Good day, welcome to the ASM International 2015 Q3 earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Victor Bareño, Director of Investor Relations. Please go ahead, sir.
Thank you, Daniel. ASM issued its 2015 third-quarter results last evening. For those of you who have not seen the press release, it, along with our latest investor presentation, is accessible on our website, asm.com. We remind you that this conference call may contain information relating to ASM's future business or results, in addition to historical information. These forward-looking statements involve risks and uncertainties that could cause actual results to vary materially from those expressed or implied in such statements. These include, without limitation, statements relating to revenues, margins, cost reduction programs, liquidity, break-even levels, strategies, and economic conditions. For more information on the risk factors that could affect results, please refer to the company's press releases, reports, and financial statements, which are available on our website. All forward-looking statements are based on information as of today, October 29th, 2015, and the company assumes no obligation to update these statements.
I will now turn the call over to Chuck del Prado, President and CEO.
Thank you, Victor, and thanks to everyone for attending our third quarter 2015 results conference call and for your continuing interest in ASM International. After a review of operations, Pieter van Bommel, our CFO, will join me in answering any questions that you may have. Let's start with a review of our third quarter financial results. Performance in the third quarter was again solid and in line with our expectations. Revenue in the third quarter decreased by 19% compared to the record level that we achieved in the second quarter and increased by 33% from the third quarter last year. At a level of EUR 162 million, third-quarter revenue was within the range that we had guided for. Our ALD business was again the main top-line driver. By customer segment, the revenue stream was led by memory, followed by foundry.
The gross margin remained at a solid level of 43.7%, down from 45.1% in the second quarter, mainly due to a less favorable mix, and up from 43.2% in the third quarter of last year. SG&A expenses decreased by 3% compared to the second quarter. As a percentage of sales, SG&A amounted to 15% in the quarter, up from 12% in the second quarter and down from 16% in the year-ago period. SG&A expenses included one-off expenses of close to EUR 1 million, in part related to the tax refund in Korea. R&D expenses decreased by 1% sequentially and increased by 47% compared to the second quarter of last year. As a percentage of sales, R&D amounted to 14% in the quarter, up from 12% in the second quarter and up from 13% in the year-ago period.
Apart from a currency impact of 10%, the year-on-year increase in R&D was primarily driven by increased customer demands related to newer ALD applications, similar as in the previous quarters. Operating income fell to EUR 23 million, down from EUR 42 million in the second quarter, and up from EUR 17 million in the third quarter of last year. The operating margin amounted to 14% in the quarter, compared to 21% in the second quarter. Financing results in the quarter was slightly more than EUR 2 million positive and primarily consisted of a translation gain of EUR 3 million. In the second quarter of this year, financing results included a translation loss of EUR 13 million. The translation gain in the third quarter was mainly related to movements in the Japanese yen and Korean won, while the loss in the second quarter mainly reflected the depreciation of the US dollar in that period.
Tax in the third quarter amounted to income of EUR 8.7 million compared to tax expenses of EUR 4.5 million in Q2 of 2015. Tax income in Q3 2015 included EUR 9 million tax benefits due to Korean tax refunds from previous years related to higher tax exemptions than originally assumed. Results from investments, which reflects our share of approximately 40% in the net earnings of ASMPT, fell to EUR 8 million for the quarter, down from EUR 21 million in the second quarter and EUR 31 million in the year-ago period. These figures exclude the ongoing amortization charge, which amounted to almost EUR 7 million in the third quarter. For the full year, this charge is projected at EUR 27 million. ASMPT sales fell in the third quarter to HKD 3.2 billion, down 14% from the second quarter of this year and down 33% from the third quarter last year.
ASMPT reported bookings of EUR 381 million for the third quarter, a decrease of 23% compared to the second quarter, and 29% lower than in the third quarter of last year. Note that ASMPT already announced on October 9th that the third quarter revenue were lower than expected due to a deterioration in market conditions and the push-out of order deliveries. Now turning back to ASMI's consolidated operations. ASMI's net earnings on a normalized basis amounted to EUR 42 million in the third quarter, down from EUR 47 million in the second quarter and down from EUR 60 million in the third quarter of last year. The drop in operating results and the drop in the results from investments were the main reasons for the Q-on-Q decrease in net earnings, partly offset by a higher financing result and the one-off tax benefit.
New orders decreased by 11% from the second quarter to €148 million in the third quarter and were at the higher end of the range that we provided in July, which was between €130 and €150 million. Year-on-year, the drop in orders was 5%. Orders were for the largest part driven by our ALD business. Bookings were spread among a relatively larger number of customers with memory, the leading sector, in particular DRAM, followed by foundry. Turning to the balance sheet and cash flow. The cash position increased to €428 million at the end of the quarter, up from €363 million at the end of June. This increase was a result of primarily a strong operating cash flow, the tax refund during the quarter, and the dividend received from ASMPT.
Net working capital on an absolute basis decreased from €149 million at the end of June to €113 million at the end of the third quarter. This reduction was a result of the lower activity level while working capital ratios remained at the same time well under control. Accounts receivables and inventory decreased, partly offset by a reduction in account payables. The number of outstanding days of working capital measured against quarterly sales decreased from 67 days at the end of June to 63 days at the end of the third quarter. We generated €63 million in operating cash flow in the quarter, up from €11 million in the second quarter. Operating profitability decreased sequentially, but this was more than offset by the aforementioned improvement in working capital and to a lesser extent, the one-off tax benefits, which had a cash impact of €6 million during the quarter.
Dividends received from ASMPT during the quarter amounted to €18 million. Let's now make a few comments on the share buyback program. With the Q3 earnings release, we announced the authorization of a new share buyback program for up to €100 million of the company's common shares. This program will be executed within the 2015-2016 time frame. The share buyback program is part of ASMI's continued commitment to use excess cash for the benefit of its shareholders, and it takes into consideration our company's solid financial performance and the company's healthy cash position. As a reminder, the new share buyback program follows on the previous program, which was also for a total amount of €100 million that was announced at the end of October last year and was concluded in May of this year. Let's now look at our ALD business.
Momentum in the ALD market has remained strong this year. Our top-line performance demonstrates that we continue to benefit in a healthy way from the ongoing growth in the ALD market. Including our guidance for the fourth quarter, our full-year sales are on track for the third consecutive year for a double-digit increase on a constant currency basis. A notable factor behind our sales growth is similar to last year, the successful broadening of our customer base beyond the top three semiconductor capital spenders. ASM's ALD tools are now used in volume manufacturing by all of the top 10 players in our industry ranked by capital spending. We remain confident that the ALD market has the potential to double over the next three to four years, with 2014 as the baseline, driven by a steady increase in the number of applications.
The transition to the 10 nanometer node in the logic and foundry sector will be an important step in this expansion of the ALD market. The smaller geometries, combined with higher aspect ratios and increased complexity of these next generation FinFET devices, will further increase the need for highly precise and conformal film deposition. Going from 16/14 nanometer to 10 nanometer, we expect a significant increase in the number of ALD applications in which we are engaged with customers in the logic and foundry segment. One of the most significant new single wafer mini batch ALD opportunities at the 10 nanometer logic foundry node will be the use of spacer-defined or self-aligned multiple patterning. The deposition of highly conformal films by ALD is a critical and enabling step in spacer-defined multiple patterning.
As many on the call are probably aware, we have built a commanding position over the last five, six years in spacer-defined multiple patterning in the memory sector, where several of the largest customers have already ramped multiple technology nodes using our ALD solutions. With the leverage of this strong track record, we believe we are well-positioned to benefit as our logic and foundry customers expand their use of spacer-defined multiple patterning. For patterning applications at the 10 nanometer node, we are engaged with multiple customers for multiple layers. Multiple patterning also continues to be a key enabler in the DRAM sector. At the 1X node, for which we expect initial shipments next year, more layers are likely to require multiple patterning. We feel we are well-positioned to serve these increasing patterning requirements of our DRAM customers.
In 3D NAND, we expect to strengthen our presence in the next couple of years, with a gradual increase in revenue contribution from 3D NAND in the coming years. In today's 3D NAND generations, however, the need for ALD is still limited. Let's now look briefly at the overall market environment. Regarding the semi market as a whole, over the last few months, chip pricing has continued to weaken. Inventories remain high, and full year semiconductor revenues in the industry are now expected to have negative growth in 2015. At the same time, market research firms such as VLSI and Gartner have further lowered their expectations for the wafer fab equipment spending in 2015. They now both project a slight drop in wafer fab equipment spending for the full year in 2015.
Logic foundry spending is tracking lower in the second half of this year compared to the first half, as 14/16 nanometer investments were mostly completed in the first half, while the 10 nanometer ramp is only expected to start next year. DRAM spending on 20 nanometer is at a lower level in the second half compared to the first half. NAND flash investments in the second half are steady compared to the first half, with a growing portion of 3D NAND. For the full year 2015, both in the first half and the second half, memory spending clearly wasn't the key driver. Regarding the market environment in 2016, for logic foundry, the focus will be on 10 nanometer technology ramp.
For DRAM, we expect investments in 2016 to be lower than in 2015, with likely a relatively higher level of spending in the second half of the year compared to the first half. Regarding NAND, we believe that there is potential for an increase in 2016, depending on the speed of the transition to 3D NAND. Let's now look at our outlook as we communicated overnight in our press release. For Q4, we expect sales between EUR 125 million and EUR 145 million on a currency comparable level, and orders are expected to come in at a level of EUR 120 million-EUR 140 million, also on a currency comparable level. Our current visibility is that equipment bookings for next technology node investments in logic foundry will start in the course of the first half of 2016.
At this point, we are more than happy to answer any questions that you may have.
Thank you, sir. If you would like to ask a question at this time, please press the star key, followed by the digit one on your telephone. Please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Again, please press star one to ask a question. We will pause for just a moment to allow everyone to signal. We can now take our first question. It comes from Philippe Scholte of Kempen. Your line is open. Please go ahead.
Yes, that's Philippe Scholte from Kempen. Good afternoon, everybody. First of all, on your guidance or your statement on the logic foundry bookings for the next node starting in the course of. Is that maybe another way of saying that you do not really expect the bookings and maybe the sales level to recover from the guided Q4 level before the second half of 2016? My other question is related to the R&D expenses. No, let me actually put it on the SG&A. I was actually hoping for a bit more of a decline sequentially after the last quarter was actually quite a significant number. What is the way to look at that going forward?
Your first question. It's difficult for us to give more visibility than we gave in our outlook. It's clear that so far in second half of 2014 and throughout 2015, memory has been the most important driver in our industry. It's clear that in the course of 2015, logic and foundry spending came down. Also memory in the second half shows a different, somewhat weaker pattern than in the first half. It is important to the industry now that the next driver will step up and everybody is looking forward to 10 nanometer logic foundry to take that role. It's clear based on the current visibility with our customers, that really bookings will start to kick in the first half. Of course, translating for logic and foundry into revenues, let's say as of mid of the year, throughout the remainder of the year.
In terms of bookings kicking in in the first half, very likely, it will clearly start with the visibility we have now in Q1 and then further strengthen in the course of the year. That's the best visibility we can give on logic foundry and on memory, as we said, that is of course a very important other factor, which will determine the strength also in the first half of the year. You know that also memory visibility is mostly given towards the end of the year, going into the next year. We are still developing our visibility. As we said, for DRAM, we view that we are very well positioned from a technology point of view to benefit from transitions going into new nodes, especially from a patterning point of view. How volume will develop going into 2016, that's too early to tell.
On NAND, we gave also our comments in the introduction itself.
Okay. The second question.
Yeah, let's dig a little bit on R&D and SG&A cost. First R&D, Philippe. As we indicated earlier, in R&D, we see two impacts. When you compare what we did the first nine months of 2014 versus the first nine months of 2015, and when you compare also Q2 with Q3. Q2 to Q3 doesn't show an increase any longer, but the strong increase has been, of course, already in the earlier quarters. It's driven by two things. First of all, of course, is what we also have disclosed in our quarterly report is that currency plays an important role, so that's more than 10%. That's a substantial amount of cost increase that's causing that. The second thing is that we strive, due to the fact that customers are asking us to do a lot of additional work for them. I've explained that in previous calls already.
That we are increasing there our efforts, and the target that we have with regard to R&D is to keep our R&D over a certain period of time in the low to mid-teens. That has not changed. When you look to SG&A, basically the same story. When you look to the year-to-date figures, you see that we have increased our SG&A with approximately EUR 11 million for the first nine months 2015 compared to 2014. Half of that is related to currency impacts. We also have indicated in our quarterly report. The other half is we have seen some incidents. I explained in the third quarter that we had some additional costs.
Also this quarter, we expected originally that our costs would come down a little bit more due to the fact that we were able to take some extra actions in our Korean environment, which has led to a substantial amount of money that we received back from the tax authorities, we had to make some costs for that, which led to slightly higher SG&A costs in the quarter than we originally have been forecasting. Overall, when you would take out the currency impact, when you would take out those incidents, you would see that the SG&A cost for the year so far are only slightly higher than the level that we have seen in the first quarters of next year. Hopefully that gives you a little bit of the color to get to better grips about the development of SG&A.
Right. Thank you.
I might have said next year. This, of course, last year.
Thank you, sir. We can now move to our next question. It comes from Jim Fontanelli of Arete. Your line is open. Please go ahead.
Thank you. Afternoon, gentlemen. A couple of questions. Firstly, on 3D NAND. Clearly, over the last couple of weeks, we've seen a fair few announcements around new capacity for 3D NAND, new entrants such as Intel, probably a pull forward of 64-layer by Samsung next year. I just wanted to get your view on the incremental opportunity you see in 3D NAND over the next 12-18 months versus maybe, when we last spoke to you, on the 2Q conference call. Within 3D NAND, clearly the real inflection point in terms of ALD usage comes at 64-layer, I think, when the aspect ratio goes close to 100:1. As we understand it, the layer count for ALD moves from one to three layers at 48-layer NAND to maybe 12-15-layer opportunity at 64-layer.
I just wanted to get your perspective on whether that was broadly right. Secondly, to get your perspective on the opportunity sitting behind selective deposition, which is certainly a technology some of your customers seem to be getting more excited about for 7 nm, given the ongoing lateness of EUV, and for which the ALD players would seem to be well-positioned. I wanted to get your perspective on that and whether that's another incremental opportunity you have, maybe on a two to three-year-out view. Thank you.
Yes, Jim. Okay, thanks for your question. First of all, on 3D NAND, well, it's of course difficult for us to comment on individual customers, as you know. In general, yeah, we can make the statement that, like we said also in our introduction and in earlier calls, we do have engagements in 3D NAND with multiple customers. We started to really focus much more on 3D NAND about two, three years ago. Those engagements are now starting to pay off, because we are very focused on the opportunities in 3D NAND, and we really see that the ALD content, well, whether it's one, three, or 12 layers, differs also a little bit by customer. In general, indeed, you can say that we see the amount of layers in VNAND when you go to higher stacks increasing.
As a result of that fact and the fact that our engagement since a couple of years ago is starting to pay off, because we are building on the relationship that we built with quite a few memory customers throughout the years and with other applications. Based on all of that, we do expect to increase our presence in the 3D NAND space in the next couple of years, with the first meaningful revenue contribution to the company really being in 2016. That's what we are seeing when we look at our, let's say, four to six quarter-out forecast and our current engagements with customers. We trust that answers that part of your question.
Yeah. Sorry, just to interrupt. By meaningful, you mean what? Are you talking 10% plus, 20% plus? What's a meaningful revenue contribution?
Yeah. We're not going to specify that, but it's, let's say, more than one or two tools. Yeah. Maybe when we get into 2016, we will see if we can provide a little bit more guidance to the market. Again, so far it has been one or two tools here and there. Really, a more meaningful at-the-market offering will start to take place in 2016. As you said, as a result of customers going to higher stacks, as a result of which the ALD content is going to increase. At the same time, they've also had the time to become more familiar with our tools, our hardware tools, the reliability of our tools, et cetera, et cetera, through the engagement in other applications. The other question you had on selective deposition.
I think in general, without going into all the details of the R&D engagements that we have ongoing with our customers, we do see indeed that there's so much growth opportunity for ALD, let's say, as a market down the road. We shared that 2014 as a baseline. We think the market will at least double in three to four years, by 2017 to north of EUR 1.2 billion. That is just because new applications are popping up. Indeed, selective deposition could also be part of that trend down the road. First evidence to us of this is that going into 10 nanometer logic and foundry, that we see that the number of applications that we will be engaged with is expected to significantly increase compared to 16 and 14.
We view the transition of 16/14 to 10 as a more significant transition for us in logic and foundry than from 20 to 16/14. We're building on that baseline position and go from there. I trust that answers your question, Jim.
Yeah, that does. If I could just add one follow-on, please. Could you talk about how you see the relative competitive positioning of ASMI within 3D NAND? Clearly, you've had multiple points of engagement across multiple nodes within DRAM, within logic for Intel. 3D NAND is obviously a new technology roadmap for the industry. I'm wondering what the competitive dynamics within 3D NAND for ALD, given that it's a new process with new material sets, how that looks versus your more traditional markets of NPU logic and DRAM and spacer for planar NAND.
Yeah. Okay, Jim, we have talked, of course, in several of the former calls about the competitive landscape. We try to provide the audience as much color as we can in that respect. As far as I can say, I don't see necessarily different dynamics from a competitive point of view in 3D NAND compared to the other areas. That is the short and the most simple answer I can give you, and I trust that's helpful to you, Jim.
Yeah. That's great. Thank you.
Okay.
Thank you. We can now take our next question. It comes from Tammy Qiu of Berenberg. Your line is open. Please go ahead.
Thank you for taking my question. Firstly, you mentioned logic and foundry spending will be coming back in H1 2016. That is more optimistic than what your peer has been saying. Spending is likely to recover from mid of 2016. Do you think that spending is mainly driven by 10 nanometer, or do you think there will be more 14 and 16 nanometer ramp? I have a follow-up. Thanks.
Okay, Tammy. First of all, we don't expect, let's say, on the short term, let's say, a strengthening of the 14/16 nanometer spending. We view that the capacity that our customers needed to build primarily happened in, let's say, up to including the first half of this year. Yeah, maybe we have not been completely clear on our guidance for next year, and also in my earlier comment in this call, I've not been completely clear because what we really were talking about was bookings. The dynamics in terms of bookings in the first half.
In the outlook statement, we clearly said that equipment bookings for the next technology node investments will start in the course of the first half, we provided a little bit more color by saying that it will start in Q1, and we expect it to strengthen in the course of the year, which translates into deliveries, revenues, starting as of, let's say, mid of the year and then developing in the course of the year. That's it.
Okay. From a spending pattern perspective, am I understanding correctly, 2016 will be pretty much a second half-loaded year versus 2015 is more front half-loaded year? Memory spending in 2016 is more likely to be smoother instead of half 1 load in 2015?
Yeah. Your translation could be on that on logic foundry. From a revenue point of view, second half is stronger than the first half. That is your own translation of what we said. On the memory side, I think in general, in some of the former years, we have seen that it was more front-end loaded than second-half loaded. For next year, the visibility is still not there to comment to that. Again, we think normally in the next two months, the visibility on how memory will start going into 2016, the visibility will likely increase significantly for us.
The only thing we can do at this moment in time is just make sure that we are excellently positioned from a product and technology point of view, to benefit from whatever investments they are going to make, and that we are well-positioned from an inflection point of view, going to next nodes. That's what we have been doing.
Okay. That's helpful. Thank you.
Thank you. As a reminder at this time, it's star one from your telephone keypad, if you'd like to ask a question today. We can now take our next question. It comes from Hans Slob of Rabobank. Your line is open. Please go ahead.
Thanks for taking my question. First question is on the gross margin. You're mentioning sales mix impact in Q3, which drove down the margin a little bit. What is the gross margin, let's say, outlook for Q4? That's my first question. Second question is, could you take us through the trends you're seeing in your non-ALD business? Vertical furnaces, plasma-enhanced CVD, and epitaxy, what are you seeing there?
Okay, Hans, let me do the gross margin. The gross margin was indeed slightly lower than last quarter. Mix plays a role, and that has to do with the different sort of products that we are having. Within the product categories, if it's ALD or non-ALD, there we do not have big differences overall in gross margin. Certain products for certain customers can have a lower gross margin than others. When you compare that with the second quarter, our mix was slightly less than what we saw in that second quarter where we had a rather rich mix. That's basically everything what can be explained about the third quarter gross margin deviation as compared to Q2. There were no major elements in it which has led to that deviation.
When you look to the outlook, the outlook, we only can reconfirm what we have said in earlier stages. We expect that our margins will be in the high 30s to low- to mid-40s, depending on where we are in the cycle. We have shown in the past four quarters, the past six quarters I should say, margins in the 43% in most of the quarters, with the exception in last quarter where it was at the 45% level. The original remark that always have made, high 30s to low- to mid-40s still remains. That's basically the only guidance that we are giving going forward with regard to gross margins. Hans, on the non-ALD products. First of all, looking back until today, decent contribution from those product lines.
ALD clearly is in the lead, by far in the lead, as we have said for, let's say, last probably eight quarters in a row. Vertical furnace, steady contributor from a revenue, also profitability and cash flow point of view, steady contributor in a niche part of the market. Here and there, slight growth in certain new applications that we have been engaged in. We're very happy with execution along the strategy that we defined, is going very well. PECVD, also decent, somewhat more modest contribution, but also in a very focused, predefined market. EPI also in the analog power part of the market. We are getting the business that we are going after.
With these product lines, I can tell you that we are very focused on looking at what inflection points are taking place in the industry, whether it's in logic or in memory. See whether one of these products can play a role in serving our customers as an alternative to what's out there at this moment in time. As soon as, let's say, meaningful changes would happen in those product lines compared to, let's say, our current focus areas, and we see short-term impact of that in the P&L, we will mention it in this call. That is not the case at this moment in time. They are not a drain in our P&L. On the contrary, they all three contribute in a healthy way to the bottom line.
Thanks a lot.
Yeah, you're welcome.
Thank you. As a final reminder today, it's star one from your telephone keypad if you would like to ask a question. We can now take our next question. It comes from Edwin de Jong of SNS. Please go ahead.
Good day, gentlemen. A few questions left from my side. If you look at the remarks that you've made so far today, you're getting more positive, it seems, on 3D NAND. EUV developments must be a positive for you. If you look at the total addressable market for ALD products, you said it's going to double in three to four years. Is there maybe more potential upside than the EUR 1.2 billion that you talked about? Could you give a feeling on how much further it could go? The second question is, we have had a lot of M&A activity, of course, in the sector, not only on clients but also KLA and Lam. Could you tell us a little bit about your position there, and how do you look at that?
As a final question, if you look at EPI and the furnaces, could you give some feeling on the outlook there? Those were my questions.
Right. Yeah, Edwin. First of all, on the size of the market, first answer is very short because your answer is there opportunity beyond EUR 1.2 billion? Answer is definitely yes. This is only the start of this ALD market, the doubling of this market in three to four years. By far, this market will not stop growing at that level. That's not single-digit percentages growth. Only the timing, that's what we will look at when we get closer to that point. That's on your first question, KLA and Lam. That's a pretty interesting announcement. The KLA and Lam announcement was indeed an interesting announcement for the industry. Your question was whether we are also eager to do M&A. There, our answer is not changed by this event.
Our approach has not changed, compared to what we have shared with the market before, and that is that we have the intellectual and financial bandwidth to look at opportunities outside the company, to look at opportunities beyond organic growth. At the same time, as we said, we have tremendous potential to grow organically and create shareholder value. That is the primary focus. At the same time, as part of our strategic planning, that just is a continuous process. We do look at M&A opportunities, also on a continuous basis. Again, it's not a goal in itself. That's how we have viewed it for the last couple of years, and that has not changed today. The key thing for us always is when we would consider M&A, how can it contribute really to long-term value creation for the company?
Your last question was, what are the opportunities for the other product lines? Like we said, so far we have had with these product lines a very focused strategy for specific parts of the market and specific set of customers. With that focus, the contribution of these product lines will continue to stay steady as we believe. At the same time, we are looking at whether there are inflection points in memory or logic foundry that can further accelerate or enhance the growth of any of these product lines. The only thing I can tell you, that we are carefully looking at that, and in some instances, we are also strongly engaged with customers to jointly look at opportunities. It's too early to share any details or claim any victories in one of those product lines with this audience at this moment in time.
Okay?
Okay.
I trust that answers your questions, Edwin.
Thank you.
Thank you.
Thank you. We now have a follow-up question from Jim Fontanelli of Arete. Please go ahead, sir.
Thank you. Just a couple of follow-ups. One was a quick one. On 3D NAND, is that likely to be more focused on plasma ALD? Where do you see the balance of 3D NAND demand?
No, there are opportunities across the board.
Okay.
Yeah. That's for sure, yeah.
Secondly, if you think about your average ASP, I know you don't talk about specific ASPs for ALD, but if you look over the next couple years at the opportunities coming, both in logic and NAND, how do you see your ASP trend moving on average within the ALD portfolio? Is it an opportunity to grab more value by pushing ASPs up, or is that something that you have to give away to hold market share and get some of these opportunities that are coming down the pike? How do you see that?
Yeah. Let me grab that question, Jim. In principle, because ASP, the opposite of that is of course gross margin, and I think that the gross margin is still in line with what we have stated earlier, that the high 30s to low to mid-40s range, and that, for the time being, has not changed. We have not given any further guidance about that. We think that that's too early to give more color on the earlier statements that we have made.
Okay. Just to understand that continued high 30s-low 40s guidance, from memory, I don't think your gross margin has been below 43%, certainly not over the last six quarters. What is coming in the next few quarters or in the next few years that is going to take your gross margin well below what has been the average of 43%-44% over the last six quarters, over which we've seen reasonable CapEx spending, but it hasn't been a great up cycle, and equally, it hasn't been a great down cycle. What's going to push it four or five points below the average of the last six quarters?
Yeah. Again, I only can repeat what I've said earlier. We have, I think since 2013, with also much lower sales levels, we have shown gross margin developments in the range that I just indicated. We do not see any reason for making other statements than what we have done in the past two years.
Okay. I guess one of those reasons would be your confidence around ALD and the opportunity ahead, maybe this isn't the time for it. Good. Thank you.
Okay. Thank you, Jim, for your questions.
As we have no further questions, I would now like to hand the call back to the speaker for any additional or concluding remarks. Thank you.
All right. Well, just also on behalf of Pieter and Victor, I would like to thank you all again for attending our call today. Let's stay in touch also outside these calls in one of our roadshows. Yeah. Let's stay in touch, and I wish you all a very good day. Thank you very much again for attending. Bye-bye.
That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.