four years, and it will start today. Mrs. Kahle is present here this afternoon, and her name is Stefanie, and I'd like her to introduce herself and to say something about herself.
Even better. So, thank you very much, Jan, and, good afternoon, dear shareholders. I feel very honored to be nominated to the supervisory board of ASMI. As we heard, such an impressive, track record of the company and so much rich history as a technology leader. In some way, for me, this is coming home, and I say that in that sense that I have worked in the Netherlands, and I have worked for, Philips as well as NXP Semiconductors for about 15 years, and I spent most of my career in the high-tech sector, and, that included my executive roles in Singapore and Switzerland. I would like, and I know this sector very well, and I would like to be aiming for bringing my experience across technology, but also across finance, to this very experienced supervisory board and to add value to it.
I look very much forward to working with my future colleagues. But above all, I would like to thank you, and I'm grateful to you, the shareholders of the company, to give me this opportunity. I want to thank you for your trust and for your confidence. Thank you very much.
Thank you, Stefanie.
And now, I would like to put this proposal to the vote. This is the appointment of Mrs. S. Kahle-Galonske as a member of the supervisory board. If you vote 1, if you press 1, you vote in favor, 2 is against, and 3 is abstention from voting on this item on the agenda. A few more seconds to vote, and the system is closed, deactivated. And it is a great pleasure to conclude that 99.97% of the votes cast in favor of the appointment of Mrs. Stefanie Kahle-Galonske. So welcome, Stephanie, and there's flowers for you. Which brings us to 8B on the agenda, which is the reappointment of myself. I'm available for reappointment, and as this agenda item is about me, I've asked Mr. van Pernis to deal with this. Martin? Yes, now it's getting very exciting.
The term of Jan Lobbezoo will end at today's date, and we propose to you to reappoint him as a member of the supervisory board and the chair of the supervisory board for four years, expiring on the date of the AGM in 2021. We have therefore drawn up a binding nomination in accordance with Article 22.3 of the Articles of Association and Section 2133 of the Dutch Civil Code to reappoint Mr. Lobbezoo. And the supervisory board confirms, in accordance with Article 22.9 of the Articles Association, that he has done his job more than adequately. Do you have any questions regarding this? Or maybe you want to encourage him or root for him? If not, we can vote on this. Yes, you may do so now. You may no longer cast your vote.
Oh, no, no, no, no, no. We have to wait for that red bar at the bottom of the screen to disappear. Now, you may no longer vote. And as you can see, you have reappointed Jan Lobbezoo with 99% and a bit, and there are a few votes against. I do not have any flowers, but we'll offer him a drink tonight. Thank you, Martin. And thank you everyone here, all the shareholders, for the trust that you have in me, and I will do my utmost to do my best in the next 4 years. Agenda item 9 is next on the list, which is the appointment of the company's auditors for the financial year 2017. KPMG is being proposed as the external auditor for the financial year 2017, and we would like you to decide on this.
You can cast your vote on this, but not until I've checked with you whether you have any comments or whether you have any questions. I see no hands raised, therefore, I would like you to vote on this, and this being the appointment of the company's auditors for the financial year 2017. 1 is in favor, 2 is against, and 3 is abstaining from voting on this item on the agenda. You can no longer cast your vote. And as you see, 99.9876% has voted in favor of reappointment of KPMG, so they will do the audit for us in the coming year. Thank you. And we continue with agenda item ten.
Our agenda-
This concerns authorizing the management board as a competent body to issue common shares and rights to acquire common shares, and in the second part, we will also satisfy any pre-emptive rights. So there are these two points which we will vote on separately. 10 A is as follows: This is designating the management board as a competent body to issue common shares and rights to acquire common shares. And who might I give the floor in this regards? I see that nobody needs the floor or wants it, so then we may vote on agenda item 10 A.
... A few seconds more, and then we'll close the vote, and we can look at the results on the screen. The system is now closed. And we see that a little over 87% has voted in favor of this, so also this item has been adopted, which moves us to ten B, which we'll take to the vote as well. And this item concerns the designation of the management board as the competent body to set aside any preemptive rights of, you know, existing shareholders for shares that are, when common shares or rights to subscribe for common shares are issued. So who might I give the floor to, to ask a question on this? Yes, there is somebody. Chairman, in all likelihood, last year, you made a similar proposal and put it to the vote also for a period of 18 months.
And so normally, what we adopted last year, you know, will create overlap with the proposal now. And so the proposal 10 A and B that we adopted last year, you know, will become superfluous, null and void, no longer applicable. And does it say this anywhere in the agenda? Because I haven't seen you say that in the agenda. Ah, no, we didn't write this down in so many words. Thank you for being so attentive and observant.
Yeah. Uh,
Well, if nobody needs the floor on this, then let's vote on this item. And this item then, once again, concerns designation of the management board as the competent body to set aside any preemptive rights. And you may vote now by pressing 1 if you're for, 2 if you're against this proposal, 3, if you wish to abstain from voting on this item on the agenda. Thank you. Well, the voting is closed now, and we can look at the results on the screen. And the proposal's been adopted by 82.25% that have voted in favor, 17.75% against. And so, again, this has been adopted, and we can move to agenda item 11. And this concerns authorization of the management board to repurchase common shares in the company. Is there anybody who would like to take the floor in this regard?
There's a hand up there in the room. Well, Mr. Peters, I'm lawyer for Eminence. Eminence is going to vote against here as well, and we will say a little bit more about it by the words of Mr. Sandler. The background is that the share buyback almost obliterates the effect of the reduction of the stake in ASMPT, and so we'll vote against. Thank you for that information. And if there's nobody else... Ah, there, the VEB Dutch Stockholders Association has a question or comment.
It's a question, Chairman. Although we will vote in favor of this, since it is just a regular routine item on the agenda, and it fills our requirements.
That is not to say that there may be not no truth in the words of the Eminence spokesperson just now, and it's about giving money back to shareholders. Mr. del Prado has showed us a beautiful graph showing that so much money is being returned to shareholders over past years, and you can do it in various ways, and share buyback is one way, but economically or beneficially speaking, it only you know adds value. Well, you know, I'm just trying to say, repurchasing shares can never be a purpose by itself. Do you agree that they are undervalued at this point?
Thank you for that question. Hard to say. They say the market is always right, don't they? And perhaps the board will, board of management will respond to this nevertheless.
We believe, says Mr. Velpraat, that more value can be created through the ASMI share in the long term. Yes.
Thank you for that answer, Chuck. And if there are no other questions, then let me also take this to the vote. It concerns item 11, authorization of the Management Board to repurchase common shares in the company. 1 is for, 2 is against, 3 is abstention, and you may vote now.... Votes now closed. 86.69% have voted in favor, 13.31%, rounded up, has voted against. And so also, this item on the agenda, the authorization of Management Board to repurchase common shares in the company, has been adopted. And so we move to item 12, and this concerns withdrawal of treasury shares, of, of bought up shares, if you will. And this is the final voting item for today, and this concerns withdrawal of treasury shares of the company. Who might wish the floor on this?
If there's no one, then let's also take this to the vote. 1 is for, 2 is against, 3 is if you wish to abstain. You may vote now. Seconds more, and then we'll also close this vote. In favor, 99.98%, 0.02%, rounded up, have voted against. And also, this therefore has been adopted, this item 12, which concerns the withdrawal of treasury shares, which brings us to item 13. This concerns the agenda item request from Eminence Capital, and it isn't a voting item, but a discussion item.
In accordance with Article 25.3 of the Articles of Association and Section 11.4A of Book 2 of the Dutch Civil Code, any shareholder holding at least 3% in the company's issued capital may request the inclusion of items in the agenda of the annual general shareholders, shareholders at least 60 days in advance of the meeting. With respect to the request of our shareholder, Eminence Capital, these conditions have been satisfied. Hence, ASMI has included this item on the agenda. Now, Eminence has indicated that they want 10 minutes, give or take, and we are happy to honor that request. They have made a presentation, and they would like to show this presentation, and so we will. After the presentation, also, ASMI would like to respond with another couple of slides.
Now let's go to Eminence Capital, and let's give them the floor.
... Speak today. Shareholders, my name is Ricky Sandler. I'm the founder and CEO of Eminence Capital. Just a brief background on Eminence Capital. We're a 19-year-old investing firm, managing about $6.5 billion out of New York. We run with a quality value investment framework, so we want to buy good businesses that we think are undervalued. We think ASMI fits that mold. We're long-term investors, typically own companies for many years, and we are the second largest shareholder of ASMI today with $350 million and north of EUR 300 million stake, and we've been shareholders for 3.5 years.
I think one of the things we can agree on with the management team here is that shareholder value creation is the most important. This is a quote from Mr. del Prado at the 2014 AGM, reiterated again today about how important shareholder value is, and about how they look at the ASMPT stake through the lens of shareholder value creation. So, we're gonna talk about shareholder value creation a little bit, and the ASMPT stake, and whether keeping the stake or divesting the stake would be better for shareholders, at least in our opinion. So when we think about the pillars of long-term shareholder value creation for ASMI, first and foremost would be good execution on the front-end business.
This includes the kind of R&D that the company is investing in, on, in ALD. This includes pursuing market adjacencies, like they did in the Epi market, to gain new entrants, and sort of continuing to invest in their core business to stay strong. We also think pursuing strategic actions that strengthen the front-end business but also make financial sense are important towards long-term shareholder value. And things that strengthen the company's competitive position while also making financial sense. This could include joint ventures, M&A, as a buyer or as a seller. And then lastly, effective capital allocation. This would include things like our capital position in ASMPT, future share buybacks, dividends, and other investments.
So, our view is that the stake in the ASMPT doesn't provide us any operational benefits, it clouds the strategic decisions that management's gonna make, and it limits management's ability to effectively allocate capital. So let's look at each of those pillars of shareholder value for a moment through the lens of holding the stake or divesting the stake. So if we think about executing on the front-end business, management has argued that the stake provides financial strength and stability, and in the past, they've stated that the stake provides a stronger industrial presence to the company.
In effect, our customers want us to have this stake because it makes us secure and stable in the industry, and that maybe there's some industrial presence, even though the company doesn't have any R&D overlap or any sales overlap. We would argue that the front end has plenty of scale and stability today. This is a business that does EUR 700 million of revenue today. It's got over EUR 600 million of cash on the balance sheet today. It is very strong, very stable, highly profitable the last five years. We would also argue that potentially you could keep extra cash from the sale of ASMPT to increase financial stability if that was something that was so important to your customers.
While their customers may want them to keep the stake or may even say it's beneficial, at the end of the day, the point is what's best for shareholders? And we would argue that divesting the stake is best for shareholders. Our customers may want us to keep the stake because they want us to remain independent, because us consolidating is worse for them, and better for us. So, I think at the end of the day, it's very important to think about what is best is in the interest of our shareholders. We'd also say that there's little or no R&D overlap with ASMPT, and therefore, the industrial logic of keeping these two businesses together makes absolutely no sense.
In terms of executing on the front end, if we do divest the ASMPT stake, we would argue that management incentives, and alignment get much more aligned with the front-end business, which is the business that we all want to invest in. If you separate these two businesses, the only business that management would be compensated on is the front-end business. The stock price will be fully reflective of the front-end business, and so any compensation based on, the stock price or on financial performance is solely based on, the front end of the business. This alignment of incentives would definitely lead to better operating performance. We also think a single-minded focus on the front end would lead to better operating performance.
History has shown that companies that separate and split up and have a single-minded focus typically have better operating performance. So, in our view, on execution on the front end, clearly would be significantly better if we had divested ASMPT than if we kept ASMPT. On pursuing strategic actions that enhance the front end's competitive position, management hasn't provided a reason why retaining the stake allows them to better pursue strategic actions that enhance the competitive position on the front end. Our view is that by divesting the stake, you separate two businesses that have independent strategic agendas. One's a back-end business, one's a front-end business. They both have different customers, different competitors, and strategically different agendas. And by keeping them together, this is clouding the strategic decisions of ASMI, particularly.
We think strategic combinations as a buyer would be much more feasible if we divested the stake. First of all, we'd have more cash resources. Second of all, the stock of ASMI today is undervalued, specifically because we own the stake in ASMPT, and using an undervalued stock as currency in an acquisition is not a good idea. That would be dilutive. So in order to have a fully valued stock that we might want to use as a buyer in a combination, divesting the stake would significantly help us in pursuing strategic agendas. In addition, a potential seller who is taking our currency may be deterred by our big stake in ASMPT, as they'd have to take on that significant risk.
And lastly, and probably most importantly, the stake in ASMPT today acts as a poison pill. When a company owns more than 30% of a Hong Kong-listed entity, and they are the subject of a takeover offer, that company has to make a takeover offer for the Hong Kong-listed company. So if anybody came in to buy ASMI today, they'd also have to make an offer for ASMPT. That's a significant incremental investment. They may have no interest in that, and so this stake today is hampering this ability. And we're not saying that the company should be sold.
We're just saying that if somebody showed up with a very, very full and fair price, that we all thought was, in our best long-term interest, that's something we should listen to, and that's something that should happen without them having to also bid for, another company. So clearly, in the pursuit of strategic agenda, to enhance the competitive position of the front end, we think divesting the stake is, significantly better than retaining the stake. And lastly, on capital allocation. Retaining the stake in ASMPT, management has to, conclude that this investment is worthy of EUR 1.9 billion of our capital to continue to invest in it. We believe that the back-end business is nowhere near as good as the front-end business competitively. It's a business that is much more driven by price than technology.
It's a business that's much more volatile. We also happen to think it's ASMPT is a business that's close to peak operating performance, and has a significant new business in active alignment, which is getting very high shares early on, which we also think over time is gonna see much more competitive responses. So we think that in order to retain the stake, we have to justify the fact that this investment is twice as good as our investment in the front end. Today, the front-end value as Chuck pointed out is about EUR 1 billion. We have nearly twice that amount invested in ASMPT, a company that we don't have management influence on, we may be on the board.
A company that is in a much worse competitive position or, competitive situation than our core business. A company we think that is operating at peak performance, and it's significantly moving around the company that we own, ASMI. A huge stake, not making operating decisions, operating at a peak in a worse business, we think it's definitely better for capital allocation to reduce the stake. So we would argue that capital allocation decisions, once we divest the stake, are no longer distorted, the way they are today. Stock buybacks will no longer be diluted by the stake in ASMPT.
So I think, we've highlighted this before in our presentation, but if you think about selling the ASMPT stake and then going back and buying back stock, at first we're reducing shareholders' exposure to the stake, and then by buying back stock, we're increasing it again. And so the effective share buybacks are significantly diluted through the holding of the stake. In addition, as we said, M&A is going to be hampered by an undervalued currency, and we also think that we'd have, if we divested the stake, we'd have excess capital to be able to enhance shareholder values in many ways. And so, effective capital allocation, we think would be significantly enhanced through the divestment of the stake. Other benefits of a split. We think based on where peer companies trade-
And as we front-end business. (Dutch Interpreter Audio Track)
Significant benefit of divesting the ASMPT stake. And then lastly, companies that are historically separated have better operating focus, better financial performance, both on an operating level and in the stock market. So in conclusion, we see no obvious benefits of continuing to hold a significant stake in ASMPT while subjecting shareholders to significant stock price risk. It acts as an improper poison pill against anybody that had an interest in acquiring the company. And again, we're not saying that ASMI should be taken over. We're just saying that, if someone were to pay a very, very full and fair price, this stake acts as a poison pill from us even considering that. We've laid out clear strategic and financial benefits of a full divestiture of the ASMPT stake, and we think it should be pursued by management.
And we think shareholders should, should require much more convincing evidence from management to retain such a non-core, investment. An investment that, as, as I said, is EUR 1.9 billion, it's more than 55% of the market cap of the company, it's twice the size of the implied front-end business. It's a business that, based on our research, is much more, is in a much worse, part of the semiconductor capital equipment industry, a business that's operating at peak operating performance and peak profits, and, and a peak multiple. And so we think, we should require much more, convincing evidence to keep the stake. Thank you.
Thank you, Ricky. Thanks for your presentation and your plea to sell down the ASMPT investments. The management feels that they should reply to this presentation and the conclusions drawn from it. And therefore, I would like to ask Chuck and Peter to also present a few slides on behalf of us, ASMI, as a point to be made in reply and also for the discussion with regards to the points made by Eminence Capital.
All right. Okay, thank you, Ricky, for your introduction on this agenda item. Yeah, on behalf of the company, I will present a few slides, then Peter van Bommel, my colleague in management board, will present a few slides, and then I will close on the presentation on behalf of both of us. So first of all, you know, this is a legal slide we always have to show. Please be aware that also these cautionary notes are regarding forward-looking statements apply on this presentation. So, okay. We would like to start with this overview here. First comment, long-term shareholder value creation is a key commitment for the company and for ASMI's management. That should be very, very clear to everybody here in the room and everybody on the webcast.
That's what we always have emphasized with, in our engagement with investors, year over year. We all know that the ASMI share price delivered a solid return over time, and that Front-End has turned to a positive value. Nevertheless, we, the company, believes the share price still undervalues the full potential of our Front-End activities. We strongly believe that a further successful execution of our Front-End strategy will drive a higher value. Based on our strong position in the ALD market, we believe that we are well-positioned to outperform the WFE market over time, as we did in most of the years between 2010 and today. With our structurally improved margins, we expect sales growth to drive healthy development in profit and cash flow.
We have and will keep using excess cash for the benefit of our shareholders, illustrated by the substantial cash amounts we returned in recent years. This commitment remains unchanged. A significant stake in ASMPT is a key element of our strategy, indeed. It provides us with the additional financial strength and stability, and we believe this is essential in expanding our position at this stage of the development of our Front-End activities and our Front-End business. We do regularly and critically review our position in ASMPT, taking into account, amongst others, the strategic value of the stake, as well as the value development of the company. Until early 2013, as many of you know, the implied value of Front-End, despite a successful turnaround, continued to be negative.
By selling a 12% stake in March 2013, we went from a majority to a minority position in ASMPT, from 50 to 42, from 52 to 40%, and we deconsolidated the back-end from our P&L. By doing so, the visibility of our front-end business increased significantly. Combined with a strong, improved operational performance of front-end and the implied, the, the implied value increased from nearly EUR 500 million negative to approximately EUR 1 billion positive today. In the last two years, the front-end implied value did not further improve, value did not further improve. At the same time, our overall share performance was supported by a sharp increase in the value of our ASMPT stake. We, we believe the current value undervalues our front-end business.
A recent strategic review led to the decision to sell another 5% and to use the proceeds for a new share buyback. We believe this is another step that, combined with the continued solid performance of the front-end activities, will support a further increase over time of the implied value that we can stake in ASMPT, and we still strongly believe that this remains of strategic value in this phase of the company. Going forward, we will continue, of course, to evaluate our stake in ASMPT on a regular basis, as we have always and consistently done so far. So this slide elaborates a little more on the strategic value, the strategic value of a significant stake in ASMPT. The first two bullets on this slide, as you can see here, are crucial, in my opinion, in our opinion.
First of all, a significant stake in ASMPT has been essential in achieving today's customer relationships and our leading position in ALD. And secondly, ASMPT stake continues to be a positive factor in further expanding business with key customers. Those two points are very crucial. Why are they so crucial? Let us explain, elaborate a little bit on that. We are viewed by our top customers as a stronger and broader-based supplier/partner within our industry, and also as a partner with a stronger balance sheet. This has been essential in achieving the company's position today. The additional financial strengths and industrial presence provide our customers with comfort and trust that we are a solid player for the longer term in this industry. Why is this trust so essential? We supply, first of all, we supply enabling technologies.
We are not a supplier of me-too solutions, products, but of leading-edge enabling technologies. Our products are critical, critical for our customers to move to the next technology nodes, to stay on Moore's Law, which in turn is key for them to introduce new products and expand their business. Secondly, development processes can take several years. We are already working with customers on new technologies that will go into high-volume production in 2, 3, or even 4 years from now. Thirdly-
... We operate in a consolidating industry. In a consolidated industry, there are only a very limited number of customers that have the scale to invest in leading-edge fabs. As a consequence, our top 10 customers account for 80% of our sales, as we saw earlier this afternoon. Further expanding our position with this very limited number of key customers is essential to our success. On top of that, over time, more overlap has developed between ASMI's top customers and leading customers of ASMPT. And last but not least, quite a few of our competitors are larger than we are. Also, in this context, a broader industrial presence and financial strength provides comfort and trust to our customers.
What you also see on the slide is as per the end of 2016, the book value of our stake amounted to 1 (garbled) with a higher solvency. The stake in ASMPT also provides us with a higher market cap. Again, this is, this is in part a reflection of financial strengths, and it has also helped us and will keep helping us to address a broader base of investors and shareholders. We still have a great opportunity within ASMI to expand with our key customers. The ALD market is expected to be a double-digit growth market in the coming years, as we discussed earlier this afternoon, and we are taking steps to broaden our business also in the EPI market, as you saw earlier. We are still in the process of building size and scale in our front-end businesses.
We therefore strongly believe that a significant stake in ASMPT, and the trust that it gives to our customers, has strategic value at this stage of the company. Okay, now we go through, three financial-- more financial slides that, Peter will speak to. We believe that the strategy of, growing the front-end business, in combination with a significant stake in ASMPT, have generated attractive shareholder value over time. I think this, this slide shows that. It shows the shareholder value that we have created since 2009. Compared to 2009, our market cap increased by nearly EUR 3 billion. If you look at the sum of the parts, our stake in ASMPT, reflected in the gray part, clearly delivered a solid return and brought the value from EUR 300 million... from EUR 500 million to nearly EUR 1.9 billion.
The share value, excluding ASMPT, the orange part, also showed, however, a strong improvement, showed also a very strong improvement during this period, going from a negative amount of more than EUR 100 million to a EUR 1.5 billion positive amount. This is a combination of, on the one hand, a higher implied value of the front end, and on the other hand, cash generated during that period of time. This led to a total increase of EUR 3 billion in market cap. Note that this also excludes the EUR 500 million in cash that we have distributed in the form of dividends and a capital return in 2013. Now, let's look to the next slide, where we show the development of the share price over that period of time.
So when you look to the share price as per the first of January 2009, or the second of January 2009, of course, the share price increased from EUR 6.5 to more than EUR 55 at the end of last Friday. That's a more than eightfold increase. On top of that, we distributed more than EUR 7 per share over this period, in total dividends and the capital returns in 2013. This gives a solid IRR of 36% for an internal rate of return, which means an annual average return for our shareholders of 36% over a period of from 2009 to 2017. Interesting is also to see how that develops against our share in PT.
So this graph shows the long-term total return of the ASMI and ASMPT share, also from the period as from January 1, 2009. This includes dividends and capital returns. It's clear that while ASMPT delivered a solid cumulative return of about 500% since 2009, the return on the ASMI shares is more than twice as high over that same period of time, at 1,000%. In other words, our stake in ASMPT has definitely been a positive factor over this period, but not the only factor in driving the ASMI return. Excluding ASMPT, the ASMI share even delivered a higher cumulative return during that period of time. It's also interesting to note in this graph that until the first half of 2013, the development of the ASMI share closely followed the development of the ASMPT share....
Since that time, when we sold a 12% stake in ASMPT, the ASMI share price stopped following the ASMPT price and started to develop its own, dynamics. This reflects not only a substantial improvement from negative to positive in price value, but also the fact that Front-end by itself has become a key factor behind the ASMI share price development. Now, let's also look in how the ASMI share price has developed against its competition. So we are following again here the same time frame since early 2009, and this shows also that the cumulative return is somewhat below that of ASML, but clearly ahead of AMAT then. So overall, we think a very decent performance. Then, I give the floor again to Chuck for his closing words.
All right. Okay, so some closing remarks. So we believe our long-term strategy, of which a significant stake in ASMPT is an essential part, clearly is successful. Since our first breakthrough 10 years ago, we have built a leading position in single wafer ALD. We are the largest player, not only by revenue, but also in terms of breadth of product portfolio. We supply ALD for different solutions and to all key customers. Again, without the trust of our customers, for which the stake in ASMPT has been a very important factor, it would have been impossible to achieve this leading position. A major change in our company, compared to 10 years ago, is also our customer exposure.
Historically, we are and continue to be strong in leading edge logic, but we have less exposure in the leading memory and foundry in the players. This has completely changed. We now supply again to all of the top 10 CapEx players, several of whom, particularly in memory and foundry, were not traditional ASM customers. To illustrate this point, our revenue from the five leading memory and foundry customers in our industry represented less than 10% of revenue in 2009. Today, it represents half of our revenue. This shows the huge gains we have achieved with the leading memory and foundry play, customers over time. Our success with ALD and in expanding with key customers is clearly reflected in our operational and financial performance.
In the last six years, we have grown sales with a CAGR of 11% at constant currencies. This compares to growth for the WFE market on average, that was in the low single digits over this period, about 2% as per Gartner data. Combined with extensive restructuring efforts and improvements in our manufacturing and supply chain, we drove those margins to current low to mid-40s. This provided us with the means to invest substantially in R&D, while improving EBIT margins to solid double-digit levels. Our improved financial performance and strengthened customer relationships also gives us the scale to step up our corporate responsibility initiatives. So the bottom line is, the strongly improved operational performance also led to very strong long-term value creation for our shareholders, as Peter just clearly demonstrated in those three slides.
That cannot be clearer. We returned EUR 500 million in cash in the form of dividends and a capital return since 2009. That excludes another almost EUR 300 million that we did in share buybacks. The implied value of Front-end has improved from almost -EUR 500 million to, in 2012, to EUR 1 billion. All that to a solid return for shareholders over time. Since 2009, a total return of 36% on average. Even more important than this strong historic share return, share return is that going forward, ASM is today much better positioned for the long-term value. ASM is today much better positioned for the long-term value creation.
We are now the incumbent supplier of enabling deposition technologies, a position that the company has never had before since its inception. We have built strong relationships with all our key customers. We have structurally improved our financial model, and we have a clear roadmap how to further deliver on our corporate responsibility commitments. We strongly believe that a significant stake in ASMPT continues to help us in further expanding our position with key customers, which asks for everybody in this room. Thank you.
Thank you, thank you, Chuck. We have now heard from Eminence Capital, their points of view and their suggestions. You have also learned the point of view which is currently held by ASM management and Supervisory Board. I would like to give an opportunity to another shareholder to give some of their views. Yeah, for Americans, it's-
For Americans, says Mr. Frake, money is cheap, and all sorts of silly things are happening as a result in this country. And, I'm sure you all know about Wall Street. Great is good, they say.... But definitely, we don't really want them here, you know? We saw it in Unilever, saw it in Unilever, at, AkzoNobel, now at ASMI. We saw it in ABN AMRO, KLM, ING Group. We have these gorgeous crown jewels, and you are right, we don't want to throw them away. I'm in favor of a company with a long-term commitment to its staff, its workforce, and to society. I used to work at ING. We took over ING banks.
I work at ING Bank International, and our president of the international division said we shouldn't do that because we went from being corporate bankers to being investment bankers, and investment bankers are super competitive. In retrospect, the takeover of Barings by ING turned out to be penny-wise but pound foolish. I think it's a good idea that Minister Kamp, who is looking at a number of these cases, will also look at the current one. My suggestion is, and I want to be helpful, the fastest possible raising of the share price from EUR 55 to EUR 65. You know, that's manageable and feasible. Definitely, if you... If you put in a lot of work, and this may well satisfy also a number of shareholders. Thank you. Thank you, Mr.
Frijkes, as the chairman, and definitely we will work hard to take the share price to a level of perhaps even higher than you say, and you may be reassured we're not gonna chuck anything away. There are several opinions and views, and, you know, they're welcome, and they've been presented here today. And this just now was yours. Well, anybody else? Stockholders association, perhaps, would you like to say something?
Thank you. Yes. This item on the agenda, and I also thank Eminence for proposing this item. And I think there's something to say for both stories. At the same time, they both also miss final convincing power, both Eminence and ASMI. Therefore, I have a question. Let's be practical and ask one of our ASMI, first of all.
My question to you: Very recently, you indicated that an interest of 5% would be sold in ASMPT, and the timing of that makes us think that it was greatly connected to the proposal of Eminence. So might you indicate whether this was in response to a request they had made, or whether they are very separate things or a bit of both? And then, as far as we're concerned, the strategic value that the stake still has is still not made sufficiently clear. Even in the past, you said things about it, but also in this presentation today, it seems to be a repetition of things you said before, generalities.
You are saying that there are customers that value greatly your stake in ASMPT, but you haven't indicated whether that strength you say you have cannot be achieved also in a different way, or is that would be one of the points. This is one of the points that Eminence is putting forward. And then, to what extent is it a goal not to have that interest go below 30%? Because that was part of the presentation of Eminence, and it's been mentioned earlier also in regard to the Applied Materials contract that you've concluded. I've not heard you say much about it today. And what are your plans in the long term for the stake in ASMPT?
I think many shareholders would like or, or need a somewhat more, well, specific and concrete, reflection on your part of where you want to be in 10 years from now. Okay, Chuck, would you like to respond? Well, yes. First of all, in respect to those 5%, and you say, was that, sort of in coordination or correlation with the item on the agenda? The clear answer is a very clear no. The longer answer is that, of course, first of all, we always said that we still believe that holding a significant stake in PT is a key element of our strategy, our strategy of creating long-term shareholder value.
At the same time, you know, we also said in this meeting, but also in our interaction with any shareholder, not just chair, Eminence, any shareholder, whether home or abroad, you know, London, Paris, Frankfurt, New York, Boston, anywhere really where we talk to shareholders at least two times a year, all across the world. Let me just emphasize that, that we've always said also to them that very regularly and very critically, we review, as the management, what our position in PT is. And, you know, what we consider, besides other aspects, is, on the one hand, the significance of the strategic stake for our front-end business and in addition, the valuation development.
We keep reviewing this on a regular basis, as management various times a year, and we're triggered to do this also by shareholders, one more than the other, with constructive questions that they ask us. You know, even in the beginning of the year, we decided this also with the advisory board, it's simply in the minutes late February, we discussed it with them, and really, points like that are recurring items throughout the year. So apart from the fact that we much appreciate our dialogue with Eminence, and of course, that's been ongoing for three and a half years, and it's not always been only on things we agree on, but we speak face-to-face at least twice a year. However, apart from that, we will discuss this anyway.
So you keep us on our toes as shareholders, but it's absolutely not necessary for us to set our strategic agenda based on that. We can set it based on what we want and what we think. You're saying we're being so general about what we say about this. Well, customers are no general thing for us, because the confidence and trust of our customers is what would pay our salaries. It is the most important thing, also for the returns for shareholders. So trust of customers, the comfort they have to work with us, to have confidence in us, to give us more than we have, to give us a chance and an opportunity in EPI, they are crucial things rather than general points in our growth and success.
Third question, the 30% stake, which we want to keep, you know, as a minimal stake, you suggest, how important is it to do that? Well, what we can tell you is that for us, the main thing, the very most important thing, is to maintain a significant interest in ASMPT in this stage of front-end. It is a strategic value to do that, but that would always be the leading principle. It's not exactly 30%, the recent strategic review that we made about this stake and the recent decision to come to a 5% divestment. So, that's in regard to what you asked about, 30%, precisely. Then finally, you asked whether you could be more concrete, says the shareholder.
Well, it is hard to be more specific than I've been up to this point, and I understand that you would love to have a little more guidance. What remains important for us, I can tell you, is that at this time, a strategic stake, significant stake in ASMPT simply has a purpose, but also to the future, as we've done, as I've just described, recently, and based on when we made the recent decision, we will keep doing this on a regular basis. Whether it be on the agenda for next year or not, we don't need items on the agenda to stay on our toes with regard to the fiduciary duty we feel to create long-term value. You know, we've been able to show that over the last 10 years, with all our workforce, you know, we've always done this.
You know, that has not made us complacent. Our success hasn't made us complacent. We can't afford it in this industry. Complacency is simply not in our dictionary because we have to stay on our toes, or else we'll be out of business within five years. This is how we deal with our products and our customers and this topic. Well, that's what I can tell you. We are simply building this beautiful business, and a significant stake in TP is part of that, as TP is part of it at this point, but we'll keep reviewing it as well. Okay, two points I'd like to respond back to, if I may, but thank you first. First of all, you indicated that based on those regular reviews, you came to your divestment of 5%. What is still not patently clear to me is why 5%?
Why not, you know, why not exit 10%? I'd like a little more substantiation of exactly that scope, that scale. And as to your customers and whether or not you made lots of general remarks, I think we must absolutely agree that customers are essential, really, for any company. But what I find so hard to imagine is that there be a customer who says: "Okay, wonderful, interesting machine you have, but I wouldn't buy it. It is only because you have a stake in PT that I will buy it." You know, I would have doubts about that. Well, I...
We tried, and, and, maybe you wrote this down just for this afternoon at an earlier stage, because we tried to give you a little more color in the presentation, you know, as opposed to this sort of general idea that you think we were going to give you, perhaps. And I don't want to repeat all of it, but maybe one-on-one, we can have a bit of a talk about this. Well, it is clear that customers expect you to have a specific size, but what's not clear to me is why that size should include a big stake in PT, or perhaps simply by putting more cash on your balance sheet, that might do it in the way that Eminence says. Well, perhaps Peter can come back to that, where how a stake is very different from a cash position.
So let's put that on hold. Then the question about 5, and why not 6 or 7%? Well, it was simply the outcome of our regular strategic review, where we found a very healthy balance at around 5%. We've tried to be clear on the one hand that. We see the 5% as a significant step, significant reduction, which combined with a share buyback in the long term, may have a positive impact on the valuation, the appraisal of the company. At the same time, the 5%, you know, is in line with what we seek to do, namely, retain a significant stake in the company. This afternoon, we've tried to make it clear to you just how important that is for our front-end strategy.
So this is the balance we were able to find, and just now, I already spoke to your other questions. We think the balance, the equilibrium we've created is a very good outcome, and may make a contribution to long-term value creation. Then a cash question. Chuck has said it before, in the presentation, it's important for our customers to have presence, and the combination with a strong balance sheet is, well, you know, does that give more certainty or security for our customers? And if you tell us then how you view cash, well, that is experienced as a different thing by customers than having a significant stake in an industrial company in the same sector. And there's another reason which is more an in-house one.
Our policy has always been clear that we don't like to have excess cash on the balance sheet, and so we've always told you that EUR 300 million in cash is what we keep on the balance sheet, but anything extra or over and beyond that is paid out in one way or another, or is used in one way or another, you know, for the shareholders. And you know, we both feel that excess cash is not a healthy thing for a company to have on the balance sheet for a prolonged- That concludes my questions to you, but I'd like to ask a few to Eminence, if you will indulge me. Well, I would propose that you do that outside the meeting.
After all, you know, this item on the agenda was put on the agenda at Eminence's request, but a discussion about policy of the management and our work regarding our stake in ASMPT. Well, you've been able to hear that there are various opinions in regard to that. We agree to disagree, is what we should simply say in English. And then let me propose, unless there is something, you know, very, very burning, that we simply close this item on the agenda, and I also view the time, it's 5:40 P.M. I understand, and I understand the sign you're giving, but a few critical comments, if I may, also, regarding the presentation of evidence, simply to bring equilibrium in the critical questions that I'm asking here, but if you wouldn't appreciate that, I can leave that aside.
Well, yes, please do. So, sir, you are the very final person who is keeping us from a drink, a snack. So, Chair, Chair, I'll be brief. A lot has been said, but this is something that must be expressed. It is a common opinion between Eminence and your board, and that is that the value of Front End is undervalued. We agree on this, and we hear this in both presentations. So how are you going to remedy that? There is a conglomerate discount. There are two elements, but, Chair, let me get back to my questions put earlier. Urgency. When do you take action on something that you wish to realize? The distribution dividend policy, the dividend policy. I'd like to say something about that. There is EUR 250 million that came into your coffers. Mr.
van Bommel said that in the current strategy, you do not wish to buy more than 20%. It's a passive approach. It's worked, but now there is a new stadium, a new phase in the development of ASM. The development, I feel, that must make you change the dividend policy. Maybe you should be more offensive in your share buyback, but also I feel that you should evaluate, assess the dividend policy. EUR 250 million on the balance sheet. That would take about 2.5 years to have another share buyback program. I think that you have an opportunity to do this, but also to review your dividend policy. What's stopping you? Nothing's stopping you. After the half-year figures, maybe it is a good opportunity to review the dividend policy.
We have all confidence that the half-year figures will be good, but we do feel that there is still a discount on the visible value. Mr. van Bommel already said there is an in-house rule that we wish to have some EUR 300 million available in cash for contingencies, and that is an additional driver, and it will give a better insight into what you do. And I think that the opportunity that
...it will give you a smaller discount, will be bigger actually, and I will recommend this to you. Well, thank you, sir. We noted this. Thank you for your suggestions, and we will take these on board for future discussions regarding this topic.
Follow-up questions to Mr. del Prado and Mr. van Bommel.
Yeah.
So,
A few minutes, all right, Ricky?
Yes.
Okay.
Absolutely. Mr. Prado, you mentioned the financial strength and particularly important in a consolidating industry around your customers. Why is a significant stake in a company that doesn't sell to the same customers provide you with that strength, stability, as opposed to divesting of the stake and having a combination with somebody that would sell to the same customers that would give you more leverage with the same consolidating customers? That's question number one. Question number two, you've highlighted that at this time you view it as not the right time to divest the ASMPT stake. What specifically would you look for to tell you that it's the right time in the development of the front-end business to do that? It's been this comment in the last several years.
It clearly was true years ago when you were loss-making in the front-end business. Today, given the significant strength, I think it's a lot less true. And then, also in Mr. Brummel's comments, he mentioned the significant stockholder return, a fair amount of which was delivered by ASMPT. I think the point is, what is the prospects for ASMPT from this point forward? What's happened in the past is the past, but now we have $1.9 billion of shareholder money at risk, and what are the prospects going forward? And then lastly, as you've mentioned, each time the front-end value has stalled, you've sold ASMPT stock and the value has risen. You sold 12%, you got a significant value rise.
It then stalled again for two years, and you decided to sell another 5%, and it's, it's risen again. Why not continue to take that step further? You even acknowledged through your actions that selling the stake enhances the value of the front end. So, so why not continue to take that step, as, as your own actions have shown?
Thank you. Geert will give a brief reply, and then we will close this agenda point. Geert?
All right. Okay. Okay, yeah, Ricky, so, so, so first of all, you said about why those customers. I don't get it. Well, we tried to make clear in the presentation earlier today that it's really about a stronger and broader-based company, being perceived as a stronger and broader-based company. Secondly, a company with a stronger balance sheet, you know, gives more comfort, more trust to build stronger relationship. And gives them more comfort to give us more business and expand the relationship. That's one. And by the way, you said there is no overlap in customers. That's what we addressed in the presentation today. There is increasing overlap.
You know, over time, you know, compared to 10 years ago, more and more customers, more, more-
What % of sales at ASMI come from customers that overlap?
Oh, I don't think you want to hear that answer. You know, I don't think you want to hear that, because key customers in the top ten are becoming increasingly PT customers, so that's not very favorable answer for you.
Okay.
Yeah, so, so that's one. Then let me just finish the rest of your questions. So then, you said, at this time. Yeah, at this time. Well, you said, well, we repeated that several times. We really have -- we will continue in our strategic reviews to review continuously on one hand, the value of the significant stake in the front end, and on the other hand, you know, the valuation development. We will continuously compare that in our strategic review, so there is no straightforward answer that you may want to hear, that next month's it done, it's done. That's not the way a business works. Yes, that's not the way we run our business. Yeah, we run a business to create long-term value. Yeah, then you cannot answer a question just like that.
Then we compare it on a regular basis in our strategic reviews, and then we take sensible decisions. So then, with your statement, you suggested that the value creation was one-on-one related to the stake sales. I think it's not that simple, Ricky. It's a combination of reducing the stake and working very, very hard with 2,000 employees on the front-end business and building the track record that we showed you over the last couple of years. It's not that simple. It's a combination of the two things that made where we are today, and that created the value for all shareholders.
You built the value with your hard work. You've displayed the value after you've sold the stakes.
It's a combination, Ricky. Yeah, it's not only the stake sale that did the work. It's, they go together. It's not that simple.
Okay.
Okay.
PT, going forward from this valuation level, and then, you know, it's been a good stock for the last, you know, since 1999. I know it's 2009, the point you picked, but as you look at it today, at its significantly higher profits and higher multiple?
Yeah. So, what's your question?
My question is, looking in the rearview mirror and saying it's done well is not the same as saying we believe that putting $1.8 billion of shareholder capital at risk in this company going forward is the right decision.
Okay, I think, thanks, we hear what you say, Rick. But as I said earlier, I think in view of the time and the various points which have been made, I would like to make-
... A closing of
The only thing I want to say on this, Jan, if you allow me, is that, you know, we are. It's also in our interest that PT develops in the right way. Yeah, because, we are part of their board. We follow the business. We are a shareholder, you know, a 40% shareholder. So we are part of their board, and we review their long-term strategy on a regular basis to make sure, you know, that the company becomes stronger over time. And I'm not talking about the share price today or tomorrow, comparing the share price of tomorrow with yesterday.
I'm comparing the development of this company in creating value over a longer period of time, and that's what we have been doing over the last 5, the last 10 years, and that's what we're going to do going forward also. But it's not about 1 week from now, yeah? It's long term.
Okay, thank you. I would,
Okay, final item on the agenda, which is number 14. 14, is any other business. Would anyone like to put any questions right now? I see a hand raised. A person who has a question for this item, the any other business. Mr. Chairman, you know that I'm Mr. Heyman. Go back to the previous item, but I'll be very brief, I promise. My first comment is, why should Pacific be divested? Divesting means selling. Why not wait until there is an offer? If Pacific Technology is attractive enough, you can always get rid of your stake. Akzo, Unilever, we've seen things happen there. Heinz and Kraft want to take over Unilever, Heinz rather, and PPG or whatever they called, they are so in love with Akzo, they keep increasing their bid. So let's wait for a bid, and then maybe you can decide to sell. That's my first comment.
Second comment, and to what degree is ASMPT an addition to ASMI's activities? What is the client base of PT? Does it give value to the company? What do they manufacture? What are the services? Does it add value to the company? It's still so unclear to me up to today. But if PT adds value, whether it's on the short term or the long term, it may mean that the share in ASMI would become even bigger. Why sell it? Why sell something that is good? I do not understand. Thank you, Mr. Heyman, for your suggestions, and with your comments and your rhetorical questions, you've confirmed what Chuck said. It is important for customers, and it is important that there are customers. So thank you for your question and your comment. My pleasure, says Mr. Heyman. Any other questions?
If not, this brings us to the end of this item, of this agenda. The closure. Please return your chip cards, your voting pads. Please go to the registration desk to return those, and I thank you for your contributions. I thank you for your presence here today. I thank you warmly. After this meeting, you may enjoy a drink, maybe a snack. Thank you so much. I hereby close this meeting.