Ladies and gentlemen, thank you for standing by, and welcome to the ASM International Q2 2020 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question- and- answer session. To ask a question during the session, you need to press star one on your telephone. I must advise you that this conference is being recorded today. I would now like to hand the conference over to your speaker, Victor Bareño. Please go ahead, sir.
Thank you, Nadia. Welcome everyone. I'm joined here today by our CEO, Benjamin Loh, and our CFO, Peter van Bommel. ASMI issued its second quarter 2020 results yesterday evening at 6:00 P.M., Central European Time. For those of you who have not yet seen the press release, it is available on our website, asm.com, along with our latest investor presentation. As always, we remind you that this conference call may contain information relating to ASM's future business and results, in addition to historical information. For more information on the risk factors related to such forward-looking statements, please refer to our company's press releases, reports, and financial statements, which are available on our website. Now with that, I'll turn the call over to Benjamin Loh, President and CEO of ASMI.
Thank you, Victor. Thanks to everyone for attending our second quarter 2020 results conference call. Welcome to everybody. I hope everyone is healthy and fine. It's a real pleasure for me to talk to you today, in today's call, and I look forward to meet every one of you in the near future, either in person or virtually. As most of you know, I joined ASM as the new CEO following the approval at the AGM on May 18. I have recently also moved to the Netherlands, and I'm now based out of the headquarters in Almere. My experience comprises about 30 years in the capital equipment sector, covering semiconductors, data storage, scientific and analytical instruments, with both U.S. and European public companies. Based on my observation in these first two months, it is clear to me that ASM is a great company.
We have leadership positions in the fast-growing parts of the wafer fab equipment market. We have built up strong relationships with all of the top CapEx spenders in our industry. We have a solid portfolio for advanced technologies. Finally, we have highly motivated and talented employees, which is our key asset. Having taken over at a great- performing company, the key task for me will be to continue to further drive the growth of ASM in the coming years. A quick note on the agenda for the rest of today's call. I will first provide you with an update on the impact of and our response to COVID-19.
My colleague, Peter van Bommel, will then review our second- quarter financial results. Thereafter, I will continue with a discussion of the market trends and outlook. Finally, we will conduct the usual Q&A session. First, an update regarding COVID-19.
During the quarter, we continued to prioritize the safety of our employees. For me, it is very impressive to see how ASM employees, while putting the health and safety of all of us first, showed strong commitment and creativity to make sure we continue to serve our customers in the best possible ways, such as the use of smart technologies to work remotely on our customers' tools. In terms of demand, the impact from the pandemic remained limited in the second quarter as our customers maintained their investments in the most advanced nodes. During the quarter, our operations continued to be impacted by bottlenecks in our supply chain, especially the lockdown measures in Malaysia and Singapore impacted several of our suppliers and led to shortages and delays for certain parts.
In addition, the border closure with Malaysia prevented some of our employees from coming to work in our facility in Singapore. Despite these challenges, our team did a fantastic job, and we succeeded in meeting customer demands. Towards the end of the quarter, supply chain and logistical conditions improved as lockdown measures were gradually lifted or eased, especially in Asia-Pacific and Europe. However, due to the constraints during the quarter, a relatively large part of sales were booked in the later part of the quarter. As the global pandemic is not yet under control, we remain focused on measures to safeguard our employees and to ensure business continuity. Last but not least, as we already reported last quarter, due to the lockdown measures in Singapore, construction work on our new manufacturing facility had to be temporarily halted.
Since a few weeks, construction work has started again, be it at a low scale, and completion is now planned for late this year, early next year. I will now hand over to Peter for a discussion of our financial results.
Thank you, Benjamin. In the second quarter of 2020, our revenue amounted to EUR 342 million, which is up 5% from the first quarter, and is a solid increase of 32% compared to the second quarter of last year, and that is excluding the proceeds from the litigation settlement in that period.
The revenue in the quarter was towards the higher end of our guidance, which was a range of EUR 300 million-EUR 350 million. Service and spare sales grew strongly by 47% year-on-year and represented 23% of our total sales. Equipment sales increased by 27% year-on-year, and were primarily led by our ALD products. The strong improvement in our spares and service sales is partly caused by the COVID-19 uncertainty, which led to additional safety orders from some of our customers, but also structural higher level of sales caused by a higher installed base. By Industry segment, revenue in the second quarter was led by Foundry, followed by Logic, and then Memory. Combined Logic Foundry sales decreased sequentially, but were still at a solid level and continued to account for the largest part of sales.
Memory was up sequentially with sales increases in both DRAM and NAND. The gross margin increased to a record level of 48.3% in the second quarter, which is up from the 44.5% in the first quarter. The gross margin was again supported by cost reductions related to the installation of new products that were introduced in earlier periods, while the exceptional high level in the quarter was entirely driven by mix effects. The SG&A expenses increased by 15% compared to the first quarter, which is explained by one-off costs and higher variable compensation costs. The R&D expenses increased by 18% compared to the first quarter. This increase was primarily driven due to impairment cost. Excluding these impairments, the increase would have been 2%.
The operating profit increased 12% compared to the first quarter, with the operation percentage at 25.6% in the second quarter, which is a new record high for ASM. Below the operating line results included a currency translation loss of EUR 6 million, mainly explained by the depreciation of the US dollar in the quarter. This compares to a translation profit of EUR 12 million in the first quarter. The result from investment, which reflects our 25% share of the net earnings from ASMPT, increased to EUR 11 million in the second quarter, which is up from the EUR 1 million in the first quarter and also up from the EUR 2 million in the second quarter of last year. ASMPT reported sales of $557 million, which was up 28% compared to the first quarter and was up 21% from the second quarter of last year.
Their bookings amounted to $472 million in the quarter, which was down 29% sequentially and down 22% year-on-year. Let's now turn back to ASMI's consolidated operations. Our net earnings on a normalized basis amounted to EUR 77 million in the second quarter. Our new orders in the second quarter were EUR 298 million, down 11% from the first quarter and up 10% year-on-year. Orders were well within the range of the EUR 280 million-EUR 310 million that we had guided for. Looking at the breakdown in bookings by Industry segment, Foundry represented the largest segment again in the second quarter, followed by Memory and then Logic. Combined, logic/Foundry bookings decreased compared to the record level in Q1, but were still at a healthy level. Memory bookings increased sequentially and were mainly driven by DRAM. Turning to the balance sheet.
We ended the quarter with EUR 432 million in cash, which is down from the EUR 529 million in the previous quarter. The drop of almost EUR 100 million is largely explained by EUR 105 million in cash that we returned to our shareholders and is partly offset by EUR 8 million in ASMPT dividends received during the quarter. The free cash flow amounted to zero in the second quarter, as the strong level of profitability was offset by a cash outflow of EUR 65 million for higher working capital, which in turn was mainly caused by higher accounts receivable. As Benjamin already mentioned, a relatively large part of sales was booked towards the end of the quarter due to the COVID-19- related constraints, this drove the higher accounts receivable position at the end of June.
The underlying quality continues to be healthy, illustrated by a record low level of overdues at the end of the second quarter. Inventories were also up somewhat in the second quarter, as we increased inventory for certain parts in view of the supply chain bottlenecks risks during the quarter. We expect this to gradually come down in the course of 2020, since supply chain bottlenecks are reduced. In the second quarter, we also spent EUR 19 million on CapEx, which is largely related to a new manufacturing facility in Singapore. In the quarter, we also paid the final dividend of EUR 2 per share, or close to EUR 100 million in total. In addition, we started the earlier announced share buyback program of EUR 100 million, which we completed for 7% by the end of the second quarter.
Finally, on the 21st of July, the earlier announced cancellation of 1.5 million treasury shares became effective. With that, I hand the call back over to Benjamin.
Thank you, Peter. Let's now look in more detail at the trends in our markets. In the first half of the year, the semiconductor market showed overall a resilient performance, while different segments such as smartphones, industrial, and automotive have seen a significant impact from COVID-19. Other parts related to the digital infrastructure that support work from home and digital learning saw a boost in demand. Wafer fab equipment spending also held up well in the first half, as customers continue to invest in the leading-edge nodes. Looking at the market by segment, Logic Foundry spending remained strong in the first half.
Our customers continue to invest in the advanced node capacity that will enable end- market products growth in areas such as 5G and data centers. In Foundry, which is our largest segment, the majority of investments will focus on the advanced sub-10 nm nodes in the second quarter.
In leading Logic, investments were targeted at 10 nm capacity additions. The number of ALD layers in these most advanced nodes has increased with a substantial double-digit percentage. As is clearly demonstrated by ASM's outperformance in the last 18 months, we substantially increased our share of wallet with key customers on the back of these node transitions in Logic and Foundry. Our expectations for the combined Logic and Foundry segment have remained quite steady. We expect healthy spending in Logic and Foundry in the second half of the year, though slightly lower than in the first half. Expectations regarding the mix have shifted somewhat more towards the Foundry segment. The incremental strength in Foundry is offsetting some softening of expectations for the Logic segment.
We are currently strongly engaged in R&D, and looking at the next nodes in the Logic Foundry sector, we expect our served available market to grow again by a double-digit percentage. Looking at the Memory market, end- market trends in DRAM and 3D NAND developed in a healthy way in the second quarter, supported by strong demand in segments that benefited from work from home, such as PCs and data centers. Wafer fab equipment spending in the Memory segment remained, however, at relatively modest levels in the quarter as customers continued to carefully monitor developments in supply-demand conditions. We still expect some increase in Memory spending in the second half with a focus on technology transitions. We are not yet seeing evidence of new significant capacity additions.
Our ambition in Memory remains to increase our served available market as we further step up our investments and customer engagements in new applications. This year, we are especially strengthening our position in the DRAM segment, where we have booked a number of important tool wins in non-patterning ALD. A key application for us in this area is the high-k layer in the so-called PERI of DRAM device. This is a Logic-like process in which we, of course, have significant experience. In the second quarter, we had a record quarterly high in DRAM bookings. For a meaningful part, this was driven by non-patterning ALD. Longer- term, step by step, we expect to improve our participation in the Memory ALD market. On the back of that, we expect that over time, we will increase the contribution of Memory to our growth.
However, at the same time, it is important to keep in mind that Logic/ Foundry represents the largest part of our sales. This exposure strongly increased as we more than doubled our sales in Logic/ Foundry over the last couple of years. From a geographical perspective, a strong driver in the first half was the Chinese market, both for the wafer fab equipment market and also for ASM. We achieved substantial growth in this important market with, for the first time, a double-digit contribution to our total sales, mainly driven by domestic customers. The mix of investments is shifting towards the more advanced nodes, which is clearly playing to ASM's strength.
In view of the breadth of our R&D engagement with basically all key domestic customers and the commitment to invest in new technologies and capacity, we see good opportunities for China becoming another leg of growth for ASM in the coming years. In terms of products, ALD was the key sales driver with record-high sales in the first half of this year. In EPI, we remain strongly focused on further expansion of our position, supported by ongoing R&D engagements. In vertical furnaces and PECVD, we target to gradually strengthen our position in specific targeted segments. For the full year, we expect wafer fab equipment spending to increase by a mid-to-high single-digit percentage. As just discussed, the outlook for the wafer fab equipment market in the second half is supported by healthy spending levels in the Logic/ Foundry segment, and some increase in Memory spending.
The economic outlook continues to be dominated by uncertainty about the impact from COVID-19. Global GDP is moving into a steep recession this year, and the pace of recovery is still uncertain. Despite these uncertainties, the longer-term outlook for our industry looks strong. The necessity for all of us during the lockdown to look for smart and virtual ways of working, learning, and communicating has led to an acceleration in the trends of digitalization. Investment in leading-edge capacity will be required to produce the powerful and advanced semiconductors that will help enable multi-year drivers such as 5G, cloud computing, artificial intelligence, and autonomous driving. As our customers transition to next-generation devices, increasing complexity and shrinking geometries will drive increasing requirements for advanced technologies such as ALD and EPI. Now, let us look at the guidance we issued with our Q2 press release.
For Q3, on a currency comparable level, we expect sales of EUR 300 million-EUR 320 million. Q3 bookings on a currency comparable level are expected to be in the range of EUR 280 million-EUR 300 million. Based upon current market developments, we expect the wafer fab equipment market to grow with a mid-to-high single-digit percentage in 2020. Our Q4 sales are expected to be at least at the same level as in Q3. Hence, we expect to outgrow the wafer fab equipment market in 2020. With that, we have finished our introduction. Let us move on to the Q&A, and I will pass you back to Victor.
We'd like to ask you to please limit your questions to not more than two at a time, so that everyone has a chance to ask a question. All right, operator, we are ready for the first question.
Thank you. Ladies and gentlemen, let's begin the questions. The first question comes from the line of Achal Sultania from Credit Suisse. Please go ahead. The line is open.
Hi, good afternoon. Maybe if you can touch a bit more on gross margin. Obviously, you had very strong gross margins in Q2. You mentioned a strong sales mix helping with that. Can you help us quantify, or maybe just give some more color as to how we should think about the impact from that strong mix in the quarter helping? Secondly, as we go into the second half of this year and more actually into 2021, what are the positives and negatives on gross margin? Given that you're still ramping up your fab in Singapore, you probably still had some supply chain issues from COVID in Q2. Any color around that would be helpful. Secondly, on one of your large customers obviously delaying their latest node ramp-up. How should we think about the impact from that customer?
I understand that you are already very strong on 10 nm, as you mentioned earlier on your remarks on advanced Logic. Is it something that is actually a meaningful negative for you as we go look into 2021? Thank you.
Achal, let me take the questions about the gross margin first. Then Benjamin will jump in the impact of the customer that you mentioned. The gross margin, yeah. What we have said in the last years is that we expect our gross margins to be in the low to mid-40s, whereby we have said, okay, in the past quarters, that we expected that our gross margin would be more going into the direction of the higher end of that range. We also have always said that we could have a gross margin, which is slightly lower or slightly higher than that range, depending on the mix that we had. Now, we had, what we also mentioned in our press announcement, a very strong mix in the second quarter.
While we had in 2017, 2018, a few quarters where we are below the range, you have now seen in the second quarter that we are above that level. When you look going forward, we still expect that the gross margin trend, what we have mentioned earlier, will continue in the direction of the low to mid-40s, with a tendency of being on the higher end of that range. While there could be quarters that we will also be above that level.
Hi, Achal. Coming back to your question regarding the large Logic player that has recently announced a delay. For us, when we look at the second half, the combined Logic and Foundry segment continues to be very strong. In that respect, we do not see any impact, as far as the second half of 2020 is concerned. Now, going into 2021, of course, that's still a little bit far, and some of the plans from the Logic player are still not fully, let's say, announced. When we look at, again, in 2021, especially in the advanced nodes for both Logic and Foundry, we are in a very good position. If there is going to be any kind of outsourcing or transfer, we will stand to gain from that as well.
Overall, even though it's too early, we view 2021 as still having a very good momentum for Logic and Foundry.
Thank you. Benjamin.
Thank you. The next question comes from the line of Stéphane Houri from ODDO BHF. Please go ahead. Your line is open.
Yes, thank you very much for letting me on. Yes, thank you for answering to the question about your largest customer. Just to clarify, I know there is a lot of moving parts about 2021. Would you say that 2021 should be a year of growth for you? You talked about if there is outsourcing, then you will benefit from that; this part seems to be clearly under control. From a global standpoint, what is your view on the year?
Stéphane, that's a good question. I think, as far as we can see, 2021 is still a little bit too early for us to give any forecast, any projections as to whether there will be growth. What I can say is when you look at the secular trends driving the usage of advanced semiconductors, and just from the last two months that I've been in the company, looking at the engagements that we have with our customers, especially on the advanced nodes. It all looks positive. As long as the demand for advanced semiconductor usage and adoption is good, I think it will also be good for us.
Okay. Thank you.
To add to that, Stéphane, it's very strongly dependent on the exact timing of our customers, of course. Yeah. The underlying trend is there. The timing is for us, the big uncertainty.
Benjamin, as you said, you are here for only two months. It could be interesting for us to know exactly what you think, of course, of the company you discovered. I assume that you are going to drive a kind of strategic review. Would the stake in ASMPT be part of this strategic review? Thank you.
As you correctly mentioned, Stéphane, I have been in the company for slightly more than two months, under very strange conditions caused by COVID-19. I've been trying to do whatever I can. Of course, trying to understand more about the business that we are in, our customers. So far as I've mentioned in my earlier, let's say, report, ASM looks to me to be a great company. Not only in terms of the markets that we play in, where we have the leading edge in terms of the technologies. We are also in a market where the longer-term secular trends point to continued growth. What impressed me most was the motivated and talented employees that we have in the company. I think those are all great ingredients to have in the making of a great company.
My job as the new CEO is to try to continue to drive further growth for ASM in the years coming forward. On your question about the strategic or the stake in ASM Pacific, we view it as a strategic stake for us. The stake that we have in ASMPT gives us additional financial strength. It is also perceived by our customers favorably. They like that we have that stake, because it also gives them the perception that we have increased or let's say, diversified industrial presence. We do not have any plans at this moment to make any changes. You are absolutely correct, Stéphane. We will be doing regular reviews as part of our management process, to look at the stake that we have in ASM Pacific.
Okay. Many thanks.
Thank you. The next question comes from the line of Sandeep Deshpande from JP Morgan. Please ask a question.
Thank you. Maybe I'll ask 2021 in a slightly different way. There is a 3 nm Foundry process that is going to ramp up in 2021. Maybe you can talk about whether you think how your content in that 3 nm process is based on what you know today. Of course, there is another Logic/ Foundry process ramping up in Asia as well, and your position there. Given your strength in the Logic market that you've seen in the last couple of years, whether the Logic/ Foundry market will be able to potentially offset any impacts from your IDM customer into 2021.
Sandeep, thank you for the question. I will attempt to, again, answer the second part of your question first, which is, I think, directed at how do we see 2021. I think that was another way of you asking the question. I will say again that it's a little bit too early for us. Peter has kindly also chimed in. Part of it is attributed to timing, and at this moment, we are not 100% sure as to when our Logic and Foundry customers will be investing, although it could be any time within 2021. On the 3 nm Foundry question, every time when there is a node advance, basically our served available market, especially in ALD, increases by a double digit.
As the nodes get smaller, especially in Logic Foundry, you are probably well aware that the number of layers that require ALD, the number of layers that require EPI increase significantly. For us, we have been engaging with the said Foundry customer that is planning a 3 nm for a long time. We have a lot of engagements with them, both from the earlier period when they were just starting to look at the technology and the process to now, where I think they are probably finalizing it and about to go into more substantial manufacturing. For us, the move to 3 nm, in summary, is going to be very good. We expect that our market share of the serve, or let's say the share of the served available market, is going to increase by double-digit, more ALD layers, more EPI layers.
We are heavily engaged with that said Foundry customer.
Thank you.
Thank you. The next question comes from the line of Keagan Bryce from Barclays. Please go ahead, ask your question. Your line is open.
Good afternoon, gentlemen. Keagan Bryce from Barclays here. I understand that you haven't given any formal sales guidance for the fourth quarter other than saying it's going to be similar to three, two levels. Perhaps you can give us some more color around some of the order trends you're seeing across Foundry, Logic, and Memory. Historically, 4Q has always been up sequentially quite a lot. Is there a reason why this may not be the case this year, or is it sort of too difficult to say with limited visibility?
Keagan, good afternoon. First of all, maybe a quick just remark on why we decided to include a little bit of a Q4 indication. Primarily, we felt that it might be good for the market, for the investors, because of all the uncertainty related to COVID-19. You see a lot of reports about recession here, recession there. We just wanted to add a little bit of color based on what we know about Q4. The Q4, we expect that Logic and Foundry is going to continue to be strong, going right until the end of the year. In terms of Memory, just in terms of timing, we see a little bit of uptick. Again, as we have tried to qualify, it's not as significant as a huge amount of capacity additions. We do see technology investments, technology buys, which is going to be good for us.
We have been working with some of the Memory players for quite some time, and they already have the first tools in their fabs, and we just have to wait for them to go into what you call capacity buys, and that should be good for us. In summary, when we look at Q4, Memory may be a small uptick, but potentially driven by technology buys. Logic and Foundry are continuing to see very strong momentum.
That's clear. Thanks, Benjamin.
Thank you. The next question comes from the line of Krish Sankar from Cowen & Co.. Please go ahead. Your line is open.
Yeah, hi. Thanks for taking my question. Benjamin, congrats on the new role. I had two questions. First one is, you kind of mentioned that the second half WFE's incremental strength is coming from Memory. Is it DRAM or NAND where you see the incremental strength, even though if it's on the technology side? Add a follow-up.
The question is, in the second half, the incremental in Memory , is it coming from DRAM or is it coming from NAND, right?
Right. Yeah.
Given the level where we play in terms of the Memory market in both DRAM and NAND, like I said, when you compare to our strengths and our size in Logic and Foundry, Memory, first of all, it doesn't cover such a huge percentage. The answer to your question is, we are seeing increments actually in both, but they are more technology buys. In that respect, the increments are not of such a high level to us. We do see technology buys in both.
Got it. That's very helpful, Benjamin. Just as a follow-up, congrats on getting some share wins in the non-patterning ALD for DRAM. You said that it is a Logic-like device. Are you seeing your DRAM customers kind of mimic the whole Logic production tool of record in their DRAM fab? In other words, your tool position and strength in Logic is that tool set being mimicked in DRAM too, right now?
In DRAM, one of the areas, as you correctly mentioned, that we have had success in penetrating is the non-patterning layer, specifically what we call the high-k layer that is associated with the high-k metal gate stack, which essentially is a Logic layer. This is in the CMOS poly-gate transistors. If you look at, as DRAM scales and the geometries shrink, our expectation is that we're going to see more and more non, let's say, patterning layers being used. We're going to see more and more Logic-like layers, and that is driving actually, potential future demand for us, and that is where we are currently heavily engaged with the DRAM players.
Thank you.
Thank you. The next question comes from the line of Robert Sanders from Deutsche Bank. Please go ahead and ask your question. Your line is open.
Hi, good afternoon. Just coming back on the decision of the delay at Intel. If they were to go fully fabless, what does that actually mean, do you think, for your long-term addressable market? Obviously, it's great that there's a lot of more advanced volume at the leading edge if they do that, but obviously it would lead to more customer concentration. It would also remove a very inefficient deployer of capital. Have you guys thought about the long-term implications of potentially a pseudo- monopoly in Foundry Logic?
Rob, thank you for the question. I think you may have asked a question where a lot of people have been speculating, maybe, and I appreciate the question very much. First of all, I think Intel's going fabless is a kind of limited possibility, but let me try to answer the question that you have posed. For us, it really is just dependent on the usage and adoption of advanced semiconductors, and customers continuing to shrink geometries to produce semiconductors with 3D, let's say, structures and so on. As long as the demand is there and as long as our Logic/ Foundry customers continue to invest in these advanced nodes, we do not see an impact on us. You could say that in one sense, Logic then shifts to Foundry. We don't really see an impact even if that happens.
Got it. Just my follow-up, just the DRAM, the incumbent there is Lam on the single wafer side and TEL on the batch side. Are you seeing any benefit from the shift from batch to mini batch or batch to single wafer in DRAM because of the need for more precision, et cetera?
The shift from batch to a single wafer definitely plays to our strength, because our biggest market share is in single wafer, and that's also our biggest strength. At the same time, the shift towards more Logic- like layers in DRAM is also an area that plays to our strength. As this technology change is going on, it becomes better for us.
Thank you.
Thank you. The next question comes from the line of Wim Gille from ABN AMRO. Please go ahead, ask your question. Your line is open.
Yeah, thank you very much. First of all, on the split between spares and services and systems, you obviously had a bigger weight towards spares this quarter, as your clients are stocking up some components which they deem critical in the supply chain, given all the uncertainties. What is, in your feeling, a more normalized level for spares during the quarter? Do you think that the stocking is over now or that the stocking by your clients may continue for a few more quarters to come? In association there with, what is the gross margin differential between system sales, and spares, and services? Is it possible that, let's say, the elevated weight of the spares business is actually pushing up gross margin temporarily? Then I have a small follow-up.
Wim, let me take that question. First of all, I think when you look to the step up that we have seen in the spares and service business in the second quarter, what I mentioned earlier in the prepared notes, was partly related to the stocking, but also a big part was indeed the installed base that we really see improving now. With the increases of sales that we have had in the past years, when you're running out of the guarantee period, you see that we are structurally going to a higher level as we expect.
The biggest part of our growth is related to that. The gross margin on spares is healthy, but as what we have said in earlier calls, the gross margin that we have on the spares business is comparable with, is not much deviating from, the margins that we have on our equipment sales.
The underlying question is the gross margin, mainly related to the fact that you have more spare business. The answer is no. We have also seen that our equipment margins in this quarter were very healthy.
Very good. A second question, if I may. This quarter, you had another impairment of about EUR 4.8 million. That's actually the second quarter in a relatively short period of time that you did have these impairments. Can you give us a bit more of a feeling on what it is related to? If you have any visibility on what the future's going to bring in terms of impairment. Do you think this is it, or should we expect a structurally higher level of impairments going forward?
It will not be a structurally higher level of impairment. It's difficult to say in general, but what you see is with that on a certain moment, you start a lot of projects, and some of them are less successful than others. We are a conservative company, as you know. On the moment that we see any risks, then we take impairment on that, and that was where several smaller projects this time, where we said, "Okay, listen, there are certain risks on it," and we impair them.
Thank you.
Thank you. The next question comes from the line of Peter Olofsen from Kepler Cheuvreux. Please ask your question. Your line is open.
Yes, good afternoon. I had a question on epitaxy, where you said you remain focused on further expanding your position there. In the past, you've talked about broadening your customer base in Logic/ Foundry beyond your big Foundry customer. Could you talk about the progress there, and to what extent is the delayed technology transition by the bigger Logic guy affecting the potential timing of the broadening customer base, when we might see that on your business? Or is there also scope to broaden your customer base within the Foundry segment?
Peter, thanks. Good afternoon, thank you for the question. I will answer in two ways. One is when you look at the Logic/ Foundry sector, as the node transitions happen, the number of ALD, but also EPI layers, tends to increase. As I said earlier, we have been actively engaged with our customers on trying to work with them on these new layers at the new nodes. The second part of the answer is we cannot give specific, let's say, details about customers and so on. If you look at the last three years, what has happened is we have basically carved out a share of greater than 20% for ourselves in the EPI sector. We have ambitions to continue to grow our market share in this area.
I think going forward, when you look at the advanced node transitions, I think we will be in a very good position.
Is it fair to say that at this moment, your position in Logic/ Foundry is mainly the position at one large Foundry?
At this moment, again, just hold on. Sorry. Excuse me, because I'm two months in the company, I just want to make sure I tell you the right thing and not give you some things which are mistaken or some crap. At this moment, yes, we have a lot of strength in one Foundry; we have a lot of, let's say, engagements going on at other Logic/ Foundry customers.
Okay, thank you.
Your next question comes from the line of Marc. Last question comes from the Marc Hesselink line from ING. Please go ahead. Your line is open.
Yes. Thank you. I would also like more in general talk about that expanding client base. You have quite a lot of evaluation tools in the field. If I'm correct, that's quite widely spread. How do you see that progress? Maybe to focus on the two areas, dynamics in other foundries, so outside the leading one, and also more broadly on the Memory space. Do you see that those evaluation tools, you're getting those inroads? Thanks.
Marc, thanks for the question. The answer to your question is yes. It's part of our strategy, and also, to a large extent, a requirement by the customers when we are trying to penetrate advanced nodes. That, if it's a very new layer, that we have to work together with them, and there's no other better way than to have eval tools at their site so that we can work together. We are very confident that a lot of the eval tools are going to be changed into a tool or process of record. When they really do the volume investment, that's when we get the returns and see the business coming back.
Does that imply that we've seen in the last couple of years that there's more and more concentration towards the top three clients? That is a trend that should then reverse a bit over the coming quarters?
You are probably correct that a lot of the focus has been on the top three clients, but I would say that we also do selectively with customers that are not in the top three, when they have special processes or if it's a process that is new, and that we have to work together with them. That's also an area that we work on.
Okay. Thank you. One very short question. Looking at the buyback that you're doing, the volumes don't seem to be very high, despite the fact that you still have a lot of cash. Is there a reason there for that?
We regularly look to, of every share buyback program that we are doing, Marc, we look at the specific market circumstances on that moment. We have chosen this time for a program which is a more extended program than what we did in the past times. That's not deviating from the earlier share buyback programs that we did, which were also over a more extended period of time.
Okay, clear. Thanks.
Operator, are there any further questions?
No, there is no further questions. Please continue.
If there are no further questions, I would like to thank everybody for calling in to our second quarter 2020 earnings call again. As I said at the beginning, I look forward to meeting all of you, either in person or virtually. With that, I would like to conclude the call for today, by wishing you stay healthy, stay safe, and let's hope that this pandemic ends as soon as possible. Thank you, everybody.
That does conclude our conference for today. Thank you for participating. You may all disconnect.