ASM International NV
Annual Report 2021

Plain-text annual report

ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 ASMI CONTINUES TO INVEST IN INNOVATION AND EXPANSION, SHARPENS SUSTAINABILITY FOCUS, AND DELIVERS STRONG GROWTH. In this fifth consecutive year of double-digit growth, we achieved strong expansion in logic/foundry and strengthened our position in the memory market, while working closely with customers to develop the key technologies for the next nodes. We published our 2025 targets as part of our Growth through Innovation strategy. Prospects for our key ALD and Epi products are bright, enabling industry breakthroughs, such as the next-generation transistor architecture. Supported by increased investments in R&D, we aim to continue outpacing market growth. Growth through innovation We have reinforced our commitment to sustainability. In 2021, we took a next step by defining our sustainability priorities for the next horizon, including announcing our target to achieve Net Zero emissions by 2035. People are our key asset. We are committed to creating a safe, inspiring, inclusive and diverse workplace where employees have the opportunity to maximize their potential. With our technology, and underpinned by our values – We Care, We Innovate, We Deliver – we continue to help move the industry roadmap forward, driving innovation in the electronics market and improving people’s lives. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 1 TABLE OF CONTENTS ABOUT MESSAGE FROM THE CEO ASMI AT A GLANCE STRATEGY KEY PERFORMANCE VALUE CREATION Long-term value creation Customers and markets Innovation and products People Global operations Sustainability Shareholders Interview with the CFO GOVERNANCE Corporate governance Risk management Management Board Supervisory Board Supervisory Board report Remuneration report External auditor Declarations 2 3 7 12 16 19 20 23 26 39 52 57 74 86 89 90 93 99 101 106 111 117 118 FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS Consolidated statement of profit or loss Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements ASM INTERNATIONAL N.V. FINANCIAL STATEMENTS Company balance sheet Company statement of profit or loss Notes to the company financial statements INDEPENDENT AUDITOR’S REPORT 119 120 120 121 122 123 124 125 165 165 166 167 173 NON-FINANCIAL SUMMARY NON-FINANCIAL PERFORMANCE DATA ASSURANCE REPORT OF THE INDEPENDENT AUDITOR 180 181 184 GENERAL INFORMATION Product description Other information Glossary and definitions Locations worldwide Safe harbor statement 187 188 190 192 196 198 NOTES TO THE READER PDF/printed version This document is the PDF/printed version of ASM International N.V.’s 2021 Annual Report and has been prepared for ease of use. The 2021 Annual Report in European Single Electronic Reporting format (the ESEF reporting package) is the official version. The ESEF reporting package is available on the company’s website. In case of any discrepancies between this PDF version and the ESEF reporting package, the latter prevails. Unrounded figures Amounts in the Annual Report may not add up due to rounding differences. The total amounts may therefore deviate from the sum of the parts. Percentage changes are based on the unrounded figures. About ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 2 ABOUT Message from the CEO ASMI at a glance Strategy Key performance 3 7 12 16 ASM International N.V. (ASMI) is a leading supplier of semiconductor wafer processing equipment and process solutions. Our customers include all the top semiconductor device manufacturers in the world. Semiconductor chips sit at the heart of almost every electronic device we use today, and ASMI equipment is a key technology used to manufacture many of these chips. Our strategy is Growth through Innovation. Innovation is at the core of what we do at ASMI. With our global, networked R&D model, we can collaborate closely and early with our customers, industry partners, and universities. In 2021, as COVID-19 continued to impact each of us, the health and safety of our people remained our biggest priority. ASMI not only delivered strong financial results, but we also took important steps forward in strengthening our position as an innovation leader and expanding our growth potential. Message from the CEO Message from the CEO ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 3 MESSAGE FROM THE CEO As COVID-19 continued to impact each of us in 2021, the health and safety of our people remained our biggest priority. ASMI not only delivered strong financial results, but also took important steps forward in strengthening our position as an innovation leader and expanding our growth potential. The year began on an optimistic note, with the belief that vaccines would help control the pandemic and some normality would resume. But as 2021 unfolded, and new variants drove further COVID-19 waves, uncertainty and disruption persisted. We experienced the deep impact of the pandemic on our lives, communities, and world economies. At ASMI, we continued to prioritize the health and safety of our people, business partners, and communities. Throughout 2021 and at the start of 2022, we continued with our robust control measures, travel restrictions, and work-from-home protocols. “ WE TOOK IMPORTANT STEPS FORWARD IN EXPANDING OUR GROWTH POTENTIAL.” I am proud of our people, and how they all pulled together as one ASMI team – putting health and safety first, while serving our customers in the best possible way. Thank you to all our employees for a great effort, and for showing your resilience and relentless commitment. SEMICONDUCTORS ENABLING THE DIGITALIZATION TREND Accelerated digitalization has driven strong growth in the semiconductor industry. The global semiconductor end market increased 24% in 2021, exceeding the US$500 billion level for the first time. The pandemic triggered structural changes in how we communicate, consume, and work. Semiconductors provide key building blocks for the digitalization trend, and the continued build out of IT infrastructure. The surge in demand that started in 2020 and sped up in 2021 has been outstripping supply, despite sector-wide efforts to boost output and capacity. This resulted in shortages and increased lead times in many parts of the chip markets. This, in turn, has driven further investments in capacity. It has also highlighted the increased importance of the semiconductor industry in today’s world. Benjamin Loh President and Chief Executive Officer ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 4 STRONG GROWTH IN LOGIC/FOUNDRY AND EXPANDED POSITION IN MEMORY The wafer fab equipment (WFE) market increased strongly with a mid-to-high 30s percentage in EQUIPMENT REVENUE DRIVEN BY ALD AND EPI In terms of product lines, revenue was again led by very solid double-digit growth in our ALD business, which continued to represent more than half our equipment revenue. Epi, our 2021. We benefited from strong demand across the board. In terms of customer segments, our second-largest product line, also showed very strong growth on the back of robust demand in sales were driven by foundry, followed by memory, and then logic. The combined logic/foundry the advanced CMOS market, and the rebound in the analog/power segments. An important segment remained the key driver for ASMI. This was fueled by our customers’ substantial achievement in 2021 was the second customer win for our Intrepid ES tool, in the advanced investments in leading-edge manufacturing capacity, to meet growing demand for high-end CMOS market for an advanced gate-all-around application. We also launched the new Intrepid ESA. computing and 5G smartphones. We continued to benefit from substantial increases in the This makes the substantial performance and cost-of-ownership benefits of the Intrepid available ALD requirement in the most advanced logic/foundry nodes, resulting in share of wallet gains for for 300mm applications in the analog, power and wafer-maker markets. our company. During the year, we further expanded our R&D engagements for the next nodes, and we won several new key applications. We also saw the first meaningful bookings in the We invest selectively in our PECVD and vertical furnace product lines. Noteworthy in 2021 is the second half of 2021 for the upcoming node transition, which, for most of our key logic/foundry contribution of the A400 DUO, our high-productivity 200mm vertical furnace. Introduced in 2019, customers, is expected to go into high-volume manufacturing in the second half of 2022 and this is now having great success, including several new customer wins in China. into 2023. We expect the number of ALD layers to show strong double-digit percentage growth in the next node. This will provide us with further opportunities for share of wallet increases with key logic/foundry customers. “ WE EXPECT THE NUMBER OF ALD LAYERS TO SHOW A STRONG DOUBLE-DIGIT PERCENTAGE GROWTH IN THE NEXT NODE.” “ OUR OUTCOME-BASED SERVICES CREATE VALUE BY REDUCING COSTS AND INCREASING UPTIME.” Our spares & services business delivered a solid performance, with 16% higher revenue. The sales increase in 2021 moderated compared to the 29% growth in 2020, in part due to the impact of customers investing in higher inventories of spares in 2020 in the face of COVID-19-related Against a backdrop of healthy spending trends in memory, we achieved a significant increase in our disruptions of global supply chains and logistics. Our new, innovative outcome-based services had sales to memory customers in 2021. A key driver for our memory business has been the adoption of strong traction. We booked multiple contracts for our so-called Complete Kit Management (CKM), high-k metal gate ALD in DRAM. This is a key technology that enables greater power efficiency and and spares-as-a-service offerings. These are creating value for our customers by reducing costs improved performance of cutting-edge DRAM devices. We have strong engagements for several and increasing uptime of our equipment. other new applications, both in DRAM and 3D-NAND, which we expect will increase our memory position in coming years. SUPPLY CHAIN CHALLENGES COVID-19 continued to create challenges in our operations, especially supply chain. In terms of Growth in WFE spending on the trailing-edge technology nodes in 2021 is also worth noting. our capacity, we benefited from our investment in the new manufacturing facility in Singapore. This was driven by strong end-market demand and capacity shortages. In this market, we have This provided us with the flexibility to meet increased demand. Since completion at the end of 2020, a number of solid positions in niche segments, particularly in the power, analog and wafer-maker we have steadily been increasing headcount to raise output. In September 2021, we announced segments, even though ASMI in total derives most of its sales from the most advanced node that we had started the design work on the second manufacturing floor within this new facility, spending. Analog/power demand, which has a relatively higher exposure to the automotive and aiming to be production ready by early 2023. This will result in a further substantial capacity boost. industrial markets, rebounded strongly in 2021 following the drop in 2020. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 5 In supply chain, the situation was already tight as we entered 2021, and constraints increased in to 20% by 2025. As part of our aim to build a strong and unified culture, we launched our core the second half of the year. This included the impact of the lockdown measures, resulting in reduced values – We Care, We Innovate, We Deliver – defining who we are at ASMI, and what we stand factory outputs – in Southeast Asia, and especially Malaysia – which is an important link in the for. We stepped up our internal communications, and implemented improvement actions following supply chains in our industry. Building on the learnings from COVID-19-related disruptions in 2020, our earlier engagement survey. These steps are essential to making us attractive as an employer. we took several actions to mitigate the impact. This included maintaining higher buffer inventories, The war for talent is fierce, especially in the semiconductor sector, and we need to significantly grow and qualifying new suppliers. We were still able to meet our customer requirements. We achieved our workforce to execute our growth ambitions. We stepped up our talent-recruitment initiatives quarter-on-quarter record-high sales thanks to very strong execution by our team, and outstanding and benchmarked our global rewards and employee-benefits programs. In 2021, we succeeded support and commitment from our supply chain partners. in welcoming a record-high number of new colleagues, and grew our total number of employees by 28% to 3,312. SUSTAINABILITY AND ESG  This was also the year we substantially stepped up our sustainability ambitions. Our focus is on long-term sustainable value creation for all our stakeholders. Building on a solid foundation of achievements in sustainability, we are now taking important steps forward as we strive to make a positive impact in the world. In 2021, we defined our key sustainability focus areas and priorities for 2021-2025 in key environmental, social, and governance areas. These are well-aligned with our strategy and the priorities of our key stakeholders. “ WE AIM TO CREATE A SAFE AND INSPIRING WORKPLACE OF INCLUSION AND DIVERSITY.” RECORD-HIGH FINANCIAL RESULTS Our company again delivered strong financial results in 2021. Revenue increased 30% to Our priorities include: continuing our relentless focus on safety leadership; development of our €1.7 billion, our fifth consecutive year of double-digit growth. The gross margin improved from people and culture; reductions in our environmental footprint; ensuring a responsible supply chain, 47.0% to 47.9%. Net R&D increased by 9% and SG&A expenses by 20%. Our operating result and continued strengthening of governance, including cybersecurity and IP protection. An important grew about 50%, with the operating margin improving from 24.6% to 28.4%. step in 2021 was the announcement of our target to achieve Net Zero emissions, including Scope 3, by 2035. In 2021, we transitioned most of our key sites to electricity from renewable sources, in The income related to our 25% stake in ASMPT increased to €87 million from €45 million in 2020. line with the commitment we made last September. We believe we remain on track to achieve our This result excludes the amortization of intangible assets related to ASMPT. target for 100% electricity from renewable sources for all our sites by 2024, with an estimated 90% reduction in our Scope 1 and 2 greenhouse gas (GHG) emissions relative to 2020. Free cash flow more than doubled from €120 million in 2020 to €266 million in 2021. This increase “ OUR TARGET IS TO ACHIEVE NET ZERO EMISSIONS BY 2035.” PEOPLE ARE OUR BIGGEST ASSET One of our key focus areas in sustainability is people. We aim to create a safe and inspiring was driven by the strong improvement in profitability, with working capital under control, and despite higher income tax paid. CapEx additions amounted to €79 million in 2021, with a significant part spent on expanding and upgrading our R&D lab facilities. In 2021, we also reconfirmed the key elements of our capital allocation policy. Investment in the growth of our company and maintaining a strong financial position remain the priority. Our commitment to pay a sustainable dividend and use any excess cash for the benefit of our shareholders is unchanged. In 2021, ASMI returned €237 million to shareholders in the form of dividend and share buybacks, up workplace of inclusion and diversity, where our employees can unleash their potential. In 2021, from €165 million in the previous year. We will propose a dividend of €2.50 per share to be paid over we launched ConvERGe – our new employee resource group – on International Women’s Day. 2021, up 25% from €2.00 last year. We have set a target to increase the percentage of women working at ASMI from 15% in 2021 ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 6 OUTLINING OUR GROWTH THROUGH INNOVATION STRATEGY Long-term prospects look bright. Data-intensive end-market applications, such as artificial The WFE market is expected to increase by a mid to high teens percentage in 2022. Solid spending is expected for the logic/foundry segment, driven by the combination of ongoing capacity additions intelligence and cloud computing, will drive investments in faster and more power-efficient as well as investments in next node initial capacity. While the memory market remains dependent semiconductors. At our Investor Day in September 2021, we outlined how we are going to drive on supply-demand developments, spending in 2022 is likely to be supported by expansion projects growth through innovation. ALD and Epi will be critical technologies to enable the inflections on and investments in the new nodes. our customers’ roadmaps, particularly the increasing adoption of 3D structures and new materials, coupled with traditional scaling. We believe our company is well positioned to benefit due to Supported by a record high order backlog at the end of Q4, ASMI has started the year on a strong unique strengths. These include our networked R&D model, early customer engagements, vast footing. Looking at the first half of the year of 2022, supply chain conditions are expected to remain experience in ALD materials, and a broad portfolio of ALD solutions. tight. For Q1, on a currency comparable level, we expect revenue of €500-530 million, with a further We expect ALD to remain one of the fastest-growing segments of the WFE market, with a CAGR in the second half of 2022 to be higher than the level in the first half. We expect to outperform the of 16% to 20% in the years to 2025*. In ALD, we aim to maintain a leading market share in excess WFE market in 2022. steady increase in Q2 revenue compared to Q1. Based on the current visibility, we expect revenue of 55% by 2025. This is based on continued leadership in the logic/foundry space, and an increase in our ALD memory share. We project the Epi market to increase with a CAGR of 13% to 18% in the years to 2025*. We target our Epi market share to increase from about 15% last year to more than 30% by 2025. A key inflection will be gate-all-around (GAA), a new and advanced transistor architecture that is expected to further increase the need for both Epi and ALD. In our vertical furnace and PECVD product lines, we target selective growth. Our spares & service “ WE WILL STAY FOCUSED ON FURTHER EXPANDING OUR ENGAGEMENTS WITH KEY CUSTOMERS.” business is further contributing to ASMI’s growth, as we are moving to outcome-based services. We will stay focused on further expanding our engagements with key customers. In 2022, we will At our Investor Day, we also committed to 2025 financial targets. We aim to grow our revenue with ahead of us. We also plan to report on our progress in sustainability, as we set further targets and a CAGR of 16% to 21% in the next five years*. We target solid gross margin in a range of 46%-50% undertake new initiatives in our key focus areas. also further invest in our business – to strengthen our position and tap into the many opportunities and operating margin of 26% to 31% in 2021-2025. LOOKING AHEAD TO 2022 Our industry entered 2022 with strong momentum. The global economy is forecast to show further March 3, 2022 solid improvement this year, despite risks related to the pandemic, including a continuing impact on the supply chain, geopolitical tensions, and inflationary pressures. Capacity shortages mean that part of the demand in 2021 has carried over into 2022. Benjamin Loh President and Chief Executive Officer *Compared to the baseline year 2020 as presented during the Investor Day in September 2021. ASMI at a glance ASMI at a glance ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 7 ASMI AT A GLANCE WHAT WE DO ASMI supplies wafer processing equipment to the leading semiconductor manufacturers, primarily for the deposition of thin films. We design, manufacture, sell, and service our deposition tools to supply our customers with the advanced technologies to produce semiconductor devices, or integrated circuits (ICs). Semiconductor ICs, or chips, are a key technology enabling the advanced electronic products used by consumers and businesses everywhere. Semiconductor manufacturers use our tools in their wafer fabrication plants, or fabs. We also provide maintenance service, spare parts, and process support to our customers globally at their fabs. BASICS OF SEMICONDUCTOR MANUFACTURING The process of making semiconductor chips at our customers’ fabs is highly complex and costly. Semiconductor fabs house a large set of wafer-processing equipment, which performs a series of process steps on round silicon wafers, typically 300mm in diameter. The equipment operates in cleanrooms, where the air is filtered to prevent contamination from small particles that could negatively affect the circuitry on the chips. There are many steps to creating a semiconductor chip, involving various types of wafer-processing equipment. These include photolithographic patterning, depositing thin-film layers, etching to remove material, and thermal treatments. ASMI’s systems are designed for deposition processes where thin films, or layers, of various materials are grown or deposited onto the wafer. Many different thin-film layers are deposited to complete the full sequence of process steps needed to make a chip. After testing the individual circuits to make sure they are performing correctly, the chips on the wafer are separated and packaged in a protective housing. Ultimately, they will become part of a set of semiconductor chips on circuit boards within an electronic product. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 8 OUR PRODUCT TECHNOLOGIES ASMI’s ALD, epitaxy, PECVD and vertical furnace systems are all used in the manufacturing process EPITAXY Our second largest product line is epitaxy (Epi), which is the process of depositing highly controlled for the world’s most advanced semiconductor chips. It is increasingly difficult for the semiconductor silicon-based crystalline films. It is one of the fastest-growing segments in the deposition market. industry to achieve each subsequent technology node, which is fueling the demand for more The number of Epi steps is increasing as logic/foundry customers move to smaller nodes, and more advanced process steps and new materials. Our equipment is a key component in enabling powerful devices are needed for mobile applications and electric vehicles. the industry to advance its technology roadmap. We are a major player in the ALD and epitaxy segments, and a niche player in vertical furnace and PECVD AND VERTICAL FURNACES The relatively large size of the PECVD and vertical furnace segments makes these markets PECVD. These product technologies are described below: attractive to ASMI. We have seen solid increases in the total revenue of these two product lines ALD ASMI has a leading position in atomic layer deposition (ALD). It is our largest product line, accounting for more than half our equipment revenue in 2021. ALD is the most advanced SERVICE AND SPARE PARTS Technical service and spare parts are important product offerings for our business. To ensure deposition method in the market, making it possible to create ultra-thin films of exceptional speedy availability, our global service teams are based close to our customers at regional and local material quality, uniformity, and conformality. service centers. We are expanding our offering with new outcome-based services. in last years. ALD CYCLE Precursor By-product PURGE 1 PURGE 4 Oxidant 2 3 By-product ALD CYCLE ALD is a surface-controlled layer-by-layer process that deposits thin films one atomic layer at a time. Layers are formed during ALD reaction cycles by alternately pulsing precursors and oxidants, and purging out by-products with inert gas in between each pulse. The repetition of the ALD cycles results in a layer-by-layer growth of the deposited film. Because the ALD process is self-limiting, due to the principle of surface saturation, it results in films with a uniform thickness, even over varied surface topographies (conformality). The thickness of the film is precisely controlled by adjusting the number of ALD cycles. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 9 COMPANY FACTS & FIGURES ABOUT ASMI Leading player in advanced technologies in the semiconductor equipment market A heritage of 53 years of relentless research and innovation, and breakthrough technologies 649 employees working in R&D €206 million gross R&D expenses 26 10 Historical revenue* HISTORICAL REVENUE* € billion € million 2.0 1,730 1,328 1,125 737 818 1.5 1.0 0.5 2017 2018 2021 * Excluding proceeds from patent litigation and arbitration * Excluding proceeds from patent litigation and arbitration settlement in 2019. settlement in 2019. 2019 2020 ASMI IN NUMBERS €1.7 billion revenues 28.4% €492 operating margin million cash position 3,312 employees 47 2,250 nationalities patents REVENUE BY GEOGRAPHY in % ASMI FOCUS IS ON DEPOSITION TOOLS in % Target to achieve Net Zero emissions by 2035, with 100% renewable electricity by 2024 64 10 10 Asia US Europe 26 26 19 64 64 Asia Asia US US Europe Europe 81 Equipment revenue Spares & services Our core values Numbers refer to 2021, unless indicated otherwise. NEW HIRES New hires A leading 55% market share in ALD in 2020 1,500 1,000 500 1,146 Growing position in Epi since 2016 659 487 407 515 2017 2018 2019 2020 2021 Selective growth in vertical furnaces and PECVD Spares & services driven by outcome-based services ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 10 OUR GLOBAL FOOTPRINT RESEARCH FACILITIES Belgium - Leuven Finland - Helsinki BUSINESS UNIT AND PRODUCT RESEARCH & DEVELOPMENT FACILITIES Japan - Tokyo The Netherlands - Almere South Korea - Dongtan US - Phoenix MANUFACTURING FACILITIES Singapore - Singapore South Korea - Dongtan The Netherlands - Almere CORPORATE, SALES AND  SERVICE OFFICES China France Germany Ireland Israel Japan Malaysia The Netherlands Singapore Taiwan US We are present in 14 countries Key customers in Asia, US, and Europe Suppliers in more than 20 countries 3 manufacturing facilities For a complete overview of all our locations, please visit our corporate website: www.asm.com ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 11 ASMI HISTORY: MORE THAN 50 YEARS OF INNOVATION ASMI was founded in the Netherlands in 1968, at the very start of the semiconductor industry. by ASMI’s participation in a joint venture with Philips in the mid-1980s to develop lithography technology, known today as ASML. ASMI sold its share in ASML in 1988. Founder Arthur Del Prado (1931-2016) was our CEO until 2008. He was succeeded by his son, Since the early 1990s, ASMI has focused its efforts on deposition. This includes investing in the Chuck Del Prado, who was CEO until 2020. In May 2020, Benjamin Loh, our current CEO, took novel technique of ALD (atomic layer deposition), leading to acquisitions of ASM Microchemistry over. ASMI initially entered the furnace deposition market, and started producing these systems in 1999, and ASM Genitech Korea in 2004. In 2007, our Pulsar ALD tool became the first system in the Netherlands in the early 1970s. As a pioneer of technology advancement and globalization, used in the high-volume manufacturing of devices using a new hafnium-based high-k gate dielectric the company also began launching new companies around the world. material. Since that breakthrough, ASMI has continued to strengthen its footprint with leading- edge customers. We have brought novel deposition processes to the market to realize 3D device In the mid 1970s, ASM Pacific Technology (ASMPT) was founded in Hong Kong, becoming a architectures that can only be enabled by ALD. Over the past five years, we have also been growing market leader in back-end semiconductor assembly and packaging equipment. ASMI divested our position in the Epi market. its majority share in ASMPT in 2013, but maintains a minority share today. ASM America was The combination of ASMI’s continuous focus on innovation with its global entrepreneurship has led also founded in the 1970s, laying the foundation of our current epitaxy technology. In the early to ASMI’s unique structure, with centers of excellence close to customers around the world, and 1980s, ASM Japan was started, the basis for today’s plasma CVD products. This was followed centralized manufacturing in Singapore. ASMI’s technologies are focused on supporting our customers to continue extending Moore’s Law, enabling faster and more power-efficient semiconductors 1 0 0 B I L L I O N 100,000,000,000 10,000,000,000 1,000,000,000 100,000,000 10,000,000 1,000,000 100,000 10,000 1,000 r o s s e c o r p o r c m i r e p s r o t s i s n a r T 5 0 , 0 0 0 80s 2 0 0 0 70s 1 5 B I L L I O N 2 B I L L I O N 4 0 M I L L I O N 1 M I L L I O N 90s 00s Decades 10s 20s Strategy Strategy ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 12 STRATEGY We are an innovation leader in the semiconductor industry. This is the result of our focus on key issues and challenges within the industry, enabling us to make a difference to and create value for our customers, employees, investors, and other company stakeholders. While challenges and opportunities will change over time, we continue to bring our breakthrough technologies into volume manufacturing. PURPOSE Our purpose is to improve people’s lives through advancing technologies that unlock new potential. ASMI is a leader in innovation for the semiconductor industry. With our technology, we help move the industry roadmap forward, driving innovation in the electronics market and improving people’s lives. MISSION Our mission is to enable our customers’ success by creating leading-edge semiconductor process products, services, and new materials. Our deposition technology helps our customers address their device and process-development challenges. By partnering with leading chipmakers to develop new materials, processes, and technologies that support their roadmaps, we drive innovation in semiconductor technology. This helps create new, improved semiconductor devices. We have a deep understanding of the important requirements of the next generations of device roadmaps. This enables us to develop value-added service solutions to the industry’s critical issues. PURPOSE MISSION STRATEGY STRATEGY Our strategy is Growth through Innovation. Innovation is at the core of what we do at ASMI. With our global, networked R&D model, we can collaborate closely and early with our customers, industry partners, and universities. Over the past 20 years, we have accumulated a vast amount of know-how in ALD materials and chemistries. Coupled with decades of experience in developing reactors and processes, ASMI has a legacy of innovation of more than half a century. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 13 OUR MAIN STRENGTHS We are a focused deposition equipment player in the semiconductor wafer fab equipment Attracting and retaining talented employees This is key to growing and strengthening our organization. The demand for highly skilled people is increasing everywhere we operate. (WFE) market. Our principal technologies are in ALD and Epi, and these play a critical role for our Without the best people, we will not be able to realize our strategy. customers in enabling the transition to new device generations. From 2016 to 2021, we grew at a rate of one-and-a-half-times faster than the WFE market. Our target is to continue outperforming Environmental footprint The semiconductor industry provides critical and enabling technology, which contributes to society overall. But the industry’s environmental footprint is significant and the market by leveraging our strong position in advanced nodes. Through revenue growth, we can gaining more global attention. Our customers place a high priority on environmental performance generate healthy cash flow and profitability, further increase investments in R&D, and create value and the associated fab operational economics. It is key to their decision-making process when for our stakeholders. selecting manufacturing equipment. It is also a major priority of our other stakeholders. In 2022, we plan to further strengthen our team, and global innovation and collaboration network, We have helped shape the industry by driving innovation through our collaborative R&D models, to increase the energy and resource efficiency of our products. This will help to improve the successfully delivering advanced new materials, products and processes to our customers. environmental footprint of the industry. With R&D centers in six countries throughout the world, we are close to our customers, and have access to world-class professionals in the semiconductor industry. This R&D capability has led to Geopolitical risk and shift in global supply In the past, the success of the semiconductor industry was strongly linked to the success of all parties along the value chain. Innovation by a portfolio of leading technologies and a strong patent position, with 2,250 patents in force. equipment suppliers supported original solutions developed by chip manufacturers. This led EXTERNAL TRENDS The world around us is digitalizing fast Technology is increasingly shaping how we live and to new opportunities for customers to take advantage of these advanced chips. Geopolitical developments put this model at risk. The increased awareness of the importance of a domestic semiconductor industry leads to shifts in the global footprint of the semiconductor industry. work – and much of this technology is created with advanced semiconductors. As society We carefully review any impact such developments may have for us, while seeking to take becomes more automated and connected, we’re relying on a broad range of electronic devices advantage of any new opportunities they may offer. to control our homes, offices, vehicles, and communications. Our connected world is leading to a growing demand for massive amounts of data. This needs ever-greater computer processing Scarce resources The increased global demand for semiconductors will fuel the need for more scarce resources. Our obligation to responsibly source such resources will drive us to continue power and storage, capable of analyzing and acting on the data quickly and effectively. To make our innovations around the development of new chemistries. this possible, the processing power of semiconductor chips must constantly increase. ASMI’s process equipment technology is key to making this happen. Rising complexity of chip technologies The continuation of Moore’s Law, which states that the number of transistors on a chip doubles every two years, is becoming increasingly difficult. The equipment costs for these advanced nodes are rising, which will place greater pressure on equipment manufacturers to create innovative solutions. At the same time, increasing complexity and smaller chip technology will require more ALD and Epi steps. Being at the forefront of technology development is critical to remaining successful. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 14 g n e s t r o c i a l n a n r m a r f o e fi ri v D p e c n Gro w A L m D b aintainin lo gic/fo exp a u m e m n n din ory usin g lea dry a g in n ess by d in d Accelerate sustainability STRATEGIC OBJECTIVES Our strategy can be broken down into the following six strategic objectives Increase Epi market share Gro w sp & services ares usin b ess w t h r o e g d n F a D n i c h V s e e l e S c ti v i n V C E P STRATEGY ENABLERS To be able to realize our strategy and strategic objectives, we identified five critical enablers. These key enablers support all strategic objectives. Best people Leading- edge innovation Early customer engagements Flawless operational excellence Strong financial position SIX KEY ELEMENTS OF OUR STRATEGY: Our strategy is based on the following six strategic objectives: GROW ALD BUSINESS BY MAINTAINING LEADERSHIP IN LOGIC/FOUNDRY AND EXPANDING IN MEMORY Our ALD business is a key priority. ALD will continue to grow as a core technology as our customers transition to the next nodes. We expect the ALD market to be the fastest-growing segment in the deposition market in coming years. We are focused on maintaining our leading position in the logic/foundry segment, and increasing our market share in the memory segment. Supported by a strong increase in our R&D engagements in DRAM and 3D-NAND applications for the next nodes, we aim to meaningfully increase the contribution of our memory business over time. We estimate that the single-wafer ALD market will grow to US$3.1-3.7 billion in 2025. Our goal is to have a market share larger than 55% in 2025. INCREASE EPI MARKET SHARE Epitaxy has become a second growth engine in our product portfolio. Our Intrepid product has enabled us to make successful inroads in the advanced CMOS part of the Epi market, while increasing our presence in the analog/power market. In R&D, we are working with multiple customers on new Epi applications for the next nodes, which should contribute to further growth of our market share. We estimate the Epi market will grow from US$0.8 billion in 2020 to US$1.5-1.8 billion in 2025. Our goal is to have a market share of more than 30% by that time. SELECTIVE GROWTH IN VF AND PECVD NICHES In vertical furnaces and PECVD, we want to further develop our current niche positions by addressing targeted growth opportunities. Vertical furnace applications for the analog/power market is an example of a niche position we have selectively been investing in. GROW SPARES & SERVICES BUSINESS We aim to accelerate the growth of our spares & service business through continued expansion of our installed base, and growing our offerings to include differentiated outcome-based services. These are in addition to our existing offering of spare parts, maintenance and support services. The focus of the new offerings will be on creating value for our customers. An example is the development of new surface technologies for the parts we use to improve our system performance, lower costs, and reduce the resources required to keep our systems running. We are positioning service packages designed to improve our customers’ entire ASMI installed base on wafer performance, and system uptime and output. The benefit for the customer is lower operations costs. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 15 For us, it means being able to expand our service to our entire installed base, not all of which is R&D models. We have successfully delivered advanced new materials, products, and processes maintained by ASMI today. Through approaches like this, we are able to unlock our latent installed to our customers. Our R&D spending is focused on developing new materials and process solutions base as a solid business-growth driver. ACCELERATE SUSTAINABILITY that enable additional applications. Continuous product improvements in performance, reliability and cost of ownership is key. We are also focused on improving the energy and resource efficiency of our products. In addition, we are making capital investments in lab space and equipment to further expand Our focus is to deliver long-term sustainable value creation for all our stakeholders and have a positive our development capabilities in next-generation technologies. As well as our internal R&D efforts, impact on the world. We aspire to be a sustainability leader in our industry, evidenced for example we are growing and deepening our strategic cooperation with key customers, suppliers, chemical by: our recent Net Zero by 2035 target which is among the most ambitious in our industry, being manufacturers, and research institutes. Read more in the section ‘Innovation and products’. consistently recognized and awarded as an industry safety leader by key customers, and by improving our CDP Climate and Water scores. Furthermore, we will do so by continuing to address the key EARLY CUSTOMER ENGAGEMENTS ESG topics and opportunities that are aligned with and responsive to our stakeholder priorities. We have strong customer relationships with the leading semiconductor manufacturers, working closely DRIVE STRONG FINANCIAL PERFORMANCE together in the early stages of their device roadmaps. As we have expanded and deepened our R&D engagements with chipmakers, we have developed our understanding of the key requirements Healthy profitability will allow us to continue investing in growth. To this end, we have formulated of the next generation of device roadmaps. This is enabling us to develop value-added solutions to the our profitability targets for the period 2021-2025. We strive to achieve sustainably higher gross industry’s critical technology issues. Read more in the section ‘Customers and markets’. margins between 46% and 50%, and an improved operating margin of 26% to 31%, generating strong free cash flow. FLAWLESS OPERATIONAL EXCELLENCE While technology leadership remains crucial, operational excellence is essential to further strengthen FIVE KEY ENABLERS FOR OUR STRATEGY To be able to realize our strategy and strategic objectives, we identified five critical enablers. our future position. We aim to provide our customers with dependable, leading-edge products and services at a consistent performance level, while providing the best total cost of ownership. All our activities are focused around these elements: We continuously focus on further improving the effectiveness and efficiency of our organization. BEST PEOPLE Following our strong growth in recent years, we need to strengthen our organization and business processes in specific areas. For example, we are stepping up our capabilities in engineering, product Our employees are our biggest asset. We strive to create a safe, inspiring, and motivating workplace lifecycle management (PLM), and quality. We aim to strengthen our new product introductions where our people have the opportunity to use their talents, excel, and develop their potential as we processes to provide our customers with additional on-site support, as the pace of technological work together to deliver the cutting-edge technologies of tomorrow. Following the continued rapid change continues to accelerate. Read more in the section ‘Global operations’. expansion in our workforce, we are focusing on strengthening ASMI. This means developing our talent pool with more long-term career progression and training. It also means strengthening and unifying STRONG FINANCIAL POSITION our ASMI culture. Our core values – We Care, We Innovate, We Deliver – will help us grow employee We strive to maintain a strong balance sheet that allows us to continue investing in R&D. To this end, engagement, and shape an inclusive and diverse culture. This will support us in attracting, retaining, our target is to increase the minimum amount of cash on our balance sheet from €300 million to and developing the talent we need to support ASMI’s growth. Read more in the section ‘People’. €600 million in the period until 2025 (as announced at our Investor Day in September 2021). At the LEADING-EDGE INNOVATION end of 2021, we had €492 million in cash and cash equivalents. ASMI generated a healthy free cash flow of €266 million. We intend to continue paying a sustainable dividend, and use excess cash for The core element in our overall growth strategy is continuous innovation. This provides ASMI with the benefit of our shareholders through share buybacks. Read more in the section ‘Shareholders’. a leading technological competitive advantage. With R&D centers in six countries, we have helped shape today’s leading-edge semiconductor products by driving innovation through our collaborative Key performance Key performance ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 16 KEY PERFORMANCE FINANCIALS Bookings* € million 2,196 1,314 1,170 942 774 2,500 2,000 1,500 1,000 500 Revenue* € million 2,000 1,500 1,000 500 737 818 1,730 1,328 1,125 REVENUE In € million 1,730 +30% Gross margin* in % 41.5 40.9 42.6 47.0 47.9 50 40 30 20 10 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Operating result* € million Free cash flow*,**,*** € million Cash returned to shareholders € million 491 327 219 500 400 300 200 100 113 124 300 250 200 150 100 50 251 266 120 75 60 750 600 450 300 150 607 281 199 165 237 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 *  Excluding proceeds from patent litigation and arbitration settlement in 2019. **  Excluding proceeds from the sale of ASMPT shares in 2017. ***   The free cash flow previously reported is adjusted to reflect the definition of the free cash flow. For more information, see Glossary and definitions. The years 2017-2018 are revised for comparability purposes to reflect accounting of leases under IFRS 16, effective as of January 1, 2019. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 17 KEY PERFORMANCE PEOPLE Employees People in R&D 3,312 2,583 2,181 2,337 1,900 612 613 649 544 497 800 600 400 200 3,500 3,000 2,500 2,000 1,500 1,000 500 EMPLOYEES 3,312 +28% New hires 1,500 1,000 659 487 500 515 407 1,146 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Diversity Voluntary attrition in % Global injury and recordable rates 40 29 29 29 50 40 30 20 10 47 100 80 60 40 20 15 10 5 15% 2017 15% 2018 15% 2019 15% 2020 15% 2021 Number of nationalities Female employees as % of total employees 10 10 9 8 11 0.75 0.50 0.25 0.62 0.55 0.42 0.26 0.18 0.17 0.58 0.23 0.50 0.26 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Recordable injury rate Injury rate ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 18 KEY PERFORMANCE PLANET ELECTRICITY FROM RENEWABLE SOURCES in % 75.6 +66% Greenhouse gas (GHG) emissions* Water withdrawals Landfill diversion rate (in %) (Scope 1 and 2 emissions and normalized per R&D investment) (Absolute and normalized per R&D investment) Primary manufacturing and engineering sites 300 250 200 150 100 50 181 158 196 156 240 250 159 145 300 250 200 150 100 50 83 41 200 160 120 80 40 0 178 1,559 129 1,031 156 123 121 813 707 758 2,000 1,600 1,200 800 400 0 100 80 60 40 20 0 79 78 82 84 82 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Greenhouse gas emissions (mtCO2e - Scope 1 + 2, x100) Absolute water consumption (m3, x1,000) Intensity of mtCO2e/million € R&D spend Intensity of m3/million € R&D investment Electricity from renewable sources (in %) Water from stressed regions (in %) Landfill diversion (in metric tons) Primary manufacturing and engineering sites WRI water stress high and extremely high rankings (All product packaging reuse - ASMI, Customer) 80 60 40 20 11 11 9 10 76 100 80 60 40 20 0 81 73 53 50 48 259 163 139 92 95 300 250 200 150 100 50 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 *  2021 Scope 2 emissions presented are based on the market-based method. Value creation ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 19 VALUE CREATION Long-term value creation Customers and markets Innovation and products People Global operations Sustainability Shareholders Interview with the CFO 20 23 26 39 52 57 74 86 Our purpose is to improve people’s lives through advancing technologies that unlock new potential. Our focus is on long-term sustainable value creation for all our stakeholders. We focus on value creation for our customers, by continuously improving our products to support their technology roadmaps, increase productivity, and lower operating costs per wafer. Our people are our key asset. Our role is to create an inclusive workplace and culture that allows everyone to grow, thrive, and develop a fulfilling long-term career. We are committed to creating long-term shareholder value. ASMI’s growth and innovation have driven investment in manufacturing, supply chain, and key talent to keep up with, and stay ahead of, technology and market demands. We do all of this with innovation and sustainability top of mind. Sustainability is an integral part of our Growth through Innovation strategy. In 2021, we defined our sustainability focus and priorities for the next horizon: the years 2021 to 2025 and beyond. Long-term value creation Long-term value creation ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 20 LONG-TERM VALUE CREATION We create value through our technologies by enabling leading semiconductor manufacturers to deliver the world of tomorrow through our innovative processing solutions, equipment, and services. The process solutions delivered on our equipment enable a range of chip technologies, such as more powerful microprocessors and higher density memory devices, all operating at lower power. The advancements of new semiconductor technologies benefit our society and improve people’s lives. GREATER PERFORMANCE, REDUCED ENERGY CONSUMPTION Our advanced deposition technologies support cost-effective products that enable the electronic devices of today and of the future – devices that deliver ever-greater performance while using less empower global consumers: they have extensive computing power in the palm of their hand that increasingly drives their daily activities. energy. The industry’s relentless push to follow Moore’s Law, and complex new device architectures, leads to the continuous demand for smaller, faster, and cheaper semiconductor components. The OUR BUSINESS MODEL We strive to create value for the company and all of our stakeholders. Our technology enables the technologies required to achieve these advancements depend heavily on equipment such as ASMI’s precision deposition of thin films in various steps in the fabrication of semiconductor chips. This process tools. Furthermore many advanced processes require developing new materials. Innovation helps our customers build the most advanced chips used in electronics systems throughout society. is the growth engine that drives our R&D programs to develop the equipment and processes that To achieve this, we are working with our customers to develop innovative solutions, while constantly our customers’ roadmaps require. For example, ASMI’s ALD and Epi tools are critical to creating looking at what is best for our investors, employees, society, and other stakeholders. Our products high-performance transistors that can operate at lower power levels. This is a key enabler for and process solutions benefit society by helping to enable a wide range of advanced logic and products such as smartphones, Internet-of-Things (IoT) devices, which have substantial functionality memory chips used in most of the world’s electronic systems. Fundamental to our model is R&D in a small form factor with good battery life. More powerful and energy-efficient processors and investment, including basic chemical, materials, and feasibility research, followed by process and memory chips also enable new end-market applications such as artificial intelligence, which in turn product developments. One of our strengths is more than two decades of accumulated know-how can contribute to advances in healthcare, education, and many other industries. in ALD materials and chemistries. This value creation benefits all our stakeholders. Our people are our key asset, our role is to create We aim to continuously recruit world-class technologists in the semiconductor process and an inclusive workplace and culture. Thanks to our leading position in advanced deposition solutions, equipment technology fields. We cooperate with research institutes and our customers to our employees can enjoy the challenge of developing cutting-edge solutions. Our suppliers, in understand the technology roadmap challenges, and to develop the appropriate process and addition to a higher activity level, benefit from improved quality and efficiencies resulting from equipment solutions required. Our manufacturing facilities allow us to deliver high-quality systems our supplier process control program. Consumers benefit from the enhanced functionality and on schedule so our customers can ramp their fabrication plants. We support our customers globally added value provided by the new electronic products enabled by advanced semiconductors. with process and equipment services, and spare parts. We are increasing our focus on integrating A great example of this is the widespread use of smartphones. Continuous advancements in chips sustainability and circularity in our product lifecycle in the areas of innovation, design, system operation, refurbishment, and services. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 21 HOW WE CREATE VALUE: GROWTH THROUGH INNOVATION RESOURCE INPUTS FINANCIAL Strong financial position €492 million cash position MANUFACTURING & SUPPLY CHAIN Cost of sales €902 million Steep ramp of our new manufacturing facility Suppliers in more than 20 countries INNOVATION Gross R&D spending of €206 million More than two decades of know-how in ALD materials PEOPLE 3,312 talented and skilled employees 47 different nationalities COLLABORATION Partnerships with universities/imec Strategic relationships with universities/imec PURPOSE Improve people’s lives through advancing technologies that unlock new potential MISSION Enable our customers’ success by creating leading-edge semiconductor process products, services, and new materials l i v e s ASMI in n g v i n Im pr o pe o p l e ’ s o f o u r d i g i t a l s o i z c a t D r i v i n g i i e o t y n o v a t i o n e g d e g- s l o o s t e n gi d e p ositio L e adin olo & techn E c nabling ustomers’ ext-gen dev i c e s n STRATEGIC OBJECTIVES Maintain leadership in ALD market Grow share in Epi market VALUE OUTPUTS IMPACT FINANCIAL 30% increase in revenue €266 million free cash flow Driving long-term value for all stakeholders MANUFACTURING & SUPPLY CHAIN Delivering on customer requirements with record shipments in 2021 despite supply chain constraints Creating growth opportunities for our suppliers and encouraging them to follow best practices in sustainability Continued investment in state-of-the-art infrastructure INNOVATION Strong pipeline of new applications for 2nm and beyond 2,250 patents in force Our advanced deposition technologies enable next-gen semiconductors, driving the digitalization of our society PEOPLE 1,146 new hires 11.1% voluntary attrition rate Creating an inspiring, diverse, and safe workplace where our people can excel, pursue a career, and develop themselves COLLABORATION New partnership with IBM Several new JDPs* for next technology nodes By working together with customers and partners we contribute to continued innovation in our industry NATURAL 54,998 MWh, 76% from electricity from renewable sources, and 156k cubic meters water used Selective growth in PECVD & vertical furnace niches Grow spares & services through outcome-based offering Drive continued strong financial performance Accelerate sustainability in key focus areas: Innovation, People, Planet, Responsible supply chain, Governance NATURAL Transitioned most key sites to electricity from renewable sources in 2021 59% improvement landfill diversion (all sources) * Joint development programs Net Zero emissions by 2035 Reducing our environmental footprint Numbers refer to 2021 unless indicated otherwise. ASMI’s enterprise value creation and reporting models are informed by the Value Reporting Foundation’s integrated reporting framework and SASB Semiconductor Accounting Standard. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 22 HOW WE ENHANCE SUSTAINABILITY Our focus is on long-term sustainable value creation for all our stakeholders. Sustainability is an integral part of our Growth through Innovation strategy. In 2021, we defined our sustainability focus and priorities for the next horizon – the years 2021 to 2025, and beyond. These are: innovation, people, planet, responsible supply chain, and sustainability governance. We’ve identified priorities for each area, and address these in detail later in the report. Below is an overview of our five sustainability focus areas. INNOVATION RESPONSIBLE SUPPLY CHAIN Product sustainability Improving the energy and resource efficiency of our products Product safety Improving the safety of our products and our customer’s operations PEOPLE Safety Making a positive impact on the safety of our industry Our team Unleashing everyone’s potential at ASMI Community, industry, society impact Positively impacting our communities, industry, and the world around us PLANET Net Zero Achieving our Net Zero 2035 target Climate adaptation Addressing climate change risks and opportunities Safety Ensuring safety throughout our supply chain Net Zero Collaborating to address our carbon footprint Product sustainability Improving ASMI product sustainability Human rights Ensuring the ethical treatment of people throughout our supply chain SUSTAINABILITY GOVERNANCE Cybersecurity and IP protection Assuring robust cybersecurity and IP protection Disclosures Providing transparency, integrity, and assurance Customers and markets Customers and markets ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 23 CUSTOMERS AND MARKETS Wafer fab equipment (WFE) grew significantly in 2021, driven by customer demand across logic/foundry and memory leading-edge nodes. There was also solid growth in segments such as analog and power, due mostly to the Internet of Things (IoT), autonomous driving, and 5G connectivity. The service and support of this equipment is also driving customized, outcome-based solutions. As the industry approaches US$100 billion in WFE, and the market for leading-edge solutions continues to grow, ASMI’s strong track record of innovation in materials, hardware, and process continues to support our customers. We enable their roadmaps, which are focused on technology acceleration, manufacturing efficiency, cost optimization, and sustainability. MARKETS With the ever-increasing digitalization of global economies, advanced semiconductors are playing Within wafer processing equipment, the major segments include lithography, etch & clean, deposition, and process diagnostics. Our focus is on deposition equipment, which comprises a key role in creating this more connected world. As a result, new end-market products and about 20-25% of WFE. Within deposition, ALD and Epi are fast-growing market segments. applications are being developed, including: Edge and cloud computing, and big data analysis; Artificial intelligence; 5G smartphones; Autonomous and electric vehicles; IoT for smart connected devices; and Ultrafast wideband 5G communication networks. The single-wafer ALD market is expected to grow from ~US$1.5 billion in 2020 (ASMI estimate) to around US$3.1 - $3.7 billion in 2025 (ASMI estimates). The Epi market is expected to grow from ~US$0.8 billion in 2020 (VLSI Research April 2021) to about ~US$1.5 - US$1.8 billion in 2025 (ASMI estimates). Based on these estimates, the ALD and Epi markets are expected to outgrow the total WFE market. Looking ahead, market researchers are predicting the semiconductor market will almost double, to reach at least US$1 trillion by 2030. This is driven by the digital transformation megatrends, In 2021, the semiconductor industry was driven by a US$2.5 trillion global electronics industry which ultimately will also grow the WFE market. (VLSI Research, December 2021) that required around US$578 billion of semiconductors, up 24% compared to 2020. The increased need for semiconductors was driven by growing demand for data Wafer fab equipment in % processing in the work-from-home economy, and by higher prices in memory devices, as supply and demand of the memory market began to balance out. In turn, the semiconductor industry supported the around US$125 billion semiconductor capital equipment industry, which supplies the required production systems and services. WFE spending was up about 38% in 2021. It reached US$88 billion (VLSI Research, January 2022), due to increased spending for advanced logic and foundry, as leading customers stepped up spending on the most advanced nodes. 10 12 24 24 30 Lithography Etch & clean Deposition Process diagnostics Other wafer processes Source: Gartner, December 2021 ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 24 The constant drive for smaller, more powerful, and more energy-efficient devices puts further pressure on our industry at each new technology node. Moving to new nodes is increasingly difficult, OTHER MARKETS There are other smaller yet still important market segments for which ASMI supplies equipment, with challenges in new materials and device architectures, and complex process steps, which are such as analog and power. Analog and power semiconductors are devices used in a wide range also driving more ALD and Epi applications. With each new technology node, the challenge grows of electronic systems for mobile products, vehicles, telecommunications, and other applications. to reduce the environmental footprint of the manufacturing equipment, and processes used to make Wafer manufacturing is another relatively small segment we participate in. This is for the processing these chips. of bare silicon wafers before they are delivered to semiconductor fabs. Consequently, we see that each new technology node requires increasing investment in process equipment. Given that the semiconductor production market is so capital intensive, only a limited CUSTOMERS The goal of customers is to build faster, cheaper, and increasingly more powerful semiconductors number of companies are able to participate. This means our customer base has become more for each new technology node. We work closely with our customers to make this a reality, concentrated over time. It is only recently that we have seen some new customers from China forging mutually beneficial partnerships to help develop their technology roadmap. Through our enter the semiconductor space, albeit not yet in the most advanced nodes. Our customers are intensive R&D programs and customer co-development, we continuously improve and extend the increasingly dependent on the R&D investments and performance of their equipment suppliers. capability of our products and processes to meet these advanced technology roadmaps, increase Accordingly, we maintain a close, mutually beneficial business relationship with our customers. productivity, and lower operating costs per wafer. The result is value creation for our customers. This includes a cooperative development environment, linking technology roadmaps and equipment-performance requirements. While doing so, we work on the edge of what is technologically possible. This creates a very attractive professional and learning environment for our employees, and generates long-term value While the market has evolved to a smaller number of large semiconductor manufacturers, it is for all our stakeholders. We serve society by helping our customers produce the chips needed for still highly global with major fabs, which we support, throughout the United States, Asia and the advanced electronics that deliver a world of improvements and opportunities. Europe. Notably, the China region has become a significant growth area for new fab investments. This includes both domestic Chinese companies and foreign companies building fabs there for the We are engaged with, responsive, and committed to addressing the collectively broad range of local market. To better serve this growing market, we are continuing to increase our investment in our customer’s sustainability expectations, which include detailed inquiries and periodic audits. people and support infrastructure in China. We collaborate with our customers on sustainability topics wherever possible, to expand our LOGIC, FOUNDRY AND MEMORY MARKETS The semiconductor market can be split into three primary segments: logic, foundry and memory. ASMI supplies equipment to the leading semiconductor manufacturers in all of these segments. 2021 CUSTOMER ACCOMPLISHMENTS ASMI is committed to providing its customers with the best products and services. We work closely The logic market is made up of manufacturers creating chips, such as microprocessors, that with our customers to make sure our products meet their roadmap requirements. Our service teams are used to process data, and are used in smartphones, laptops, and computers; are on hand at their global fabs to deliver ongoing support for equipment and processes. The foundry market consists of businesses that operate semiconductor fabs to manufacture the designs of other so-called fabless semiconductor companies; and Throughout 2021, we were recognized by several key customers for equipment performance contributions and impact. The memory market covers manufacturers that make chips that store information – either temporarily, such as Dynamic Random Access Memory (DRAM), or permanently, such as and support. NAND non-volatile memory. In January, a customer in China recognized ASMI with a Best Supplier award. In April, another customer in China presented us with its Excellent Support Award. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 25 Growth through innovation COLLABORATING WITH OUR CUSTOMERS “ WE SUPPORT OUR CUSTOMERS’ ROADMAPS FROM THE EARLY STAGES, UP TO 10 YEARS IN THE FUTURE.” ASMI’s R&D teams are driving innovation by collaborating with our customers and In Q1, we were recognized by a top customer in Taiwan for Safety Leadership, and by the Taiwan government’s Industrial Safety and Health Association for zero recordable accident hours. In January, a large multinational customer presented ASMI with its 2020 Excellent Supplier Award for activities at its fab in China. In Q3, another multinational customer in China gave us its Sustaining Excellence award. In March, Intel recognized ASMI with a Preferred Quality Supplier (PQS) Award, and Distinguished Performance in Safety for 2020. In November, a large customer in South Korea presented ASMI with its 2021 Best Collaboration Award. In December, ASMI was awarded the Excellent Performance Award from TSMC for Excellent Production Support. In 2021, our service team was honored with the Top Supplier Award in Safety from a leading memory customer in Taiwan for their annual safety performance. It was the second year in a row that ASMI received this award. This underlines how we value safety, both among our teams and in our workings with customers to improve our shared safety. aligning our developments with their roadmaps. A critical component of our success In 2020, a key customer invited ASMI to join its highly select Sustainability Leaders program. is close and early collaboration with global research institutions, such as imec, Our 2021 accomplishments exceeded their expectations, positioning ASMI as a sustainability key universities, suppliers and leading customers. leader in our industry. Through our advanced R&D organizations in Helsinki, Finland, and Leuven, Belgium, we initially work with R&D partners and customers on new process and materials LOOKING FORWARD Strong digitalization trends are driving significant growth in the semiconductor and WFE markets. technology that is about four to eight years away from expected manufacturing. ASMI is preparing to support its customers and grow its business in that environment. ASMI is In our key product units, we work with customers on technology that is about two the leader in ALD and is expanding in Epi. These technologies are expected to outgrow the WFE to six years away from volume manufacturing on their roadmaps. market, driven by key inflections such as GAA transistors. Strategic objectives include: maintaining High-k metal gate technology was first developed for logic/foundry and, more recently, spares & services. Strengths in innovation, early customer engagement, and product differentiation is being used in DRAM memory devices. ALD patterning applications were initially enable advanced, cost-effective solutions for our customers. leadership in logic/foundry, expanding in memory, gaining share in the Epi market, and growing developed for spacer-defined double patterning (SDDP) in memory, and subsequently for logic/foundry. ALD gap-fill processes were initially focused on 3D-NAND, and are now also targeted at a wide range of applications across all device types. Innovation and products Innovation and products ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 26 INNOVATION AND PRODUCTS We continually improve our products through innovation, the growth engine of ASMI. Our products and innovations are crucial to advancing our customers’ technology roadmaps, and enabling the industry to advance to the next technology node. ASMI’s ALD, Epi, PECVD and vertical furnace systems are important growth areas, and we focus a large part of our R&D investments on these technologies. Our innovations and product stewardship are geared to making our tools more productive and efficient. Also, to enhance their safety and energy efficiency, so reducing their environmental impact. GLOBAL RESEARCH The industry’s relentless push to follow Moore’s Law, and complex new device architectures, A global platform engineering group addresses the need for common platforms and software for the various products in our product portfolio, and across different key-product units. This helps us drive leads to the continuous demand for smaller, faster, and cheaper semiconductor components. standardization of hardware and software throughout the organization. The technologies required to achieve these advancements depend heavily on equipment such as ASMI’s process tools. Furthermore, many advanced processes require developing new materials. We collaborate globally with R&D partners, suppliers, and customers. Our R&D portfolio, and Innovation is the growth engine that drives our R&D programs to develop the equipment and technology and product roadmaps, are aligned with our customers, and mutually, with a defined processes our customers’ roadmaps require. controlled process. We perform quarterly reviews of our R&D programs and portfolio to make sure they align with our strategy and short-term industry needs. We also perform annual roadmap and ASMI has a globally decentralized R&D and engineering organization, with a corporate R&D group. technology reviews to match up with the long-term needs of the industry. Resources are located mainly in Helsinki, Finland, and Leuven, Belgium, with additional resources in our product-development sites in the Netherlands (Almere), the US (Phoenix), Japan (Tama) An important aspect of our operating model is to engage with customers early in the R&D process. and South Korea (Dongtan). The R&D effort is centrally managed from our headquarters in the This means we are better able to align our roadmap and R&D portfolio with that of our customers. Netherlands. It also means we can down-select candidate materials and processes more effectively. Through our advanced R&D organizations in Helsinki and Leuven, we work with customers on the technology The corporate R&D group addresses common needs for advanced process and materials that is expected to be used in manufacturing in about four to eight years time. In our key product development. It also looks at process integration work for the advanced nodes that are four to units, we work with customers on the technology that is closer to being used in manufacturing, in eight years away from initial semiconductor production at our customers. less than six years time. The product-development sites are centers of excellence for a subset of products and technology. For example, the site in the Netherlands is focused on vertical furnaces. In Phoenix, it’s on Epi and thermal ALD. In Dongtan, it’s on PEALD, and in Tama, it’s on PECVD and PEALD, in collaboration with Dongtan. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 27 2021 R&D ACHIEVEMENTS In 2021, we significantly increased our capital investment related to R&D activities, and grew the Driving innovations ASMI in the value chain number of R&D employees from 613 to 649. These investments included demo, R&D, and metrology tools. To accommodate our strong performance in the ALD growth market, we expanded our Tama R&D facility, and are planning to grow our Dongtan Korea R&D footprint. We also have an expansion plan for our Helsinki R&D facilities, to increase our capability in materials development. To support our strong increases in the ALD and Epi growth markets, we invested significantly in modernizing the equipment base in our Phoenix R&D facility, including investments in the advanced metrology tools we use in our labs. Our global R&D network is well suited to initiate and coordinate collaborations globally, and manage them centrally. Accordingly, as an integral part of our roadmap-driven R&D efforts, we have expanded our external R&D engagements with new collaborators. In 2021, we continued our strategic partnership – that was renewed for the third time in 2017 – with the Interuniversity Microelectronics Center (imec) in Leuven, Belgium, the world-leading R&D institute in our industry. We have now renewed this for the fourth time, extending through to 2025. We intend to significantly expand the scope of this collaboration, equivalent to roughly doubling R&D spend over the next four years. The statement of work includes many of our state-of-the-art 300mm products. It also includes work aimed at disruptive inflections in our industry that may materialize beyond 2026. The imec collaboration gives us the opportunity to investigate, both jointly and independently, the integration of individual process steps and new materials in electrically active devices. We have partnered with imec since 1990, with significant on-site representation since 1994. In February 2022, we signed a new five year agreement with the University of Helsinki to form and fund the Atomic Layer Deposition Center of Excellence (ALD CoE). This is a significant expansion of the nearly two-decade collaboration with the University that first started in 2004. The ALD CoE will focus on research around ALD that is necessary for future semiconductor technologies. The ultimate aim is the design of new precursors, processes and materials that will have great scientific and technical impact. We are co-located with the university, allowing for a close collaboration on creating new ALD chemistries and developing new materials deposited by ALD. The intended timeline to bring most of these targeted innovations into production is towards the end of our horizon of 2028, and beyond. We engaged in a new three-year contract with the Semiconductor Research Corporation in their nanostructured materials program (NMP). We expect this collaboration will expand our connection RESEARCH institutEs & UNIVERSITIES CHIP MANUFACTURERS ASMI TECHNOLOGY AND PRODUCTS ADVANCED IC CHIPS COMPUTING SMART CARS INTERNET OF THINGS ARTIFICIAL INTELLIGENCE DATA CENTERs 5G MOBILE ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 28 with academia, mainly in the United States, but some other countries too. Also in 2021, we engaged technologies with selected customers. The scope of these JDPs span many nodes – from the 5nm in a three-year program with IBM in their Albany SUNY research center. This will enable us to test node currently in production, to well beyond the 2nm node for foundry, and the equivalent DRAM our Epi and ALD materials in GAA devices. and 3D-NAND technology nodes. Through our network, we collaborate with universities in several countries on a bilateral basis, including, among others, academic institutions in the Netherlands, Belgium, Finland, the PATENTS, TRADEMARKS, & IP SECURITY New deposition technologies and chemistries continue to be a major driver for new intellectual United States, Canada, Japan and South Korea. property (IP) for ASMI. Patents give us the right to protect our innovative processes, products, services, or aspects thereof, so enabling us to speak more openly about our innovations and We contribute to several process and equipment development projects at the major Dutch technical share ideas in the marketplace that benefit our customers. At the same time, failure to adequately universities through the Dutch NWO* funding organization in the domain TTW** (covering applied protect our IP and/or leakage of our IP, trade secrets, or confidential information, could result in and engineering sciences). And in Belgium, we participate in the industrial users group for several the loss of our competitive advantage, and adversely impact our customers and suppliers, or our projects supported by the Flemish funding organization VLAIO***. financial performance. We applied for membership of the European Industrial Alliance for Processors and Semiconductor Our vision is to increase our value to our customers, suppliers, employees, and shareholders by Technologies. Its two main objectives are to reinforce the European electronics design ecosystem, using our IP in a way that differentiates our products, influences the market, and provides additional and establish the necessary manufacturing capacity along a twin track towards 16nm to 10nm, and monetization opportunities. We generally file patents in the principal countries where semiconductor below 5nm to 2nm, and beyond. We are discussing partnerships in projects related to the Important devices or equipment are manufactured and/or sold. Project of Common European Interest (IPCEI) on Microelectronics and Communications Technology. We participate in select publicly funded programs to research and develop ‘More than Moore’ ensure freedom to market, and a competitive advantage as a shareholder asset. Recent research technologies. This is a strongly growing market of various types of analog chips that are not driven by LexisNexis® PatentSight® shows that ASMI was listed among the top 20 patent owners in the by the same Moore’s Law technology scaling inflections of mainstream logic and memory chips. technology field of semiconductor manufacturing, and that ASMI leads the Patent Asset Index™ We are also a member of the Association for European NanoElectronics Activities (AENEAS), and in ALD****. On an annual basis, we review our portfolio to optimize its strength, while limiting the participate in roadmap activities. increase in maintenance costs associated with an expanding portfolio. As of December 31, 2021, We strategically develop our IP portfolio via strong interaction with the ASMI technical community to we had 2,250 patents in force worldwide protecting our various products. We occasionally cooperate with other semiconductor capital equipment suppliers in complementary fields. Our aim is to gain knowledge of the performance of our own deposition processes, in Patents in force cooperation with other processes, either in bilateral or consortia projects. In 2021, we were engaged in several formal joint-development programs (JDPs) with customers for 300mm applications of our products. We were also active in evaluations of our most advanced *  De Nederlandse Organisatie voor Wetenschappelijk Onderzoek (“Dutch Organization for Scientific Research”) **  Domein Toegepaste en Technische Wetenschappen (“Domain for Technical and Applied Sciences”) ***  Vlaams Agentschap Innoveren & Ondernemen (“Flemish Agency for Innovation and Entrepreneurship”) 1,959 2,094 2,250 1,604 1,692 2,500 2,000 1,500 1,000 500 ****  www.patentsight.com/en/ip-analytics-blog/atomic-layer-deposition-thin-layers-are-a-big-thing 2017 2018 2019 2020 2021 ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 29 We have registered a number of trademarks covering our product portfolio in the principal countries As a baseline, we protect ASMI, customer, supplier, and partner confidential information by training where we do business (as of December 31, 2021): all employees on the importance of intellectual asset protection, as well as how to recognize and ASMI, the ASMI logo, Advance, Aurora, Dragon, Eagle, EmerALD, Epsilon, Intrepid, Previum, report possible violations. This training is provided to all new hires and employees are given regular Pulsar, Silcore, XP, XP8 and Synergis are our registered trademarks. refresher training. We have also implemented an information rights management (IRM) system to The ASM Qualified Licensed Supplier logo, AEGIS, A400, A412, ES, and ESA are our trademarks. Drive Innovation, Deliver Excellence is our service mark. further structurally improve protection. We anticipate additional systems and processes will be utilized to further enhance our IP and confidential information protection program. IP and confidential information security and cybersecurity are fundamental aspects of our business. In addition to implementing IRM, we have focused on strengthening our cybersecurity posture in a Responsibility for intellectual asset security is assigned to the Senior Director, IP and Licensing, number of ways: Shortening patching intervals, securing endpoints with best-in-class anti-malware and responsibility for cybersecurity is assigned to the CIO. These leaders work closely together technology, increasing resilience against phishing campaigns, and implementing tools that enable to ensure full coverage of these important matters and areas of overlap. We took further steps continuous threat detection and monitoring of our most commonly used IT systems and operational in 2021, completing a business-wide intellectual asset security and cybersecurity assessment technology devices. This increased proactive approach towards cyber defense helps limit and with the combined engagement of a recognized expert third party, our Internal Audit function, contain impacts from a potential cybersecurity incident. It also builds our readiness to respond to and our key business area leaders. This assessment, its findings, and the resulting improvement potential risks introduced from new and existing vulnerabilities. roadmap and progress is reviewed with the Management Board, and the Audit Committee of the Supervisory Board. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 30 OUR PRODUCTS Our products include wafer processing deposition systems for ALD, Epi, PECVD and vertical structures vital to the future of electronics. 3D technology provides several benefits. This includes saving space while delivering chips with higher performance that consume less power. Many new furnaces. We continuously drive innovation of our products and services to address the applications are emerging where ALD is the technology of choice, and in some cases it is the only technology needs of our customers, and the industry’s focus on reducing costs and improving the solution able to meet the challenging technology requirements. For example, ALD high-k gates are environmental footprint. Our development programs are aimed at increasing throughput, equipment now in production for high-performance DRAM devices. We are seeing customers requiring more reliability and yield in our customers’ manufacturing line, and lowering the energy and resource ALD applications for each new technology node. intensity and cost of ownership. This benefits our customers through reduced operating costs, as many of our products use the same parts and consumables, while a common control architecture In PEALD, plasma is used to provide the reaction energy for the process, enabling us to use lower improves ease of use. ALD ASMI is the leader in the fast-growing single-wafer ALD market – with an estimated market share of temperatures for low-thermal budget applications. This technology was introduced in DRAM and planar NAND flash manufacturing for spacer-defined double patterning (SDDP). This technique can reduce device dimensions, postponing the need for new lithography technologies. about 55% in 2020, as presented at the Investor Day in September 2021. Using ALD technology, ASMI has the broadest portfolio of ALD products. On our XP platform, we offer Pulsar and EmerALD we can scale devices to smaller dimensions while reducing the power consumption of transistors. single-chamber ALD process modules for high-k dielectric and metal gate films respectively. The This helps the industry follow Moore’s Law, and create smaller, more powerful semiconductors. Synergis ALD tool uses the XP8 platform, and leverages the core technologies from our Pulsar and ALD allows us to deposit thin films atom-by-atom on silicon wafers. This means we can deliver EmerALD ALD products for high-productivity thermal ALD applications. Synergis is available for a atomic-scale thickness control, high-quality deposition film properties, and large area uniformity. range of films, including high-k metal oxides, metal nitrides and metals. Such precision allows us to use materials that could previously not be considered, and develop 3D OUR PLATFORMS We make two types of process tools: single-wafer and batch. Most of our business comes from processing or integration of sequential process steps on one platform. Our XP8 platform single-wafer tools, designed to process an individual wafer in each processing chamber on follows the basic architectural standards of the XP, but provides even higher productivity with the tool. In contrast, our vertical furnaces are batch tools, designed in such a way that a large up to 16 chambers integrated on a single-wafer platform with a relatively small footprint. The number of wafers are processed at the same time, in a larger processing chamber, to achieve XP8 platform can be configured with four dual chamber modules (DCM), enabling up to eight a higher throughput. Single-wafer tools typically achieve a higher level of process performance integrated chambers, or with four quad chamber modules (QCM) for up to 16 integrated and control, especially for complex, critical applications, and a shorter cycle time. In recent chambers on the same platform. years, we have developed single-wafer tools with multiple chambers configured together in a XP8 DCM XP8 DCM XP8 QCM XP8 QCM compact way on a single platform. This approach offers the best of both worlds, combining high productivity and short cycle times, and a high level of performance. Our single wafer tools are designed for use on a common platform architecture. The XP platform is a high-productivity, common 300mm single-wafer platform that can be configured with up to four process modules. The XP platform enables high-volume multi-chamber parallel XP8 DCM XP8 QCM ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 31 Growth through innovation GATE ALL AROUND (GAA) for logic/foundry advanced-node transistors Impression of GAA transistor “ OUR R&D TEAM IS SHAPING THE FUTURE OF TECHNOLOGY.” Also on the XP8 common platform architecture, we offer PEALD processes for a wide range of applications. The Eagle XP8 uses DCM module configurations for high-productivity silicon oxides, metal oxides and nitrides. Our XP8 QCM tool offers PEALD processing on quad chamber modules for very high productivity. A wide range of silicon oxide and silicon nitride process applications are available with the QCM tool. Our XP8 QCM tool excels in the 3D-NAND high aspect ratio dielectric gap-fill application. This is where silicon oxide films are deposited void-free in deep trenches that are up to 100 times deeper than their width. EPITAXY Epitaxy (Epi) is a critical process technology for creating advanced transistors and memories. The Epi process is used for depositing precisely controlled crystalline silicon-based layers, important for the electrical properties of a semiconductor device. In some cases, the epitaxy films incorporate dopant atoms to achieve specific material properties. ASMI’s estimated share of the Epi market was about 15% in 2020, as communicated during the Investor Day. Our most advanced Epi tool is the Intrepid ES for CMOS transistor applications, using our XP platform to configure up to four Intrepid reactors on the same tool. Temperature control is extremely important in Epi reactors. We have developed new methods of temperature control in our Intrepid ES Epi tool that enable improved film performance and repeatability in volume production. Intrepid’s ASMI’s ALD and Epi innovations are helping to enable critical new technology inflections closed-loop reactor temperature control also allows for enhanced stability in production. In 2021, such as GAA for logic/foundry advanced-node transistors. ALD and Epi processes will play we further improved the Intrepid temperature control performance with Verace-CL. We gained an a crucial role in the device architecture migration from FinFET to GAA transistors. Here, the additional key customer win in 2021 for advanced node CMOS transistor applications. ALD high-k gate material surrounds the epi channel material on all four sides to improve electrical performance. Compared to FinFET, where the gate surrounds the channel on For enhanced Epi film performance, we introduced a pre-deposition wafer surface clean technology. three sides only, the GAA will also consume less power per operation. This is performed in our new Previum process module, integrated with Intrepid epitaxy process To fabricate the GAA device, the channel is formed by depositing a stack of multiple silicon surface for defect-free epitaxy film deposition. This is critical for achieving the most advanced modules. The surface clean process is used prior to the epitaxy deposition to create a pristine alternating Epi silicon and silicon germanium layers. ALD is used for depositing the node transistor-performance requirements. high-k metal gate layers conformally around those channel structures. While a FinFET device extends the gate area vertically for improved transistor switching control, the GAA In 2021, we strengthened our Epi product offerings with the launch of the Intrepid ESA tool for architecture extends that control area further by wrapping ‘all around’ each of the stacked 300mm silicon-based epitaxy for power devices and wafer-manufacturing applications. The Intrepid channels. reactor architecture allows for thick Epi deposition in a single pass, a significant productivity benefit Leveraging more than two decades of ALD innovation experience, ASMI’s ALD tools are the industry standard for depositing high-k metal gates. Our Epi tools enable precise For 200mm epitaxy applications, we offer the Epsilon 2000 tool. deposition of silicon and silicon germanium transistor channel materials. for our power and wafer customers. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 32 A400 DUO INTREPID ES EPITAXY SYNERGIS ALD PECVD In PECVD, our key position is on low-k for advanced logic interconnects. PECVD processes are SPARES & SERVICES ASMI systems are complex and operate under extreme conditions. To start them up and keep them offered on our high-productivity XP8 platform. Our Dragon XP8 PECVD tool addresses a broad running requires highly trained service engineers and a complete set of spare parts. ASMI spares range of dielectric films for various low-temperature deposition applications, such as interconnect & services is our customer frontline. It is there to install and qualify our new systems shipped to layers, passivation layers, and etch stop layers. VERTICAL FURNACE Vertical furnaces use a batch configuration. This means a large number of wafers are processed at the same time for productivity and cost savings. Our furnace tools are designed with dual-batch the customer, as well as maintain the systems via spare parts and services through their lifecycle. In 2021, we gained strong traction globally, with new multi-year contracts of our newest outcome- based service, Complete Kit Management (CKM), as well as our outcome-based offering, spares- as-a-service (SaaS). reactors for even more productivity. Our furnace tools include the A412 vertical furnace for 300mm ASMI has always provided service engineers locally, along with spare parts partially stocked locally. logic, foundry and memory applications, and the A400 DUO vertical furnace for 200mm and smaller Otherwise, it has made these parts available with some lead time on demand. Recently, we have wafers, targeting analog, power, RF, and MEMS applications. Our newest furnace tools, the A400 become more proactive in our spares & services business model, focusing on outcome-based DUO, has achieved significant wins in the China market. A wide range of process applications are services. These are products that deliver a quantifiable and verifiable value for a price, and the onus available on our furnace tools, including LPCVD, oxidation, diffusion and cure. is on us to deliver the defined value. This is in contrast to a historical model where the customer ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 33 purchased parts and people in a transactional way. This translates into ASMI putting concerted For the second year running, we have also focused on improving our operational efficiencies effort into developing new services that enable customers to enjoy improved system performance, in service. We have a full suite of operational metrics – from how long it takes us to install and higher output, and lower costs per wafer for their installed base. qualify a new system, to how our service team is used globally, and 31 other metrics in between. On a 100-point scale, we’ve successively driven up our score globally, from 36 in 2019 to 85 in Periodically, our systems require proactive maintenance to continue to perform well, and this is 2021. These improvements allow us to deliver a better, and more cost-effective service experience where CKM – our fastest-growing outcome-based service of the year – comes in. In effect, CKM to our customers. is a little like taking your vehicle for a routine oil change, that comes with fluid-level checks, an air-filter replacement, etc. With CKM, ASMI makes sure the right, quality parts and expertise is there for when customers need it. ASMI is also working constantly towards reducing the costs and downtime associated with these maintenance. With ASMI having developed the system, and with our resources and learning scale available, we can deliver superior value in this area. This compares favorably to the past when customers had to manage most of this process, if not all of it, themselves. Our second fastest-growing outcome-based service is dubbed ‘SaaS’ or spares-as-a-service. Periodically, parts in a system wear out, like tires on a car. These are called ‘consumables’. Other parts stop functioning over a longer period, and in a less predictable way, like a lock on a car door. These are called ‘non-consumables’. In both cases, a relatively low-cost part can keep a much more expensive system idle, as the system waits for the part to enable it to function. In the past, in line with the normal business model, we would fulfill orders for parts when we received them. But this process can take a long time, even months. Customers, generally, have had to take responsibility for parts planning to make sure they had stock when needed. With SaaS, ASMI takes on this planning and inventory. As ASMI builds this service globally, our ability to have the part a customer needs, at any time, improves. It also means customers’ systems will not be down as they wait for a part to come in. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 34 3D and NEW MATERIALS Next-generation semiconductors increasingly require: 3D STRUCTURES AND NEW MATERIALS FinFET to GAA FINFET TO GAA DRAM high-k/metal gate Periodic table Planar NAND to 3D-NAND Planar DRAM to 3D-DRAM PLANAR TO 3D-NAND PLANAR TO 3D-DRAM Elements marked green are used in semiconductor manufacturing, currently or expected in the future. 3D AND NEW MATERIALS INCREASINGLY REQUIRED FOR NEXT-GENERATION SEMICONDUCTORS TECHNOLOGY TRENDS LOOKING FORWARD At ASMI, we believe that as long as there is growing demand for semiconductors, Moore’s Law A second example of 3D is the GAA transistor, poised to take over in a few years, following five or more generations of FinFET. This stacks up to four channels on top of each other, significantly – or at least a generalized version of it – will continue. Scaling of the smallest dimension through multiplying the current a particular transistor can carry. Simultaneously, this improves the control lithography is no longer enough to increase density and decrease cost-per-function. Increasingly, over that current. Third, chips are now stacked vertically in a package to reduce the package size scaling is complemented with a move to the vertical dimension ‘3D’. A first example of this was and shorten the connection lengths between the chips. For example, a high-bandwidth DRAM the transition from 2D-NAND to 3D-NAND non-volatile memory with, currently, as many as 128 device integrates a logic chip, formerly ‘the periphery’ in a single chip, with multiple vertically transistors aligned vertically along a single vertical channel. stacked memory arrays in a single package. And fourth, the difficulties in scaling the cost and size of a DRAM is expected to lead to a transition to stack transistors vertically in a 3D-DRAM beyond 2026. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 35 ALD  Due to its ability to create substantially uniform and high-quality layers of complex materials over 3D structures (‘conformality’) at relatively low temperature, the share of ALD (including PEALD) in energy savings per wafer realized. Finally, tool settings have been optimized for periods of time when the tools are not in use creating a “smart idle” state. the deposition market will grow substantially with this trend towards 3D. On the one hand, existing technologies like LPCVD will be replaced by single-wafer ALD. On the other hand, new ALD SUSTAINABILITY IN R&D We have taken several initiatives that contribute to an improved environmental impact of our R&D processes will enable further changes in device architecture that could not have occurred with other operations. Our road-mapping process, led globally by the Office of the CTO, and the associated deposition technologies. New materials, such as better conductors and insulators, for example, will controls, are intended to prioritize our work towards the most likely technologies needed for future be needed to maintain adequate electrical performance. Materials need to be deposited in narrow, technology nodes. Vertical collaboration leads to more efficiency in R&D as down-selection of deep gaps, without any holes or seams. More and more of these critical process steps are expected options can be done more effectively. These two processes, prioritization and vertical collaboration, to migrate towards ALD and PEALD. result in fewer materials and wafers being wasted in experiments. EPI The GAA transistors will rely on an epitaxial superlattice of as many as 8 to 10 silicon and silicon- Executing part of our new chemistry developments and initial selection in a lab on coupons in R&D systems, rather than on full wafers in 300mm manufacturing systems minimizes the number germanium layers. For 3D-DRAM, this superlattice is expected to be even taller: starting with around of experimental trials needed to conclude a development. This reduces energy and chemicals 64 layers. This is expected to scale quickly to even more layers. The new GAA transistors will also consumption, as well as silicon wafer usage. require new epitaxial contact layers, selectively grown bottom up with high doping. In addition, power electronics for, among others, electric vehicles, will require thick epitaxial layers. In our selection process for chemistries, during our initial pathfinding, we investigate many different Overall, we believe ALD and Epi are the most important growth markets – at least in the next five part of our selection process. Although ASMI uses only a relatively small amount of these chemicals years. Accordingly, we have focused most of our R&D spend on these technologies. internally in its R&D process, their use down the value chain by customers can be very large. These precursors and chemistries. A sustainability review of these chemistries is becoming an integral PRODUCT SUSTAINABILITY Developing tools and processes more efficiently helps improve energy and resource usage. initial chemistry choices are therefore important in minimizing the environmental footprint of our equipment in operation at our customers. We are working to achieve this in various ways, including: Additionally, in 2021 we improved the rigor in our R&D process with an improved tollgate (or stage Developing process technologies that enable advanced semiconductor chips with lower gate) process, and various pipeline controls. This improves the effectiveness and efficiency of our power consumption; R&D process, decreasing waste in chemicals, materials, and test wafers. Thus far, our internal Designing our equipment to use less power when operating in our customers’ fabs. analyses shows that these R&D process optimizations led to a reduction in wafer and chemical use per research topic in the range of 25 to 50%. In 2021, ASMI continued its strong focus and commitment to reduce energy and resource consumption across our product portfolio. Using Epi as an example, we demonstrated significant We use proprietary techniques in data science in planning and conducting our R&D. This serves energy savings with development in multiple areas. Our unique Epi chamber architecture inherently to optimize the efficiency and effectiveness of product and process development, and knowledge shows advantages with reduced gas consumption and net power consumption per wafer due to transfer. This in turn has proved to significantly reduce energy and resource consumption. With its reduced chamber volume. Additional hardware engineering innovations, and the use of green advanced models of process and hardware behaviors, we are better able to identify and robustly certified components, have been implemented as well. Process recipe optimization, including the validate further improvement opportunities. Such advanced techniques are necessary in working at use of multi-wafer clean schemes, helped to minimize clean chemistry consumption with a further atomic scale, to balance deposition performance with energy and resource consumption. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 36 ENABLING MORE ENERGY-EFFICIENT CHIPS Some of the materials and processes we work on with our customers enable more energy-efficient include country legislation, the extensive standards defined by the semiconductor industry and its customers, and ASMI-specific requirements. We analyze if the safety requirements can be met chips, with transistors and memory elements that consume less power per operation, and during the concept and design phases, as part of safety-risk assessments. We confirm compliance interconnect with lower power losses. In 2021, 2.1-2.4% of the world’s energy* was already used for through independent third-party validations during the product validation phase. processing (1%) and communicating (1.1-1.4%) data across the internet, and in data centers. This energy use roughly doubles every three years, growing much faster than overall global energy use. We integrate the identification of opportunities for safety-design improvements from our global New materials and process technologies developed by ASMI help to reduce the power consumption equipment to report incidents, areas of concern, or opportunities for improvement. Corrective and in advanced semiconductor devices, while increasing their performance. For example, ALD gate preventive actions and lessons learned are captured, prioritized, and acted upon, providing an dielectrics and new work function (WF) metals enabled reductions in gate leakage current by invaluable link between end-users and the design process. All those working with our equipment 1000x. ALD, due to its near-perfect conformality, also enabled the transition of device architectures rely on this process of continual assessment and improvement to make sure they can safely work safety-reporting system. This system enables our engineers and technicians who work with our from planar to 3D FinFET structures. FinFETs have a lower power consumption per operation than with our products. planar FETs. Key advancements in our safety program in 2021: Going forward, ALD and Epi processes will play a crucial role in the next device architecture Expanded product safety education: Each year, we look at new regulations, advancements in migration from FinFET to GAA nanosheet transistors. Compared to FinFET, the GAA will consume standards, and lessons learned. We update our training material accordingly, and customize it with less power per operation. The migration of DRAM periphery to high-k dielectric and metal gate will specific product line examples for respective product design teams. ASMI’s product safety significantly reduce its dynamic and static power consumption, just like it did for logic devices. Also, engineering training classes address the latest lessons learned, and changes to compliance we expect that the new materials for memory that ASMI is currently researching – such as phase- regulation and standards. change materials and ferroelectric materials – will play a critical role in future energy-efficient memory Successful third-party virtual safety audits during COVID-19 restrictions: devices, and energy-efficient AI architectures. PRODUCT SAFETY Product safety is central to ASMI’s innovation process, and is realized through the design, ASMI’s Product Safety Engineers performed virtual third-party audits in all regions globally. Due to travel restrictions, these required significant additional preparation and coordination. Also, the number of audits globally increased markedly due to the significant increase in new product-development programs. development, manufacturing, delivery, and ongoing use and support of our products. The Product Semiconductor industry product-safety engineering leadership: We presented to the Safety Program is defined and championed by a new Strategic Safety Council, which includes international semiconductor industry forum (SESHA) on three key innovations in product safety the leaders of ASMI’s EHS and Product Safety Engineering and their executive management. This engineering: council sets strategic direction and provides governance to strategy execution and ongoing program 1. Challenges in risk assessment and risk reduction; management. This embodies our ‘Stronger Together’ philosophy, where EHS and Product Safety 2. The world of virtual SEMI S2+ audits; and strive to work together optimally. It includes improvements in business processes and systems, 3. Focused IH activities to minimize maintenance downtime. safety culture, training, and ensuring continued industry-safety leadership. Product Safety Engineering makes use of a compliance scorecard to track key regulatory and in key industry efforts to advance product safety, as well as our own capabilities, methodologies, compliance requirements through all product lifecycle stages. These compliance requirements and systems. Looking ahead, in line with our safety leadership ambitions, we will continue our strong engagement *  www.iea.org/reports/data-centres-and-data-transmission-networks. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 37 ASMI aims to comply with applicable hazardous substance equipment content regulations as they We are developing our product-safety innovation roadmap, and look forward to sharing more become applicable. We engage with industry associations regularly to stay informed, and provide about these innovations in the coming periods. a voice on industry positions and value-chain compliance. Regulations related to product content, such as RoHS, REACH, and PFAS, are regularly revised and applicability redefined. ASMI has engaged a third party to support us in evaluating the hazardous substance content of our suppliers’ PRODUCT LIFECYCLE MANAGEMENT Product stewardship and product lifecycle (PLC) management are the foundation of our product parts, and will continue to drive compliance in this important area. development efforts. This involves in-depth understanding of our markets and the challenges our PRODUCT SAFETY INNOVATION  Product safety is the ability of a product to be safe for its intended use (safely delivered, installed, customers face. It is also about translating this into market requirements and product-development programs to address our customers’ challenges and enable their roadmaps. operated, updated, maintained), against ‘reasonably foreseeable misuse’, ‘designed so that It also involves taking responsibility for reducing our products’ environmental impact along their a reasonably foreseeable single point failure fault or reasonably foreseeable set of concurrent entire lifecycle, from cradle-to-grave. Ultimately, this approach enables us to develop products more failures accumulation of faults does not result in an unsafe condition’. It includes the intrinsic ability efficiently. It results in products that are more efficient and productive, while providing for a more to mitigate the risk or impact of equipment or broader damage even if other layers of safety fail. circular product by extending its useful life. The safety of a product is evaluated against a myriad set of established standards (e.g. SEMI S2 and S8) and rules, which grow in number and become more complex with time. Our product lifecycle process follows the well-established construct of phase-gate product The safety of products represents the risk of harm to people, environment, facilities, business continuity, reputation (ASMI and customer), and other, whether the product is operating in our facility Our collective industry knowledge/experience and subject-matter experts; Industry/customer requirements and frameworks (such as customer-purchase specifications and development guided by several key inputs: or a customer site, or another environment. A single event (e.g. explosion, fire) can result in serious business requirements); and injuries or fatality, potentially destroy major portions of or even an entire fab, and potentially disrupt Industry regulations, standards, and guidelines. large segments of industry supply chains. Our customers expect us to comply with all applicable standards, verify compliance by a certified independent authority, and maintain compliance Product-specific requirements realized from these inputs are documented in market requirement coincident with design, configuration, and use-case changes over time. Certain customers require specifications (MRS), which are held as the objectives we need to meet throughout the product adherence to their own special conditions, which can drive the cost of compliance up for all. development process. The MRS are updated continuously to capture changes to market conditions, We firmly believe there can be no compromise on safety, and the industry should not increase regulations and standards, and related specifications. its risk appetite. We are focused on ensuring compliance with all regulations, standards, and best practices to reviews), and phase exit meetings through the various lifecycle stages of the product. maximize product and operational safety, striving to perform at the highest levels. As recognized safety leaders in our industry, and leveraging our innovation heritage, we also see significant We maintain the certification ISO9001-2015, relating to the scope ‘design, sell, make, install, and opportunity for innovations that meaningfully reduce safety risk, and improve safety-related customer support of front-end semiconductor processing equipment’, which was recertified on fab economics. August 1, 2019. The next recertification audit is in April 2022. We did not have any product quality Governance is provided through key technical meetings (architecture, design, and validation recalls or related material financial impact in 2021. In 2021, we brought such a key innovation to the market. It reduces purge gas and exhaust volume, lowering energy and resource use while maintaining equipment and operational safety. We are evaluating this key innovation with a leading customer. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 38 EXTENDING THE PRODUCT LIFE OF OUR SYSTEMS The market for our new systems continues to grow rapidly, driven primarily by customers’ needs SUSTAINABLE PARTS LIFECYCLE Customers want parts that last, increase the output and lifetime of the system, and reduce the for the latest technologies. At the same time, many of our older systems remain in full or partial cost of ownership. We have integrated technologies, such as a soft remote plasma clean, in place use today. of in-situ plasma cleaning, which helps to extend the life of these parts. We have a team in our services group tasked with improving the intrinsic lifetime of parts. This means focusing on surface For systems no longer in use, there is an after-market where our customers reuse these systems. technologies that will make internal chamber parts more resistant, so they will not need to be ASMI has selectively been participating in this market. We continue to explore how to participate replaced as often. more broadly, in a way that will help to lower costs and deliver a higher ROI to our customers. For those systems not operating optimally, we have a team that works on refurbishment and with new parts. This involves the original new-part surface technology, as well as the used- upgrade solutions for our installed base. We actively work with customers to understand and part surface technologies, to find ways to refurbish the used part to lower costs and extend life implement improvement opportunities. In 2021, we continued to see a significant amount of parts. We are evolving our supply base to be more local to our customers. We are also focusing system-level refurbishment business, and expect this to grow in the future. on the refurbishment of existing parts, rather than the costly and less sustainable approach of The team also looks at how to reuse the parts that need to be replaced, rather than replacing manufacturing new ones. Our team also seeks to find solutions for the components that will inevitably become obsolete in the supply chain. The aim is to continue repairing existing installed base components, rather than replace them with new ones, and keep our systems running long into the future. People People ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 39 PEOPLE Our people are our key asset. They drive ASMI’s strong growth through their actions, innovative ideas, and passion for delivering every day. Our role is to create an inclusive workplace and culture that allows everyone to grow, thrive, and develop a fulfilling long-term career. Engaging with and contributing to the communities where we do business is a significant opportunity to make a positive impact. PEOPLE - OUR TEAM To ensure the long-term success of our employees and our company, ASMI’s people initiatives and This multi-pronged approach has resulted in a structural improvement in ASMI’s talent-acquisition approach. It has raised brand awareness, strengthened our identity, and built pride, all of which roadmap focus on establishing us as an industry employer of choice. are helping to establish ASMI as an employer of choice for new and experienced talent. DRIVING TALENT ATTRACTION In 2021, we introduced numerous employee branding initiatives to help ASMI achieve its growth This approach has resulted in ASMI’s most successful year for talent acquisition, with a total of 1,146 people joining us in 2021. Our total workforce grew from 2,583 to 3,312, a total increase ambitions by attracting the best in our industry. Activities throughout 2021 led to the strong growth of 28%. The increase in our voluntary attrition rate from 8.3% in 2020 to 11.1% in 2021 can be explained by strong growth in our industry and the recovery in the economy. of our workforce. Some of our initiatives: Introduced ASM Accelerate, an intensive PhD graduate program; Launched a global employee referral program, a strategic recruitment program that encourages employees to refer top talent; Leveraged our award-winning employee value proposition, ‘Power of an Open Mind’, successfully using it across multiple recruitment campaigns; Adapted and introduced virtual recruitment webinars worldwide, targeting key groups, including PhD graduates, IT, and global operations; First-ever out-of-home recruitment campaign ran in Singapore. ASMI appeared on buses, at train stations, and other busy spots around the city; and WORKFORCE Employees Employees including temp % temporary workers Number of workers under Collective Bargaining % workers under Collective Bargaining Nationalities Male Female Ramped up social media, building our employer brand presence and online community. Voluntary attrition rate 2017 1,900 2,043 7.0% 2018 2,181 2,327 6.3% 2019 2,337 2,444 4.4% 2020 2,583 2,689 3.9% 2021 3,312 3,462 4.3% 224 260 278 328 254 11.8% 29 85% 15% 10.4% 9.1% 29 85% 15% 9.9% 10.8% 11.7% 29 85% 15% 8.7% 40 85% 15% 8.3% 7.7% 47 85% 15% 11.1% ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 40 Growth through innovation OUR PEOPLE ARE OUR POWER Claire Lin Software engineer Kurokawa, Japan “ I TRULY BELIEVE THAT ASMI CONSTANTLY INNOVATES, IN LINE WITH OUR COMPANY VALUES.” Growing up in Taiwan, Claire Lin had a keen interest in the Japanese language and culture. After graduating from university, ASMI’s global network made moving to Japan possible. Claire has been with ASMI for four years, joining us straight after graduating from university. We ask Claire about working at ASMI, personal growth, and her drive to innovate. You started your career with ASMI. Can you tell us how you’ve grown with us in that time? “I joined ASMI at an exciting time; the semiconductor industry is very important to the whole world, and ASMI is a key member of the semiconductor supply chain. I get to use my software skills at ASMI and develop wider knowledge beyond technology. This helps me work smoother as I know more about the whole semiconductor equipment structure. That’s how I experience personal growth and progress – not only last years, but continuously in the last years.” Can you tell me what innovation means to you in your role? “To me, innovation at ASMI means that I am always being challenged by customer requirements, new technology, and developments in software engineering. Innovation comes from thinking constantly. To me, new ideas emerge in the process of improvement. It makes me feel like the content of my work is not set in stone and this helps me keep progressing.” How important is innovation to you and life at ASMI? “I truly believe that ASMI constantly innovates, in line with our company values: We Care, We Innovate, We Deliver, we are encouraged to improve our work, and I am always enabled to do my best. The nature of my role also involves a lot of international, cross-cultural collaboration, which allows me to use my language skills and experience the power of teamwork on a global and local level. For example, last year, I had the opportunity to work closely with colleagues from Korea on a project. It was a lot of fun, and we all learned and shared a lot.” Can you tell me how you see your future with ASMI? “I really like being part of this software team; it’s not only about the contents of my work, but also my colleagues that make my role enjoyable. I believe my growth at ASMI will continue in the next few years. As the supply and demand of the world’s semiconductor supply chain continue to increase, we will face some challenges, but this motivates me. Another factor is ASMI’s ‘We Care’, which incorporates our well-being and creates a good working environment, making me believe that ASMI and I can grow together.” ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 41 LEADERSHIP AND DEVELOPMENT Long-term career progression is core to retaining our employees. We are in a strong, new growth pipeline. We also implemented development centers alongside a relaunched leadership academy. These focus on a smaller group of business leaders, empowering them and preparing them to be phase and need to continually develop our people and managers. To this end, ASMI implemented a future leaders at ASMI. talent-management approach built around employees’ strengths. This provides tailored support and career development opportunities. In 2021, hundreds of our people were assessed, with actions We extended our e-learning platform (Harvard ManageMentor) to all employees globally. As a result, designed to tap into their potential. This will continue into 2022, with individual development plans we have seen an increase of 72% in active learners, with a 53% increase in the average learning implemented for all employees. time. As we continue to foster a learning culture, we expect to double these numbers. We also worked to identify roles that are critical to our continued success. These positions form To retain existing talent and attract new people, ASMI has taken a robust approach to its people a central part in our succession planning, a process that maps our internal talent against critical agenda, innovating at every turn as it looks to drive itself as an employer of choice. positions. It ensures that ASMI has continuity in key roles, and helps us strengthen our internal talent ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 42 PEOPLE ARE OUR BIGGEST ASSET OUR VALUES To unleash everyone’s potential at ASMI, and to allow each employee to build and establish a long-term and sustainable career, we are focusing on four areas. STRENGTHENING OUR CULTURE Unleash our renewed focus on ASMI’s culture and values. Shaping a culture of compassion, inclusivity, innovation, and drive to deliver. GROWING ENGAGEMENT We are making the changes that matter. Focusing on engagement initiatives defined by our employees, the driving force behind improvements for everyone at ASMI. LEADERSHIP & DEVELOPMENT We are strengthening our talent pool by focusing on long-term career progression with training for all employees and our future leaders. INCLUSION & DIVERSITY We are a company that acts with integrity, compassion, and respect always. Together we are inclusive, inspired by others, and always growing. STRENGTHENING CULTURE AND GROWING ENGAGEMENT CULTURE At ASMI, we believe that people are our differentiating factor. So we will only achieve true further, taking part in interviews, focus groups, and surveys. The results have reinforced our strengths, and shown us where we can still improve. potential by attracting and retaining the best talent in the industry. To do this, we are focusing on But we are not stopping here: creating one ASMI is a continuous journey. further strengthening our culture, and shaping a workplace centered around compassion, trust, accountability, delivery, and innovation. Ultimately, we aim to build connections between our employees’ personal values and ASMI’s purpose. We will work with all employees to help them understand their roles in shaping their In 2021, we took an essential step in defining who we are at ASMI, and what we stand for, own futures, and the future of ASMI. by launching our core values – We Care, We Innovate, We Deliver. These core values have been embedded throughout the organization, top-down and bottom-up. and we know that an engaged workplace can increase productivity, quality of work, and help to In addition, hundreds of our employees have played a critical part in helping to shape our culture retain top talent. Developing a culture unique to ASMI will help us create an even more engaged workplace – ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 43 ENGAGEMENT INITIATIVES Our first employee engagement survey, held in late 2020, achieved a solid 94% participation rate. PULSE SURVEY The pulse survey had a 79% participation rate, and offered us valuable insight into progress in In 2021, the mission was clear: our employees were keen to participate in the company’s change our engagement journey. The survey, a quick check-in with colleagues old and new, came one year journey. They were all instrumental, therefore, in putting actions into place throughout the year to after our first company-wide engagement survey. increase engagement. ASMI took a local approach to implementing improvement initiatives, tasking people managers and progress in engagement, and strong recognition of the inclusive culture at ASMI. We will continue their teams with creating ‘action plans’. These plans represent ideas and improvements, suggested to support teams that require additional training and coaching to prepare for our next full biannual by the individual team members, to help boost engagement and create a work environment suited engagement global survey in 2022. The survey focused on team action plans and an inclusivity index. The survey revealed solid to each team’s unique needs. Alongside action planning, we identified other immediate priorities. This included a need for more consistent, transparent, and open communication. As a result, two major initiatives were undertaken in 2021. CO-TALKS is a quarterly virtual all-hands meeting, with the CEO and senior management team. Throughout 2021, thousands of our employees joined us online to listen to company updates and take part in Q&As. Employees were encouraged to ask the senior management team questions, either anonymously or face-to-face. This allowed for honest, open discussions between management and employees. CONNECT, another employee communications tool, relaunched as an online news platform in February 2021. The platform has gone from strength to strength, with many employees submitting Great communication of engagement survey results by leadership and local management, with 79% rating it as excellent (‘5’ – 50%) or good (‘4’ – 29%); stories and sharing their successes. More than 100 articles were featured during the year, 70% of employees report participating in a good (‘4’ – 33% ) or even great (‘5’ – 37%) including 60+ interviews with our people, and 34 videos, and we’re racing towards the million action-planning session; page-views mark. 65% of employees rated either great (‘5’ – 29%) or good (‘4’ – 36%) progress on their engagement plans; and Following one year of activity, we held a pulse survey in November 2021 to track our progress. High scores on both local follow-through on the 2020 Engagement Survey (accountability) and perceptions of inclusion highlight positive changes across ASMI. Survey results at a glance The pulse survey monitored our collaborative action-planning, as well as offering crucial insights into the current status of inclusion and diversity (I&D) at ASMI. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 44 TOTAL REWARDS Alongside culture-driven actions, we have taken steps to improve our total rewards to safeguard INCLUSION & DIVERSITY At ASMI, we aim to be a truly inclusive and diverse company, a place where everyone is enabled ASMI’s position in the semiconductor labor market, which has become increasingly competitive in to do their best and be their whole self. recent years. Being able to attract and retain talented employees is key at ASMI as we focus on growing and strengthening our organization. The demand for highly skilled people is increasing in all To help achieve this, we launched a flagship initiative in 2021. Our new employee resource group, the countries we operate in. ConvERGe, will form the backbone of our inclusion and diversity (I&D) agenda at ASMI. To ensure ASMI’s continued success, and further reinforce our position as an attractive employer We announced ConvERGe in March 2021, during a week of events centered around International to both potential and current employees, we undertook a total rewards strategic diagnostic review Women’s Day. More than 500 of our employees from all locations and backgrounds joined us for in 2021. This focused primarily on global benchmarking and an in-depth analysis of compensation training, talks, and Q&As hosted by two of our female Supervisory Board members, with other programs. Recommendations following this review have led to progressive changes in our internal and external speakers. compensation approach and policy. ConvERGe is made up of ASMI’s business leaders and employee volunteers worldwide. A second benchmarking exercise and review of all employee benefits programs globally will take Its members identified three objectives, strongly linked to our ESG ambitions: place in the first half of 2022. These activities will ensure ASMI offers competitive pay and packages, 1. Drive an inclusive culture safeguarding our people and their role in supporting the company. 2. Lead in gender pay equality 3. Foster recruitment and retention of women across ASMI With our rapid growth and onboarding of more than a thousand new colleagues in 2021, it’s more crucial than ever that we focus on giving all employees a clear sense of direction and purpose to ConvERGe is committing to: come to work each day, beyond just monetary reward. Collaborating with our leadership team to target and drive for 20% women working at ASMI by 2025. This is the first time we have committed to such a target, and this will drive much of the ConvERGe activities in the coming year; Creating an internal awareness campaign and recruitment drive resulting in 100 volunteer employees joining ConvERGe, creating communities globally and locally; Sponsoring training for managers and employees worldwide; and Helping to set the I&D agenda at ASMI, considering the results of the pulse survey, identifying additional employee resource groups and activities centered around the needs and expectations of ASMI’s people. ASMI has a proven track record for equal pay, a key component to any successful, fair, inclusive, and diverse workforce. To be transparent about the impact of our compensation programs, we assess the difference in gender compensation between our female and male employees. We look at the compensation ratio at management and non-management levels. The analysis compares the median compensation as a function of gender per job grade and per country, excluding the impact of job scope and country-specific compensation levels. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 45 In 2021, we saw a limited downward shift from 99% to 95% in our gender pay ratio. This was We also care about the living conditions of our workforce. To this end, we actively engage with calculated using the relative salary position (RSP), comparing female and male employees. outside organizations to benchmark best practices in line with the Anker methodology, a relevant The decrease is largely due to ASMI’s growth and record year for recruitment. We conducted survey practice for corporate organizations. We also make use of the WageIndicator Foundation a strategic diagnostic review of ASMI’s compensation in 2021, with resulting actions to be definition and data, which is dedicated to labor-market transparency. implemented in 2022. This will help support our continued focus on making sure all employees are rewarded fairly, and in line with local, regional, and global best practices. The scope of the living-wage assessment conducted in 2021 included all countries where we have Median RSP (female/male) Senior management/executives Middle management Non-management Total 2020 103% 102% 100% 99% 2021 91% 91% 97% 95% ASMI employees or contractors (currently 16). As with the assessment in 2020, we did not identify any cases where employee wages were below the agreed living wage. This is also driven by the fact that we have a predominantly highly educated workforce, with competitive remuneration levels. Our wage commitments also align with our ‘We Care’ value and ‘employer of choice’ ambitions. ASMI collaborates on bringing visibility and action to this important topic outside our value chain. Starting in 2020, we co-proposed with three other companies to add ‘living wage’ as an GLOBAL EMPLOYMENT STANDARDS AND HUMAN RIGHTS ASMI is dedicated to creating a safe and healthy workplace. We also take responsibility for amendment to the RBA Code of Conduct. The proposed amendment was not adopted in the latest version of the code, but ‘living wage’ was formally added to the RBA’s strategic plan in international employment standards across our supply chain. Our Global Employment Standards 2021. Our advocacy efforts culminated in the RBA forming a Living Wage Task Force in 2021 to (GES) summarize our policy and standards regarding human rights throughout our global study the impacts and recommend best practices for RBA member consideration and potential operations. They are written with everyone in our value chain in mind. The GES reflect the principles implementation. laid out by the United Nations in the Guiding Principles on Business and Human Rights, and support the RBA Code of Conduct labor standards framework, including the following: Prohibit the use of forced or involuntary labor, including fees of any type to secure employment; Prohibit the employment of child labor; ASMI policy specifically does not allow anyone under the age of 18 to be employed at ASMI; and Prohibit corporal punishment, threats of violence, or other forms of physical or verbal coercion or harassment. We believe that everyone deserves to work in an environment free of any threats to their human rights. In 2021, we had no reports or evidence of any human rights violations or abuses within our global hiring or employment practices. The full text of our Global Employment Standards is published on our website. LIVING WAGE ASMI is a member of the Responsible Business Alliance (RBA), the world’s largest industry coalition dedicated to corporate social responsibility in global supply chains. Our employees are paid above the local minimum wage, and we are committed to paying at least a living wage. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 46 WORKING HOURS AND DAYS The standard working week varies by region and country and is often dictated by local regulations or the Global Compliance Officer. The Ethics Committee investigates any reports. Independent of how an issue is reported, our COBC includes a non-retaliation policy that applies to any person and norms. One consistent standard across ASMI is aligned with the fundamental principle in the making use of this process. RBA Code of Conduct that addresses working hours and days for hourly employees involved in the production of goods and services. The RBA code limits working hours to 60 hours per week, or In 2021, eight concerns were reported through our SpeakUp! system, while four cases were the local limit, whichever is lower. And such employees shall be allowed at least one day off every reported via other channels to the Ethics Committee. We reviewed and responded to all incidents. seven days. In one case, the investigation revealed a non-conformity with the COBC and related policies, and appropriate action was taken. There is an allowance for emergency situations, such as when COVID-19 unexpectedly disrupts schedules with lockdowns, quarantines, and production worker availability. With some impact within these guidelines, ASMI was able to perform within the RBA limits for both working hours and days. PRIVACY We have adopted and rolled out a privacy policy and practice, which is in line with GDPR, and We were able to achieve this because of our existing management framework around the control of have established privacy-protection agreements with third parties where applicable. In our effort working hours and days. The adherence to these criteria is part of a corporate-level dashboard and to protect the confidentiality of our employees’ data, we conduct regular audits and act on any is monitored and reported closely to ensure compliance. filed reports. The same applies to the privacy of our customers and suppliers. BUSINESS ETHICS ASMI’s Code of Business Conduct (COBC) management system includes 18 underlying policies, HEALTH AND SAFETY The protection of the health and safety of our employees, customers, suppliers, contractors, including fair competition, gifts, entertainment and hospitality, corruption and improper advantages, and others in our value chain is an uncompromising principle. We measure our success against and anti-fraud. our vision of ZERO HARM!, a commitment we have across our operations. Our ultimate goal is ZERO HARM!, whereby we strive to eliminate all harm within our operations, and are collaborating, The refreshed COBC is more comprehensive and comes with training for all employees in multiple influencing, and enabling others to do the same. languages. The training is set to effectively influence desired conduct rather than merely reinforce rules. At the same time, it further defines the consequences of such violations through our newly introduced disciplinary policy. All training is supported by a wealth of resources. This includes a dedicated web page on ASMI’s intranet, reference material, and tools for specific areas, such as gifts and entertainment, the Whistleblower program, and SpeakUp!, an anonymous way to voice concerns or violations of the COBC. The COBC applies to our Supervisory Board, Management Board, all employees, consultants, contractors, temporary employees, and critical suppliers. SPEAKING UP The SpeakUp! program enables employees, suppliers, customers, and other stakeholders to report ethics issues and concerns anonymously and in their own language. People can report potential violations of our COBC through the SpeakUp! process, or directly to management, the People team, ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 47 BE SAFE SAFETY LEADERSHIP FRAMEWORK EXPECTATIONS Set the foundation for our safety culture EMPOWER Everyone is a leader for safety EXEMPLIFY ELIMINATE Lead by example, in words and actions Prevention always comes first, eliminate hazards up front EDUCATE EVALUATE Know for yourself, require timely completion of safety training Your and your organization’s safety leadership SAFETY LEADERSHIP Empowering safety leaders in all areas of the company regardless of role is a fundamental part of A prestigious ASMI award recognizes safety leaders every quarter. Employees who demonstrate our approach to safety. Safety is both ‘in the moment’ and is influenced by the world around us notable contributions – scaled for their role, positive attributes, and leadership – in safety can be every day. What we say, how we say it, and what we do influences everyone we work with. We nominated by peers for a global quarterly Safety Leadership Award. recognize this and continue to promote our 6Es of Safety Leadership to instill the philosophy that anyone can be a safety leader. We honor these safety leaders at ASMI: QUARTERLY SAFETY AWARD WINNERS Q1 Q2 Q3 Q4 Senior Field Service Engineer Japan - For sustained team safety motivation Senior Manufacturing Manager Singapore - Consistently exemplified safety through his leadership Field Service Engineer US - For exemplary safety leadership in an extraordinary moment Manager Product Support Phoenix - Safety leadership inspiring others around the ASMI global lab operations ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 48 In 2021, we started or continued key focus areas of our safety systems, including: Blueprinting and development of a new, digital platform for Environmental, Health & Global injury and recordable rates (Case rate per 100 employees) Safety (EHS) applications based on industry-leading architecture – This project is called 0.75 SHIELD and the first application being developed is an upgrade to our Safety Incident Reporting (SIR) platform. The transformation of this system will allow us to better understand and improve our safety performance, particularly with predictive capabilities. We have a three-year roadmap to grow SHIELD beyond activity and action planning, and integrate it with other key control and workflow processes. Safety leadership collaborations – During the COVID-19 pandemic, we continued to drive our industry-leading safety leadership collaborations with our customers virtually. To collaboratively reduce our shared risks, we compare our observations and data, understand mutual challenges, and identify areas we can work together to improve. We plan to engage with additional customers to broaden this collaboration. Lab safety plans – We are seeing significant growth in our engineering and R&D operations, and that means expansion of our R&D labs. How we expand safely, and continue to drive overall safety 0.62 0.56 0.50 0.30 0.26 0.25 0.55 0.45 0.21 0.18 0.42 0.42 0.19 0.17 0.58 0.37 0.23 0.17 0.50 0.37 0.26 0.17 performance and risk reduction in these high-risk labs is a key focus. 2017 2018 2019 2020 2021 Manufacturing safety plans – Even with a new state-of-the-art manufacturing facility in Singapore, we continue to focus on reducing risk in our manufacturing processes there, as well as in our operations in South Korea and the Netherlands. Service safety plans – Our service organization faces unique risks at customer sites, which are shared work environments with customers, other suppliers, and trades. We have a focused annual plan for risk reduction and customer engagement in this critical area of our operations. Industry engagement and collaboration – With a view to collaboration and engagement around health and safety, we continue to be a platinum sponsor of SESHA, a multi-industry Recordable injury rate Injury rate Recordable target Injury target ‘Learn once anywhere, address everywhere, in as close to real-time as possible’. ASMI is committed to conducting business, both in our own operations and throughout our supply chain, association focused on furthering safety, health, sustainability, and environmental knowledge in a manner consistent with RBA principles to protect our employees, customers, business and processes. We actively engage with and contribute to working groups at SEMI (the global partners, communities, and the environment. electronic products industry association) working groups that drive standards and knowledge-sharing for the industry. SAFETY MANAGEMENT SYSTEMS Our safety management system includes a robust set of safety policies and processes across all aspects of health and safety management. Our policies address core philosophies and practices, including but not limited to: Stop Work – Everyone has a right to ‘Stop Work’ when they encounter a situation at any level that involves safety or health. Even if an employee feels unsafe without any event occurring, we encourage and support them to call a ‘Stop Work’, seek a safe setting, get help or advice on how to proceed safely, or escalate the situation to someone who can help them do so. Proactivity – Programs that focus on the early detection of hazards and risks including our Safety Management by Walking Around (SMBWA) and Good Catch reporting. These are forms of hazard identification that engage employees and managers in their work areas. Through this engagement, ASMI Safety Program - Our vision is ZERO HARM! This means we strive to prevent all incidents and injuries, regardless of severity or impact. This vision is supported with the appropriate range of we use our eyes every day across our company to identify and eliminate risks and hazards. Energy safety – Policies and procedures for safely working around energies of all forms, and how policies, programs, and governance. Our safety mantra, whether for prevention or response, is to safely de-energize. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 49 Chemical safety – Protocols for the request, review, and approval to safely use chemicals and Management review – There are quarterly reviews of Lab, Manufacturing, and Service strategic gases. This incorporates protocols for determining safe handling, storage, and exposure plans and progress. Health and safety is a standing topic for the Senior Management Team prevention through the hierarchy of controls. It is integrated with our environmental policies for the meetings, with performance to targets and objectives included. planning of proper treatment or disposal as applicable. Industrial hygiene – Understanding exposure controls for chemicals and other physical hazards is a key part of our focus on health and safety. Our industrial hygiene program aims to prevent KEY RESULTS We measure our success not in the number of serious injuries, or the number of days away from occupational exposures that could cause harm or disease. work, but in the total injury rate, which includes all injuries requiring first aid or more. Our vision is Risk and incident reporting, prevention, and response – Our safety incident reporting (SIR) system is the foundation of driving risk and incident reporting, prevention, and response. This ZERO HARM! Only when our Injury Rate reaches and is sustained at zero will we reach that vision. Our progress towards this vision started in 2012, when we set this ambitious objective. We have includes what to do when a risk is detected or an incident occurs, policies around immediately seen our total injury rate fall significantly since then, from 1.09 to 0.50. In the same period, we have reporting when it is safe to do so, getting the right attention to properly contain the situation first, seen our recordable incident rate improve from 0.54 to 0.26. and then focusing on the structural improvements necessary to prevent a risk or incident from happening again. As we strive for ZERO HARM!, each stage of our journey gets progressively more challenging. Our Employee engagement – Employees are empowered members of safety committees and Injury Rate improvement progress has recently slowed - our 2021 total Injury Rate of 0.50 did not working groups across our organization and sites. They have the ability to submit a ‘Safety Good meet our target of <0.37. We believe this underperformance is largely due to the challenges of the Catch’ into the SIR system. SIRs are reviewed daily by EHS and managers across the company, business growth and intensity level and matriculating many new employees into our safety program and acted upon where appropriate. Employees frequently receive personal thank-you notes from and culture. This also informs where and how we must improve. As such we plan to continue this our executive team for their safety leadership, and submitting their observations and findings to challenging target of <0.37 in 2022. further preventive measures. It’s a collective, collaborative effort by everyone to keep safety ingrained in everything we do. We target completing an analysis and safety strategic plan in the first half of 2022, the actions Contractor safety – Program for collaborating with contractors to keep them safe while from which will target bringing us back on track to our improvement trend ambitions. We continue performing their scope of work at ASMI. This includes contractor company screening, individual to challenge ourselves every day to culturally and structurally eliminate or mitigate risks, toward contractor training and orientation to our sites and requirements, and administrative controls, such eliminating every incident and injury. as safety plans and work permits. We work with contractors on our sites to ensure close coordination through pre-task planning and site incident-prevention programs to minimize the risk of our operations impacting their tasks, and subsequently their safety, and vice-versa. LOOKING FORWARD Collaboration is key to collectively improving the safety of the industry. It starts with us, but grows Management of change – When changes occur, this set of protocols serves as a guide through a risk assessment of the change, aimed at establishing if new or improvement safety, health, or when seeded with engagement. We seek and engage in initiatives that strengthen collaboration with our customers, as well as looking to build more collaboration between our own operations, environmental protection measures and controls are necessary. across R&D labs, production floors, and service regions. We are also focusing on strengthening Training – Safety is not just a part of ‘safety training’. We embed it in equipment-specific training, so it is part of the equipment maintenance and manufacturing experience, and not something that collaboration in industry groups, including SESHA and SEMI. is only covered by policy. We also engage every new employee around the basics of safety during We strive to achieve ZERO HARM! and we are constantly looking for ways to further improve. our new-hire orientation course. This is in addition to the safety training specific to working in high-hazard areas or high-hazard conditions. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 50 PEOPLE - COMMUNITY We care about the communities where we do business, engaging with them and making a positive ASMI EMPLOYEES SHOW ‘WE CARE’ ABOUT CHILDREN’S HEALTH More than 150 ASMI employees from Ireland, the UK, Israel, China, Singapore, the US, and the impact. Whether individually or in teams, our people around the world show their commitment to Netherlands joined a month-long charity event to raise money for a children’s hospital in Ireland. community through volunteer service. ASMI colleagues, friends and families walked, ran, cycled, and swam 50km within 31 days. Participants completed around 7,500km of exercise as volunteers aimed to do ‘50K My Way’. ASMI CHINA SHOWS ‘WE CARE’ ABOUT CHILD EDUCATION ASM China employees sponsored access to equipment for online English learning and video ASMI matched the funds raised. meetings. Also, a group of volunteers traveled to Guizhou province to support a special three-day In 2021, ASMI donated to Red Cross India – a non-profit organization providing humanitarian aid program at the Yanjiao Primary School. This involved face-to-face classes and interactive activities to victims of COVID-19 – in support of our employees with roots in India. ASMI also donated to aimed at increasing the children’s interest in English. An ASM China charity auction held during the Save the Children, a non-profit that provides humanitarian, life-saving relief to children. event raised sufficient funds to pay the school fees for more than 50 children. ASM Singapore facilitated donations by employees to the Sembawang Family Services Center (FSC). The funds were for the purchase and distribution of food and other essential items to at least 40 low-income families living near ASM Singapore’s Woodlands Heights operations. ASMI employee volunteer team with Yanjiao Primary School students 50K My Way Team Donation to Children’s Health Foundation, Crumlin, Ireland “Thanks to all the hard work by ASMI China volunteers. I hope our charity team will keep going. “The team spirit and support from across the company has brought our core value ASMI will consistently contribute to public welfare.” - Lai Xu, General Manager, ASM China ‘We Care’ to life,” - David Connell, Director of Service and Spares. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 51 COVID-19 RESPONSE Manufacturing ASMI was affected by the pandemic as it surged globally, through waves of community outbreak and exposure. We monitored the potential for interruption to our product facilities, and guarded onsite access closely. Strict protocols were in place, often going above and beyond local requirements to minimize the risk of exposure at ASMI. We used regular testing at our production facilities in Singapore to help ensure early detection of positive cases. When the situation warranted it, we provided employees with temporary accommodation to mitigate potential risk of exposure and maximize social distancing when off work. While some employees tested positive for COVID-19, our case tracking and investigations did not indicate likely exposure while at ASMI production sites. Our teams are proud of the effort they made to mitigate the risk and come together to implement creative solutions to ship orders on time – all in keeping with our culture of ‘We Care’. Our Corporate Director of Global Manufacturing was inspired by teams’ efforts saying “A team that manages through crisis together, learns together and stays together.” Customers “ A TEAM THAT MANAGES THROUGH CRISIS TOGETHER, LEARNS TOGETHER AND STAYS TOGETHER.” In 2021, the COVID-19 pandemic continued to impact the world in unprecedented ways. As our customers responded to the pandemic, we worked closely with them to ensure Every person and every company in the world has felt its effects in some way – and ASMI is continuity of their policies and exposure controls with our employees. We also ensured no exception. Whether it was the impact on our employees and their families, or in our own continuity of our commitments to provide them with leading products and service. In 2020 operations, supply chain, or customers – COVID-19 has left an indelible impression. and 2021, we were able to adjust how we support and respond to customer requirements, As this report is written and released, we continue to take measures to minimize risk from this challenges related to travel, as our engineering and customer support, and customer base, virus. Within our own operations, we continue to maximize work from home as a key control spans the globe. Border restrictions mean it may be difficult to get an expert into a country or for those able to do their jobs remotely. For those who must come to our sites or customer or new service team-members to an engineering center to help strengthen knowledge and skills. supplier sites, we have robust control measures in place, including screening protocols, masks, We continue to address the challenges and minimize the setbacks. including improving our remote training abilities and leveraging remote expertise. There are still social distancing, increased ventilation, and general hygiene measures. Supply chain We also recognize the risk of travel and continue to implement a travel restriction and approval The impact from COVID-19 was felt at all levels of ASMI’s supply chain in 2021. Around 75% policy. Only critical travel is approved. of the manufacturing sites of ASMI’s direct suppliers were shut down for a period during the year. Additionally, nearly all suppliers were impacted by lockdown-related workforce capacity limitations. The full discussion of impact on our supply chain can be found in the section ‘Global operations’ of this report. Global operations Global operations ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 52 GLOBAL OPERATIONS ASMI’s growth and innovation have driven investment in manufacturing, supply chain, and key talent to keep up with and stay ahead of, technology and market demands. We do all of this with sustainability top of mind. Our focus starts with finding ways to move faster and smarter to support engineering in new product introduction, improve efficiencies in manufacturing, and provide full supply-chain support through the after-market. With the continuing impact from COVID-19, we are taking further steps to increase the robustness and flexibility of our supply chain and manufacturing. We are also continuing to improve and revise our own risk management and business continuity plans, as well as those of our supply chain. MANUFACTURING OPERATIONS ASMI has global manufacturing sites in Singapore, the Netherlands, and South Korea. GLOBAL SUPPLY CHAIN ASMI operates globally and has partnerships with suppliers in more than 20 countries across Asia, Our manufacturing strategy is guided by a Plan of Record (PoR) process. This consists of detailed North America, and Europe. ASMI has high expectations of suppliers around operational flexibility analyses of all the critical parameters that will allow us to deliver tools in the most efficient manner and responsiveness. This means working proactively with supplier partners to make sure they are – maximizing our global footprint while aiming to be closer to our customers. Our manufacturing able to assess and manage risks. The impact of COVID-19, global shortages, and limited labor facilities comply with RBA Code of Conduct requirements, and have self-assessed as ‘low risk’ force, have tested this flexibility and responsiveness over the past two years. using the RBA SAQ tool. On top of ASMI’s new facility in Singapore, which we completed at the end of 2020, our enable its growth and innovation. The speed and volume of product development and production manufacturing footprint and capacity have increased steadily through initiatives such as innovative ramps, continues to challenge the supply chain. With engineering teams located around the world, line design, modular test expansion, and facility enhancements. Globally, ASMI will continue to setting up improved support and faster turnaround of supply is key to feeding the innovation and expand even more in 2022 and beyond. As announced in September 2021, we started the design product-development engine. In spite of the challenges, ASMI continues to strive to build a global, world-class supply chain to work on the second manufacturing floor in our new Singapore facility, which we expect to be ready for production in early 2023. This will further expand our capacity, and provide us with the flexibility to deliver on our 2025 growth plans. In addition to infrastructure and capacity expansion, improving product quality remains a top priority. We continue to enhance quality standards by identifying risk early within production processes, and eliminating it. This process includes the expansion of process standardization, the use of failure mode and effect analysis (FMEA), tools, and enhanced training capabilities. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 53 SUPPLY CHAIN GROWTH AUTOMATION DEMAND SIGNAL STABILITY CAPACITY EXPANSION PROGRAMS IMPROVED CHANGE MANAGEMENT CAPABILITY Automation, demand signal stability, capacity expansion programs, and improved change-management capabilities. TOWARDS BUILDING A RESPONSIVE SUPPLY CHAIN ASMI continues to invest in its supply chain systems and business processes to improve added subject-matter experts (SMEs), who define supplier roadmaps in key technology areas. The supplier development (SDE) and supplier quality engineering (SQE) teams continue to expand responsiveness to the continuously changing needs of our customers. Increased speed, globally, adjacent to both supplier and customer sites. All three teams work to ensure that a ‘quality responsiveness and flexibility in the supply chain is critical to our growth and differentiation first’ mindset is designed into our products and processes. in the marketplace. We have four main strategies in place to drive agility in our supply chain: automation, demand signal stability, capacity expansion programs, and improved Supplier engineering and supply chain teams seek partners to meet our future technical challenges change-management capabilities. together. After selection, suppliers are trained to document and share manufacturing processes to minimize part-to-part variability, while scaling to meet ASMI’s growth. Focus areas for suppliers In 2021, ASMI continued to roll out its supplier collaboration tool, ASCENT, to more suppliers. The continue to be technical capability, capacity flexibility, and commercial commitment. tool is currently in use by suppliers that cover 80% of our spend. The plan is to complete the roll-out to all direct material suppliers by the end of 2022. The ASCENT platform drives automation and SUPPLY CHAIN SPEND BY REGION digitalization of our supplier communication. This will allow us to dramatically scale our business without significantly increasing resources. In 2021, ASMI also began to implement the advanced planning and forecasting system, FERP. This will allow us to dampen the demand variability that we pass onto our suppliers. The system will make it easier for them to respond to demand changes, while improving the stability and level loading of their production lines. In 2022, the target is to complete the roll-out of the FERP system to all targeted suppliers. Another critical tool that ASMI kicked off in 2021 is the long-range capacity planning tool for critical suppliers and commodities. The tool enables ASMI to identify capacity gaps and develop plans to address them ahead of time. It does this by leveraging long-range market projections, and translating them into longer-term supplier needs. SUPPLIER DEVELOPMENT AND PERFORMANCE MANAGEMENT ASMI’s supplier engineering team is committed to total quality, while accelerating product commercialization through supply-base development. A new supplier technology (STE) team has 5% EUROPE, MIDDLE EAST, AFRICA 18% NORTH AMERICA 77% ASIA PACIFIC ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 54 COVID-19 IMPACT ON SUPPLY CHAIN The impact of COVID-19 has been felt across all levels of our supply chain. In 2021, around 75% SUPPLIER DAY AND CELEBRATING SUSTAINABILITY On November 2, 2021, we hosted a virtual Supplier Day, inviting key suppliers from across the of the manufacturing sites of ASMI’s direct suppliers were shut down for a period. Also, nearly all globe to join the event. Our annual Supplier Day gives us an opportunity to share ASMI’s business suppliers were impacted by limitations on reduced workforce. There were efficiency losses due to strategies and priorities. It includes a focus on technology, quality, sustainability expectations, and protocols on social distancing, working hours, disinfectant protocols, movement-control restrictions, growth. For ASMI to continue to be successful, these are key areas for suppliers to understand and work-from-home mandates. and support. During the event, suppliers heard from members of ASMI’s leadership team, including our CEO and key members of the executive team, on how to shape better relationships between Recovery from pandemic shutdowns has been slow. In many areas, ASMI is still working with companies. We also presented three awards, recognizing suppliers for their performances and suppliers on recovery plans and prioritized deliveries, and providing support in ramping operations. outstanding support: We are fortunate to have a global supply base across more than 20 countries. This means that while the impact of the pandemic was severe at times, the natural spread of the virus across the globe did not cause a full-scale shutdown at any point. Kawasaki Heavy Industries VDL Enabling Technology Group Song Tat Precision The impact of COVID-19 has also complicated supplier-delivery performance deep into supply ASMI is committed to collaborating with suppliers to increase the impact of sustainability initiatives chains that were previously not as actively managed – from raw materials to simple off-the-shelf and recognize their success. For instance, these initiatives may address the climate crisis, human components and capital equipment needed for expansion. The ripple effects of these shortages rights in the supply chain, as well as other important social topics and safeguards. In 2021, and constraints put further pressure on suppliers to deliver. ASMI introduced its PRISM Sustainability Award, including Leadership and Innovation categories. The winners of the inaugural 2021 ASM PRISM Sustainability Award in Supply Chain were: Early on in the pandemic cycle, ASMI was proactive in working with suppliers to understand its impact, increasing purchase-order coverage, staying close to suppliers, and securing critical Leadership - XP Power Innovation - CEVA Logistics parts. We also established a real-time COVID-19 impact reporting system to monitor the impact of shutdowns and local restrictions. Due to these measures, ASMI has for the most part continued to deliver on customer demand for tools throughout 2021. Sustainability Supply Chain - Innovation ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 55 RESPONSIBLE AND SUSTAINABLE SUPPLY CHAIN Ensuring a responsible and sustainable supply chain is a key focus of our overall sustainability program. Our priorities include: Health & safety, Net Zero, helping ASMI improve the energy and resource efficiency of its products, and human rights. Health & safety – Extending ASMI’s vision of ZERO HARM!, and its intensive commitment to safety, we expect our critical and strategic suppliers to have a robust safety program, culture, and results. As such, we have communicated this expectation to our key suppliers and intend to set safety-performance targets for these suppliers, which is intended to set an industry standard. Read more in the ‘People’, ‘Health and safety’ section. Net Zero – To support ASMI in achieving its Net Zero by 2035 target, we intend to collaborate with suppliers to address our own and their environmental footprint, to accelerate progress and achieve impact beyond each other’s individual scale. Key priorities will include working together to measure and address our Scope 3 emissions, encouraging our suppliers to maximize their use of energy from renewable sources, setting their own ambitious Net Zero targets, and disclosing their environmental performance through CDP. Read more in the ‘Planet/Net Zero’ section. Product environmental footprint – Improving the energy and resource efficiency of ASMI Critical supplier responsibility strategy PHASE 1 Risk assessment PHASE 2 Self- assessment questionnaire (SAQ) RBA CODE OF CONDUCT PHASE 3 Auditing/ corrective actions products is one of our key product-development priorities. But we know we cannot achieve our The RBA online platform has strict criteria for scoring SAQs for supplier risk-level. Suppliers that ambitions alone. We are collaborating with our supply chain, as a key component of our global complete the RBA SAQ and self-assess as high risk are required to complete a corrective action innovation network, to maximize innovation and impact to benefit our customers and the plan, and may be audited. In 2021, ASMI had no suppliers rated high risk. industry overall. Read more in the ‘Innovation and products’/’Product lifecycle management’ section. Human rights – We care about the ethical treatment of people throughout our supply chain. SUPPLIER EXPECTATIONS We communicate our expectations to our suppliers, with a particular focus on our critical and We strive to identify and address the key risks, wherever and however they may exist, as further strategic suppliers that represent the majority of our 2021 spend. This approach manages our discussed below. supply chain risks by focusing on the primary areas of material origin and spend. SUPPLY CHAIN CODE OF CONDUCT Our supply chain code of conduct is the foundation of our efforts. We hold our suppliers to the same high standard as ourselves, requiring their commitment to and compliance with the Responsible Business Alliance (RBA) Code of Conduct. Critical and strategic suppliers are required to commit to the code, and complete the RBA self-assessment questionnaire (SAQ) to assess and provide evidence of their compliance biennially through the RBA-Online platform. Our process for managing code commitment, supplier self-assessment, auditing, and corrective action is consistent with RBA requirements. In 2021, 100% of our critical and strategic suppliers committed to the code and 98.7% completed the RBA self-assessment questionnaire (RBA SAQ). We expect our critical and strategic suppliers to commit to: RBA Code of Conduct ASMI Corporate Responsibility policy ASMI Code of Business Conduct ASMI Intellectual Property policies Ensuring a safe working environment, including a Recordable Case Rate (RCR) target Support of ASMI Net Zero 2035 target Innovation to support ASMI product energy and resource efficiency improvement Conflict materials identification and disclosure Global trade compliance and export controls ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 56 HUMAN RIGHTS Ensuring the protection of human rights is a critical element of our code. We are committed to maintaining and improving our systems and processes to assure respect for human rights related to ASMI was an early signatory of the Women’s Rights and Mining statement on gender-responsive due diligence and human rights of women in mineral supply chains. our own operations, supply chain, or products. We are increasing due diligence and management We joined and are actively engaged in the widely recognized Responsible Minerals Initiative controls to identify, assess, and address human rights-related risks and potential impacts. ASMI is (RMI), including to extend supply chain due diligence measures to other minerals, such as cobalt co-leading efforts in the newly formed RBA Living Wage Task Force to provide the necessary due- and mica. The RMI brings together the electronics, automotive, and other industries to improve diligence processes and infrastructure to ensure workers in our supply chain receive a living wage. conditions in the extractives industry. The protection of human rights has been fundamental for ASMI and an important aspect of the RBA Code of Conduct and the introduction of our Global Employment Standards. We stand against FORCED LABOR/BONDED LABOR We also go beyond the RBA Code, to map our contract manufacturer labor-sourcing process to any form of forced or bonded labor, human trafficking, and all forms of human rights abuses. prevent forced and bonded labor (FLBL). In 2021, we reviewed our FLBL mapping for COVID-19 impacts on the migrant labor-sourcing practices of our contract manufacturers. We found that In 2021, we had no reports or evidence of human rights violations or abuses within our global migrant labor programs had been suspended due to restrictions on employee travel. We continue supply chain. to monitor the situation and will update maps and due diligence as travel restrictions may ease in 2022. To date, no forced or bonded labor has been identified with our contract manufacturers RESPONSIBLE MINERALS SOURCING Conflict minerals are those minerals mined in the Democratic Republic of Congo (DRC) or adjoining through our initiatives. countries. Profits from the sale of these minerals may directly or indirectly benefit those involved in rebel conflicts and human-rights violations. These minerals and the metals created from them – tin, SUPPLY CHAIN DIVERSITY ASMI is actively engaged in the SEMI MOD workgroup, which has engaged participation from all tantalum, tungsten, and gold – can make their way into the supply chains of products used around aspects of SEMI membership. The SEMI MOD workgroup commits to increasing the number and the world, including the semiconductor industry. As a responsible member of the global community, overall impact of diverse owned and operated companies serving the semiconductor industry. we are committed to preventing such human-rights violations. In 2021, ASMI increased its commitment to diversity of supply by forming a committee focused We require our critical and strategic suppliers to source tin, tantalum, tungsten, and gold (3TGs) supplier selection and qualification process. Through these efforts we are seeking to increase our responsibly, and to use certified, conflict-free smelters from recognized certification organizations. spend with diverse owned and operated companies. on increasing supply chain diversity. We also added diversity-ownership requirements to our new Our goal is to trace 3TG sourcing, ensure the use of certified conflict-free smelters, and confirm that our sourcing funds do not finance conflict in the covered countries. We conduct due diligence based on Organisation for Economic Co-operation and Development (OECD) guidance, and detailed data verification with identified suppliers’ smelters, This process establishes traceability to the smelters. It also confirms that they are on the validated conflict-free smelters (CFS) list published by the Responsible Minerals Initiative (RMI). This helps us ensure that the products and components we source are free of DRC conflict minerals. Current information on our policy and due diligence process can be found on our website in the Supply chain section under Corporate responsibility. Sustainability Sustainability ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 57 SUSTAINABILITY At ASMI, sustainability is about understanding our impact and increasing our value as an integral part of our business strategy. We engage with stakeholders to assess and understand our impact on society. Aligning our strategy and sustainability focus with their priorities, we strive to maximize long-term value creation. LONG-TERM VALUE CREATION AND IMPACT In this section, we provide an overview of our sustainability focus areas that are aligned with and ASMI ESG HISTORY responsive to our stakeholder priorities – all with our focus on delivering long-term sustainable value ASMI’s sustainability journey started in earnest in 2012, with first coverage in our annual creation, and striving to make a positive impact in the world. report. We committed to what is now the Responsible Business Alliance (RBA) Code of Conduct and set our first multi-year targets for GHG emissions, water conservation, and As sustainability is integral to our business, you can find a more detailed discussion of these focus solid waste diversion. areas in the appropriate sections of this report, that build on this overview. From the foundation of progress built in previous years, in 2020 we focused on developing our and priority topics. These included building our safety program toward our vision of sustainability priorities for the next horizon, building the internal engagement and commitment, ZERO HARM!, progressively ensuring compliance with the RBA Code of Conduct, and meaningful engagement with our stakeholders, an assessment of our capabilities and progress, extending the RBA Code to our supply chain. From 2014 through 2016 we published and assembling the network of partners needed to accelerate progress. Our updated materiality dedicated Corporate Responsibility Reports. assessment, the UN Sustainable Development Goals, and company strategy inform our sustainability focus areas for the next horizon – 2021-2025 and beyond. The plan was reviewed with In 2015, we set our 2016-2020 objectives with an environmental focus: furthering our Senior Management Team, and approved by the Management Board and Supervisory Board. GHG emissions reduction; water conservation, solid waste diversion, and that any These focus areas reflect ASMI’s ambition to create sustainable, long-term value and increase our new facility exceed local energy-efficiency standards. In these early years, we also built a foundation for further progress, addressing key policy positive contribution to the world. For 2017, we moved our CR disclosure back into our annual report, towards a goal of integrated reporting, with further progress continuing in this report. In 2019, we set our ambition for a big step forward in our sustainability focus. Our 2019 employee survey revealed that 98% of employee respondents said ‘ASMI’s commitment to sustainability is very important to me’, and 58% said ‘I want to help’. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 58 SUSTAINABILITY FOCUS AREAS Our sustainability focus areas are: innovation, people, planet, responsible supply chain, and sustainability governance. Each focus area and its priorities are further described below, and more information can be found in the respective chapters/sections in this Annual Report. INNOVATION PEOPLE Innovation is our DNA. Through our technology, which is our greatest contributor to society, we bring our innovation DNA to the challenges and opportunities of sustainability. We strive to enrich the lives of everyone we engage with, and make a positive, enduring impact in our communities, industry, and society overall. Safety – The safety of our people, and everyone in our value chain, is of paramount importance. Product environmental footprint – Our technology contributes to our industry and society overall, Our aim is to be safety leaders and influence improvements across the industry. We strive to deliver but it also has a significant environmental impact. This lies in the energy and resource consumption safe products to our customers, and collaborate to make sure shared work environments are safe. of our products – both in our own operations and especially in our customers’ fabs across its often 20+ year useful operating life. This is an important sustainability factor for our customers, as a key Our team - We strive to unleash everyone’s potential at ASMI, and to enable each employee to source of their Scope 1 and 2 GHG emissions and their operating cost. For ASMI, it is a significant build and establish a long-term and sustainable career we are focused on four areas: Strengthening component of our Scope 3 GHG emissions. Thus, we are focused on improving the energy and our Culture, Growing Engagement, Leadership & Development, and Inclusion & Diversity. resource efficiency of our products. Product safety innovation – A semiconductor fab is a highly complex system, with many potential where we do business is a significant opportunity to make a positive difference, and enhance our and serious hazards. It relies on compliance to equally complex design standards, operational license to operate. It is also a key expectation of and motivation for our employees, as they want controls, and many other factors to ensure safe operation. The controls have considerable risk and to be part of a broader cause. Participating in such activities can play a powerful role in employee operational impact. We see opportunities to innovate that can significantly reduce risk and improve team-building, retention, and attracting new employees. Community, industry, and society impact – Engaging with and contributing to the communities the fab operational impact of ensuring safety. We also recognize the opportunity to make an enduring positive impact to our industry and society overall by participating in and collaborating on important opportunities. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 59 PLANET The world needs commitment from all levels of society in addressing the environmental issues facing our planet. Our actions today decide the future of tomorrow. It is from this principle that ASMI is working collaboratively to take action today. Net Zero – We recognize the importance of the climate crisis to all stakeholders. Accordingly, our carbon footprint is a priority in ASMI’s sustainability strategy. In September 2021, we set an ambitious target of Net Zero 2035. Collaboration across our value chain is a requirement in achieving this goal. Climate adaptation – We recognize the importance of climate change and the potential risks and opportunities it can represent, now and into the future. As such, it is important to carefully assess Environmental footprint – Our supply chain is a substantial portion of our Scope 3 emissions, and we must all work together to address the climate crisis. We intend to collaborate with our supply chain to address our environmental footprint. This includes collaborating and innovating to address the challenges of improving the energy and resource efficiency of our products. Human rights – We are committed to protecting human rights throughout our supply chain. We strive to identify and address the key risks, wherever and however they may exist. SUSTAINABILITY GOVERNANCE We are connected and responsive to our stakeholders. We are building sustainability into our governance structure and systems. the climate adaptation risks and opportunities for our business, from which we can determine Disclosures and assurance – Our stakeholders place a high priority on the transparency and priorities and plans to address them. RESPONSIBLE SUPPLY CHAIN Our suppliers are our partners in progress. More than just supporting our business, we share values and opportunities. We are progressively expanding the sustainability expectations for our suppliers, and will grow to accelerate progress and amplify impact beyond our individual scale. Safety – We hold our supply chain to the same high standards as we do ourselves. This includes extending our vision for ZERO HARM! to our supply chain partners. integrity of our disclosures, and their trust is of paramount importance. A considerable portion of our Annual Report contains non-financial and sustainability-related information. We expect that assurance of non-financial information will become a requirement in the future. As such, starting with this report, key non-financial aspects receive limited assurance. Cybersecurity and intellectual property (IP) protection – Assuring robust cybersecurity and IP protection is critical to protect our business and the trust of our partners and stakeholders. Protecting our computer systems and networks is vital to our business operations and continuity. These threats and risks are rapidly becoming more sophisticated and intense. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 60 INFORMING OUR FOCUS Our sustainability focus areas and priorities were informed by meaningful engagement with our stakeholders through our materiality assessment and ongoing stakeholder engagement, and the UN Sustainable Development Goals. MATERIALITY ASSESSMENT  To best inform our future focus areas, we conducted a significant update of our materiality assessment, guided by an expert third party. Our process follows the sustainability materiality steps and matrix based on the Global Reporting Initiative’s (GRI) G4 sustainability reporting framework. Stakeholders engaged include: key investors, top customers, our employee ‘Thought Leader’ group, key suppliers, and engaged NGOs. The process included peer-group benchmarking. The collected inputs were initially reviewed and prioritized in a workshop with key employees facilitated by the expert third party. This output was then finalized with the Management Board, resulting in the materiality analysis presented here. H G H I N O I S I C E D R E D L O H E K A T S N O E C N E U L F N I W O L Human capital Planet and climate Energy management Inclusion & diversity Water Waste management Cybersecurity and IP protection Community/industry/ society impact Human rights Health & safety Responsible supply chain Circularity Ethics Corporate governance Disclosures Innovation Product sustainability Product safety & quality Emerging regulations Climate risk & opportunity (TCFD) LOW IMPACT ON ESG HIGH Environmental Social Governance Priority ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 61 STAKEHOLDER ENGAGEMENT Stakeholder How we engage Our applicable focus areas Customers We engage directly with our customers on important issues through recurring meetings and development sessions We have direct innovation engagement to enable customer roadmaps Innovation Planet People Responsible supply chain Included in materiality assessment Yes, desktop research Progress in 2021 Resulting strategy changes Key Innovation successes Customer recognition Continued partnership in key customer sustainability leadership program Safety Leadership Collaborations with key customers Climate strategy Employees Quarterly CEO led all-employee meetings and open Q&A CONNECT all-employee dialog intranet site Engagement and other key topic surveys Safety culture survey of service, R&D labs, and manufacturing employees Investors Direct engagement discussions Responsive to their sustainability questionnaires and ESG ratings Suppliers Executive and commodity manager engagement Annual Supplier Day Direct interviews NGOs NGO engagement letters Direct engagement sessions CDP Climate and Water Security disclosure People Planet Innovation Yes, through direct surveys with all employees and thought leader surveys Significant increase in leadership and employee dialog through CEO led all-employee meetings and through CONNECT intranet communication High safety risk work areas strategic plans Engagement pulse survey and engagement plans and progress Service, lab, and manufacturing safety plan very high response rate Yes, direct engagement sessions Responsive to key investor inquiries Engagement in key ESG ratings (See ‘ESG ratings’) Comprehensive sustainability plan informed Climate strategy Yes, direct engagement sessions Two suppliers received inaugural PRISM Sustainability Award - Supply chain, Innovation and leadership categories Supplier Day sustainability focus Yes, desktop research and recurring engagements Invited to influence key NGO future priorities CDP Climate and Water Security scores Net Zero target Climate adaptation risk improved from C to B Innovation Planet People Responsible supply chain Governance Innovation People Planet Responsible supply chain Governance Planet People Responsible supply chain Industry consortiums R&D partnerships such as imec and University of Helsinki Industry associations include SEMI and SIA memberships, and SESHA (board seat) Responsible Business Alliance (RBA) members Innovation People Planet Responsible supply chain Governance Yes, desktop research and active engagement in committees and working groups Significant innovation progress through R&D consortia SESHA strategic direction through board seat Actively engaged in Living Wage, RMI, and other RBA efforts Communities Employee volunteering and contributions to local communities People Planet Governance No See ‘Community’ section and opportunity assessment Diversity & Inclusion focus and targets Responsible supply chain Expanded innovation network Safety strategic plan Sustainability strategy Human Rights priority topic Sustainability strategy Community, Industry, Society engagement and impact as a priority ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 62 Below are the seven United Nations Sustainable Development Goals (SDGs) we have selected, to guide and align our efforts and ambitions with: UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (UN SDGs) Actions by ASMI SEE SECTION Achieve gender equality and empower all women and girls 5.5 Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic, and public life 5.6 Enhance the use of enabling technology, in particular information and communications technology, to promote the empowerment of women Established employee resource group “ConvERGe” We launched the strategic target to increase women working at ASMI from 15% in 2021 to 20% in 2025 Provides training during International Women’s Day (IWD) events through virtual learnings, and promotes ASMI women in leadership through our communication platform Connect and in social media People People Ensure access to affordable, reliable, sustainable, and modern energy for all 7.2 By 2030, increase substantially the share of renewable energy in the global energy mix 7.3 By 2030, double the global rate of improvement in energy efficiency Promote sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all 100% renewable electricity procurement by 2024 with focus on high-quality EACs that bring additionality to markets when available Sustainability ASMI enables this through our innovation and support of customer roadmaps Innovation and products 8.7 Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking, and secure the prohibition and elimination of the worst forms of child labour, including ASMI engagement with supply chain on force labor/bonded labor (FLBL) mapping and initiatives recruitment and use of child soldiers, and by 2025 end child labour in all its forms 8.8 Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment ASMI engagement with supply chain on force labor/bonded labor (FLBL) mapping and initiatives Global operations Global operations Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation 9.4 By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities ASMI's continued investment in modernizing its infrastructure, including with recent upgrades and investment in operations and infrastructure in South Korea and Singapore Global operations 9.5 Enhance scientific research, upgrade the technological capabilities of industrial sectors in all ASMI's core focus everywhere we operate countries, in particular developing countries, including, by 2030, encouraging innovation and substantially increasing the number of research and development workers per one million people, and public and private research and development spending Innovation and products ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 63 UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (UN SDGs) Actions by ASMI SEE SECTION Reduce inequality within and among countries 10.2 By 2030, empower and promote the social, economic and political inclusion of all, irrespective Renewed Business Code of Conduct, including enhanced focus on People of age, sex, disability, race, ethnicity, origin, religion or economic or other status inclusion & diversity (I&D), career development opportunities of 10.4 Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality female leadership, and benchmarking living wage levels globally Adoption of Global Employment Standard (GES) including social protection policies. Active monitoring of gender pay ratios, living People wage levels, and CEO pay ratio, and transparency of these in our Annual Reports Ensure sustainable consumption and production patterns 12.2 By 2030, achieve the sustainable management and efficient use of natural resources Wood crate responsible wood source and certification policy Sustainability 12.4 By 2020, achieve the environmentally sound management of chemicals and all wastes throughout ASMI waste minimization and management protocols, Sustainability their lifecycle, in accordance with agreed international frameworks, and significantly reduce their including objectives to eliminate all hazardous waste to landfill, and release to air, water, and soil in order to minimize their adverse impacts on human health and the implementation of air emission control devices on process modules environment 12.5 By 2030, substantially reduce waste generation through prevention, reduction, recycling, and reuse ASMI waste minimization and management protocols, Sustainability including objectives to eliminate all hazardous waste to landfill, and implementation of air emission control devices on process modules 12.6 Encourage companies, especially large and transnational companies, to adopt sustainable ASMI annual and sustainability reporting, including CDP Sustainability practices and to integrate sustainability information into their reporting cycle Take urgent action to combat climate change and its impacts 13.2 Integrate climate change measures into national policies, strategies and planning 100% renewable electricity procurement by 2024 with focus on Sustainability high-quality EACs that bring additionality to markets when available ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 64 PLANET Our commitment to help fight climate change and care for our planet – one of our five sustainability focus areas – means we take steps to reduce greenhouse gas (GHG) emissions, use water and ASMI’s next steps in its Net Zero by 2035 target will be: ASMI has completed a detailed study of its Scope 2 emissions with the assistance of a recognized external expert. Based on this, we will source 100% of our electricity from renewable sources for other resources responsibly, and limit waste production. Reducing our environmental footprint goes all our global operations from 2024 onwards; hand in hand with steps towards a circular business model. In this section of the report, we provide information on progress made towards achieving these environmental targets. Innovating for the future should not come at its own cost. Our technologies will help people live better, tackle challenges, and connect like never before. We aim to enable this by playing our part today to make tomorrow’s world worth living in. We intend to align our target to the Paris Agreement 1.5°C pathway; Size ASMI’s Scope 3 footprint and set a target for all scopes before the end of 2022; Accelerate the further energy and resource efficiency-improvement of our products; Provide further interim goals on the pathway to Net Zero; and Develop an emissions compensation and neutralization strategy to address residual emissions. The issues facing our planet require bold and collaborative action from all companies, governments, RENEWABLE ELECTRICITY ASMI’s first major step toward Net Zero is reducing our Scope 1 and Scope 2 emissions. In 2021, and society. In 2016, ASMI set objectives for 2020 in important areas relevant to our impact: for our six key sites, our renewable electricity market-based purchases reduced our location-based greenhouse gas emissions, water withdrawals, solid waste disposal, and responsible construction. Scope 2 GHG emissions by 70%. Our aim is to source 100% of our electricity from renewable Those were a starting point for our future ambitions below. We aim to collaborate across all sources for all of our global operations by 2024, with the following path to that goal: industries to bring faster and more meaningful change to the environmental challenges facing Source 100% of electricity from renewable sources for key sites in the United States, the the world today. Netherlands, Finland, Japan, and Singapore, from 2021 onwards. Relative to its 2020 baseline, this represented a 67% reduction of ASM Scope 1 and 2 GHG emissions. CLIMATE Climate change is a risk the whole planet is facing together. It presents extreme weather events, Source 100% of electricity from renewable sources for the remainder of global operations from 2024 onwards. Relative to its 2020 baseline, we estimate this will represent an estimated 90% habitat and biodiversity loss, increased risk of more frequent pandemics, among other global reduction of ASMI Scope 1 and 2 GHG emissions. impacts. It also poses increasing risks to ASMI and its stakeholders, including the supply chain. We recognize these risks and are taking action to do our part to mitigate them. ASMI achieved its 2021 goals through market-based electricity purchases of high-quality Energy NET ZERO In 2021, ASMI announced its target to achieve Net Zero emissions by 2035. This includes setting Attribute Certificates (EACs). The market-based method uses contractual arrangements where electricity is procured from specific sources, instead of a location-based approach of procuring energy available from local grids only. ASMI targets the procurement of high-quality certificates, targets for Scopes 1, 2, and 3 GHG emissions, with the aim of reducing emissions as near to zero intended to focus on in-market sourcing and focused on providing additionality, which means the as possible. We aim to further conserve energy use, maximize the use of renewable electricity, and funds contribute to the continued growth of renewables capacity in the markets where we operate. neutralize remaining emissions. As the climate crisis transcends the actions of any one company, industry, or country, we look to collaborate across our value chain for a collective global impact. We strive to embody high standards in the definition, scope, transparency, and realization of this target. In 2021, the purchases included the following types of EACs by region: Europe – the Netherlands and Finland - 100% in-market EU GoOs and EKOenergy labeled wind United States – 100% in-market Green-e Renewable Energy Certificates (RECs) of wind Singapore – 92.5% in-market TIGRs of solar, and 7.5% from Thai Gold Power Solar Japan – 100% in-market J-credits of renewable biomass ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 65 Currently, ASMI is not subject to any energy regulations or policies, including any that would restrict Greenhouse gas (GHG) emissions our renewable electricity purchases. (Scope 1 and 2* emissions and normalized per R&D investment) ASMI operates a key facility in South Korea, where the renewable electricity market recently opened and is developing. We are monitoring this market carefully in relation to our 2024 target to power our South Korean location, in the event it becomes feasible to meet this target earlier. We included our global service and sales offices in our 2024 target, and are also evaluating if or how we may address these locations earlier. GHG EMISSIONS Purchased electricity and its indirect GHG emissions are only a part of our overall emissions inventory, yet they account for a significant portion of our Scope 2 emissions potential. Continuing to move towards a Net Zero objective requires a full understanding of all emissions. 300 250 200 150 100 50 181 158 196 156 240 250 159 145 300 250 200 150 100 50 83 41 2017 2018 2019 2020 2021 Greenhouse gas emissions (mtCO2e - Scope 1 + 2, x100) Intensity of mtCO2e/million € R&D spend * 2021 Scope 2 emissions presented are based on the market-based method At ASMI, our GHG emissions are attributable to the following: response is contributing to reducing the risks of further biodiversity impacts. broader regions that have an impact on the biodiversity of our planet as a whole. Our climate Scope 1 – Chemical and by-product emissions such as NF3; fuel from onsite heating and abatement units; fuel from emergency generators Scope 2 – Purchased electricity; district heating in limited locations Scope 3 – A full inventory will be conducted in 2022; this will include applicable upstream/downstream sources CLIMATE ADAPTATION ASMI has started its journey toward alignment with the Task Force on Climate-Related Financial Disclosure (TCFD), an initiative created by the Financial Stability Board. This is ASMI’s first alignment toward TCFD disclosure, reflecting our actions and processes as of December 31, 2021. We aim to provide a full TCFD disclosure in the future. In calculating the related emissions of these sources, for 2021 the emission factors used for calculating our Scope 1 and Scope 2 (location-based) emissions were sourced from the IEA and Governance - Climate adaptation response the US EPA. The Management Board has final responsibility and approval of ASMI’s ESG and sustainability strategy, including climate targets and related matters. The Management Board has tasked the In 2021, we achieved a 66.5% reduction in our Scope 1 and Scope 2 (market-based) GHG Corporate Vice-President of Sustainability to provide input on ESG and sustainability strategic emissions from our 2020 baseline, versus our estimate of 70%. This was the result of both matters, including matters regarding climate change. On a quarterly basis, the Corporate our increase in use of renewable electricity, from 9.9% to 75.6% globally, as well as a reduction Vice President of Sustainability reviews the organization’s environmental (which includes climate- in our Scope 1 emissions. We still aim to reduce our Scope 1 and 2 emissions by 90% from related) strategy, policies, performance against agreed major plans of actions, and specific KPIs, the 2020 baseline by 2024. and reports the findings to ASMI’s Management Board. The Senior Director Global Environmental, Health and Safety/Sustainability (reporting to the Corporate VP of Sustainability) is responsible for We have assessed that our climate response is also our greatest contribution to protecting the identifying, creating, and managing environmental goals, targets, and policies, including matters biodiversity of our planet. We have previously assessed that while Singapore is within the greater involving climate change. Climate-related risks and opportunities are included in the risk mapping, Sundaland Biodiversity Hotspot, we have not identified any sensitive biodiversity areas adjacent and reviewed as part of the periodic reviews of risks and opportunities identified at corporate level to our facility, nor near any of our facilities worldwide. We recognize that climate change impacts by the Enterprise Risk Committee. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 66 Strategy - Assessing climate risk and opportunity We will assess the findings of the analysis of both physical and transition risks in 2022, and use them In addition to the environmental risks and processes identified and disclosed previously in ASMI’s to develop action plans to mitigate or adapt to climate-related risks. 2020 Annual Report, and in alignment with the recommendations of the TCFD, a climate-scenario analysis is being conducted to better understand ASMI’s exposure to climate change. For this, ASMI Risk management is implementing a process called climate-adaptation risk and opportunity assessment (CAROA). The overall approach of ASMI to risk management and a summary of the top risks identified can be Within this process, ASMI intends to routinely identify, assess, and manage its top physical and found in the ‘Risk management’ section. We will continue to include climate-specific risk assessments transition climate risks and opportunities: and mitigation activities into the risk elements for consideration in the centralized company risk Physical risks The goal is to assess the risk of various physical hazards likely to be exacerbated by climate Metrics and targets management framework. change, and have an impact on ASMI or its value chain. These hazards are analyzed under a ‘4° As one of the key pillars toward TCFD disclosure, ASMI has developed metrics and targets related scenario’ Representative Concentration Pathway (RCP) 8.5 climate scenario, and for two time to climate. As noted earlier in this report, our target to achieve Net Zero by 2035 is a cornerstone of horizons: a medium-term (2030) and a long-term (2050). It is important to identify key regions our response to climate impact, with an interim objective to source all renewable electricity across our and hazards important for ASMI. For this, the nine most important countries based on revenue operations by 2024. Within that plan are additional steps in 2022 and 2023 to progressively meet the per region, and a number of facilities and employees, were included in the analysis. These are the renewable electricity target and achieve an estimated 90% absolute reduction in our Scope 1 and 2 Netherlands, Belgium, Finland, Japan, South Korea, Taiwan, China, Singapore, and the United GHG emissions by 2024. States. Within these countries, the most relevant hazards for ASMI are being identified. They include water scarcity, drought, heavy snow, heavy precipitation and flooding, heat waves/extreme Next steps  temperatures, tropical storms and sea level rise, and coastal flooding. We intend to disclose the results of the climate scenario analysis and the corresponding financial impact assessments in our 2022 Annual Report. ASMI will establish the CAROA process as an From a financial perspective, at this stage we have not identified any current physical risks that have ongoing business activity to continuously enable further transparency and alignment on TCFD climate- a material impact on our current accounts and disclosures, including judgements and estimates in related disclosure. ASMI aims to continue to integrate climate-related risks into its risk management the financial statements. Transition risks framework. In 2022, ASMI strives to size its Scope 3 footprint and aims to set science-based targets for all scopes aligned with the Paris Agreement 1.5°C pathway. The objective of the transition risk analysis is to identify the risks and opportunities that may arise for ASMI in these main areas: policy and legal, technology, market, and reputation, in the context of OTHER EMISSIONS Consistent with our environmental policy, we also place significant focus on improving all emissions the transition to a low-carbon economy. For this assessment a ‘rapid transition’ scenario, whereby associated with our operations. ASMI equipment, which is installed and used in our R&D labs globally, warming is limited to below 2°C (in line with IEA SDS and other scenarios where relevant), is being generates effluents that must be treated or removed from releasing to the air. This includes non-GHG used considering short (0-5 years) and medium-term (2030) time horizons. Five transition risks and emissions, such as particulates or volatiles. ASMI has stringent air-quality permits and criteria opportunities are being assessed, including 1) stricter regulations on the reporting and reduction that we are required to meet, and are continuously driving initiatives to improve our performance. of fluorinated GHG emissions; 2) changes in carbon-pricing schemes; 3) mandatory compliance At sites where we operate and permits are not required, we strive to use the best-known methods on measuring and reporting GHG emission; 4) improvements in energy efficiency in buildings; and to help ensure our abatement equipment is operating at peak performance to minimize emissions. 5) failure to respond or communicate climate-related product issues. We closely monitor emissions and efficiencies of the air-abatement systems, which remove GHG and non-GHG effluents from gas exhaust. We engage outside consulting experts to help guide us with the best-known technologies in abatement for the processes we develop. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 67 CARBON DISCLOSURE PROJECT (CDP) WATER Ecosystems depend on clean and available water. Our communities in high water-stress regions Founded as the Carbon Disclosure Project, and with its first report published in 2003, expect access to clean and sustainable supplies of it. CDP has evolved to become the trusted environmental disclosure platform. ASMI has participated in the annual climate disclosure since 2013, and water security since 2017. While ASMI does not need ultra-pure water for its equipment processes, our equipment relies on The latest completed disclosure cycle is for calendar year 2020, reported in July 2021. local need for water, ASMI has made it a priority in recent years to responsibly manage our water ASMI reported to both the climate disclosure and water security disclosure, and their consumption. We also work on ensuring our discharges meet local requirements for adequate sanitary sources of water for cooling and abatement purposes. Taking into account the global and respective supply chain modules in coordination with requesting customers. Our CDP treatment and return to our ecosystems. disclosures improve transparency of not only our GHG emissions and water impacts, but also risks and opportunities in these areas. In December 2021, scoring was released and ASMI recognizes that it operates and takes water withdrawals in regions that are currently ASMI received the following: experiencing high water stress, according to the WRI Aqueduct 2019 assessment. Water stress is defined as the ratio of total water withdrawals to the available renewable surface and groundwater 2021 CDP disclosure scores supplies. Climate disclosure Water security disclosure B B Our three largest engineering centers in South Korea, Japan, and Phoenix, the US, account for 69% of our water consumption in 2021, and are all located in medium-high or extremely high water- stressed regions. This is an improvement over the 2020 reporting, which received C ratings for both climate ASMI manages the risks through water efficiency and conservation measures. In all regions, disclosure and water security disclosure. With a strong focus on our transparency, and regardless of water-stress level, ASMI focuses on proactive water conservation, and implementing strengthening of our understanding of risks and opportunities related to climate and water, a best-practice approach for that region. In previous years, ASMI has significantly reduced its we aim to continue to improve our CDP reports in coming years. absolute water withdrawals. The wastewater treatment systems at our engineering sites all have water reuse/recirculation systems to minimize consumption. The CDP supply chain reporting enables us to collaborate further with our customers in defining our collective impacts through the manufacturing and use of ASMI’s products. This collaboration helps customers better understand a portion of their Scope 3 GHG emissions and water-security impacts. ASMI is driving CDP reporting into its own supply chain, and will engage through the CDP supply chain module in the same manner as we do for our customers. Looking ahead, ASMI intends to continue to report our climate and water security progress to the CDP. We are encouraged by the stronger alignment of CDP with other disclosures such as the TCFD, and its alignment with the Science Based Targets Initiative (SBTi) to bring companies in line with 1.5°C targets. Location Key operations WRTI water stress Almere, the Netherlands Special projects manufacturing Low Singapore Manufacturing Low Dongtan, South Korea Engineering, manufacturing Medium-high Tama, Japan Engineering Phoenix, Arizona, US Engineering Medium-high Extremely High Withdrawals m3 x 1000 2 47 28 5 74 ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 68 WATER. WE CARE. WE CONSERVE. EVERY DROP. Water withdrawals (Absolute and normalized per R&D investment) Our impact on water resources associated with our operations, and the equipment we design and sell, includes supply-quality, availability, and discharge quality requirements. We continuously aim to reduce our impact through direct conservation efforts, responsible water discharge, and by addressing associated triggers to water security, including climate change. We engage with our stakeholders on water security, and through this aim for progress that exceeds minimum regulatory requirements wherever applicable. We strive to align our approach with recognized standards, policies, and guidelines, including the OECD, the United Nations SDGs, and recognized water-stress risk initiatives, and we set targets and objectives 200 160 120 80 40 0 178 1,559 129 1,031 156 123 121 813 707 758 2017 2018 2019 2020 2021 2,000 1,600 1,200 800 400 0 to measure our progress. We communicate our progress annually through the CDP’s Global Absolute water consumption (m3, x1,000) Water Report and our Annual Report, and aim to drive progress on water security in our Intensity of m3/million € R&D investment supply chain. We continued to focus on sustaining our progress while conducting a water audit at our key Our absolute water consumption increased due to growth in our operations in Phoenix, and new engineering sites in 2021. The objective of the audit is to strengthen our understanding of our manufacturing site in Woodland Heights, Singapore coming fully online. Due to additional capacity means of consumption, and identify where opportunities may exist for further conservation through demands, we retained production capabilities in our Yishun factory. This additional capacity led to equipment or system enhancements. an increased absolute consumption, however our normalized consumption to both R&D spend and total revenue remained consistent with 2019 and 2020, demonstrating our current controls are Water effluent quality is maintained within regulatory control parameters. Local requirements and working. Our challenge now will be to find further opportunities for improvement as we continue to capabilities for wastewater collection and control vary, but ASMI adheres to regulatory discharge grow in the coming years. limits and permit conditions. In some regions, we are able to pre-treat and discharge to a publicly operated treatment-works facility. In others, we need to collect wastewater for offsite transport, treatment, and management. In all cases, our first responsibility is to ensure our collection systems CIRCULARITY ASMI has an ambition to move to a more circular economy. This means minimizing consumption at are robust, so we don’t risk leaks or releases while the wastewater is in our system. Once ready for our sites and within our operations, designing out waste in our products, and focusing on reusing discharge, we make sure we are operating within permit or legal collection/disposal parameters to materials in a sustainable way until the end of their lifecycle. Most of the world, however, is designed ensure the receiving treatment facility can manage the effluent. around a linear economy, and has been for centuries. So the challenge to move past a linear economy towards a circular one is an ambitious one that requires collaboration across the value chain. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 69 MINIMIZING RESOURCE CONSUMPTION ASMI strives to focus on responsible resource consumption first. If we do not use the material, there and provide social and economic benefits. Procedures are developed in many instances that allow for the maintenance and continued operation of the crating to prolong its life. Only when it has been is no need to reuse or recycle the material. Whether it is through innovation, engineering, or at our determined that the packaging is no longer fit for purpose, it will be taken out of service. At this functional locations, we are focusing on putting resource consumption first. point, we work with partners in our value chain on the responsible disposal of the materials. In many cases, that means the wood and metal parts can be recycled. Ways we reduce consumption Data science – As a technology and science-driven company, we are able to build theoretical We are committed to increasing the use of reusable and sustainable product packaging across our models of our technology before the need to ever run processes on our equipment. value chain. This is measured through the avoidance of landfill disposal. In a one-time-use scheme, See ‘Global research’ section for more information; every shipment could have resulted in landfill disposal. So, through the reuse of these packaging Parts refurbishment – We can extend the life of some of our parts through refurbishment and materials, we avoided 259 metric tons of landfill disposal through ASMI’s reuse packaging program reuse. See the ‘Innovation and products’ section to learn more about how we do this; in 2021, in these areas: Product lifecycle – Whether it is in the engineering and design of our products, or extending the useful life of the products, we make an effort in leveraging our innovation to reduce material needs. See the ‘Product lifecycle management’ section for more details on our sustainable parts lifecycle, and how we extend the life of our systems; and Circular program Description ASMI to customer Product and supporting equipment sales to customers Packaging – Our packaging is a significant contributor to our potential for waste generation. The cycle of package use extends beyond our walls, and into our value chain. So collaboration ASMI to supplier to reduce packaging is key. See below for more information on how we do this. Parts and sub-assemblies shipped between ASMI and suppliers as part of the production process Metric tons of waste disposal avoided 45 2 PACKAGING Across our global value chain, including customers and suppliers, moving final products, parts, spares, and engineering resources presents opportunities to significantly reduce the consumption of resources through reused packaging. ASMI to contract manufacturer ASMI to other vendors Assembled equipment and sub-assemblies 213 Miscellaneous programs with indirect spend in engineering or other functions where commodities are transported Programs under development starting in 2021 Our products are large when assembled, and due to the extreme performance and sensitivity of REUSE OF SHIPPING PACKAGING the equipment, they must have carefully engineered packaging. The industry standard practice for packaging has been one-time-use wood crating built around the product at the production site. After de-crating at the delivery site, the packaging materials may be recycled with other wood products. We recognize there is an opportunity to reduce the waste associated with this process, not only at our sites, but throughout our value chain. We also focus on sustainable consumption for our packaging. It is our policy that only wood products certified by the Forest Stewardship Council (FSC) can be used in our crates. FSC is the ‘gold standard’ for wood harvested from forests that are responsibly and environmentally managed, 259 METRIC TONS Reuse of shipping packaging helped avoid 259 metric tons of combined disposal for ASMI and our value chain. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 70 PACKAGING REUSE New Products shipped to customers Product is uncrated, crate is deconstructed and shipped back to ASMI Returned crate is inspected and damaged/worn parts are replaced Customer has averted a crate disposal, historically this has usually been to landfill CUSTOMERS Assembled products and parts shipped to ASMI manufacturing site Product(s) is uncrated, crate is deconstructed Crate and parts are inspected and damaged/worn parts are replaced ASMI ships empty crate back to contract manufacturers ASMI has averted a crate disposal, historically this has usually been to landfill Responsibly managed wood product policy DIRECT SUPPLIERS CONTRACT MANUFACTURERS Specified parts and supplies that can be crated/reuse packaged are shipped to ASMI manufacturing site Product(s) is uncrated, crate is deconstructed Crate and parts are inspected and damaged/worn parts are replaced ASMI ships empty crate back to supplier ASMI has averted a crate disposal, historically this has usually been to landfill INDIRECT SUPPLIERS As of late 2021, the process of identifying opportunities with indirect material suppliers has just begun. ASMI is investigating opportunities to reuse packaging and crates with materials that are provided to its engineering sites. There are pilots occurring in early 2022 that we hope to report on in the future. “MINIMIZE WASTE TO LANDFILL FOR ASMI, CUSTOMERS, SUPPLIERS, AND CONTRACT MANUFACTURERS.” ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 71 SOLID WASTE GENERATION Ultimately, waste materials are generated at ASMI sites in the course of production and engineering. RESPONSIBLE CHEMICAL AND WASTE MANAGEMENT ASMI’s innovation and technology depends on a wide variety of chemicals and gases. Their safe We focus on maximizing reuse and recycling in those instances, under the limitations of regional storage and handling is of paramount importance in protecting our employees and communities. service capabilities. Employees are encouraged to foster a recycling mentality, and look for All our sites use engineered storage solutions to minimize the risk of incidents related to chemical continuous improvement opportunities. storage, use, or handling. Landfill diversion rate (in %) Primary manufacturing and engineering sites 100 80 60 40 20 0 79 78 82 84 82 2017 2018 2019 2020 2021 The process of bringing new chemicals and gases into our facilities is structurally controlled through a robust chemical approval process. The review and approval process engages our own chemical experts from process engineering, EHS, product safety engineering, and facilities. The multidisciplinary team identifies the risks and compliance aspects of bringing the chemical onsite, connecting it to our equipment, using it in our processes, managing by-products and effluents, and preparing for any possible waste issues. Controls to ensure safe use are implemented. They include gas and leak detection, exposure controls during maintenance, emission controls such as gas abatement and wastewater treatment, and storage controls such as reinforced storage rooms. This documented protocol has been in place for many years. It continues to be improved on and shared across all our engineering and research sites. The chemical change process also applies to our manufacturing sites, but the frequency of change is We currently measure our success through diversion from landfill disposal. The intensity measure much less. is metric ton per revenue. For non-hazardous wastes, the inputs are all materials that are deemed waste at the end of a manufacturing, engineering, or logistics purpose, including site-supporting The chemical approval process affords us an opportunity to challenge ourselves in evaluating safer waste such as office materials. This includes: and more environmentally friendly alternatives. The chemicals and gases necessary to deposit a layer Production and engineering waste Packaging crates and materials Facilities support materials of atoms in a process-controlled chamber are limited, and in many cases unknown until an application is identified. This means every new chemical request is evaluated with environmental regulation and impact in mind. In some cases, chemicals are ruled out during the review process simply because of their environmental-impact potential. Our landfill diversion rate amounted to 82% in 2021. While our progress remained flat last year, we will look for additional opportunities to increase diversion of landfill, particularly in the packaging ASMI stays abreast of the ever-changing landscape of chemicals and hazardous substances in reuse opportunities with our suppliers and contract manufacturers. our industry. We participate in industry working groups, such as SEMI, to help drive improved However, diversion is not the long-term way to measure this. An absolute reduction of disposal management, and with safe processing in our equipment at ASMI and our customer sites. is our objective. As we get better, and our value chain engages further in structurally eliminating These industry engagements are a cornerstone of collaboration for the benefit of all. consumption and reusing resources, the materials identified as ‘waste’ for disposal will comprise our total waste. It is in this way of structurally moving to a circular economy, that we will change the way Responsible waste management is always determined during the chemical selection process. In environmental and safety standards. These standards help with both hazardous substance we view and report our success. most cases, effluent is generated by our equipment, then processed and treated by air emission and water emission-control systems. In other cases, such as in the case of expired chemicals or unused ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 72 chemicals, they must be managed according to local regulations. The regions in which waste is Innovate new methods to engage vendors at our engineering and non-manufacturing sites, to generated at ASMI are covered by the Basel Convention definition of waste, and properly managed eliminate single-use materials, such as cardboard and plastics; and – in some cases as hazardous waste. ASMI first focuses on hazardous waste minimization. For Engage our local waste-management providers to explore more sustainable options for the example, our Phoenix, Arizona, site has been a very small quantity generator (VSQG) for several disposal needs we are currently unable to avoid. years. This is the lowest classification of hazardous waste-generation status in the United States. Where hazardous waste cannot be avoided, it is ASMI’s objective to avoid landfill. EU TAXONOMY EU taxonomy explanation: ENVIRONMENTAL MANAGEMENT SYSTEMS ASMI is certified to the ISO 14001 environmental management system (EMS) globally for its primary a common language and methodology across European listed companies for reporting on sustainability and applies to large EU PIEs including financial and non-financial listed companies. engineering and manufacturing locations. The scope of having a global system helps ensure For the first time this year, the EU taxonomy regulation requires companies, falling under NFRD, consistency in practice across our operations. The foundation of the EMS is in the environmental in accordance with European Regulation 2020/852 of June 18, 2020, and ‘Besluit bekendmaking policy, which is included in the sustainability policy, published on our website. niet- financiële informatie’ to report on the EU taxonomy. For fiscal year 2021, companies are only In the course of 2021, the first delegated act of the EU taxonomy was adopted. It aims to provide required to report what share of their economic activities are in scope of the EU taxonomy or are, Under our EMS, we did not sustain any significant (> US$10,000) environmental-related fines or in EU taxonomy terminology, considered to be ‘eligible’. For fiscal year 2022, companies will also penalties in 2021. We received one notice of violation for a brief water-quality excursion in our need to report on whether these eligible activities are considered to be ‘green’, or in EU taxonomy treatment system in Phoenix, due to a pump failure in that system. terminology ‘aligned’, following a three step approach including technical screening criteria set LOOKING FORWARD With our Net Zero by 2035 goal, and the evolving intensity of the climate crisis, we will continue to make our climate response a priority. We recognize the challenges in front of us, as ASMI grows by the EU taxonomy. Finally, the key performance indicators (KPIs) for eligibility and alignment are reported as the proportion of turnover, capital expenditure (CapEx) and operating expenses (OpEx) in line with the EU taxonomy delegated acts. in scope and size. Growth will mean greater absolute consumption of energy. But our focus is, ASMI eligibility for climate change mitigation and adaptation: and will continue to be, on sustainable growth and consumption. We are expanding our scope of ASMI’s technology and innovation allows its customers and, in turn their customers down the value surveillance and reporting, to include remote sales and service offices in 2022 and 2023. We aim to chain to introduce electronic devices with superior performance and lower energy consumption. include those in our renewable electricity purchases as they are captured in scope, with a goal to ASMI’s innovative R&D activities, aimed at continuously improving technologies to help deliver achieve 100% renewable electricity footprint for all our global operations by 2024. further energy reductions, are key in this. As such, ASMI has an important role as an enabler in Circularity is an important aspect of ASMI’s sustainability plan. We are continuing to challenge ourselves and our value chain to collaborate around responsible resource management, including: ASMI has performed continuous research since July 2021 with both internal and external Expansion of product crate reuse with new products and customers. The introduction of new stakeholders on the eligibility of their revenue, CapEx and OpEx under the EU taxonomy. packaging and protocols requires pilot programs and adoption. We will partner with customers to ASMI underlines that the EU taxonomy is new and evolving. Furthermore, the specific category collaborate for our shared successes in this area; within the EU taxonomy (manufacturing of low carbon technologies (3.6)) applicable to ASMI, is Supplier and contract manufacturing engagement is critical, and will continue to be a focus of our subject to interpretation. ASMI has concluded that a conservative approach for this year would be reducing the carbon footprint of its customers and end customers. efforts for packaging reuse; most appropriate and that none of the revenue, CapEx and OpEx would at this stage be considered eligible under the climate delegate acts related to this specific category. This rational applies in the same way to the capital and operational expenditure for research and development for which ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 73 also no eligibility is reported this year. Additionally ASM looked into eligibility for other capital and Climate change mitigation operational expenditures like transport, renovations and leases, and has concluded that only operational expenditure (€ 3.9 million equal to 2.9%) is eligible for ASMI this year. Based on the important role that ASMI’s R&D plays for energy reduction and the fact that energy reduction is always a key objective, ASMI will keep monitoring the developments of the EU taxonomy closely to ensure eligibility in the future to climate change mitigation or adaptation or any of the other environmental objectives is being monitored. Looking forward: ASMI has performed an assessment of its current initiatives related to the EU taxonomy environmental objectives to assess whether these support alignment if in the future any of ASMI’s activities would be considered eligible. Initiatives currently performed in this area are the Net Zero initiative, the Climate Adaptation Risk and Opportunity Assessment (CAROA) process, the water security project, refurbishment initiatives and the human rights policies and due diligence activities. In the upcoming year, these and other initiatives will also be assessed against the EU taxonomy criteria and any gaps will be closed to take further control over becoming aligned to the EU taxonomy. ASMI understands where it stands at the moment and is ready for the journey ahead. Share of eligibility Share of non-eligibility Eligibility (EUR million) Revenue share of eligible activities CapEx share of eligible activities OpEx share of eligible activities 0% 0% 2.9% 100% 100% 97.1% – – 3.9 Climate change adaptation Share of eligibility Share of non-eligibility Eligibility (EUR million) Revenue share of eligible activities CapEx share of eligible activities OpEx share of eligible activities 0% 0% 0% 100% 100% 100% – – – Shareholders Shareholders ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 74 SHAREHOLDERS Our Growth through Innovation strategy aims to create sustainable value for all our stakeholders. As part of this strategy, we are committed to long-term shareholder value. This section discusses ASMI’s financial performance in 2021. It also provides information particularly relevant for shareholders and investors. This includes information related to our share listing and share price performance, dividends, and share buybacks. FINANCIAL PERFORMANCE ASMI again delivered a strong financial performance in 2021. At slightly over €1.7 billion, our In terms of customer segments, revenue for the full year was led by the foundry segment, followed by memory, and then logic. Revenue in the combined logic/foundry segment showed a revenue increased 30%, compared to €1.3 billion in 2020. Revenue grew 34% at constant strong increase, driven by solid investments throughout the year in leading-edge manufacturing currencies. The global economy recovered strongly in 2021, following negative growth in 2020. capacity. We continued to benefit from the significant increase in ALD requirements in the most The global semiconductor market had a very strong year, increasing 24% to US$578 billion. advanced nodes. These supported strong share of wallet gains for ASMI with the leading logic The total wafer fab equipment market amounted to US$88 billion (VLSI Research, January 2022), and foundry customers. Sales in the memory segment also showed a solid increase in 2021, led up 38% compared to 2020. There was strong demand across the board, with solid capacity by the DRAM segment. We benefited from strong demand for our high-k ALD solutions for high- additions in the most advanced nodes, and significant growth in the older technology nodes. performance DRAM devices. Supply chain conditions remained difficult during the year, and worsened in the second half. This included the effects of new lockdown measures on our supplies in Southeast Asia. Due to close cooperation with our suppliers, and measures such as maintaining buffer inventories, we were still able to increase our revenue by 15% from the first half to the second half of the year, excluding the impact from currencies. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 75 The following table shows the operating performance for 2021 compared to 2020: The following table shows certain consolidated statement of profit or loss data as a percentage (EUR million) New orders Backlog Book-to-bill Revenue Gross profit Gross profit margin % Other income Selling, general and administrative expenses Research and development expenses Operating result Operating margin % Net finance income (expense) Foreign currency exchange gain (loss) Income taxes Net earnings before share in income of investments in associates Share in income of investments in associates Net earnings Net earnings per share, diluted Net earnings per share excluding amortization from the sale of ASMPT shares in 2013 2020 1,313.6 323.6 1.0 1,328.1 623.6 47.0% – (157.4) (139.0) 327.1 24.6% (1.9) (23.1) (48.7) 253.4 32.0 285.4 €5.78 €6.04 2021 2,195.7 811.3 1.3 1,729.9 828.1 47.9% 4.1 (189.5) (151.2) 491.5 28.4% (2.0) 33.5 (102.6) 420.3 74.4 494.7 €10.11 €10.36 Change 67% 151% 30% 33% – 20% 9% 50% (0.1) 56.6 (53.9) 166.9 42.4 209.3 €4.33 €4.32 of revenue for 2020 and 2021: Revenue Cost of sales Gross profit Other income Selling, general and administrative expenses Research and development expenses Operating result Net finance income (expense) Foreign currency exchange gain (loss) Share in income of investments in associates Earnings before income taxes Income taxes Net earnings from operations 2020 100.0% (53.0)% 47.0% 2021 100.0% (52.1)% 47.9% –% 0.2% (11.9)% (10.5)% 24.6% (0.1)% (1.7)% 2.4 % 25.2% (3.7)% 21.5% (11.0)% (8.7)% 28.4% (0.1)% 1.9 % 4.3 % 34.5% (5.9)% 28.6% Revenue The revenue cycle from quotation to shipment for our equipment generally takes several months, depending on capacity utilization and urgency of the order. On average, acceptance is obtained four months after shipment. The revenue cycle is longer for equipment installed at the customer’s site for evaluation prior to sale. The typical trial period is six months to two years after installation. Our revenues are concentrated in Asia, the United States, and Europe. The following table shows the geographic distribution of our revenue for 2020 and 2021: (EUR million) United States Europe Asia Total Year ended December 31, 2020 2021 333.0 141.3 853.8 25.1% 10.6% 64.3% 1,328.1 100.0% 454.1 172.4 1,103.3 1,729.9 26.2% 10.0% 63.8% 100.0%     ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 76 A substantial portion of our revenue is earned by equipping new or upgraded fabrication plants The following table shows the level of new orders and the backlog for 2020 and 2021: where device manufacturers are installing new fabrication lines. As a result, our revenue in this segment tends to be uneven across customers and financial periods. Revenue from our 10 largest customers accounted for 85.1% and 78.9% of revenue in 2020 and 2021, respectively. The three (EUR million) largest customers accounted for around 59.4% of revenue in 2021 (2020: 59.1%). The composition Backlog at the beginning of the year of our 10 largest customers changes from year to year. In 2021, we had three customers (2020: three customers) who contributed more than 10% of total revenue. New orders Revenue FX-effect Year ended December 31, Backlog at the end of the year Year ended December 31, 2020 351.2 1,313.6 (1,328.1) (13.1) 323.6 2021 323.6 2,195.7 (1,729.9) 21.9 811.3 % Change (8)% 67% 30% 151% (EUR million) Equipment revenue Spares & service revenue Total 2020 1,051.5 276.6 1,328.1 2021 % Change 1,408.1 321.8 1,729.9 34% 16% 30% Equipment sales accounted for 81% of total revenue. Equipment revenue grew by 34% in 2021, and by 38% at constant currencies. We recorded strong double-digit growth in our largest product line, ALD, which continued to account for more than half our total equipment revenue in 2021. We also booked very strong growth in our Epi product line, driven by both advanced CMOS applications, and the analog/power/wafer-maker customer segments. Book-to-bill ratio (new orders divided by net revenues) 1.0 1.3 The backlog includes orders for which purchase orders or letters of intent have been accepted, typically for up to one year. Historically, orders have been subject to cancellation or rescheduling by customers. In addition, orders have been subject to price negotiations and changes in specifications as a result of changes in customers’ requirements. Due to possible customer changes in delivery schedules and requirements, and to cancellations of orders, our backlog at any particular time does not necessarily indicate actual revenue for any subsequent period. While representing a smaller part of ASMI’s total revenue, the analog/power market is more exposed grew by strong double-digit growth and reached record-high levels in all our product lines. For the year in total, our new bookings increased by 67% in 2021 to €2,196 million. New bookings to industrial and automotive segments, which were negatively impacted by COVID-19 in 2020. Spares & services revenue increased by 16%, and by 18% at constant currencies. This was driven by growth in the installed base of equipment in recent years, as well as an increased contribution from our new value-added services such as Complete Kit Management (CKM). Growth was moderate compared to the 29% increase in 2020, when spares & services sales were driven, to a lesser extent, by customers increasing inventories in response to the COVID-19-related supply chain challenges. Spares & services represented 19% of total revenue in 2021. By geography, our revenue was led by the Asia region, with a growth of 29% in 2021. The book-to-bill, as measured by orders divided by revenue, was 1.3 in 2021. Equipment bookings were led by the foundry segment, followed by logic and then memory. Bookings in smaller segments, such as analog/power and wafer-makers, also increased strongly. Bookings increased by 37% from the first half to the second half, reaching new record quarterly highs of €625 million in the third quarter, and €645 million in the fourth quarter of 2021. We finished the year with an order backlog of €811 million, up sharply from €324 million at the end of 2020. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 77 Gross profit margin Total gross profit developed as follows: Year ended December 31, Gross profit Gross profit margin (EUR million) Gross profit margin 2020 623.6 2021 828.1 2020 47.0% 2021 47.9% Increase (decrease) percentage points 0.9% The gross margin increased from 47.0% in 2020 to 47.9%. Within the year, the gross margin moderated from 48.8% in the first half, which was supported by a relatively strong application mix, to 47.1% in the second half.   Total research and development expenses developed as follows: (EUR million) Gross research and development expenses Capitalization of development expenses Amortization of capitalized development expenses Impairment of capitalized development expenses Net research and development expenses Year ended December 31, 2020 171.8 (64.1) 21.2 10.1 139.0 2021 206.0 (82.0) 25.2 2.0 151.2 % Change 20% 28% 19% 80% 9% Currency changes led to a decrease of 3% in gross profit compared to 2020. Other income Other income of €4.1 million was related to the divestiture of property. Selling, general and administrative expenses Total selling, general and administrative expenses developed as follows: We continue to invest strongly in R&D. As part of our R&D activities, we are engaged in various development programs with customers and research institutes. These allow us to develop products that meet customer requirements, and to gain access to new technology and expertise. The costs relating to prototypes and experimental models, which we may subsequently sell to customers, are charged to the cost of sales. Operating result (EUR million) Selling, general and administrative expenses 2020 157.4 2021 189.5 % Change 20% Year ended December 31, The operating result developed as follows: Selling, general and administrative (SG&A) expenses increased by 20% in 2021 year-on-year. The increase was partly explained by the higher activity level; also, because of increased investments in IT and the strengthening of the sales and functional organization. (EUR million) Before special items Impairment charges After special items Year ended December 31, 2020 337.2 (10.1) 327.1 2021 493.5 (2.0) 491.5 % Change 46% (80)% 50% As a percentage of revenue, SG&A expenses in 2021 were 11%, down from 12% in 2020. Operating profit increased by 50% to €491 million, from €327 million in 2020, resulting in an The impact of currency changes on SG&A expenses resulted in a decrease of 1% year-on-year. operating profit margin of 28.4% (2020: 24.6%). Impairment charges in 2021 and 2020 are related to capitalized development expenditures Research and development (R&D) expenses and assets. Gross R&D expenses increased by 20% in 2021, compared to the previous year. As a percentage of revenue, gross R&D expenses were slightly lower at 12% (13% in 2020). Currency changes resulted The impact of currency changes on operating results shows a decrease of 3% year-on-year. in a 3% decrease in R&D expenses year-on-year. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 78 Financing costs Working capital Financing costs are mainly related to translation results. Financing costs in 2021 included translation Working capital as at December 31, 2021 was €316 million (2020: €243 million). Working capital gains of €34 million, compared to translation losses of €23 million in 2020. The translation results consists of: inventories, accounts receivable, other current assets, accounts payable, provision for are mainly related to movements in the US dollar in the respective periods. A substantial part of our warranty and accrued expenses and other payables. The number of outstanding days of working cash position is denominated in US dollars. Share in income of investments in associates capital, measured against quarterly revenue, decreased from 63 days as at December 31, 2020 to 58 days as at December 31, 2021. Our inventories increased year-on-year from €162 million at the end of 2020 to €212 million at the end of 2021. Our accounts receivable position increased from Share in income of investments in associates, which reflect our shareholding in ASMPT, increased to €280 million to €447 million. The percentage of overdue in accounts receivables did not change €87 million from €45 million in 2020. This result exclude the amortization of intangible assets related year-on-year, reflecting the healthiness of this position. to ASMPT. During the year, our stake in ASMPT decreased slightly from 25.07% to 24.96%. Total revenues as reported by ASMPT increased by 49% to US$2.8 billion in 2021 from continuing operations. Revenues of the Semiconductor Solutions increased by 70% in 2021. Revenues of SMT Solutions increased by 25% in 2021. From continuing operations, ASMPT gross margin increased from 35.0% in 2020 to 40.6% in 2021 and net profits surged up by 399%. For further information on ASMPT, please visit www.asmpacific.com. Income tax The working capital developed as follows: (EUR million) Inventories Accounts receivable Other current assets Accounts payable Provision for warranty The income tax expense of €103 million (2020: €49 million) reflects an effective tax rate of 17.2% (2020: 14.6%). For further information on tax, see Note 22 to the consolidated financial statements. Accrued expenses and other payables Working capital December 31, 2020 December 31, 2021 162.2 280.1 72.9 (124.5) (19.0) (128.9) 242.8 211.8 446.7 51.0 (175.4) (27.2) (190.6) 316.4 Net earnings Net earnings developed as follows: (EUR million) Before special items Impairment charges After special items ASMPT Share in income from investments in associates Amortization other intangible assets from purchase price allocation Total income of investments in associates Year ended December 31, 2020 263.5 (10.1) 253.4 44.9 (12.9) 32.0 2021 422.3 (2.0) 420.3 86.6 (12.2) 74.4 Change 158.8 8.1 166.9 41.7 0.7 42.4 Net earnings from operations 285.4 494.7 209.3 Liquidity Our liquidity is affected by many factors. Some of these relate to our ongoing operations. Others are related to the semiconductor and semiconductor-equipment industries, and the economies of the countries where we operate. Although our cash requirements fluctuate based on the timing and extent of these factors, we believe that cash generated by operations – together with the liquidity provided by our existing cash resources and our financing arrangements – will be sufficient to fund working capital, capital expenditures, and other ongoing business requirements for at least the next 12 months. On December 31, 2021, our principal sources of liquidity consisted of €492 million in cash and cash equivalents, and €150 million in undrawn bank lines. For the most part, our cash and cash equivalents are not guaranteed by any governmental agency. We place our cash and cash equivalents with high-quality financial institutions to limit our credit risk exposure. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 79 CASH FLOW The following table shows the cash flow statement: (EUR million) Net earnings from operations 2020 285.4 2021 494.7 We generated cash from operating activities of €381 million in 2021 (2020: €264 million). We used €114 million cash in investing activities (2020: €144 million) and used €240 million in financing activities (2020: €170 million). CapEx dropped from €95 million in 2020 to €72 million in 2021, with a meaningful part spent on expanding and upgrading our R&D lab facilities. Adjustments to reconcile net earnings to net cash from operating activities: Depreciation, amortization and impairments Net loss (gain) on sale of property, plant and equipment Share-based compensation Net finance costs Share in income of investments in associates Income tax Changes in evaluation tools at customers Changes in employee benefits Income tax paid Operating cash flows before changes in working capital 1) Decrease (increase) in working capital 1) Accounts receivable Other current assets Inventories Provision for warranty Accounts payable, accrued expenses and other payables Net cash from operating activities Capital expenditures Proceeds from sale of property, plant and equipment Capitalized development expenditures Purchase of intangible assets Dividend received from associates Net cash used in investing activities Cash flows from operating activities after investing activities 1) Payment of lease liabilities Purchase treasury shares Proceeds from issuance of treasury shares Dividend to common shareholders Net cash used in financing activities Foreign currency translation effect on cash and cash equivalents Net increase (decrease) in cash and cash equivalents 1  Non-IFRS performance measure. Please see Glossary and definitions. 89.0 – 12.8 12.0 (32.0) 48.7 (39.7) (0.4) (8.1) 367.7 (93.0) (2.0) 0.5 3.8 (12.7) 264.4 (95.4) 2.3 (64.1) (3.2) 16.1 (144.3) 120.0 (7.8) (66.7) 2.8 (98.7) (170.4) (12.3) (62.6) 95.6 (4.1) 17.2 (23.5) (74.4) 102.6 (8.0) (0.3) (151.6) 448.2 (154.0) 15.4 (39.1) 7.1 103.1 380.6 (72.2) 6.2 (82.0) (2.7) 36.3 (114.4) 266.2 (7.9) (140.1) 4.6 (96.9) (240.3) 30.3 56.3 DEBT We were debt-free as at December 31, 2021. The original maturity date of the credit commitment was December 16, 2021, and in 2018 and in 2019 we exercised the options to extend the date by one year. This means that the maturity date of the credit commitment of €150 million is now December 16, 2023. As per December 31, 2021, this facility was undrawn. The credit facility of €150 million includes two financial covenants: Minimum consolidated tangible net worth; and Consolidated total net debt/total equity ratio. These financial covenants are measured twice annually, on June 30 and December 31. We were compliant with these financial covenants as per December 31, 2021. See notes 11, 16, and 17 to the consolidated financial statements for more information on our funding, treasury policies and long-term debt. ASM PACIFIC TECHNOLOGY (ASMPT) We have a 24.96% stake in ASMPT, a leading semiconductor assembly and packaging equipment and surface mount technology solutions. Net cash of our 24.96%-owned associate was €530 million on December 31, 2021. The cash resources and borrowing capacity of ASMPT are not available to ASMI. Although two directors of ASMI are directors of ASMPT, ASMPT is under no obligation to declare dividends to shareholders or enter into transactions that are beneficial to us. As a substantial shareholder, we can participate in the shareholders’ approval of the payment of dividends, but cannot compel their payment or size. Cash dividends received from ASMPT during 2020 and 2021 were €16 million and €36 million, respectively. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 80 The market value of our 24.96% investment in ASMPT was approximately €982 million as per December 31, 2021. TAX STRATEGY ASMI has a tax control framework in place, including the use of certain tax technology that ensures correct data for tax purposes. As part of this, we continuously monitor our tax positions and tax FINANCIAL RISK FACTORS We are exposed to market risks (including foreign exchange-rate risk), credit risk, liquidity risk, and developments, and review key tax positions quarterly in accordance with the respective processes. As part of our tax strategy, the tax department recommends a balanced approach in the interests equity price risk. We may use forward exchange contracts to hedge foreign-exchange risk. We do of all stakeholders, while adhering to ASMI’s tax policy and complying with all relevant tax laws not enter into financial instrument transactions for trading or speculative purposes. See Note 17 to and regulations. ASMI’s tax department is responsible for tax management. It is supervised by the the consolidated financial statements for financial risk factors. Management Board via the CFO, who discusses the tax strategy with the Supervisory Board’s OUTLOOK LIQUIDITY NEEDS We have developed forecasts and projections of cash flows and liquidity needs for the upcoming Audit Committee. In line with our tax principles, we do not use artificial tax structures solely aimed at tax avoidance, nor do we use tax havens or non-cooperative jurisdictions to avoid transparency on our tax position. ASMI proactively engages with tax authorities, and tax exposures, if any, are year. These take into account: Current market conditions; reasonable possible changes in trading contained and under control. For specific transactions and/or a specific approach, for example performance based on such conditions; our ability to modify our cost structure as a result of with respect to the application of the at arm’s length principle in transfer pricing matters, we may changing economic conditions and revenue levels. In the forecasts, we have also taken into account seek certainty upfront by requesting a tax ruling from the respective tax authority. We believe such the total cash balances amounting to €492 million on December 31, 2021; the ability to renew debt certainty is valuable for our stakeholders, including the respective tax authority. arrangements and access additional indebtedness, and whether or not we will comply with our financial covenants. Based on this, we believe that our cash on hand at the end of 2021 is adequate to fund our operations and our investments in capital expenditures, and to fulfill our existing contractual obligations for the next 12 months. TAX PRINCIPLE We view tax as an integrated part of doing business, and that tax should follow business. This resonates with our core value ‘We Care’, and contributes to the societies in which we operate. The respective taxes are determined and paid in the countries where the respective value is created, in accordance with all relevant rules and regulations. See Note 22 of this Annual Report for the total income tax expense in the Netherlands and abroad. Tax is one of the many factors we take into account when doing business, including locally available tax incentives and exemptions. We seek to establish and maintain an open and constructive relationship with the tax authorities in the countries where we operate. We do not use artificial tax structures aimed at tax avoidance; we aim to follow both the letter as well as the spirit of the law. We support the arm’s length principle to determine transfer prices in accordance with domestic and international rules and standards, such as the OECD guidelines for multinational enterprises. Our disclosures are made in accordance with the relevant local and/or international regulations and guidance, based on all the relevant facts and circumstances. As at December 31: Issued shares Treasury shares Outstanding shares SHAREHOLDER INFORMATION On December 31, 2021, the total number of ASMI issued common shares amounted to 49,297,394 compared to 49,797,394 at year-end 2020. This decrease was the result of the cancellation of 500,000 treasury shares approved by the Annual General Meeting of Shareholders (AGM) on May 17, 2021, and became effective on July 21, 2021. As at January 1: Issued shares Treasury shares Outstanding shares Changes during the year: Cancellation of treasury shares Share buybacks Treasury shares used for share-based performance programs 2020 2021 51,297,394 49,797,394 2,431,174 1,082,712 48,866,220 48,714,682 1,500,000 508,685 357,147 500,000 462,988 316,983 49,797,394 49,297,394 1,082,712 728,717 48,714,682 48,568,677 ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 81 On December 31, 2021, we had 48,568,677 outstanding common shares, excluding 728,717 The average daily trading volume of ASMI shares on Euronext Amsterdam in 2021 was 310,625. treasury shares. This compared to 48,714,682 outstanding common shares and 1,082,712 treasury This compares to an average daily volume of 316,286 in 2020. shares at year-end 2020. Besides the cancellation of 500,000 treasury shares in July 2021, the change in the number of treasury shares in 2021 was the result of 462,988 repurchased shares The graph below shows the performance of ASMI’s shares on Euronext. The total share return and 316,983 treasury shares that were used as part of share-based payments. in this graph is the performance of the share including dividends paid and capital returned over On December 31, 2021, 48,282,085 of the outstanding common shares were registered with our transfer agent in the Netherlands, ABN AMRO Bank N.V., and 286,592 were registered with Share price performance and total share return in % our transfer agent in the United States, Citibank, NA, New York. the period. SHARE LISTING ASMI’s shares are listed on Euronext Amsterdam under the symbol ASM and are included in the MSCI index. MSCI announced on February 9, 2021 that, as part of their quarterly review, ASMI would be included in the MSCI Global indexes as of February 26, 2021. The MSCI indexes are widely tracked by investors and serve as the basis for many index funds, and so-called exchange traded funds (‘trackers’). The addition to the MSCI index follows significant increases in ASMI’s market capitalization. The valuation of our shares on the stock market increased to €9 billion at 1,500 1,300 1,100 900 700 500 300 100 0 -100 the end of 2020, up from approximately €5 billion in 2019, and €2 billion in 2018. In January 2021, 2015 2016 2017 2018 2019 2020 2021 Total return Share price performance our market capitalization exceeded €10 billion for the first time. ASMI was added to the AEX Index – the 25 largest companies listed on Euronext Amsterdam measured by free-float adjusted market capitalization – in March 2020. SHAREHOLDER RETURNS Over time, ASMI has returned significant amounts of cash in different forms to our shareholders, reflecting our policy to use excess cash for the benefit of our shareholders. In 2021, we returned Our NY Registry Shares have been eligible for trading on the over-the-counter (OTC) market in the €237 million to our shareholders. This follows an amount of approximately €165 million returned United States under the symbol ASMIY since 2015. Further information can be found on: to our shareholders in the form of dividends and share buybacks in 2020. Since 2018, we have www.otcmarkets.com. returned €1.2 billion in cash to our shareholders. MARKET CAPITALIZATION ASMI’s market capitalization at year-end 2021 was €18,879 million, based on the closing share DIVIDENDS ASMI aims to pay a sustainable annual dividend. Annually, the Supervisory Board, at the proposal price of €388.70 on Euronext Amsterdam on December 31, 2021, and 48.6 million total outstanding of the Management Board, assesses the amount of dividend that will be proposed to the shares at year-end. The market capitalization at year-end 2020 was €8,766 million. AGM. The decision that a dividend be proposed to the AGM will be subject to the availability of SHARE PERFORMANCE On December 31, 2021, the closing price of ASMI’s shares on Euronext Amsterdam was €388.70. At the end of 2020, the closing price was €179.95. The highest closing share price during the year was €434.60, on November 18, 2021, and the lowest was €186.40, on January 7, 2021. distributable profits as well as retained earnings, and may be affected by our potential future funding requirements. Accordingly, dividend payments may fluctuate and could decline or be omitted in any year. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 82 The proposed dividend over 2021 will mark the 12th consecutive year that ASMI has paid a dividend. The 2021 program is our eighth consecutive share buyback program. Prior to the 2021 program, Our dividend has steadily increased over time. Over 2018, we paid a dividend of €1.00 per common the previous three programs were: share. Over 2019, we paid total dividends of €3.00 per common share, consisting of a regular dividend of €1.50 per share, and an extraordinary dividend of €1.50 per share. Over 2020, the dividend was €2.00 per common share. ASMI announced on February 22, 2022, that it would propose to the upcoming AGM a regular dividend of €2.50 per common share over 2021, which is an increase of 25% compared to the dividend paid over 2020. Start date End date Value of the program Number of repurchased shares Average repurchase price 1) June 2, 2020 March 2, 2021 €100,000,000 November 1, 2019 February 17, 2020 €100,000,000 646,180 984,279 June 6, 2018 October 11, 2018 €250,000,000 5,443,888 €154.76 €101.60 €45.92 1   The average repurchase price for the 2018 share buyback program includes repurchase expenses. Dividend per share in € paid over Information about earlier share buyback programs is available on our website. 3.50 3.00 2.50 2.00 1.50 1.00 0.50 3.00 1.50 2.50 2.00 1.50 1.00 0.50 0.50 0.50 0.60 0.70 0.70 0.80 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021* * Proposed DIVIDEND TIMETABLE Ex-dividend date: May 18, 2022 Record date: May 19, 2022 Payment date: May 27, 2022 Cumulative cash returned to market € million 2,500 Extraordinary dividend Regular dividend 2,000 1,500 1,000 500 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Share buybacks Dividends Return of capital Buyback convertibles CAPITAL REPAYMENT In earlier years ASMI distributed cash to its shareholders through two capital repayments: in 2013, €4.25 per ordinary share, and in 2018, €4.00 per ordinary share. More information about these capital repayments is available on our website. SHARE BUYBACK In 2021, ASMI used €140.1 million in cash for share buybacks, including €37.3 million related to the 2020/2021 program that was completed on March 2, 2021. On April 20, 2021, ASMI announced the authorization of a new share buyback program of up to €100 million. This share buyback program started on July 28, 2021, and ended on December 17, 2021, with 292,116 shares repurchased at an average price of €342.33. This repurchase program is part of ASMI’s commitment to use excess cash for the benefit of its shareholders. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 83 INVESTOR DAY  We are committed to maintaining a regular and open dialog with our shareholders. Our first Investor During the event, ASMI CEO Benjamin Loh provided an update of our company’s unique positioning, key opportunities ahead, and our growth strategy. Chief Technology Officer Ivo Day was a great opportunity to underline how important it is for us to actively engage with our Raaijmakers shared an overview of our R&D strengths, and new technologies on our future investors, and showcase our long-term strategy for value creation. roadmap. Corporate Vice President Global Marketing Han Westendorp presented an outlook of Investor Day, on September 28, 2021, was a hybrid event of online and in-person elements. A small into ASMI’s products and innovation. Chief Financial Officer Paul Verhagen wrapped up the event number of invited guests attended the live event in Amsterdam, including institutional investors and by outlining our long-term financial targets, and outlook to 2025. our key markets, and Executive Vice President of Global Products Hichem M’Saad deep-dived sell-side analysts. For the in-person event, we adhered to the Dutch government’s COVID-related guidelines and voluntarily implemented additional health and safety measures. The meeting room was set up to allow for social distancing. In addition, a webcast of the event was live-streamed, with the possibility for investors and analysts to participate remotely in the Q&A. Profile and geography of the participants* Investor day attendees by profile in % 31 18 51 Institutional investors Sell-side analysts Other Investor day attendees by geography in % 5 18 77 Europe North America Rest of the world * Including in-person and webcast participants, as well as on-demand views. Excluding employees. KEY TARGETS ANNOUNCED IN OUR INVESTOR DAY 2021: Targeting revenue of €2.8-€3.4 billion by 2025 (2020-2025 CAGR of 16%-21%), gross margins of 46%-50% in 2021-2025, and operating margins of 26%-31% in 2021-2025; Targeting Net Zero emissions by 2035, and 100% electricity from renewable sources by 2024; Single-wafer ALD market expected to increase from US$1.5 billion in 2020 to US$3.1-US$3.7 billion by 2025; and Further capacity expansion of our new manufacturing facility to be production-ready by early 2023. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 84 MAJOR SHAREHOLDERS Pursuant to the Dutch Financial Supervision Act (‘Wet op het financieel toezicht’ or ‘WFT’), legal The graph below provides an overview of the shareholders’ structure. entities as well as natural persons must immediately notify the Netherlands Authority for the Financial Institutional investors by geography in % Markets (AFM) when a shareholding equals or exceeds 3% of the issued capital. The AFM must be notified again when this shareholding subsequently reaches, exceeds or falls below a threshold. This 7 can be caused by the acquisition or disposal of shares by the shareholder or because the issued capital of the issuing institution is increased or decreased. Thresholds are: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75%, and 95%. The AFM incorporates the notifications in the public register, which is available on its website. Failure to disclose the shareholding qualifies as an offense, and may result in civil penalties, including suspension. 25 35 33 Europe North America United Kingdom Rest of the world The following table sets forth information with respect to the ownership of our common shares as of December 31, 2021, by each beneficial owner known to us of more than 3% of our common shares: ASM International N.V. 2) Tokyo Electron Ltd. 3) BlackRock, Inc 4) Norges Bank 5) Number of shares 728,717 2,699,000 2,515,551 2,461,124 Percent 1) Number of voting rights Percent 1) 1.5% 5.5% 5.1% 5.0% – 2,699,000 2,930,808 2,461,124 –% 5.5% 5.9% 5.0% 1   Calculated on the basis of 49,297,394 issued common shares as of December 31, 2021, and without regard to options. 2   On December 31, 2021, ASMI held 728,717 ordinary shares in treasury. 3   All of the 2,699,000 shares capital interest and voting rights of Tokyo Electron Ltd. are held directly actual. Based on the notification filed with the AFM on July 1, 2013. 4   Of BlackRock, Inc.’s capital interest 2,513,552 shares are held indirectly actual and 1,999 shares are held indirectly potential. Of the voting rights, 2,928,809 are held indirectly actual and 1,999 indirectly potential. Based on the notification filed with the AFM on August 3, 2021. 5   All of the 2,461,124 shares capital interest and voting rights of Norges Bank are held directly actual. Based on the notification filed with the AFM on November 2, 2021. Investors by profile* in % 20 80 Institutional investors Broker, retail investors, and other * Excluding treasury shares ESG RATINGS We have built a strong foundation for our ESG strategy in recent years, and stepped up our A ‘beneficial owner’ of a security includes any person who, directly or indirectly, through any sustainability focus. As ESG ratings are a widely used tool to assess our ESG performance and risk, contract, arrangement, understanding, relationship, or otherwise has or shares (i) voting power we have stepped up our engagement with several rating agencies. which includes the power to vote, or to direct the voting of, such security and/or (ii) investment power which includes the power to dispose, or to direct the disposition, of such security. In addition, CDP a person shall be deemed to be the beneficial owner of a security if that person has the right to Companies and governments that disclose to CDP are scored between A and F, with different acquire beneficial ownership of such security, as defined above, within 60 days, including but not scores given for each focus area, including climate and water. In 2021, we received a B score for limited to any right to acquire: (i) through the exercise of any option, warrant or right; (ii) through both climate and water, up from our C score in 2020. For more on our CDP disclosures, see the the conversion of a security; or (iii) pursuant to the power to revoke, or pursuant to the automatic section ‘Planet’ in this report. termination of, a trust, discretionary account, or similar arrangement. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 85 ISS QualityScore The ISS Governance E&S Disclosure QualityScore provides an assessment of a company’s ESG KEY FIGURES PER SHARE The table below shows the key figures per share and other relevant share data for the past performance. A score of 1 indicates lower risk, while a score of 10 indicates governance risk versus three years. its index or region. In 2021, we received an ISS Governance QualityScore of 1, an ISS Environment QualityScore of 4, and an ISS Social QualityScore of 5. Our 2021 scores are the same as 2020. MSCI ESG* MSCI ESG Research provides MSCI ESG Ratings on a scale of AAA (leader) to CCC (laggard), according to exposure to industry-specific ESG risks, and the ability to manage those risks relative to peers. In 2021, we received a rating of A in the MSCI ESG Ratings assessment. Our 2021 rating is the same as 2020. S&P Global ESG The S&P Global ESG Scores are a set of environmental, social and governance data that provides company-level, dimension-level, and criteria-level scores based on the S&P Global Corporate Sustainability Assessment (CSA) process, an annual evaluation of companies’ sustainability practices. In 2021, we received a S&P Global ESG Score of 58 out of 100 (up from 22 in 2020).  (EUR, except number of shares) Net earnings per share, diluted Normalized net earnings per share, diluted Dividend per share paid over Shareholders’ equity per share Issued shares year-end (thousand) Outstanding shares year-end (thousand) Average outstanding shares basic (thousand) Average outstanding shares diluted (thousand) Closing share price Euronext Amsterdam Year-end High Low Sustainalytics** Market capitalization year-end (EUR million) In October 2021, ASMI received an ESG Risk Rating of 15.3, and was assessed by Sustainalytics to be at low risk of experiencing material financial impacts from ESG factors. 2019 6.58 6.86 2.00 37.22 51,297 48,866 49,418 49,999 100.15 104.40 33.96 4,894 2020 5.78 6.04 3.00 38.07 49,797 48,715 48,907 49,359 179.95 179.95 59.18 8,766 2021 10.11 10.36 2.00 46.16 49,297 48,569 48,645 48,909 388.70 434.60 186.40 18,879 OPEN DIALOG AND TIMELY INFORMATION We maintain an open dialog with our shareholders and investors. We provide the financial markets with accurate and timely information through, among other things, press releases, annual reports, quarterly earnings calls and webcasts, and investor meetings. In 2021, we held more meetings focused on ESG-related topics, including investor meetings that provided us with input for our updated materiality analysis. Investors can find up-to-date and comprehensive information about the company and our shares on our website. * The use by ASM International N.V. of any MSCI ESG Research LLC or its affiliates (“MSCI”) data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendations, or promotion of ASM International N.V. by MSCI. MSCI services and data are the property of MSCI or its information providers, and are provided ‘as-is’ and without warranty. MSCI names and logos are trademarks or service marks of MSCI. ** Copyright ©2022 Sustainalytics. All rights reserved. This section contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at www.sustainalytics.com/legal-disclaimers. Victor Bareño Almere, the Netherlands T: +31 88 100 8500 E: investor.relations@asm.com Interview with the CFO Interview with the CFO ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 86 INTERVIEW WITH THE CFO Paul Verhagen took over as ASMI’s new Chief Financial Officer in June 2021. In the following interview Paul comments on the company’s positioning and opportunities. He also reviews ASMI’s financial performance in 2021 and discusses the capital allocation policy and investment priorities. PAUL, YOU JOINED ASMI AS CFO IN JUNE LAST YEAR. WHAT IS YOUR VIEW ON THE COMPANY’S POSITIONING AND PROSPECTS? Since joining ASMI, I have been particularly impressed by our company’s innovative strengths, and the strong growth opportunities ahead of us. In 2021, the semiconductor market increased 24% to more than US$500 billion, and is expected to grow to US$1 trillion by 2030. To enable new end-market applications in, for instance, artificial intelligence and 5G smartphones, our customers are investing in next-generation semiconductor technologies. ASMI is well placed to benefit from these trends. We are the leader in ALD, and have a growing position in Epi, which are critical technologies for our customers to transition to the next nodes. “ I HAVE BEEN IMPRESSED BY ASMI’S INNOVATIVE STRENGTH AND STRONG GROWTH OPPORTUNITIES.” It is important that we prepare our company for the next growth phase. We are expanding capacity, both for manufacturing and for our R&D lab facilities. We continue to increase our investments in R&D, for product innovation, and new applications. To support this, we need to step up our efforts in hiring new talent, and retaining our people by investing in their development. HOW DIFFICULT IS IT TO FIND THE RIGHT PEOPLE, TAKING THE GROWTH OF THE INDUSTRY INTO ACCOUNT? It’s not easy, and we have stepped up investments in our People teams to support our recruitment needs. To give an example of the strong growth we’ve been experiencing: at year-end 2021, around a third of our employees had been at ASMI for less than a year. The war for talent in our industry is reaching new heights, particularly for engineers. All technology companies are fishing in the same pond. We have to make sure we stay competitive. As one of the effects of this, we expect to see some above-average wage inflation in the next year. Paul Verhagen Chief Financial Officer ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 87 WHAT WAS THE IMPACT OF COVID-19 ON ASMI’S BUSINESS IN 2021? Our priority is always the health and safety of our people. In 2021, and as we entered 2022, we continue to take measures to minimize risk for our employees, customers and suppliers, and for the communities where we operate. our target in the first half. In the course of 2021, we took steps to grow R&D at a faster rate, resulting in a higher increase in the second half. We aim for a further acceleration in R&D spending in 2022. Our mid-term target is high single to low double-digit investments in net R&D as a percentage of sales. Selling, general, and administrative (SG&A) expenses increased by 20% in absolute terms, and decreased as a percentage of revenue from 11.9% in 2020 to 11.0% in 2021. The increase in SG&A From a demand perspective, the pandemic continued to fuel work-from-home-related computing last year was in part due to the higher activity level, as well as increased investments in, for example, IT, demands, and helped speed up digitalization trends in our economies and society. This, in turn, and the strengthening of the Sales and Quality organization. We expect to increase these investments drove strong growth in our industry. COVID-19 continued to create challenges in our operations, in 2022. Taking a mid-term view, we forecast the SG&A expenses as a percentage of sales to decline particularly in our supply chain. The industry-wide spike in demand, and the impact from lockdowns to high single-digit, as we benefit from operating leverage. and constraints, led to shortages and delays. Supply conditions tightened further in the summer of 2021, due to COVID-related lockdown measures in Southeast Asia, where many suppliers in our industry are located. Thanks to close and proactive cooperation with our suppliers and customers, and our actions to maintain higher “ OPERATING RESULT INCREASED BY 50% TO A NEW RECORD LEVEL.” inventories and to qualify new suppliers, we were still able to deliver on our customer requirements, The operating result increased by about 50% to a new record level of €491 million, with the achieving record-high shipments and sales. operating margin up from 24.6% in 2020 to 28.4%. HOW WOULD YOU DESCRIBE ASMI’S FINANCIAL PERFORMANCE IN 2021? ASMI delivered very strong results. Our revenue increased by 34% at constant currencies to Income from ASMPT increased to €87 million from €45 million in 2020. This result excludes the amortization of intangible assets related to ASMPT. €1.7 billion, the fifth consecutive year of double-digit growth. Demand for wafer-fab equipment In line with our earlier indications, the effective tax rate increased further to 17.2% in 2021, up increased strongly and across the board. Our growth was also supported by share of wallet gains in from 14.6% in 2020. The increase in the tax rate is related to earlier exhaustion of net operating the advanced logic/foundry nodes, our inroads in memory, and solid expansion in the analog/power losses (NOLs). wafer markets. At constant currencies, equipment sales increased by 38% year-on-year, driven by strong growth in our ALD and Epi product lines. Our spares & service sales were 18% higher (at Total net earnings increased by 73% to €495 million compared to last year. constant currencies) in 2021, with an increased contribution from our new outcome-based services. The gross margin increased from 47.0% in 2020 to 47.9% in 2021. Within the year, the gross margin moderated from 48.8% in the first half, which was supported by a relatively strong application mix, to 47.1% in the second half. DID YOU EXPERIENCE ANY UNFAVORABLE IMPACT OF THE RECENT HIKE IN INFLATION, AND INCREASE IN ENERGY AND COMMODITY PRICES? I am pleased to say that we were able to offset the impact from increased energy and commodity prices by other savings in our cost of goods through commercial negotiations, value engineering, Gross R&D, excluding capitalization and amortization of development expenses, and impairments, and increased efficiencies. It is too early to tell what the impact will be in 2022. But we stay focused increased by 20% in 2021. Net R&D increased by 9%, as capitalization increased and impairments on opportunities to offset further inflationary pressures, and remain committed to deliver healthy decreased compared to 2020. As a percentage of revenue, net R&D expenses amounted to 8.7% in gross margins. 2021, down from 10.5% in the previous year. The increase in R&D spending was somewhat below ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 88 ANY OTHER HIGHLIGHTS IN 2021? We made strong progress in several important areas. But if I have to choose two highlights, they’d CapEx additions amounted to €79 million in 2021, with a significant part spent on expanding and upgrading our R&D lab facilities. These investments will continue in 2022. CapEx ended up lower be our increased sustainability focus and Investor Day. In 2021, we launched our new sustainability than planned for. This was due to some carry-over from 2021 into 2022 as a result of COVID-19- priorities 2021-2025: Innovation, People, Planet, Responsible Supply Chain, and Governance. related delays. CapEx dropped compared to €95 million in 2020, which included the completion In September, as a first significant step, we announced our ambition for net zero emissions by 2035. of our new and significantly expanded Singapore manufacturing facility that year. As part of our As part of this, we aim to achieve 100% renewable energy by 2024. We are currently preparing 2021-2025 financial targets, we expect CapEx to be in a range of €60-100 million. several new actions and targets in our other sustainability focus areas, and will report on our progress in upcoming periods. Cash spent on taxes increased substantially to €152 million in 2021. This is explained by the fact that we paid cash taxes in the Netherlands in 2021 with respect to the three years 2019, 2020 and Apart from our moral duty to do business in a responsible way and make a positive impact, I’m also the estimated preliminary tax for 2021. convinced that companies that perform better in terms of sustainability are more likely to deliver stronger long-term financial results. We used €237 million in cash for shareholder remuneration, up from €165 million in 2020, and Also in September, we held our first Investor Day. An important goal of this event was to explain in more detail the technology inflections in our key markets. Also, how we expect to capture these Our financial position remained strong. We ended 2021 with a cash position of €492 million, market opportunities on the back of our Growth through Innovation strategy. We also presented compared to €435 million the previous year. consisting of €97 million for dividend and €140 million spent on share buybacks. 2025 financial targets. We expect our revenue to grow to €2.8-3.4 billion by 2025, an average annual growth of 16% to 21% compared to 2020. For 2021-2025, we target the gross margin to be in a range of 46%-50%, and the operating margin in a range of 26%-31%. Driven by strong revenue and solid profitability, we expect to generate a healthy free cash flow in 2021-2025. “ BETTER PERFORMANCE IN SUSTAINABILITY IS MORE LIKELY TO DELIVER STRONGER LONG-TERM FINANCIAL RESULTS.” WHAT DO YOU THINK OF THE CASH FLOW IN 2021? Free cash flow more than doubled from €120 million in 2020 to €266 million in 2021. A key driver was the improvement in profitability. The cash outflow for working capital amounted to €68 million, DID YOU MAKE CHANGES TO ASMI’S CAPITAL ALLOCATION STRATEGY? No, the fundamentals of our capital allocation policy remain unchanged. The key priority for ASMI is to invest in the growth of our business. That means spending on CapEx and R&D, and also scanning the market for potential M&A opportunities. Next to that, it remains key for us to maintain a strong balance sheet. We intend to gradually increase towards a cash target of €600 million. This is up from a cash target of €300 million in earlier years, as we also communicated last September, and reflects the increased size of our company. We remain committed to pay a sustainable dividend. With the publication of our Q4 2021 results on February 22, 2022, we announced a proposed dividend of €2.50 per share to be paid over 2021. This is a 25% increase, compared to the regular dividend of €2.00 paid over 2020. and was mainly driven by the strongly increased activity level. The underlying quality remained Our policy regarding excess cash is also unchanged. We plan to return excess cash to our healthy. In relative terms, working capital dropped to 58 days, down from 63 days the previous year. shareholders. Last December, we completed the €100 million share buyback program that started On a structural basis, we target days of working capital to be in a range of 55-75 days. in July 2021. With the publication of our Q4 2021 results we announced a new €100 million buyback program, to be executed in the 2022-2023 timeframe. GOVERNANCE ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 89 CORPORATE GOVERNANCE Corporate governance Risk management Management Board Supervisory Board 90 93 99 101 Supervisory Board report 106 Remuneration report External auditor Declarations 111 117 118 At ASMI, good governance is a key requirement to meeting our strategic objectives. It ensures effective cooperation and management, and provides a transparent system of checks and balances between our Management Board, Supervisory Board, and shareholders. Values and ethics, global policies, internal control monitoring, and risk management are some of the key elements of our corporate governance framework. They ensure that relevant and up-to-date information is available, enabling management and control by the Management Board, Supervisory Board, and shareholders. Our corporate governance framework is a cycle through which we strive to continuously improve the way we operate. It starts with transparency, accountability, values and ethics feeding into our global procedures describing how we work. Our internal control and monitoring activities ensure that we meet standards and identify improvement opportunities. Our risk management approach enables us to identify the risks early that may impact us, as well as the opportunities that can enable future growth. This section of the report addresses our corporate governance structure, and how we apply the principles and best practices of the Dutch Governance Code. Corporate governance Corporate governance ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 90 CORPORATE GOVERNANCE Good corporate governance is about applying sound business practices. At ASMI, we do business in an ethical and transparent manner. We achieve this by setting up transparent processes and following internal policies and procedures that enable us to operate in the best interests of all our stakeholders, and which comply with applicable Dutch corporate governance requirements. HIGH STANDARD OF CORPORATE GOVERNANCE ASMI aspires to high standards of corporate governance and ethics practices. Sound corporate governance is a key component of our culture, behavior, and management, and this is consistent with our core values. Our corporate governance is supported by a strong focus on integrity, transparency, and clear and timely communication. We endeavor to ensure that our policies and procedures comply with both applicable Dutch corporate governance requirements, and all relevant Corporate governance-related documents are available on our website, including: Supervisory Board profile; Supervisory Board rules; Management Board rules; Audit Committee charter; Nomination, Selection and Remuneration Remuneration policy; Code of Business Conduct; Whistleblower policy; Anti-fraud policy; and Rules concerning insider trading. laws. Furthermore, our corporate governance structure supports our business and meets the needs Committee charter; of our stakeholders. CORPORATE GOVERNANCE FRAMEWORK The corporate governance framework describes how ASMI’s strategy, mission, vision and objectives are embedded across our organization. Our Code of Business Conduct (COBC) sets clear standards in different areas of business life. Its purpose is to provide a clear, strong, and consistent culture of ethics that applies to all at ASMI. ASMI’s policies and regulatory framework guide how we work. Key components are our financial, IT, product safety, environment, health and safety (EHS), compliance, ESG and sustainability, and business continuity frameworks. These are supported by transparency and accountability through our monthly business review cycle, our internal control framework, and our performance management cycle. Our risk management approach enables us to identify and manage the strategic, operational, financial, climate, and compliance risks to which ASMI is exposed. It also helps us develop even more effective and efficient operations. It promotes reliable financial and non-financial reporting and compliance with laws and regulations, increasing transparency and accountability. Corporate governance framework MANAGEMENT BOARD, SUPERVISORY BOARD & COMMITTEES TRANSPARENCY & ACCOUNTABILITY V I SION VALUES & ETHICS S E V I T C E J B O CORPORATE GOVERNANCE m i s s i o n RISK & PERFORMANCE MANAGEMENT STRAT E G Y POLICIES & REGULATORY FRAMEWORK MONITORING & INTERNAL CONTROL ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 91 COMPANY STRUCTURE ASMI is a publicly listed company established under Dutch law. The company’s management PUBLICATION IN ENGLISH The Annual Report, the financial statements, and other regulated information as defined in the Dutch and supervision structure is organized in a two-tier system, comprising a Management Board, Act on Financial Supervision (‘Wet op het financieel toezicht’) will only be published in English on our composed of executive directors, and an independent Supervisory Board, composed of non- website (www.asm.com). executive directors. Our Management Board has ultimate responsibility for the overall management of ASMI. The Management Board is supervised and advised by the Supervisory Board. The draft minutes of the AGM are available on our website no later than three months after the The Management Board and the Supervisory Board are accountable to ASMI’s shareholders. meeting. Shareholders may provide their comments in the following three months, after which the minutes are adopted and published on our website. We conduct our business through wholly-owned subsidiaries, the most significant being ASM Front- end Manufacturing Singapore Pte Ltd (FEMS) in Singapore; ASM Europe BV (ASM Europe) in the Netherlands; ASM America Inc (ASM America) in the United States; ASM Japan KK (ASM Japan) 2021 AGM OF ASMI ASMI held its AGM on May 17, 2021. Given the ongoing COVID-19 situation around the world in Japan; and ASM Korea Ltd (ASM Korea) in South Korea. The location of our facilities allows us and the public health and safety measures introduced by the Dutch government, in part via the to interact closely with customers in the world’s major geographical market segments: Europe, the COVID-19 (Temporary Measures) Act, this meeting was held virtually. Shareholders were given the United States, and Asia. ASMI SHARES ASMI’s common stock trades on the Euronext Amsterdam Stock Exchange (symbol: ASM), and opportunity to vote by two means: (i) by providing – as at previous AGMs – a power of attorney with voting instructions prior to the AGM; and (ii) by voting electronically during the meeting. The attendance rate was 69.57% of the total issued share capital of ASMI as at the registration date. In line with the ASMI Boards’ recommendations, the shareholders approved all resolutions as ASMI is required to comply with the Dutch Corporate Governance Code (the Code). ASMI common proposed to the AGM. The voting results and the minutes of the AGM are published on our website. shares, which are held in the United States as New York Registry Shares, are eligible for trading on the OTC market. ANNUAL GENERAL MEETING OF SHAREHOLDERS ASMI shareholders exercise their rights through Annual and Extraordinary General Meetings of 2021 EXTRAORDINARY GENERAL MEETING OF ASMI ASMI held an EGM on September 29, 2021. Given the ongoing COVID-19 situation and the public health and safety measures introduced by the Dutch government, this meeting was held virtually. The agenda for the EGM consisted of: (i) the appointment of Mrs. Pauline van der Meer Mohr to the Shareholders. ASMI is required to convene an Annual General Meeting of Shareholders (AGM) in Supervisory Board; and (ii) the appointment of Mr. Adalio Sanchez to the Supervisory Board. In line the Netherlands each year, no later than six months after the end of the company’s financial year. with the ASMI Boards’ recommendations, the shareholders approved the resolutions proposed to Additional Extraordinary General Meetings of Shareholders (EGM) may be convened at any time the EGM. The voting results and the minutes of the EGM are published on our website. by the Supervisory Board or the Management Board. The convocation date is legally set at 42 days prior to the date of the AGM. The record date is legally set at 28 days prior to the date of the AGM. Those who are registered as shareholders at the record date are entitled to attend the meeting and to exercise other shareholder rights. Shareholders may be represented by written proxy. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 92 VOTING RIGHTS In the AGM, each ordinary share with a nominal value of €0.04 entitles the holder to cast one vote, each financing preferred share with a nominal value of €40 entitles the holder to cast 1,000 votes, and each preferred share with a nominal value of €40 entitles the holder to cast 1,000 votes. Treasury shares held by the company cannot be voted on. The company’s authorized capital The members of the board of the Stichting are: Dick Bouma (Chairman), retired Chairman of the Board of Pels Rijcken & Droogleever Fortuijn; Rob Ruijter, former Chairman of the Supervisory Board of Delta Lloyd; and Rinze Veenenga Kingma, President of Archeus Consulting BV. amounts to 82,500,000 common shares of €0.04 par value, 88,500 preferred shares of €40 par The purpose of the above-mentioned option is to protect the independence, continuity and value and 6,000 financing preferred shares of €40 par value. As at December 31, 2021, there were identity of ASMI against influences that are contrary to the interests of ASMI, its enterprise and the 49,297,394 common shares issued and fully paid. enterprises of all its subsidiaries and stakeholders. There were no preferred or financing preferred shares issued on December 31, 2021. Financing preferred shares are designed to allow ASMI to finance equity with an instrument paying a preferred POWERS The powers of the AGM are defined in our Articles of Association. The main powers of the dividend, linked to EURIBOR loans and government loans, without the dilutive effects of issuing shareholders are to: additional common shares. PREFERRED SHARES Preferred and financing preferred shares are issued in registered form only and are subject to appoint, suspend, and dismiss members of the Management Board and Supervisory Board; approve the financial statements; declare dividends; discharge the Management Board and Supervisory Board from responsibility for the performance transfer restrictions. Essentially, a preferred or financing preferred shareholder must obtain the of their respective duties for the previous financial year; approval of the ASMI Supervisory Board to transfer shares. If the approval is denied, the Supervisory Board will provide a list of acceptable prospective buyers who are willing to purchase the shares at a cash price agreed by the Supervisory Board and the seller within two months of the approval being denied. If the transfer is approved, the shareholder must complete the transfer within three months, at which time the approval expires. appoint the external auditors; approve amendments to the Articles of Association; authorize the Management Board to issue shares and grant subscriptions for shares; withdraw preemptive rights of shareholders upon issuance of shares; authorize the Management Board to withdraw preemptive rights of shareholders upon issuance of shares; and Preferred shares are entitled to a cumulative preferred dividend based on the amount paid up on authorize the Management Board to repurchase or cancel outstanding shares. such shares. Financing preferred shares are entitled to a cumulative dividend based on the par value and share premium paid on such shares. EXTERNAL RELATIONS At ASMI we believe that an open dialog with our external stakeholders is key. We provide accurate STICHTING CONTINUÏTEIT AGREEMENT ASMI is party to an agreement with Stichting Continuïteit ASM International (Stichting), pursuant and timely information through, among other things, press releases, our annual reports, quarterly earnings calls and webcasts, and meetings. At these meetings we discuss the company strategy, to which the Stichting is granted an option to acquire up to a number of our preferred shares performance and ask inputs for our materiality assessment. These meetings are held with investors corresponding with a total par value equal to 50% of the par value of our common shares issued and NGOs. We do not use lobby groups or make donations to any political party. and outstanding at the date of the exercise of the option. The Stichting is a non-membership organization organized under Dutch law. The objective of the Stichting is to serve the company’s interests. For that objective, the Stichting may, among other things, acquire, own, and vote on preferred shares in order to maintain our independence and/or continuity and/or identity. Risk management Risk management ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 93 RISK MANAGEMENT We continued to strengthen our risk management approach in 2021, in support of Growth through Innovation. The main purpose of our internal risk management and control framework is to enable early identification of risks that may impact us and opportunities that could enable further growth, and the ability to initiate follow-up actions accordingly. Our methodology proactively and periodically monitors risks and key mitigating controls based on our top-down risk assessment, our bottom-up business processes, and the process controls embedded in these. In 2021, we continued to focus on ownership and the proactive management of our risks in line with our corporate values: We Care, We Innovate, We Deliver. RISK MANAGEMENT APPROACH ASMI’s risk management approach is based on the Committee of Sponsoring Organizations’ (COSO) reference model. It is an integral part of our Corporate Governance Framework, which MANAGEMENT BOARD describes how our strategy, mission, vision, and objectives are embedded across our organization. FIRST LINE OF DEFENSE SECOND LINE OF DEFENSE THIRD LINE OF DEFENSE OWNERSHIP & MANAGEMENT RISK & CONTROL FUNCTIONS INDEPENDENT OBJECTIVE ASSURANCE BUSINESS & OPERATIONS MANAGEMENT OVERSIGHT FUNCTIONS INTERNAL AUDIT The objective of our risk management approach is to identify and manage current and emerging strategic, operational, financial, and compliance risks to which ASMI is exposed. This also enables us to improve effectiveness and efficiency in our operations, and promotes reliable financial reporting and compliance with laws and regulations. We assess the risks that could impact the achievement of our strategic objectives annually at a consolidated level (top-down approach) with our Risk Committee, as well as our senior management team and on a process level (bottom-up approach). If necessary, we implement countermeasures to mitigate the risks within the defined risk appetite, and integrate these countermeasures in our risk management and control framework. In addition, to proactively monitor and act on key risks as a result of COVID-19 in 2021, we further strengthened our focus on process improvements and ownership of key risks and process controls, both top down and in our primary processes. We did this through training and communication, but also through focused discussions on our key risks. Business management provides the Management Board with an annual assurance letter on the reliability of their financial reporting, the effectiveness of their internal controls, risk management, and compliance with internal policies, and laws and regulations. RISKASSESSMENTRISKMANAGEMENT STRATEGY &OBJECTIVESETTING Risk management approachMONITORINGACTIVITIESCONTROLACTIVITIESRISKRESPONSEABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 94 Our risk management and internal control activities are organized through the three lines of defense residual impact of the risks that ASMI is willing to accept in the pursuit of its objectives. The risk model. The Management Board is ultimately responsible for risk management and compliance in line appetite per objective or risk area is set annually by the Management Board and evaluated on an with the risk appetite, and is supported by a: ongoing basis as events occur throughout the year. First line of defense: Business and operations management owns and manages risk, which includes identifying, assessing, controlling, and mitigating risks; The nature of the risk is a key determinant of our risk appetite: Second line of defense: Oversight functions support business and operations management and help ensure that the risk and control procedures have effective metrics and are operating as intended; and Third line of defense: Internal Audit provides independent objective assurance on the effectiveness of governance, risk management, and internal controls, including the manner in which business and operations management and the oversight functions manage and control risk. Internal Audit brings a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. RISK CULTURE In line with our core values (We Care, We Innovate, We Deliver), ASMI strives for a culture of openness and transparency, in which identified risks are disclosed proactively, unexpected events are reported STRATEGIC RISKS RISK APPETITE Strategic risks and opportunities may affect ASMI’s strategic objectives. Strategic risks include economic, environmental and political developments, and the need to anticipate and respond in a timely manner to market circumstances. We are willing to accept reasonable risks in a responsible way to achieve our strategic ambitions and priorities. Innovation will drive future growth, and as a result we are willing to take a higher risk in our longer-term growth areas, such as Epi products and the spares-and-services market. OPERATIONAL RISKS RISK APPETITE as soon as they occur, and improvement opportunities are discussed and followed up on. The Risk Committee plays a key role in our risk culture. It is chaired by the Vice President of Strategy and, as all business units are represented, key follow-up on the monthly meetings is efficiently implemented Operational risks cover adverse developments resulting from internal processes, people, and systems, or from external events related to our business. We avoid risks that can negatively impact our operational goals while ensuring that we meet our environmental, social, and corporate governance (ESG) commitments. ASMI has a very low risk tolerance related to people and product safety, and associated compliance risks. We strive for ZERO HARM! throughout ASMI. Through the Risk Committee, periodic control self-assessments, and a focus on aligning our top-down risk assessment to our business processes, we are continually increasing risk awareness to make it an integral part of our company culture and our primary processes. Our Code of Business Conduct (COBC) applies to all ASMI employees and temporary staff, and describes how we work in an open, transparent, honest, and socially responsible way. In 2021, we rolled out updated training sessions to ensure deeper understanding of the COBC, and related dilemmas. We also assessed the effectiveness of and adherence with the code by actively investigating any alleged misconduct reported through the Whistleblower program, SpeakUp! and other means, taking appropriate action, including disciplinary action, where necessary. RISK APPETITE Any business activity inevitably leads to taking risks. We deal with each risk in a way that aligns with the risk appetite established by the Management Board. Risk appetite is the level of risk we deem acceptable to achieve our objectives. ASMI’s risk appetite is primarily determined based on the defined and agreed strategic plan and the individual objectives in this plan. Our COBC and other detailed policies and procedures also help guide our risk appetite. Our risk appetite is the total FINANCIAL RISKS RISK APPETITE Financial risks include risks related to accounting and reporting, tax, and other elements that impact our financial position. We avoid risks that could jeopardize the integrity of our reporting and/or the financial sustainability of the company needed to achieve the objectives. COMPLIANCE RISKS RISK APPETITE Compliance risks consist of unanticipated failures to implement or comply with relevant laws and regulations. We strive for full compliance with our COBC and the national and international laws and regulations of the markets in which we operate. We have a zero-tolerance approach to bribery and corruption, fraud, and all other forms of (illegal) misconduct. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 95 CONTROL EFFECTIVENESS STATEMENT The Management Board is responsible for ASMI’s internal risk management and control framework. All internal control systems, no matter how well designed and implemented, have inherent limitations. Even systems determined to be effective may not prevent or detect misstatements or This system is designed to manage the main risks that may prevent ASMI from achieving its fraud, and can only provide reasonable assurance with respect to disclosure and financial statement objectives. The internal risk management and control framework, and the evaluation of the presentation and reporting. Additionally, projections of any evaluation of effectiveness to future effectiveness of our internal controls and areas for improvement, are regularly discussed with the periods are subject to the risk that controls may become inadequate due to changed conditions and Audit Committee and KPMG Accountants, our external auditor. The Audit Committee reports on that the degree of compliance with the policies or procedures may deteriorate. these matters to the Supervisory Board. The Management Board has conducted an assessment of the design and operating effectiveness best practice provisions 1.2 and 1.4 of the Dutch Corporate Governance Code. In view of all of the above, the Management Board believes that it complies with the requirements of of the internal risk management and control framework. Based on this assessment and the current state of affairs, to the best of its knowledge and belief, the Management Board confirms that: The internal risk management and control framework provides reasonable assurance for the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Generally Accepted Accounting Principles; The management report includes a fair review of the development and performance of the business, and the position of the company and the undertakings, included in the consolidation as a whole, as well as a description of the principal risks and uncertainties that the company faces; There are no material risks or uncertainties that could reasonably be expected to have a material adverse effect on the continuity of ASMI’s operations in the coming twelve months; and There is a reasonable expectation that ASMI will be able to continue its operations and meet its liabilities for at least 12 months. As such, it is appropriate to adopt the going concern basis in preparing the financial reporting. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 96 RISK CATEGORIES AND FACTORS The risks detailed below are key current and emerging risks that could impact our ability to achieve business processes as well as the market we operate in. Our business, processes, and people growth through innovation; they span everything from our operational processes to our business continued to show resilience and flexibility in resolving the operational challenges we faced, environment. Our risk management process is set up to facilitate a company-wide understanding particularly within manufacturing, customer support, supply chain, and logistics. of the nature of these risks, the impact they may have on our business, and the way these risks develop over time, enabling risk-informed decision-making. These risks are not the only ones we Our risk universe is the basis for our annual top-down risk assessment. The following pages outline face. Some risks may not yet be known to us, and certain risks that we do not currently believe the key risks in our risk universe as well as the mitigating measures we have taken. to be material could become material in the future. In 2021, COVID-19 continued to impact our RISK UNIVERSE Product demand & technology change Competition 7 1 2 Cyclical nature of semiconductor market Acquisitions 6 3 People Climate & sustainability 5 4 International operations STRATEGIC OPERATIONAL FINANCIAL COMPLIANCE Timeliness, quality and safety of delivered product and service IT systems & cybersecurity 8 9 10 11 12 R&D program execution Customer dependency Supplier performance Supplier dependency 13 14 Health & safety Unfavorable changes in tax laws/regulations Business process execution Product lifecycle management 15 16 17 18 Manufacturing disruption Changes in valuation of ASMPT Outsourcing Foreign currency Financial reporting Liquidity 19 20 21 22 23 Compliance to laws and regulations 24 25 26 Intellectual property Fraud ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 97 STRATEGIC RISKS MITIGATING MEASURES 1 Inability to respond to changes in product demand and technology change could result in decreased orders and financial loss and/or reputation damage. In addition to our continued focus on new product launches, our investments in R&D continues to increase. In order to ensure optimal return on investment we have further improved our R&D processes and teams as well as optimal cooperation with key stakeholders. COVID-19 continues to impact demand from our end markets, in order to ensure successful adaptation to these changes we increased focus on the key hand off points in our R&D process improving the effectiveness and efficiency of the process. 2 Cyclical nature of the semiconductor market which leads to abrupt changes in demand resulting in fixed overheads during downturns or insufficient production capacity during upturns. We continue to invest in our production facilities to enable the growing demand for our tools. In addition, we outsource generic manufacturing and continue to optimize our primary processes to enhance scalability and elasticity. Our financial structure, including cash and a standby credit facility, is set up to further reduce downsides of this risk. 3 Inability to attract and retain qualified management, technical, sales and support employees could result in delayed product development, production and diversity of management resources. We continue to focus on competitive compensation & benefit packages tailored to the regions we operate in. We have improved our talent acquisition process to enable growth through innovation and are focusing on successful onboarding of our new colleagues. In 2021, we took important steps in following up on the 2020 ‘Power of an Open Mind’ program and the engagement survey, we also launched our corporate values strengthening our corporate culture. 4 Failure to adequately identify and mitigate the risks arising from operating in an international context such as the political landscape, changes in legislation, instability, protectionism and cultural differences could impact our business. Our primary processes are set up to quickly understand, adapt to, and effectively apply international cultural and legal norms for doing business. We have global reviews with each region specifically on these topics. Geopolitical tensions continue to increase resulting in additional trade restrictions, global trade shifts and instability. ASMI strives to support and serve its worldwide customers to the best of its ability, while being compliant with laws and regulations set by the jurisdictions where we operate, we monitor geo political risks on an ongoing basis as the impact on the industry and ASMI is not yet known and will change over time. 5 Climate change and transition risks impacting ASM, our customers, and our supply, potentially causing disruptions in our value chain and markets. In the past years we have built a solid foundation of achievements in sustainability. In 2021, we engaged a leading third party to complete In the past years we have built a solid foundation of achievements in sustainability. In 2021, we engaged a leading third party to complete a Climate Adaptation Risk and Opportunity Assessment, inclusive of our supply chain. See the ‘Sustainability’ section of this report for a Climate Adaptation Risk and Opportunity Assessment, inclusive of our supply chain. See the ‘Sustainability’ section of this report for more details. more details. 7 Major competitors or new entrances to the market, establishing or sustaining a competitive advantage or establishing disruptive business models. A process is in place to gather data through competitive analysis which helps us to outperform our competitors by collecting new A process is in place to gather data through competitive analysis which helps us to outperform our competitors by collecting new product ideas, improving our business model and service to our customers. In 2021 we increased the capacity in our market intelligence product ideas, improving our business model and service to our customers. In 2021 we increased the capacity in our market intelligence department and implemented additional analysis to make sure that relevant information is available on a timely basis. department and implemented additional analysis to make sure that relevant information is available on a timely basis. OPERATIONAL RISKS MITIGATING MEASURES 8 Unsuccessful or slow execution of R&D and missing key inflections or opportunities. Our innovative culture enables us to remain a leading supplier of semiconductor equipment and process solutions. 9 Failure to deliver product or service of sufficient quality or on time resulting in financial loss, rework and/or reduced future demand. To support this we continue to invest in R&D. In addition, we continuously improve our approach to co-create and develop technology roadmaps together with our customers. We also focus on attracting the right talent and maintain our partnerships with key knowledge leaders in our industry. We are continuously improving our quality assurance processes and controls to ensure consistent product quality. In addition to pro-actively managing the supply chain and logistical challenges, we have centralized our quality organization to report directly to the CEO. This has increased cross-functional focus in support of the 2021 ramp in production. In 2022 we will continue to focus on refining our key quality processes deeper into the organization. We are also enhancing our software/platform and service processes to enable quality in alignment with developments in the market and the tool base that is in operation at customer sites. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 98 OPERATIONAL RISKS MITIGATING MEASURES Dependence on a small number of large customers. Loss of a 10 Dependence on a small number of large customers. Loss of a customer or significant reduction in demand could result in customer or significant reduction in demand could result in significant downturn of our financial results. significant downturn of our financial results. IT security breaches including cyber attacks resulting in loss of 11 IT security breaches including cyber attacks resulting in loss of technologies, innovations, IP and process data, downtime or technologies, innovations, IP and process data, downtime or disruption of critical business operations. Any breach of our disruption of critical business operations. Any breach of our information systems could adversely affect our finances and information systems could adversely affect our finances and operating results as well as our reputation. operating results as well as our reputation. We focus on building strong and long term relationships with strategic customers, understanding the customer needs and mapping our We focus on building strong and long term relationships with strategic customers, understanding the customer needs and mapping our technology roadmap to our customers technology roadmaps. technology roadmap to our customers technology roadmaps. An IT risk management framework including IT security management is in place in which we monitor threats and vulnerabilities, conduct An IT risk management framework including IT security management is in place in which we monitor threats and vulnerabilities, conduct cyber drills, perform gap assessments, apply remediation and identify improvement projects. The frameworks are supported by policies, cyber drills, perform gap assessments, apply remediation and identify improvement projects. The frameworks are supported by policies, processes and controls. In order to assess the robustness of our IT environment a Cybersecurity and IP Protection audit has been processes and controls. In order to assess the robustness of our IT environment a Cybersecurity and IP Protection audit has been performed. Further enhancement of the processes and controls related to Cybersecurity and IP Protection is in progress. performed. Further enhancement of the processes and controls related to Cybersecurity and IP Protection is in progress. 12 13 Failure of suppliers to deliver resulting in financial loss due to penalties, rework and/or reduced future demand. Recovery plans are in place, and are continuously assessed and improved. In 2021 our supply chain and logistics were constrained as a result of COVID, the growing demand and material/component shortage in general. In order to mitigate the risks in relation to this we further improved primary processes related to regional supplier sourcing, demand planning, and import/export risks. 14 Harm to our people or value chain from injury or illness, that Harm to our people or value chain from injury or illness, that impacts our ability to operate or impacts customer trust and impacts our ability to operate or impacts customer trust and relations. relations. Our EHS organization and Product Safety Engineering organizations are responsible for preventive and corrective action processes and Our EHS organization and Product Safety Engineering organizations are responsible for preventive and corrective action processes and the implementation of structural controls within the processes. Proactivity is key to minimize harm, through our product designs and early the implementation of structural controls within the processes. Proactivity is key to minimize harm, through our product designs and early reporting culture. Safety leadership collaborations have been set up with key customers to build engagement and collaboration on reporting culture. Safety leadership collaborations have been set up with key customers to build engagement and collaboration on mitigating the risks. mitigating the risks. FINANCIAL RISKS MITIGATING MEASURES 21 Financial reporting and/or the disclosures are not complete, inaccurate or not in accordance with laws & regulations resulting in reputational damage and/or financial loss. 22 Changes in valuation of ASMPT as a result of ineffective strategy definition and execution affecting our future financial position. A financial control framework is in place and we perform an annual fraud risk assessment and take follow up actions based on the outcome. We have board representation in ASMPT, as two executive directors are non-executive directors at ASMPT. COMPLIANCE RISKS MITIGATING MEASURES 24 Failure to adequately protect our intellectual property and/or Failure to adequately protect our intellectual property and/or leakage of our IP. leakage of our IP. We regularly monitor the market and take steps, when appropriate, to ensure compliance with our intellectual property rights which may We regularly monitor the market and take steps, when appropriate, to ensure compliance with our intellectual property rights which may include various intellectual property related audits. include various intellectual property related audits. In addition, control and governance frameworks are in place in our primary processes to establish, maintain and protect our intellectual In addition, control and governance frameworks are in place in our primary processes to establish, maintain and protect our intellectual property rights and minimize the risk of data leakage as far as possible. property rights and minimize the risk of data leakage as far as possible. 25 Non-adherence to laws and regulations resulting in reputation damage and/or financial loss. We prepare, roll out and make available relevant policies and procedures which are regularly reviewed and audited. Key controls are embedded in our primary processes. Management Board Management Board ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 99 Benjamin Loh Paul Verhagen MANAGEMENT BOARD The Management Board, supervised and advised by the Supervisory Board, manages ASMI’s strategic, commercial, financial, and organizational matters, and appoints senior managers. The Supervisory Board supervises and advises the Management Board in the execution of its tasks and responsibilities, and establishes members’ individual remuneration within the boundaries of the remuneration policies approved by the Annual General Meeting of Shareholders and the recommendations by the Nomination, Selection and Remuneration Committee. COMPOSITION OF THE MANAGEMENT BOARD BENJAMIN LOH - CEO Mr. Loh was appointed as Chairman of the Management Board and President and Chief Executive PAUL VERHAGEN - CFO Mr. Verhagen was appointed as member of the Management Board with effect from June 1, 2021 Officer on May 18, 2020, for a period of four years. by the Annual General Meeting of May 17, 2021. Following this appointment, he was appointed as CFO from June 1, 2021 by the Supervisory Board Mr. Loh worked for Oerlikon Corporation from the late 1990s until 2005. He became senior vice president in 2002 and was responsible for Asia until 2005. He then joined Veeco Instruments Inc., Mr. Verhagen has a proven track record and background in Dutch listed companies and the an American thin-film process semiconductor equipment manufacturer, as senior vice president electronics industry. He made a career within Royal Philips – starting in the early 90s and until 2013, and general manager for Asia, before becoming executive vice president responsible for global he fulfilled numerous executive positions in the Netherlands, the US, Hong Kong, and China. His field operations. In 2007, he moved to FEI company as senior executive, holding various positions last two assignments – from 2007 until 2013 – were as executive vice president and CFO of Philips responsible for sales and service, global business operations, and finally as chief operating officer. Consumer Lifestyle, and executive vice president and CFO of Philips Lighting. In 2014, he became In 2015, Mr. Loh joined VAT Vacuum Valves, based in Switzerland, as executive vice president and the CFO and member of the Management Board of the Dutch stock listed company Fugro N.V. member of the Group Management Board, where he was responsible for and led worldwide sales and marketing until late 2017. Mr. Loh is a non-executive director of ASM Pacific Technologies, Mr. Verhagen is a non-executive director of ASM Pacific Technologies. He is a Dutch national, and in the past also held positions as non-executive director in several companies (Schneeberger, holds a Master of Business Administration degree, and has a post-graduate degree as Chartered Schweiter Technologies AG, and Liteq BV). He also was an advisory board member of Semi China. Controller. Mr. Verhagen is based in Almere, the Netherlands. Mr. Loh has a wealth of experience working in the electronics and semiconductor industry and vast experience as a leader. Mr. Loh has a bachelor’s degree in electronic engineering from the Tohoku University in Japan. He is of Singaporean nationality, but has spent the last 30 years living mostly outside of Singapore – in Japan, Hong Kong, China, the UK and the US. Mr. Loh is now based in Almere, the Netherlands. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 100 RESPONSIBILITIES In addition to the duties of the Management Board stipulated by law and our Articles of Association, CONFLICTS OF INTEREST Each Management Board member shall immediately report any potential conflict of interest to the the Management Board has the following responsibilities: Chairman of the Supervisory Board and to the other Management Board members. In such cases, achieving the aims, strategy, policy, and results of the company; managing the risks associated with the activities of the company; ensuring proper financing of the company; establishing and maintaining disclosure controls and procedures that ensure that all major financial information is known to the Management Board in order to ensure that the external financial reporting is achieved in a timely, complete, and accurate manner; and a Management Board member shall provide the Chairman of the Supervisory Board and the other Management Board members with all information relevant to the conflict, and follow the procedures as set out in the Management Board rules. APPOINTMENT, SUSPENSION, AND DISMISSAL The AGM appoints a Management Board member based on a binding nomination drawn up by determining relevant aspects and achieving aims relating to ESG and sustainability. the Supervisory Board. The AGM may set aside a binding nomination by a resolution taken with an absolute majority of the votes cast, representing at least one third of the share capital. If such The Management Board is guided by the interests of the company, taking the interests of a binding nomination is set aside, a new binding nomination will be drawn up by the Supervisory all stakeholders into consideration. The members of the Management Board are collectively Board and submitted to a newly called General Meeting of Shareholders. If this binding nomination responsible for managing the company. They are collectively and individually accountable to is set aside, the General Meeting of Shareholders is free to appoint a Management Board member, the Supervisory Board and the Annual General Meeting of Shareholders (AGM) for executing but only with an absolute majority of the votes cast representing at least one third of our issued the Management Board’s responsibilities. The Management Board has the general authority to capital. A Management Board member may be suspended at any time by the Supervisory Board. enter into binding agreements with third parties. The Management Board held various meetings A Management Board member may, in accordance with a proposal by the Supervisory Board, be throughout 2021. At least once a month, the Management Board meets to discuss and review dismissed by the AGM through a majority vote. A resolution to suspend or to dismiss a member of the performance of the company. RISK MANAGEMENT AND CONTROL FRAMEWORK The Management Board ensures that the company has an adequately functioning internal risk the Management Board, other than in accordance with a proposal of the Supervisory Board, shall require the affirmative vote of a majority of the votes cast at a meeting. The affirmative votes must represent at least one third of the issued capital. management and control framework. A comprehensive risk management and control framework, based on the ‘three lines of defense model’, has been established. This allows the Audit Committee REMUNERATION For information regarding the remuneration of the Management Board, please see the remuneration and the Management Board a clear overview of the effectiveness of internal controls and risk policy posted on our website, the remuneration report, which is included in this report, and Note 25 management. This is explained in more detail in the ‘Risk management’ section. The Management to the consolidated financial statements. Board periodically discusses the internal risk management and control systems with the Supervisory Board and the Audit Committee. The Management Board provides the Supervisory Board with all information required for the fulfillment of their obligations and the exercise of their powers. The Management Board provides the Annual General Meeting of Shareholders with all information required for the fulfillment of its obligations and the exercise of its powers in a timely fashion. The Management Board is responsible for the quality and completeness of financial and other reports that are publicly disclosed by or on behalf of the company, including all reports and documents the company is required to file. Supervisory Board Supervisory Board ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 101 SUPERVISORY BOARD The Supervisory Board oversees strategic and commercial policymaking by the Management Board and the way in which it manages and directs ASMI’s operations and affiliated/associated companies. Members of the Supervisory Board are appointed by the Annual General Meeting of Shareholders upon binding nomination by the Supervisory Board. COMPOSITION Name POSITION Nationality Martin C.J. van Pernis Chairman Dutch Stefanie Kahle-Galonske Member German and Swiss Didier R. Lamouche Member French Marc J.C. de Jong Member Dutch Pauline F.M. van der Meer Mohr Member Dutch Adalio T. Sanchez Monica de Virgiliis Member United States Member Italian and French Year of birth Initial appointment Term expires 1945 1969 1959 1961 1960 1959 1967 2010 2017 2020 2018 2021 2021 2020 2022 2025 2024 2022 2025 2025 2024 MARTIN C.J. VAN PERNIS Chairman of the Supervisory Board Mr. van Pernis is currently Chairman of the Supervisory Boards of the Dutch listed companies Aalberts NV and CM.com. He is also a member of the Advisory Board of G4S Netherlands. Mr. Van Pernis was also Chairman of the Supervisory Board of Batenburg NV until May 2018. Mr. van Pernis studied electrical engineering at the Technical University Delft and Technical High School The Hague, the Netherlands, and law and economics at Erasmus University Rotterdam, the Netherlands. Mr. van Pernis is a Dutch national. STEFANIE KAHLE-GALONSKE Member of the Supervisory Board Mrs. Kahle-Galonske was elected as a member of the Supervisory Board in May 2017 and reappointed for a period of four years on May 17, 2021. Since April 2016, Mrs. Kahle-Galonske is Group CFO of Egon Zehnder International AG in Zurich, Switzerland. From March 2013 until March 2016, she was CFO of Markem-Imaje at Dover Corporation based in Geneva, Switzerland. Between January 2007 and February 2012, she held various senior executive positions at NXP Semiconductors in France and the Netherlands. In the past, Mrs. Kahle-Galonske served as non-executive board member of Micronas Mr. van Pernis was elected as a member of the Supervisory Board in May 2010, and most recently Semiconductors AG in Switzerland, and Nu-Tune Singapore. appointed on May 17, 2021 as Chairman of the Supervisory Board until the end of his term at the 2022 AGM. Mrs. Kahle-Galonske graduated in economics from the Ruhr-University of Bochum, Germany, and has been a Certified Public Accountant (CPA) since 2002. Mrs. Kahle-Galonske is a German and Mr. van Pernis made a career at Siemens, fulfilling several executive positions. He joined Siemens Swiss national. in 1971, and retired from the Siemens Group at the end of 2009 as Chairman of the Management Board of Siemens Nederland NV. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 102 DIDIER R. LAMOUCHE Member of the Supervisory Board Mr. de Jong is currently a member of the Supervisory Boards of Fugro N.V., a Dutch-listed company, Nissens A/S, based in Denmark, Fiberline Composites A/S, based in Denmark, Polytech A/S, based in Denmark, and Sioux B.V., based in the Netherlands, and Chairman of the Supervisory Board of BDR Thermea Group B.V. Mr. de Jong holds a master’s degree in physics and mathematics from the VU University of Mr. Lamouche was elected as a member of the Supervisory Board on May 18, 2020, for a period of Amsterdam, the Netherlands, and a Master of Business Administration (MBA, executive program) four years. from the Erasmus University Rotterdam, the Netherlands, and Rochester, in the United States. Mr. de Jong is a Dutch national. Until the end of 2018, Mr. Lamouche was the CEO of IDEMIA (formerly Oberthur Technologies), the world leader in security and identity solutions. Prior to that, he was CEO of the Euronext-listed Bull Group until 2010. Before that, Mr. Lamouche held several senior executive positions in the semiconductor industry, most recently as COO of ST Microelectronics, and CEO of ST-Ericsson until 2013. Mr. Lamouche has held non-executive positions on the public boards of Atari, Soitec and STMicroelectronics. He is currently non-executive Chairman of the Board at Quadient, a Euronext- PAULINE F.M. VAN DER MEER MOHR Member of the Supervisory Board listed company and leader in enterprise communication systems. He is furthermore a member of Mrs. van der Meer Mohr was elected as a member to the Supervisory Board on September 29, 2021, the Supervisory Board of Adecco since 2011 (listed on the SIX in Zurich), and of ACI Worldwide, for a period of four years. a leading, Nasdaq-listed software company serving the fintech industry. Mr. Lamouche graduated in 1981 from the Ecole Centrale de Lyon as an engineer, and has a PhD in in leadership positions in multinational businesses and academia. She started her career as a lawyer in semiconductor technology. Mr. Lamouche is a French national, and Chevalier of Legion of Honor. private practice, prior to joining the Royal Shell group in 1989. In 2004, she joined TNT NV as group HR Mrs. Van der Meer Mohr is a seasoned non-executive director, and brings more than 35 years experience MARC J.C. DE JONG Member of the Supervisory Board director. From 2006, she served as senior executive vice president and head of group HR for ABN AMRO Bank N.V. Mrs van der Meer Mohr was appointed president of the executive board of Erasmus University Rotterdam in 2010. Until her retirement from her executive career in 2016, she was also a member of the Banking Code Monitoring Commission, and has served on several advisory and supervisory boards. Mrs. Van der Meer Mohr currently serves as non-executive director of London listed HSBC Holdings Plc and Nasdaq-listed Viatris Inc., and she chairs the Supervisory Board of EY Netherlands LLP. Mr. de Jong was elected as a member of the Supervisory Board on May 28, 2018, for a period of Since 2019, she has served as chair of the Dutch Monitoring Committee Corporate Governance. Most four years. recently, she was a member of the Supervisory Boards of Dutch-based ASML Holding N.V. Mr. de Jong was CEO of LM Wind Power A/S until April 2018. Prior to that, until 2009, he was and DSM N.V. a member of the executive management team of NXP Semiconductors. After that, until 2013, Mrs. Van der Meer Mohr holds a master’s degree in law from Erasmus University Rotterdam, as he was responsible for professional lighting solutions at Philips Lighting. At the same time, he was well as a master’s degree in advanced dispute resolution from the University of Amsterdam. She is a member of the group management committee of Philips. a Dutch national. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 103 ADALIO T. SANCHEZ Member of the Supervisory Board MONICA DE VIRGILIIS Member of the Supervisory Board Mr. Sanchez was elected as a member of the Supervisory Board on September 29, 2021, for a Mrs. de Virgiliis was elected as a member of the Supervisory Board on May 18, 2020, for a period of period of four years. four years. Mr. Sanchez has more than 35 years experience in the tech industry. He is a successful senior Mrs de Virgiliis has more than 25 years experience in the tech industry. She is a successful senior executive with strong operational acumen and track record in growing complex global businesses. executive with proven transformation and growth track records. She was with STMicroelectronics He was with the IBM Corporation from 1982 to 2014, where he held various senior executive officer from 2001 to 2015, and then with Infineon Technologies from 2015 to 2017 where she held various and global general management roles. Most recently, he led two IBM divisions – the x86 systems senior executive officer and global general management roles. From 2017 to 2019, Mrs. de Virgiliis unit and retail store solutions point-of-sale systems unit. Previous roles include vice president of fulfilled the role of chief strategy officer at CEA, the French Atomic & Alternative Energy Commission. corporate strategy, and before that he ran IBM’s microelectronics division. He was responsible for semiconductor process technology development, manufacturing, engineering, and the intellectual She is an experienced Non-Executive Director in the energy and technology spaces. Deeply property portfolio. He also led IBM’s UNIX systems division. passionate about energy transition and industry transformation in alignment with the Paris agreement, she has recently founded Chapter Zero France, under the auspices of the World Following the divestment of the IBM x86 division to Lenovo Group Limited, Mr. Sanchez moved to Economic Forum as a part of the global Climate Governance Initiative. Lenovo and, from 2014 to 2015, served as senior vice president of Lenovo’s Enterprise Systems Group. Mrs. de Virgiliis currently serves as a non-executive member of the Board of Directors of the Italian energy company Saras, listed at the Milan Stock Exchange. Mr. Sanchez currently serves as a non-executive member of the Board of Directors of the following Nasdaq-listed US-based companies: Avnet, Inc. a global semiconductor sales and distribution Mrs. de Virgiliis has a master’s degree in electronic engineering summa cum laude from the company; ACI Worldwide, Inc. an electronic payments software company, and Snap One Holdings University of Turin (Politecnico di Torino). Mrs. de Virgiliis is an Italian and French national. Corp., a smart home technology solutions and distribution company. He is also a member of the Board of Trustees of US-based MITRE Corporation, a non-profit organization for public good, and a member of the Board of Directors of Florida International University Foundation. THE IMPORTANCE OF DIVERSITY The Supervisory Board recognizes the value of diversity among the members of the Supervisory Mr. Sanchez has a bachelor’s degree in electrical engineering from the University of Miami, and Board and the members of the Management Board. Diversity is considered in any event to consist a Master of Business Administration degree from the Florida International University. He is a US of gender, specific knowledge, work background, nationality, age and ethnic diversity, (technical) national. experience, and skills. With respect to gender, we will have a composition of the Supervisory Board, representing at least one third of the seats held by either gender at the same time. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 104 RESPONSIBILITIES The supervision over the policies of our Management Board and the general course of our business, in which financial and legal aspects as well as financial reporting and specific features of ASMI are discussed. Every year the training requirements are reviewed and discussed. Subsequently the and the related management actions, is entrusted to the Supervisory Board. In our two-tier structure training is organized. The Supervisory Board shall consist of at least three members. The members under applicable Dutch law, the Supervisory Board is a separate body independent from the should operate independently of each other and within a good relationship of mutual trust. Management Board. They should be experienced in the management of an international, publicly listed company, and have sufficient time available to fulfill the function of a Supervisory Board member. The Supervisory The Supervisory Board supervises and advises the Management Board in executing its Board members appoint a Chairman from among themselves. The Supervisory Board is composed responsibilities, particularly regarding: of seven members. achievement of the company’s objectives; corporate strategy and the risks inherent in the business activities; structure and operation of the internal risk management and control systems; financial reporting process; compliance with legislation and regulations; relation of the company to its shareholders; and relevant aspects of ESG and sustainability-related change. All members of the Supervisory Board meet the required profile. Supervisory Board members serve in principle a four-year term and may be re-elected in line with article 2.2 of the Corporate Governance Code. REMUNERATION For information regarding the remuneration of the Supervisory Board, please see the remuneration report, which is included in our Annual Report 2021, and Note 25 to the consolidated financial The Supervisory Board is responsible for monitoring and assessing its own performance. statements. CONFLICTS OF INTEREST A Supervisory Board member facing a conflict of interest shall, in accordance with Article 13 of our COMMITTEES To more efficiently fulfill its role and in compliance with the Corporate Governance Code, Supervisory Board rules, inform the Chairman of the Supervisory Board immediately. The Chairman the Supervisory Board has created two committees: the Audit Committee and the Nomination, shall, if possible in consultation with the other members of the Supervisory Board, determine the Selection and Remuneration Committee (NSR). course of action to be taken. APPOINTMENT In accordance with Dutch law and the Corporate Governance Code, the Supervisory Board AUDIT COMMITTEE The Audit Committee assists the Supervisory Board in its responsibility to oversee ASMI’s financing, financial statements, financial reporting process, and system of internal business controls and has drawn up a profile for its own composition. This Supervisory Board Profile is available on risk management. The Audit Committee advises the Supervisory Board for the nomination of the our website. For the selection of future members of the Supervisory Board, we will actively seek external auditor of the company. candidates that support the realization of diversity on the earlier mentioned criteria. Any appointment or reappointment to the Supervisory Board shall be based on the candidate’s match with the The Audit Committee consists of: Supervisory Board Profile. For reappointment, the candidate’s performance during the previous period shall be taken into account. A Supervisory Board member who is available for reappointment must be interviewed by the Chairman of the Supervisory Board and the Chairman of the Nomination, Selection and Remuneration Committee. The Chairman of the Nomination, Selection and Remuneration Committee must be interviewed by the Chairman of the Supervisory Board. All members of the Supervisory Board follow an introduction program after their first appointment, Stefanie Kahle-Galonske (Chairwoman); Marc de Jong; Adalio Sanchez; and Monica de Virgiliis. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 105 The Audit Committee supervises the activities of the Management Board with respect to: the structure and operation of the internal risk management and control systems, including supervision of the enforcement of the relevant legislation and regulations; the role and functioning of internal audit; policy on tax structure; the applications of information and communication technology; financing of the company; compliance with recommendations and observations of internal and external auditors; release of financial information; and relations with the external auditor, including, in particular, its independence, remuneration, and review the scope and results of internal audits with internal audit; review performance evaluations relating to the auditor’s independence; review performance and services of the external auditor; and review adequateness of the financing structure and tax structure of the company. The Chief Executive Officer, Chief Financial Officer, Director Internal Audit, Corporate Director Group Control, and representatives of the external auditor are invited to, and also attend, the Audit Committee meetings. Mrs. Kahle-Galonske, chairwoman of the Audit Committee and member of the Supervisory Board, is any non-audit services performed for the company. the financial expert taking into consideration her extensive financial background and experience. The Audit Committee meets periodically to: consider the adequacy of the internal control procedures; review the operating results with management and the independent auditors; review the scope and results of the audit with the independent auditors; NOMINATION, SELECTION AND REMUNERATION COMMITTEE The Nomination, Selection and Remuneration Committee (NSR) advises the Supervisory Board on matters relating to the selection and nomination of the members of the Management Board and Supervisory Board. The NSR Committee further monitors and evaluates the remuneration policy for COMMITTEES STRUCTURE AND MEMBER INFORMATION Audit Committee Nomination, Selection and Remuneration Committee Supervisory Board the Management Board. The NSR Committee consists of: Didier Lamouche (Chairman); Pauline van der Meer Mohr; Martin van Pernis; and Adalio Sanchez. Martin C.J. van Pernis Stefanie Kahle-Galonske Didier R. Lamouche Marc J.C. de Jong Pauline F.M. van der Meer Mohr Adalio T. Sanchez Monica de Virgiliis The NSR Committee ensures that a competitive remuneration structure is provided by benchmarking with other multinational companies of comparable size and complexity operating in comparable geographical and industrial markets. The NSR Committee evaluates the achievement of performance criteria specified per Management Board member. After the evaluation, it recommends the level of remuneration to the Supervisory Board. On an annual basis, the NSR Committee reports to the Supervisory Board on the application of the remuneration policy in the previous year and recommends the remuneration policy and remuneration report for the following years. Chairperson Member Financial expert The Chief Executive Officer and the Corporate Vice President Global Human Resources are invited to, and also attend, the NSR Committee meetings. Supervisory Board report Supervisory Board report ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 106 SUPERVISORY BOARD REPORT objectives and the mid-term targets 2020-2025 outlining continued double-digit growth with strong profitability in the mid term. Another highlight was the increased focus and acceleration of sustainability objectives. The company announced during the Investor Day the target to achieve Net Zero by 2035 for all scopes. This includes the target to source its electricity needs as per 2024 from renewable sources leading to an estimated reduction of 90% of scope 1 and 2 GHG emissions compared to 2020. Following the AGM on May 17, 2021, Jan Lobbezoo retired as Chairman of the Supervisory Board after three four-year terms. During these years it was a real pleasure working with Jan and I would like to thank him for all his contributions over the years. Since his retirement I have taken over as MESSAGE OF THE CHAIRMAN Chairman of the Supervisory Board. It has been a pleasure to chair the Supervisory Board of ASMI in 2021, a year of great progress for We also expanded the Supervisory Board with two new members, Pauline van der Meer Mohr ASMI. Although COVID-19 continued to impact the company, the Management Board and all the and Adalio Sanchez. Pauline brings a wealth of board experience as well as functional expertise employees demonstrated relentless commitment to deliver another strong year. in corporate governance and human resources, and Adalio brings substantial experience in the The end markets continued to develop very positively driven by a world that increasingly gets more digital and more connected each and every year, creating tremendous opportunities for companies The Supervisory Board wants to thank the Management Board and all the worldwide ASMI technology and semiconductor markets. like ASMI. employees for their enormous commitment and relentless efforts to deliver another very strong year despite all the difficulties imposed by the pandemic. I also want to thank my colleagues on The company managed to deliver strong growth with record orders intake, revenue and profits in the Supervisory Board for all their constructive conversations and contributions. 2021, driven in particular by ALD and Epi. An important milestone was the presentation of the Growth through Innovation strategy at the Martin van Pernis Investor Day on September 28, 2021. The company presented its strategy, its six strategic Chairman of the Supervisory Board ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 107 During the year under review, the Supervisory Board performed its duties in accordance with applicable legislation and the Articles of Association of ASM International N.V., and supervised and MEETINGS OF THE SUPERVISORY BOARD During 2021, the Supervisory Board met on eight occasions. The attendance of the individual advised the Management Board on an ongoing basis. Supervisory Board members is outlined in the overview below. All Supervisory Board members FINANCIAL STATEMENTS We present the ASMI 2021 Annual Report in accordance with IFRS, as prepared by the attended all Supervisory Board meetings with the Management Board during their mandate. Mr. Jan Lobbezoo did not attend two meetings of the Supervisory Board, which were related to the succession of the chairperson position. Due to the COVID-19 pandemic, participation was Management Board and reviewed by the Supervisory Board. Our independent auditors, KPMG partly virtual. Accountants N.V., have audited these financial statements and issued an unqualified opinion. Their report appears on pages 173 to 179. All of the members of the Supervisory Board have Attendance is defined as the number of meetings attended out of the number of meetings eligible to signed the financial statements in respect of the financial year 2021. be attended. SUPERVISION Supervision of the Management Board, its policy decisions and actions are entrusted to the Supervisory Board. In accordance with Dutch law, the Supervisory Board is a separate body, independent of the Management Board. The Supervisory Board supervises and advises the Management Board in executing its responsibilities. The profile of the Supervisory Board describes the range of expertise that should be represented within the Board. The procedures of the Supervisory Board and the division of its duties are laid down in the Supervisory Board rules. Both documents are available on our website. Attendance to meetings in 2021 Committee Jan C. Lobbezoo Martin C.J. van Pernis Stefanie Kahle-Galonske Didier R. Lamouche Marc J.C. de Jong In 2021, following the Annual General Meeting (AGM) of shareholders on May 17, Mr. Jan Lobbezoo Pauline F.M. van der Meer Mohr* retired as chairman of the Supervisory Board after being a member of the Supervisory Board for 12 years. Mr. Martin van Pernis succeeded him as chairman of the Supervisory Board. Adalio T. Sanchez* Monica de Virgiliis During the Extraordinary General Meeting (EGM), which was held on September 29, 2021, * Appointed during the EGM on September 29, 2021. Supervisory Board Audit Committee Nomination, Selection and Remuneration Committee (NSR) 3/5 8/8 8/8 8/8 8/8 2/2 2/2 8/8 2/2 n.a. 4/4 n.a. 4/4 1/1 (visiting) 1/1 3/4 2/2 4/4 n.a. 4/4 2/2 1/1 1/1 n.a. two new Supervisory Board members were appointed: Mrs. Pauline van der Meer Mohr and In these meetings, the Boards discussed the strategy and the progress of implementation thereof, the Mr. Adalio Sanchez. long-term value creation, operations, business risks, product and market developments, the company’s organization, management and financial structure, and performance, including further profitability improvements. Geopolitical developments, sustainability, IT security, and succession planning of the Supervisory Board and senior management team were also discussed in depth. A recurring item at each of the Supervisory Board meetings in 2021 was the impact of the COVID-19 pandemic, with respect to the health and safety of ASMI employees, supply chain, and other impacts on the business. Other topics addressed by the Supervisory Board were the annual budget, the quarterly financial results review, the preparation of the quarterly earnings press releases, and ASMI’s first-ever Investor Day. The Supervisory Board also approved the dividend proposal as prepared by the Management Board, and proposed (and approved) at the AGM in 2021. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 108 As it happens every year, one of the meetings was earmarked to discuss with the Management Board the company’s long-term strategy, its planned implementation, and the risks attached SHAREHOLDERS In 2021, there were two general meetings: the AGM held on May 17, 2021 and the EGM held on to realizing it. In the long-term strategy meeting, the Board discussed the semiconductor and September 29, 2021. In view of the restrictions caused by the COVID-19 pandemic, these were semiconductor equipment market and outlook, the development of ASMI’s market share in the held virtually, with shareholders participating via a webcast. For the AGM, voting was possible by different segments it serves, the development of the competitive environment, technology and proxy before the meeting, as well as during the meeting via the virtual voting application platform. market trends, including the development of the ALD and Epi markets for the coming years, the Shareholders were also able to pose questions prior to and during the AGM. For the EGM, voting progress with ASMI’s strategic priorities, and ASMI’s long-term revenue and profit & loss forecasts. was possible prior to the general meeting, and the same was applicable for questions. Questions Also discussed were the strategic initiatives to be considered to improve the company’s long-term and answers were posted on the website. value-creation strategy. This included discussion of ASMI’s sustainability strategy and focus areas. Our new Sustainability priorities for 2021 to 2025 were reviewed and approved. In subsequent During the AGM, Mr. Paul Verhagen was appointed as a new member of the Management Board, meetings in 2022, the Board will follow up on the discussions of strategic topics raised in the long- and Mrs. Stefanie Kahle-Galonske was reappointed as Supervisory Board member for a period of term strategy discussion. four years. A regular dividend of € 2.00 per share was proposed and approved. To optimize the capital structure, it was furthermore proposed and agreed to decrease the issued share capital by Due to the pandemic, planned meetings at locations outside the Netherlands, also with the aim to withdrawing 500,000 shares, which the company held in its own capital, by way of cancellation of meet local management, had to be postponed. The Supervisory Board also reviewed and discussed treasury shares. the functioning of the Supervisory Board, its committees, and its individual members through an internal assessment as conducted by the members of the Supervisory Board. The composition, On April 20, 2021, ASMI announced the authorization of a new share buyback program of up to competencies and functioning of the Supervisory Board, as also described in the Supervisory €100 million. The program started on July 28, 2021, and was completed on December 17, 2021. Board profile, and its committees were part of the assessment, as well as the composition of the Management Board, their performance, and the performance of its individual members, and the On September 29, 2021, the EGM was held. During this meeting, the shareholders appointed relationship between the Supervisory Board and the Management Board. The conclusion of the Mrs. Pauline van der Meer Mohr and Mr. Adalio Sanchez as Supervisory Board members for assessment was that both the Supervisory Board and the Management Board function properly a period of four years expiring at the AGM of 2025. and effectively. CORPORATE GOVERNANCE The Supervisory Board is responsible for overseeing the company’s compliance with corporate SUPERVISORY BOARD COMPOSITION Following the EGM, the Supervisory Board is composed of seven members. All members are independent, in line with the Dutch Corporate Governance Code. Mr. Lobbezoo, after having governance standards and best practices. The Supervisory Board is of the opinion that the served three four-year terms at the ASMI Board, retired as of the AGM held on May 17, 2021. company complies with the Dutch Corporate Governance Code. Mr. van Pernis succeeded him as chairman. During the EGM held on September 29, 2021, Mrs. Pauline van der Meer Mohr and Mr. Adalio Sanchez were appointed as Supervisory Board members. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 109 MANAGEMENT BOARD COMPOSITION The Management Board is composed of two members. During the AGM on May 17, 2021, Mr. Peter van Bommel, Chief Financial Officer and member of the Management Board, retired SUPERVISORY BOARD COMMITTEES AUDIT COMMITTEE The role of the Audit Committee is described in its charter, which is available on the company’s from ASMI. On the same day, the AGM approved the nomination of Mr. Paul Verhagen as Chief website. At the end of 2021, the number of members of the Audit Committee remained at four. Financial Officer and member of the Management Board of ASMI, for a four-year term, to succeed In 2021, Mr. Jan Lobbezoo retired as chairman of the Supervisory Board and member of the Mr. van Bommel. Audit Committee on May 17, 2021. Mr Adalio Sanchez was appointed as member of the Audit Committee after his appointment to the Supervisory Board on September 29, 2021. During the year, DIVERSITY The Supervisory Board recognizes the value of diversity amongst the members of the Supervisory the Audit Committee met with the Management Board and KPMG Accountants, the company’s independent auditors, on four occasions. Audit Committee discussions included: the company’s Board and the members of the Management Board, as stated in the ASMI diversity policy. Diversity financial reporting, including the application of accounting principles; the company’s financial is considered to consist of gender, specific knowledge, work background, nationality, age, ethnic position and financing programs, and tax structure; the company’s internal risk management diversity, (technical) experience, and skills. systems; the effectiveness of internal controls; the internal audits performed and its findings; the Annual Report and financial statements, and the budget and quarterly progress reports prepared We will have a composition with at least one third of the seats on the Supervisory Board held by by the Management Board. The internal auditor participated in all four Audit Committee meetings, either gender. At the same time, we aim for the best candidate, taking into account the realization presenting their own actions and findings. On several occasions, the Audit Committee met with on the diversity criteria and match with the Supervisory Board profile. With the appointment of Mrs. KPMG Accountants, without the members of the Management Board present, to discuss audit- Pauline van der Meer Mohr and Mr. Adalio Sanchez, during the EGM, and the retirement of Mr. related topics. Furthermore, the Audit Committee discussed the auditor’s performance with the Jan Lobbezoo, the composition of the Supervisory Board is currently such that both genders are Management Board without KPMG Accountants present. represented for more than 40%. In case of open positions on the Supervisory Board or Management Board, the Supervisory NOMINATION, SELECTION AND REMUNERATION COMMITTEE The role of the Nomination, Selection and Remuneration Committee (NSR) is described in its Board prepares a profile based on the required educational and professional background. In the charter, which is available on the company’s website. In general, the NSR Committee advises the search, it will actively seek candidates that support the realization of diversity on the previously Supervisory Board on matters relating to the selection and nomination of new Management Board mentioned criteria. members, as well as the remuneration of the members of the Management Board. This Committee consisted at the start of 2021 of Messrs. van Pernis (Chairman), Lobbezoo and Lamouche. EDUCATION AND TRAINING In 2021, as is the case every year, the Management Board and Supervisory Board discussed their In April 2021, Mr. Lamouche was appointed as Chairman of the NSR. At the same time Mr. De Jong education and training needs. Both boards – in addition to their regular meetings – committed to was appointed as temporary member of the NSR by the Supervisory Board given the retirement a total of one day of training. The focus in 2021 was on the latest developments in ESG, the Dutch of Mr. Lobbezoo. In addition, Mrs. van der Meer Moor and Mr. Sanchez have been appointed as Corporate Governance Code, diversity, and insider trading. This training was given by a legal expert. members of the NSR Committee on December 20, 2021. In the Supervisory Board meeting of INDEPENDENCE The Supervisory Board has determined that its current members are all independent, as defined by the Dutch Corporate Governance Code. Neither the chairman nor any other member of the Supervisory Board is a former member of ASMI’s Management Board, or has another relationship with ASMI which can be judged ‘not independent’ of ASMI. December 20, 2021, it was decided that Mr. de Jong would continue with being a member of the Audit Committee and stop his temporary appointment as member of the NSR Committee. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 110 In 2021, the NSR Committee held four meetings and multiple conference calls. Topics discussed included the nomination and appointment of the new Chief Financial Officer and member of the Management Board, Mr. Verhagen, the succession and talent-review process outcomes for executives, the search for two open Supervisory Board positions, a proposed transition in the LTI remuneration program, the 2021 training program for the Supervisory Board, a benchmark on the Supervisory Board remuneration package, and a study on ASMI’s governance structure. Topics which were also discussed included the remuneration of the individual members of the Management Board. The remuneration of the members of the Management Board is disclosed in Note 25 to the consolidated financial statements of the Annual Report. The remuneration of the members of the Management Board during 2021 is fully in accordance with the remuneration policy. SUPERVISORY BOARD Martin C.J. van Pernis, Chairman Stefanie Kahle-Galonske Didier R. Lamouche Marc J.C. de Jong Pauline F.M. van der Meer Mohr Adalio T. Sanchez Monica de Virgiliis Almere, the Netherlands March 3, 2022 Remuneration report Remuneration report ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 111 REMUNERATION REPORT This report is based on the remuneration policy of ASM International N.V. (ASMI), as presented to and adopted by the 2020 Annual General Meeting of Shareholders (AGM). INTRODUCTION The remuneration report complies with the best practice provisions of the Dutch Corporate The Supervisory Board will determine the number of performance shares granted for on-target performance. When doing so, the board will consider two predetermined financial indicators Governance Code. It is aligned with the new Dutch legal requirements following the implementation (each with respectively 50% weight): revenue growth compared to market and average of the EU Shareholders’ Right Directive II. ASMI’s remuneration policy 2020-2023 was adopted by EBIT percentage measured over a three-year performance period. ASMI applies a face-value the AGM on May 18, 2020. It was consistently implemented in 2020 with regard to all remuneration approach to define the number of shares to be granted, which is calculated as follows: target elements and applied throughout 2021. level (calculated based on annual base salary) divided by the average share price of ASMI on the Euronext Amsterdam on the award date and the following four consecutive days. The award date The 2021 remuneration report refers to ASMI’s remuneration policy, which can be found here. is immediately following the date of the announcement of the first quarter financial results in April SHORT-TERM INCENTIVES (CASH BONUS) Each year, a short-term incentive can be earned based on achieving specific challenging targets. The target level of the long-term incentive is set at 165% of the annual base salary for the CEO These targets are based for 75% on company financial targets and 25% on non-financial targets and 125% for the CFO. The maximum number of shares granted in case of out-performance (of which half related to ESG in 2021). The on-target bonus percentage for the CEO is 100% of the of the predetermined performance indicators is 150% of the number at on-target performance. annual base salary, with a maximum payout of 150% of the annual base salary. The on-target bonus The number of shares granted will be zero if none of the targets are met. for the year the award takes place. percentage for the CFO is 75% of the annual base salary, with a maximum payout of 125% of the annual base salary. To show a longer-term commitment to ASMI and align with shareholder interests, the CEO and CFO are required to hold the vested performance shares for two years (‘holding period’) after the LONG-TERM INCENTIVES (PERFORMANCE SHARES) Members of the Management Board are eligible to receive performance shares under the ASMI N.V. vesting date. 2014 long-term incentive plan for members of the Management Board and ASMI’s remuneration For 2021, the Supervisory Board awarded the following amounts: policy to focus on the long-term interest of the company. Performance shares vest after three years, The previous CFO, Mr. van Bommel, decided to step down as of May 17, 2021, and therefore subject to meeting predetermined financial indicators and continued services. The members of no value was awarded in 2021; and the Management Board are required to hold the vested performance shares for an additional two The Supervisory Board decided to award the following on-target value to Mr. Loh, years. However, they are allowed to sell a part of the unconditional shares after three years for tax CEO: €1,070,685 (4,184 shares), and Mr. Verhagen, the newly appointed CFO: €650,000 purposes. Performance shares will next be granted in April 2022. (2,159 shares), based on the 2020 remuneration policy. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 112 Outstanding performance shares The following table shows the outstanding performance shares granted to members of the Management Board up till and including 2021 and held by members of the Management Board as at December 31, 2021: Grant date Status Number of shares at grant date Performance adjustment Vested in 2021 Outstanding December 31, 2021 Fair value at grant date Vesting date End of holding period G.L. Loh 1) G.L. Loh 1) P.A.H. Verhagen 2) July 29, 2020 April 21, 2021 July 28, 2021 Conditional Conditional Conditional P.A.M. van Bommel 3) April 20, 2018 Unconditional P.A.M. van Bommel 3) April 25, 2019 Unconditional P.A.M. van Bommel 3) April 22, 2020 Unconditional 8,087 4,184 2,159 9,008 7,343 5,559 – – – – – – 4,504 (13,512) – – (7,343) (5,559) 8,087 4,184 2,159 – – – €123.31 July 29, 2023 July 29, 2025 €245.40 April 21, 2024 April 21, 2026 €291.97 July 28, 2024 July 28, 2026 €45.71 April 20, 2021 May 17, 2021 €57.84 April 25, 2022 May 17, 2021 €100.09 April 22, 2023 May 17, 2021 Total 36,340 4,504 (26,414) 14,430 1  New CEO since May 18, 2020. 2  New CFO since June 1, 2021. 3  Former CFO till May 17, 2021. Holding obligation lapsed as of retirement. In 2021, all outstanding conditional shares that were granted to the previous CFO in 2019, respectively 2020, vested at grant level on his retirement date (7,343 and respectively 5,559 shares). PENSION ARRANGEMENT The members of the Management Board are given the opportunity to participate in a defined The shares will become unconditional after three years, depending on whether predetermined Management Board are compensated with an amount equal to the employer pension contribution. targets are achieved or not. The financial targets to be achieved are measured over a three-year The members of the Management Board have the option to participate in a net pension plan offered performance period and relate to revenue growth compared to the market and an average by the company or to have the compensation paid out in cash. contribution plan for their salary up to €112,189. For salary above €112,189, the members of the EBIT percentage performance measure. The members of the Management Board will hold the unconditional shares for at least two years. However, they are allowed to sell a part of the unconditional shares at the vesting date for tax purposes. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 113 TOTAL REMUNERATION OF MANAGEMENT BOARD The following table provides an overview of the 2021 remuneration elements in € thousands for both the CEO and CFO, as recognized by the company. A new CFO was announced and appointment approved by the AGM on May 17, 2021. 1 2 3 4 5 6 Fixed remuneration (K€) Variable remuneration (K€) Base salary Fringe benefits Short-term cash incentive (STI) Share-based payment expenses 4) Other 5) (K€) Pension expense (K€) Total remuneration (K€) Proportion of fixed and variable remuneration NAME OF DIRECTOR, POSITION G.L. Loh P.A.H. Verhagen 1) C.D. del Prado 2) P.A.M. van Bommel 3) 2020 2021 2020 2021 2020 2020 393 – 267 454 2021 649 303 – 171 36 – 28 39 58 25 – 16 99 2020 448 – 293 452 2021 898 594 – 142 2020 141 – 1,158 505 2021 570 165 – 656 – – 2,400 – 2021 109 41 – 40 69 – 52 95 2020 1,087 – 4,198 1,545 6,830 2021 2,284 1,128 – 1,025 4,437 2020 85% –% 24% 61% 2021 56% 49% –% 28% – – – – – Total 1,114 1,123 103 1,193 1,634 1,804 1,391 2,400 216 190 1  New CFO since June 1, 2021. 2   Former CEO till May 18, 2020. 3   Former CFO till May 17, 2021. 4  These amounts represent the vesting expenses related to the financial year. 5   Represents an additional payroll tax payable by the company due to vesting of granted shares in previous years related to the retirement of a member of the Management Board subject to article 32bb of the Dutch Wage Tax Act. 1. Fixed remuneration For 2021, both the CEO and CFO realized overall an over-achievement on STI (mix of above Base salary. This is the fixed annual gross base salary. A salary increase of 3% has been target/stretch realization on company financial targets and above target realization on implemented as of January 1, 2021, in line with the market movement in the Netherlands. non-financial targets). Fringe benefits. This represents the value of benefits and perquisites awarded, such as a company Share-based payment or long-term incentives. This is a multi-year variable payment of car, a representation and expense allowance, the premium for health and disability insurance, and which the value is the value of a performance share award that has become unconditional after social security contributions. 2. Variable remuneration a performance period of three years. The unconditional award is the result of targets on revenue growth compared to market and average EBIT. Short-term incentive (STI). Each year, a short-term incentive can be earned based on achieving 3. Other items specific challenging targets. The short-term incentive recognizes three levels: threshold, on-target, Non-recurring items, which in 2020 represented an additional payroll tax to the company due to and stretch. Threshold levels for both the CEO and CFO are set at 70% of the on-target level, while the vesting of shares granted in previous years, related to the retirement of a former member of stretch targets are set at 140% of the on-target level. If the actual realization is between threshold the Management Board subject to article 32bb of the Dutch Wage Tax Act. and on-target or between on-target and stretch, the payout will be based on the relative deviation against these levels. The targets are 75% based on company financial targets (equally divided between revenue, EBIT, and free cash flow) and 25% based on non-financial targets (of which half related to ESG in 2021). ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 114 4. Pension As of 2015, members of the Management Board no longer participate in the industry-wide pension CLAW BACK AND ULTIMUM REMEDIUM In exceptional circumstances, the Supervisory Board will have the discretionary authority to recover fund. They have opted to participate in a defined contribution plan for their salary up to €112,189. any paid bonus and awarded shares if evidence shows payments and awards have been awarded ASMI reimburses an amount equal to the employer pension contribution for their salary above based on incorrect financial or other data (claw back). €112,189. The CEO and CFO can opt either to participate in a net pension plan offered by the company or to have the cost for participating paid out directly. The pension contributions vary from If a variable component conditionally awarded in a previous financial year would, in the opinion 7.2% to 28.4% of the pensionable salary, depending on age. The members of the Management of the Supervisory Board, produce an unfair result due to extraordinary circumstances during Board contribute 4.6% of their pensionable salary, and ASMI pays the remaining part. There are the period in which the predetermined indicators have been or should have been achieved, the no arrangements regarding early retirement. Supervisory Board has the authority to adjust the value of bonus and shares downwards or 5. Total remuneration upwards (ultimum remedium). Value equals sum of 1, 2, 3, and 4 as described above. The NSR Committee concluded for 2021 that no circumstances have been identified that result in 6. Proportion of fixed and variable remuneration The relative proportion of fixed remuneration: By dividing the sum of fixed components: column 1 and the fixed part of pension expense presented in column 4 by the amount of total remuneration (column 5), multiplied by 100%. any adjustments or claw back of variable remuneration. COMPLIANCE TO REMUNERATION POLICY AND LONG-TERM PERFORMANCE The Supervisory Board reviewed the remuneration policy in 2020. This reviewed policy was presented to and approved by the AGM on May 18, 2020, and became applicable in 2020. Relative proportion of variable remuneration: By dividing the sum of the variable components The Supervisory Board review included an analysis of different scenarios. (columns 2, 3 and the variable part of the pension expense in column 4, if any) by the amount of total remuneration (column 5), multiplied by 100%. The purpose of the remuneration policy for the members of the Management Board of ASMI is to provide compensation that: MANAGEMENT SERVICE AGREEMENTS The CEO and CFO have a management service agreement with ASMI or one of its related Motivates and rewards executives in both the Management Board and Supervisory Board with a balanced and competitive remuneration, in line with their role and responsibilities; subsidiaries, in accordance with Dutch law, for four years: Allows ASMI to attract, reward, and retain highly qualified executives with the required Mr. Loh started on May 18, 2020, and was appointed for a four-year term based on background, skills, and experience to implement ASMI’s strategy in a highly competitive global a management service agreement; and industry; Mr. Verhagen started on June 1, 2021, and was appointed for a four-year term based on Ensures that short-term operational results and long-term sustainable value creation are a management service agreement. balanced; and For future new appointments to the Management Board, the term of the appointment will also be stakeholders in the medium- and long-term to deliver sustainable performance in line with set at four years. ASMI’s strategy, purpose, and values. Is transparent, fair and reasonable, and aligns with the interests of ASMI, shareholders, and other As mentioned in the management service agreements of the members of the Management Board, in the case of termination of the contract on behalf of the company, the members of the Management Board are eligible for a severance payment of a maximum one-year annual gross base salary. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 115 COMPARATIVE INFORMATION ON THE CHANGE OF REMUNERATION AND COMPANY PERFORMANCE The figures presented are indexed compared to the previous financial year. Annual change 2017/2016 2018/2017 2019/2018 2020/2019 2021/2020 Information regarding 2021 Management Board remuneration G.L. Loh, CEO (as of May 18, 2020) P.A.H. Verhagen, CFO (as of June 1, 2021) P.A.M. van Bommel, CFO (until May 17, 2021) C.D. del Prado, CEO (until May 18, 2020) Company performance Revenue EBIT Free cash flow* Qualitative/non-financial strategic objectives/targets Average remuneration of employees (K€) Average remuneration of employees CEO pay ratio –% –% 107% 112% 123% 133% 125% 113% –% –% 101% 105% 111% 119% 80% 103% –% –% 123% 124% 157% 171% 418% 128% –% –% 101% 64% 103% 142% 48% 88% 210% –% 66% –% 130% 150% 222% 98% 2017 2018 2019 2020 2021 78 25 75 27 85 31 88 27 87 29 * Comparative information is calculated based on the revised free cash flow definition as applied in the 2021 Annual Report. Former CFO retired May 17, 2021 Former CEO retired May 18, 2020 The ratio of the CEO’s remuneration and the average remuneration of all other employees The 2021 ASMI remuneration report considers the draft guidelines to specify the standardized (the pay ratio) is calculated by dividing the CEO’s remuneration by the average remuneration of presentation of the remuneration report as stated in Directive 2007/36EC of the European all employees. The CEO’s remuneration is the total annualized base salary and bonus of the CEO as Parliament, and amended by Directive (EU) 2017/828, Article 9b (6). well as share-based payment (extrapolated to a full year LTI value based upon three consecutive yearly grants with each a 36-month vesting period). The average remuneration of all employees is This report is the remuneration report required in accordance with article 2:135b of the Dutch Civil calculated by dividing the total personnel costs (wages, salaries, and share-based payments), minus Code and the Dutch Corporate Governance Code. the CEO’s remuneration, by the total number of employees (minus CEO). The pay ratio is in line with the anticipated internal development of pay levels. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 116 REMUNERATION OF THE SUPERVISORY BOARD The 2021 remuneration report refers to the remuneration policy of ASMI, which can be found here. The following table presents information on all remuneration (base compensation, no bonuses, long-term incentives or pensions were paid) from the company (including its subsidiaries) for services in all capacities to all current and former members of the Supervisory Board: Year ended December 31, Annual fee Committee fee Total remuneration 2020 2021 2020 2021 2020 2021 70.0 50.0 19.1 50.0 50.0 31.0 31.0 – – 26.5 62.4 – 50.0 50.0 50.0 50.0 12.8 12.8 13.5 8.5 2.3 10.0 7.5 3.7 4.7 – – 5.1 6.9 – 10.0 11.2 7.6 7.5 – – 83.5 58.5 21.4 60.0 57.5 34.7 35.7 – – 31.6 69.3 – 60.0 61.2 57.6 57.5 12.8 12.8 301.1 314.5 50.2 48.3 351.3 362.8 Supervisory Board: J.C. Lobbezoo 3) M.C.J. van Pernis U.H.R. Schumacher 1) S. Kahle-Galonske M.J.C. de Jong D.R. Lamouche 2) M. de Virgiliis 2) P.F.M. van der Meer Mohr 4) A.T. Sanchez 4) TOTAL 1   Period to May 18, 2020. 2   Period as of May 18, 2020. 3   Period to May 17, 2021. 4   Period as of September 29, 2021. Information regarding 2021 Annual change 2017/2016 2018/2017 2019/2018 2020/2019 2021/2020 Supervisory Board remuneration H.W. Kreutzer J.C. Lobbezoo M.C.J. van Pernis U.H.R. Schumacher S. Kahle-Galonske M.J.C. de Jong D.R. Lamouche M. de Virgiliis P.F.M. van der Meer Mohr A.T. Sanchez 100% 100% 100% 100% –% –% –% –% –% –% 41% 112% 107% 107% 183% –% –% –% –% –% -% 106% 104% 105% 107% 169% –% –% –% –% -% 100% 100% 38% 100% 100% –% –% –% –% -% 38% 119% -% 100% 106% 166% 161% –% –% Any recommended changes to the remuneration of members of the Supervisory Board will be submitted to the AGM for approval. The remuneration of members of the Supervisory Board was most recently revised during the 2018 AGM. A new benchmark analysis was conducted in the fourth quarter of 2021, which will lead to a proposal to adjust the remuneration of members of the Supervisory Board, subject to approval by the AGM on May 16, 2022. No variable compensation (bonus or performance shares) nor pension benefits have been granted to members of the Supervisory Board.  DEROGATIONS FROM REMUNERATION POLICY The Supervisory Board has not derogated or deviated from the remuneration policy other than the sign on arrangement for the new CFO as approved by the AGM on May 17, 2021. ASMI does not provide any loans, advanced payments, deposits, or related guarantees to the CEO, CFO, or Supervisory Board. External auditor External auditor ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 117 EXTERNAL AUDITOR In accordance with Dutch law, ASMI’s external auditor is appointed by the Annual General Meeting of Shareholders and is nominated for appointment by the Supervisory Board upon advice from the Audit Committee and the Management Board. Our current external auditor, KPMG, was reappointed as external auditor by the 2021 AGM for the reporting year 2021. The external auditor is present at our AGM to respond to questions, if any, from the shareholders about the auditor’s report on the financial statements. TAX SERVICES The Audit Committee may preapprove expenditures up to a specified amount per engagement and in total for identified services related to tax matters. Additional services exceeding the specified The Audit Committee has determined that the provision of services by KPMG and its member firms preapproved limits, or involving service types not included in the preapproved list, require specific is compatible with maintaining KPMG’s independence. All audit and permitted non-audit services Audit Committee approval. provided by KPMG and its member firms during 2021 were preapproved by the Audit Committee. AUDIT COMMITTEE POLICIES AND PROCEDURES The Audit Committee has adopted the following policies and procedures for preapproval of all audit OTHER SERVICES In the case of specified services for which utilizing our external auditor creates efficiencies, minimizes disruption or preserves confidentiality, or for which management has determined that our external and permitted non-audit services provided by our external auditor. auditor possesses unique or superior qualifications to provide such services, the Audit Committee AUDIT SERVICES Management submits to the Audit Committee for preapproval the scope and estimated fees for specific services directly related to performing the independent audit of our statutory and consolidated financial statements for the current year. AUDIT-RELATED SERVICES The Audit Committee may preapprove expenditures up to a specified amount for services included in identified service categories that are related extensions of audit services and are logically performed by the auditors. Additional services exceeding the specified preapproved limits require specific Audit Committee approval. may preapprove expenditures up to a specified amount per engagement and in total. Additional services exceeding the specified preapproved limits, or involving service types not included in the preapproved list, require specific Audit Committee approval. Declarations Declarations ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 118 DECLARATIONS COMPLIANCE WITH DUTCH CORPORATE GOVERNANCE CODE The Dutch Corporate Governance Code was last amended on December 8, 2016. As of 2018, CORPORATE GOVERNANCE STATEMENT ASMI complies with the Dutch Corporate Governance Code. All required information is part of Dutch listed companies are required to report on compliance with the revised Code. The full text of this Annual Report. the Dutch Corporate Governance Code can be found on the website of the Monitoring Commission Corporate Governance Code. Corporate governance-related documents are available on our website. These include, among others, the Supervisory Board profile, Supervisory Board rules, Management Board rules, the ASMI applies the relevant principles and best practices of the revised Code applicable to the Audit Committee charter, the Nomination, Selection and Remuneration Committee charter, the company, to the Management Board, and to the Supervisory Board, in the manner set out in the COBC, the whistleblower policy, the anti-fraud policy, the rules concerning Insider Trading, the ‘Corporate governance’ section, as long as it does not entail disclosure of commercially sensitive remuneration policy, diversity policy, and policy regarding communications and bilateral contacts information, as accepted under the Code. with shareholders. ASMI agrees with principle 3.2.3 of the Code that in most circumstances a maximum severance payment of one year for Management Board members is appropriate. However, we want to reserve ARTICLE 10 EU TAKEOVER DIRECTIVE DECREE The Management Board states that the information required under Article 10 of the EU Takeover the right to agree to different amounts in case we deem this to be required by the circumstances. Directive Decree is disclosed herein to the extent that it is applicable to ASMI. Any deviations will be disclosed. RESPONSIBILITY STATEMENT The members of the Management Board state that, to the best of their knowledge, the statutory financial statements prepared in accordance with IFRS-EU and Title 9 of part 2 of the Dutch Civil Code as included in this Annual Report 2021 provide a true and fair view of the assets, liabilities, financial position, and results of the company and its subsidiaries included in the consolidated statements, and that the management report provides a true and fair view of the position and the business of the company and its subsidiaries, and the Annual Report 2021 provides a description of the principal risks and uncertainties that the company faces. FINANCIAL STATEMENTS ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 119 FINANCIAL STATEMENTS Consolidated financial statements Consolidated statement of profit or loss Consolidated statement of comprehensive income Consolidated statement of financial position Consolidated statement of changes in equity Consolidated statement of cash flows Notes to the consolidated financial statements ASM International N.V. financial statements Company balance sheet Company statement of profit or loss Notes to the company financial statements Independent auditor’s report 120 120 121 122 123 124 125 165 165 166 167 173 In 2021, revenue grew by 30% to a new record of €1.7 billion. Growth was particularly driven by our ALD sales. Operating result increased from €327.1 million to €491.5 million in 2021. Gross profit increased from €623.6 million to €828.1 million in 2021. The financial position remained strong with a cash position of €491.5 million at the end of 2021. Cash from operations increased from €264.4 million to €380.6 million in 2021 on the back of improved profitability and a reduced outflow due to working capital. Consolidated financial statements Consolidated statement of profit or loss Consolidated financial statements Consolidated statement of profit or loss ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 120 CONSOLIDATED STATEMENT OF PROFIT OR LOSS (EUR thousand, except per share data) Revenue Cost of sales Gross profit Other income Operating expenses: Selling, general and administrative Research and development Total operating expenses Result from operations Finance income Finance expense Foreign currency exchange gain (loss) Net finance income (costs) Share in income of investments in associates Result before income taxes Income taxes Net earnings from operations, attributable to common shareholders Per share data Basic net earnings per share (EUR): From operations Diluted net earnings per share (EUR): From operations Weighted average number of shares (thousand): Basic Diluted The notes on the following pages are an integral part of these consolidated financial statements. Notes 21 23 3 23 23 17 17 17 6 22 24 Year ended December 31, 2021 1,729,911 (901,780) 828,131 4,071 2020 1,328,122 (704,553) 623,569 — (157,424) (139,002) (296,426) 327,143 141 (2,008) (23,157) (25,024) 31,950 334,069 (48,673) 285,396 5.84 5.78 48,907 49,359 (189,547) (151,197) (340,744) 491,458 23 (2,012) 33,473 31,484 74,382 597,324 (102,615) 494,709 10.17 10.11 48,645 48,909     Consolidated statement of comprehensive income Consolidated statement of comprehensive income ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 121 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (EUR thousand) Net earnings from operations, attributable to common shareholders Other comprehensive income, net of income tax Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit obligation Share in other comprehensive income (loss) of investments in associates Items that may be subsequently reclassified to profit or loss: Foreign currency translation effect Other comprehensive income for the year, net of income tax Total comprehensive income, attributable to common shareholders The notes on the following pages are an integral part of these consolidated financial statements. Notes Year ended December 31, 2021 494,709 2020 285,396 13 6 12 374 (2,296) (1,922) (98,833) (100,755) 184,641 181 11,833 12,014 91,273 103,287 597,996     Consolidated statement of financial position Consolidated statement of financial position ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 122 CONSOLIDATED STATEMENT OF FINANCIAL POSITION (EUR thousand) Assets Right-of-use assets Property, plant and equipment Goodwill Other intangible assets Investments in associates Deferred tax assets Other non-current assets Evaluation tools at customers Employee benefits Total non-current assets Inventories Accounts receivable Income taxes receivable Other current assets Cash and cash equivalents Total current assets Total assets Equity and liabilities Equity Lease liabilities Deferred tax liabilities Total non-current liabilities Accounts payable Provision for warranty Income taxes payable Accrued expenses and other payables Total current liabilities Total liabilities Total equity and liabilities The notes on the following pages are an integral part of these consolidated financial statements. Notes 2020 December 31, 2021 2 3 4 5 6 22 7 13 8 9 22 10 11 12 22 14 22 15 23,387 213,967 11,270 209,924 742,714 196 6,590 69,474 1,431 1,278,953 162,199 280,061 553 72,945 435,228 950,986 26,938 257,017 11,270 274,833 848,812 69 6,792 63,717 1,982 1,491,430 211,841 446,724 18,614 50,972 491,507 1,219,658 2,229,939 2,711,088 1,854,724 2,241,754 13,045 21,892 34,937 124,507 18,987 67,857 128,927 340,278 375,215 15,886 45,748 61,634 175,436 27,181 14,519 190,564 407,700 469,334 2,229,939 2,711,088     Consolidated statement of changes in equity Consolidated statement of changes in equity ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 123 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (EUR thousand except for share data) Balance as of January 1, 2020 Net earnings Other comprehensive income Total comprehensive income Dividend paid to common shareholders Compensation expense share-based payments Exercise stock options out of treasury shares Vesting restricted shares out of treasury shares Purchase of common shares Cancellation of common shares out of treasury shares Other movements of investments in associates: Dilution Balance as of December 31, 2020 Net earnings Other comprehensive income Total comprehensive income Dividend paid to common shareholders Compensation expense share-based payments Exercise stock options out of treasury shares Vesting restricted shares out of treasury shares Purchase of common shares Cancellation of common shares out of treasury shares Other movements in investments in associates: Dilution Balance as of December 31, 2021 Notes Number of common shares outstanding 48,866,220 Common shares 2,052 Capital in excess of par value 43,676 Treasury shares at cost (169,707) Retained earnings 1,815,690 Other reserves 1) 126,940 Total equity 1,818,651 12 13 13 13 12 12 6 12 13 13 13 12 12 6 — — — — — 127,324 229,823 (508,685) — — — — — — — — — (60) — 48,714,682 — 1,992 — — — — — 123,521 193,462 (462,988) — — — — — — — — — (20) — 48,568,677 — 1,972 — — — — 12,792 (5,923) (16,043) — — — 34,502 — — — — 17,242 (7,344) (19,119) — — — 25,281 — — — — — 8,697 16,043 (67,505) 107,510 285,396 — 285,396 (98,688) — — — — (107,450) — (104,962) 2,059 1,897,007 — — — — — 11,974 19,119 (139,150) 57,622 494,709 — 494,709 (96,893) — — — — (57,602) — (100,755) (100,755) — — — — — — — 26,185 — 103,287 103,287 — — — — — — 285,396 (100,755) 184,641 (98,688) 12,792 2,774 — (67,505) — 2,059 1,854,724 494,709 103,287 597,996 (96,893) 17,242 4,630 — (139,150) — — (155,397) 3,205 2,240,426 — 129,472 3,205 2,241,754 1 Other reserves consist of the currency translation reserve, remeasurement on net defined benefit and the reserve for proportionate share in other comprehensive income of investments in associates. See Note 12. The notes on the following pages are an integral part of these consolidated financial statements. Consolidated statement of cash flows Consolidated statement of cash flows ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 124 CONSOLIDATED STATEMENT OF CASH FLOWS (EUR thousand) Cash flows from operating activities Net earnings from operations Adjustments to reconcile net earnings to net cash from operating activities Depreciation, amortization and impairments Net loss (gain) on sale of property, plant and equipment Share-based compensation Net finance (income) costs Share in income of investments in associates Income tax Changes in evaluation tools at customers Changes in employee benefits pension plans Income tax paid Operating cash flows before changes in working capital 1) Decrease (increase) in working capital: 1) Accounts receivable Other current assets Inventories Provision for warranty Accounts payable, accrued expenses and other payables Net cash from operating activities Cash flows from investing activities Capital expenditures Proceeds from sale of property, plant and equipment Capitalized development expenditures Purchase of intangible assets Dividend received from associates Net cash used in investing activities Cash flows from operating activities after investing activities 1) Cash flows from financing activities Payment of lease liabilities Purchase of treasury shares Proceeds from issuance of treasury shares Dividends to common shareholders Net cash used in financing activities Foreign currency translation effect on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 1 Non-IFRS performance measure. Please see Glossary and definitions. The notes on the following pages are an integral part of these consolidated financial statements. Notes Year ended December 31, 2021 2020 285,396 494,709 2,3,5,7 3 13 6 22 7 3 3 5 5 6 2 12 13 11 11 89,029 — 12,792 11,975 (31,950) 48,673 (39,710) (407) (8,055) 367,743 (93,000) (2,006) 498 3,814 (12,696) 264,353 (95,441) 2,348 (64,126) (3,230) 16,142 (144,307) 120,046 (7,819) (66,715) 2,774 (98,688) (170,448) (12,244) (62,646) 497,874 435,228 95,580 (4,071) 17,242 (23,510) (74,382) 102,615 (7,980) (339) (151,623) 448,241 (154,030) 15,350 (39,148) 7,140 103,087 380,640 (72,199) 6,159 (81,973) (2,680) 36,297 (114,396) 266,244 (7,854) (140,142) 4,630 (96,893) (240,259) 30,294 56,279 435,228 491,507     Notes to the consolidated financial statements Notes to the consolidated financial statements ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 125 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. GENERAL INFORMATION/SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GENERAL INFORMATION ASM International N.V. (ASMI, or the company) is a Dutch public liability company domiciled in the Netherlands with its principal operations in Europe, the United States of America, and Asia. BASIS OF PREPARATION The consolidated financial statements have been prepared under the historical cost convention, unless otherwise indicated. The company applies the going concern basis in preparing its consolidated financial statements. The company dedicates its resources to the research, development, manufacturing, marketing Historical cost is generally based on the fair value of the consideration given in exchange for goods and servicing of equipment and materials used to produce mainly semiconductor devices. and services. The company is registered at Versterkerstraat 8, 1322 AP Almere, the Netherlands. The company's shares are listed for trading on the Euronext Amsterdam Stock Exchange values, for both financial and non-financial assets and liabilities. (symbol ASM). The accompanying consolidated financial statements include the financial statements of transaction between market participants at the measurement date, regardless of whether that price ASM International N.V. and its consolidated subsidiaries (together also referred to as ASMI, or is directly observable or estimated using another valuation technique. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly A number of the company’s accounting policies and disclosures require the measurement of fair the company). ASMI's subsidiaries are listed in Note 28 and investments in associates are listed in Note 6. The company has an established approach with respect to the measurement of fair values. If third-party information, such as broker quotes or pricing services, is used to measure fair values, BASIS FOR ACCOUNTING The consolidated financial statements for the year ended December 31, 2021 have been prepared the company assesses and documents the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of IFRS, including the level in the fair-value in accordance with International Financial Reporting Standards (IFRS) as adopted by the European hierarchy, in which such valuations should be classified. Union and also comply with the financial reporting requirements included in Section 362(9) of Part 9, Book 2 of the Dutch Civil Code. Fair values are categorized into different levels in a fair-value hierarchy based on the inputs used in The consolidated financial statements have been prepared by the Management Board of the Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. company and authorized for issue on March 3, 2022, and will be submitted for adoption to the Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or Annual General Meeting of Shareholders (AGM) on May 16, 2022. liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: inputs for the asset or liability that are not based on observable market data (unobservable the valuation techniques as follows: The consolidated financial statements will be filed with the AFM and at the Trade Register of the inputs). Chamber of Commerce in Almere, the Netherlands within eight days of adoption by the 2022 AGM. FUNCTIONAL AND PRESENTATION CURRENCY The consolidated financial statements are presented in Euros (EUR), which is the company's functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair- value hierarchy, then the fair-value measurement is categorized in its entirety in the same level of the fair-value hierarchy as the lowest level input that is significant to the entire measurement. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 126 Further information about the assumptions made in measuring fair values is included in the following notes: Note 13 - Employee benefits; and Note 17 - Financial instruments and financial risk management. USE OF ESTIMATES AND JUDGMENTS In preparing these consolidated financial statements, management has made judgments, estimates CRITICAL ACCOUNTING POLICIES A critical accounting policy is defined as one that is both material to the presentation of ASMI’s consolidated financial statements and that requires management to make difficult, subjective or complex judgments that could have a material effect on ASMI’s financial condition or results of operations. Specifically, these policies have the following attributes: (1) ASMI is required to make assumptions about matters that are highly uncertain at the time of the estimate; and (2) different estimates ASMI could reasonably have used, or changes in the estimate that are reasonably likely to and assumptions about the carrying amounts of assets and liabilities that are not readily apparent occur, could have a material effect on ASMI’s financial condition or results of operations. from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Estimates and assumptions about future events and their effects cannot be determined with Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are to be applicable and reasonable under the circumstances. These estimates may change as new certainty. ASMI bases its estimates on historical experience and various other assumptions believed recognized prospectively. events occur, additional information is obtained, and as ASMI’s operating environment changes. These changes have historically been minor and have been included in the consolidated financial Information about assumptions and estimation uncertainties that have a significant risk of resulting statements as soon as they became known. In addition, management is periodically faced with in a material adjustment to the carrying amounts of assets and liabilities within the year ended uncertainties, the outcomes of which are not within its control and will not be known for prolonged December 31, 2021 is included in the following notes: Notes 3, 5, 6 and 7 - Valuation of non-financial assets; and Note 8 - Valuation of allowance for obsolescence inventories. COVID-19 In 2021, we continued to experience tight supply constraints as a result of COVID-19 restrictions in certain countries where our suppliers are located. We worked collaboratively with suppliers periods of time. Based on a critical assessment of its accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that ASMI’s consolidated financial statements are fairly stated in accordance with IFRS, and provide a meaningful presentation of ASMI’s financial condition and results of operations. An analysis of specific sensitivity to changes of estimates and assumptions is included in the notes to the (consolidated) financial statements. to mitigate any adverse impact in delivery and availability. The company's performance was not Management believes that the following accounting policies are critical: materially impacted by COVID-19 and we were able to meet most of our customer demands. Revenue over 2021 increased to €1.7 billion, up 34% at constant currencies (30% as reported). We therefore do not view the COVID-19 outbreak as a triggering event for our accounting. ASMI will continue to monitor the impact of COVID-19 closely. revenue recognition; inventories; evaluation of long-lived assets for impairment; evaluation of investments in associates for impairment; intangible assets for capitalization and for impairment; and income taxes. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 127 CHANGES IN ACCOUNTING POLICIES Application of new and revised International Financial Reporting Standards (IFRS). Subsidiaries Subsidiaries are entities controlled by the company. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until New and amended IFRS Standards that are effective for the current year the date on which control ceases. The company has initially adopted Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) from January 1, 2021. These changes have been Interests in equity-accounted investees assessed for their potential impact and do not have a material effect on the company's consolidated The company’s interests in equity-accounted investees comprise investments in associates. financial statements. Associates are those entities in which the company has significant influence, but not control or joint ACCOUNTING POLICIES The company has consistently applied the following accounting policies to all periods presented in these consolidated financial statements. Consolidation control, over the financial and operating policies. Interests in associates are accounted for using the equity method. They are initially recognized at cost, which includes transaction costs. Upon acquisition of the investment in an associate, any excess of the cost of the investment over the company’s share of the net fair value of the identifiable assets and liabilities of the investee is recognized as goodwill, which is included in the carrying The consolidated financial statements include the accounts of ASMI and all of its subsidiaries where amount of the investment. ASMI holds a controlling interest. Non-controlling interest is disclosed separately, where appropriate, in the consolidated financial statements. Subsequent to initial recognition, the consolidated financial statements include the company's share of the profit or loss and other comprehensive income (OCI) of equity-accounted investees, until the Control is achieved when ASMI has: date on which significant influence ceases. the power over an investee; exposure, or rights, to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor's returns. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with equity- ASMI reassesses whether or not it controls an investee if facts and circumstances indicate that there accounted investees are eliminated against the investment to the extent of the company’s interest in are changes to one or more of the three elements of control listed above. the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the As from the date these criteria are met, financial data of the relevant subsidiary are included in the consolidation and deconsolidated from the date on which ASMI's control ceases. Foreign currency translation extent that there is no evidence of impairment. Loss of control The individual financial statements of each group entity are presented in their local functional currency. For the purpose of the consolidated financial statements, the results and financial position Upon loss of control, ASMI derecognizes the assets and liabilities of the subsidiary. Any surplus of each entity is expressed in euros, which is ASMI's functional currency and the presentation or deficit arising on the loss of control is recognized in profit or loss. If ASMI retains any interest currency for the consolidated financial statements. in this subsidiary, then such interest is measured at fair value at the date on which control is lost. Subsequently, it is accounted for as an equity-accounted investee or as an available-for-sale financial asset, depending on the level of influence retained. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 128 Foreign currency transactions In the second half of 2021, the company removed the Back-end segment (ASMPT) as a separate In preparing the financial statements of the individual entities, transactions in foreign currencies operating segment. This reflects how the CODM reviews the individual operations for the purpose are recorded at the exchange rates on the date of the transactions. At each balance sheet date, of assessing performance and making resource-allocation decisions. The reflected change is monetary items denominated in foreign currencies are translated at the rates prevailing on the driven by the change in the CODM and his assessment of the company’s strategy. As a result of balance sheet date. Non-monetary items carried at fair value that are denominated in foreign this assessment, the Back-end segment is assessed by the CODM as a financial asset to maintain currencies are translated at the rates prevailing on the date when the fair value was determined. sufficient involvement to monitor and protect the asset given its significance, rather than active for the purpose of resource allocation. Exchange rate differences arising on the settlement of monetary items, and on the translation of monetary items, are recognized in the consolidated statement of profit or loss in the period in which The Front-end operation (ASMI) manufactures and sells equipment used in wafer processing, they arise. Exchange rate differences arising on the translation of non-monetary items carried at encompassing the fabrication steps in which silicon wafers are layered with semiconductor devices. fair value are recognized in the consolidated statement of profit or loss for the period except for The operation is a product-driven organizational unit comprised of manufacturing, service, and sales differences arising on the translation of non-monetary items in respect of which gains and losses are operations in Asia, Europe and the United States. The performance of the individual product lines recognized directly in equity. Foreign operations is reviewed by the CODM based on its revenues, gross margin and EBIT. The company operates under a uniform global operating strategy. The CODM alone makes operating decisions regarding strategic investments and resource allocation based on aggregated information of the overall For the purpose of presenting consolidated financial statements, assets and liabilities of foreign company's operation. Therefore, the company's operation do not represent separate operating nor operations are translated into euros at the exchange rates at the reporting date. The income and reportable segments. expenses of foreign operations are translated into euros at the exchange rates at the dates of the transactions. Property, plant and equipment Items of property, plant and equipment are measured at cost, less accumulated depreciation and Foreign currency differences are recognized in OCI and accumulated in the translation reserve, any accumulated impairment losses. except to the extent that the translation difference is allocated to non-controlling interest. When a foreign operation is disposed of in its entirety or partially such that control or significant are accounted for as separate items (major components) of property, plant and equipment. influence is lost, the cumulative amount in the translation reserve related to that foreign operation Depreciation is calculated to write off the cost of items of property, plant and equipment less their is reclassified to profit or loss as part of the gain or loss on disposal. If the company disposes of estimated residual values using the straight-line method over their estimated useful lives, and is part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative generally recognized in profit or loss. The estimated useful lives, residual values and depreciation amount is reattributed to non-controlling interest. When the company disposes of only part of an method are reviewed at the end of each reporting period, with the effect of any changes in estimate associate while retaining significant influence, the relevant proportion of the cumulative amount is accounted for on a prospective basis. If significant parts of an item of property, plant and equipment have different useful lives, then they reclassified to profit or loss. Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer (CEO), who is the Chief Operating Decision Maker (CODM). Previously, the company organized its activities in two operating segments, Front-end and Back-end. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 129 The estimated useful lives of property, plant and equipment for current and comparative periods are Other intangible assets as follows: Land Building and leasehold improvements Machinery equipment Furniture and fixtures and other equipment Infinite 1-25 years 2-10 years 2-10 years Other intangible assets include capitalized development expenses, software, purchased technology, and remaining other intangible assets. Other intangible assets that are acquired by the company with finite useful lives are measured at cost less accumulated amortization and any accumulated impairment losses. Expenditure on research activities is recognized in profit or loss as incurred. An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain on disposal In determining the capitalization of development expenses, the company makes estimates and of an item of property, plant and equipment is recognized in profit or loss and included in 'other assumptions based on expected future economic benefits generated by products that are the income'. Any loss is recognized as part of impairment expenses. result of these development expenses. Other important estimates and assumptions are the Intangible assets Goodwill required internal rate of return, the distinction between research, development and high-volume manufacturing, and the estimated useful life. The company accounts for business combinations using the acquisition method when control is Development expenses are capitalized when all of the following criteria are demonstrated: transferred to the company. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Transaction costs are expensed as incurred. Goodwill represents the excess of the costs of an acquisition over the fair value of the amounts the technical feasibility of completing the intangible asset so that it will be available for use or sale; its intention to complete the intangible asset and use or sell it; its ability to use or sell the intangible asset; how the intangible asset will generate probable future economic benefits; the availability of adequate technical, financial and other resources to complete the development assigned to assets acquired and liabilities incurred or assumed of the acquired subsidiary at the and to use or sell the intangible asset; and date of acquisition. Goodwill on acquisition of subsidiaries is allocated to cash generating units its ability to reliably measure the expenditure attributable to the intangible asset during its (CGUs) for the purpose of impairment testing. The allocation is made to those CGUs that are development. expected to benefit from the business combination in which the goodwill arose. Goodwill is tested for impairment annually and whenever events or changes in circumstances indicate that the carrying The company capitalizes development expenses that meet the above-mentioned criteria in its amount of the goodwill may not be recoverable. If the recoverable amount of the CGU is less than consolidated financial statements. Subsequent to initial recognition, internally-generated intangible the carrying amount of the unit, the impairment loss is recognized. An impairment loss recognized assets are reported at cost less accumulated amortization and accumulated impairment losses, on for goodwill is not reversed in a subsequent period. Goodwill is stated at cost less accumulated the same basis as intangible assets that are acquired separately. impairment losses. The company’s goodwill arising on the acquisition of an associate is described in Note 6 over the estimated useful lives of the developed product. Amortization starts when the developed Amortization of capitalized development expenses is calculated using the straight-line method 'Investments in Associates'. product is ready for its intended use. In the development cycle, this is when the product is transferred from the validation (beta) phase to high-volume manufacturing. Amortization method, useful life, and residual value are reviewed at each reporting date and adjusted if appropriate. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 130 The estimated useful lives of other intangible assets for current and comparative periods are reversed. The determination of whether an investment is impaired is made at the individual security as follows: Development cost Software Purchased technology and other intangible assets 5 years 3 years 5-7 years Investments in associates Investments in associates are investments in entities in which ASMI can exert significant influence level in each reporting period. Evaluation tools at customers Evaluation tools at customers are systems generally delivered to customers under evaluation and include substantial customization by our engineers and R&D staff in the field. Evaluation tools are recorded at cost and depreciated using the straight-line method over their estimated useful life of five years, or their shorter economic life. The depreciation expenses are reported as cost of sales. but which ASMI does not control, generally having between 20% and 50% of the voting rights. On final written technical acceptance and purchase order from the customer, the purchase These entities are accounted for using the equity method and are initially recognized at cost. consideration is recognized as revenue at a point in time and the carrying value of the evaluation Dividend income from the company’s associated companies is recognized when the right to receive system is recognized as cost of sales. In the circumstance that the system is returned, at the end payment is established. Their carrying value includes goodwill identified upon acquisition, net of any of the evaluation period, a detailed impairment review takes place, and future sales opportunities accumulated impairment. and additional costs are identified. It is only when the fair value is below the carrying value of the evaluation tool that an additional depreciation is recognized. The remaining carrying value is When ASMI’s share of losses in an associate equals or exceeds its interest in the associate, recognized as finished goods in inventories. including any other receivables for which settlement is neither planned nor likely to occur in the foreseeable future, ASMI does not recognize further losses, unless ASMI has obligations to or made Inventories payments on behalf of the associate. Inventories are stated at the lower of cost or net realizable value. The cost of inventories is based on the first-in, first-out principle. Costs include net prices paid for materials purchased, charges for At each reporting date, the company determines if there is any objective evidence that the associate freight and custom duties, production labor costs and factory overhead. Allowances are made for is impaired. An impairment, being the difference between the recoverable amount of the associate slow-moving, obsolete or unsellable inventory. and its carrying value, is recognized in the consolidated statement of profit or loss. ASMI does not separately test associates' underlying assets for impairment. However, ASMI as the expected market value of the inventory. We regularly evaluate the value of our inventory of recognizes its share of any impairment charge recorded by an investee and considers the effect, if components and raw materials, work in progress, and finished goods, based on a combination of any, of the impairment on the basis difference in the assets giving rise to the investee’s impairment factors including the following: forecasted sales, historical usage, product end of lifecycle, estimated charge. A loss in value of an investment which is significant or prolonged will be recognized. current and future market values, service inventory requirements, and new product introductions, as Significant is defined as at least 20% over an uninterrupted period of nine months, or more than well as other factors. Purchasing requirements and alternative uses for the inventory are explored 40% on the reporting date. Prolonged is defined as measured below cost for more than a year. within these processes to mitigate inventory exposure. We record write-downs for inventory based on the above factors and take into account worldwide quantities and demand into our analysis. Allowances for obsolescence of inventory are determined based on the expected demand as well Equity method investments are tested for prolonged decline in value. If the fair value of an investment is less than its carrying value, the company determines whether the decline in value is Financial instruments temporary or prolonged. A prolonged decline in value is measured as of a balance sheet date. If The company classifies non-derivative financial assets into loans and receivables. The company after a prior recognized impairment the fair value is more than its carrying value, this impairment is classifies non-derivative financial liabilities into other financial liabilities. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 131 Non-derivative financial assets and financial liabilities – Recognition and derecognition regarding a customer's inability to meet its financial obligations; and our judgments as to potential prevailing economic conditions in the industry and their potential impact on the company's The company initially recognizes receivables on the date when they are originated. Receivables customers. comprise account (trade) and other receivables and cash and cash equivalents. Receivables are measured at amortized cost using the effective interest method, less any impairment. Financial The allowance is based on historical experience, credit evaluations, specific customer-collection assets and financial liabilities are initially recognized on the trade date when the entity becomes a history, and any customer-specific issues ASMI has identified. Changes in circumstances, such as party to the contractual provisions of the instrument. an unexpected adverse material change in a major customer’s ability to meet its financial obligation The company derecognizes a financial asset when the contractual rights to the cash flows from amounts due to ASMI. This could have an adverse material effect on ASMI’s financial condition and to ASMI or its payment trends, may require us to further adjust our estimates of the recoverability of the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in results of operations. which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not Cash and cash equivalents retain control over the transferred asset. Any interest in such derecognized financial asset that is Cash and cash equivalents consist of bank deposits and investment in money market funds that created or retained by the company is recognized as a separate asset or liability. invest in marketable debt obligations and securities of governments, corporates and financial institutions and other short-term highly liquid investments with original maturity of three months or The company derecognizes a financial liability when its contractual obligations are discharged or less. Bank overdrafts are included in notes payable to banks in current liabilities. cancelled, or expired. Financial assets and financial liabilities are offset and the net amount presented in the statement Other non-derivative financial liabilities are initially measured at fair value less any directly attributable of financial position when, and only when, the company currently has a legally enforceable right to transaction costs. Subsequent to initial recognition, these liabilities are measured at amortized cost offset the amounts and intends either to settle them on a net basis or to realize the asset and settle using the effective interest method. Non-derivative financial liabilities – Measurement the liability simultaneously. Non-derivative financial assets – Measurement Share capital Ordinary shares Loans and receivables are initially measured at fair value plus any directly attributable transaction Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of costs. Subsequent to initial recognition, they are measured at amortized cost using the effective ordinary shares are recognized as a deduction from equity, net of any tax effects. interest method. Accounts receivable Preference share capital Preference share capital is classified as equity if it is non-redeemable, or redeemable only at A significant percentage of our accounts receivable is derived from revenue to a limited number of the company’s option, and any dividends are discretionary. Discretionary dividends thereon are large multinational semiconductor device manufacturers located throughout the world. In order to recognized as distributions within equity upon approval by the company’s shareholders. monitor potential credit losses, we perform ongoing credit evaluations of our customers' financial condition. An allowance for doubtful accounts is maintained for potential credit losses based upon Preference share capital is classified as a financial liability if it is redeemable on a specific date or management's assessment of the expected collectability of all accounts receivable. The allowance at the option of the shareholders, or if dividend payments are not discretionary. Non-discretionary for doubtful accounts is reviewed periodically to assess the adequacy of the allowance. In making dividends thereon are recognized as interest expense in profit or loss as accrued. this assessment, management takes into consideration any circumstances of which we are aware ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 132 Repurchase and reissue of ordinary shares (treasury shares) status of borrowers or issuers, the disappearance of an active market for a security because When shares recognized as equity are repurchased, the amount of the consideration paid, which of financial difficulties, or observable data indicating that there is a measurable decrease in the includes directly attributable costs, is recognized as a deduction from equity. Repurchased shares expected cash flows from a group of financial assets. are classified as treasury shares and are presented in the treasury share reserve. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in Loans and receivables equity and the resulting surplus or deficit on the transaction is presented in a non-distributable The company considers evidence of impairment for these assets at both an individual asset and capital reserve. a collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred Issuance of shares by an equity-accounted investee but not yet individually identified. The associate ASMPT yearly issues common shares pursuant to their employee share incentive scheme. The effect of these issuances is a dilution of the company's ownership in ASMPT. The impairment method for account receivables is described at Note 9 Accounts Receivable. The company recognizes the impact of these issuances directly into equity. Comprehensive income An impairment loss in respect of an equity-accounted investee is measured by comparing the Comprehensive income consists of net earnings (loss) and other comprehensive income. Other recoverable amount of the investment with its carrying amount. An impairment loss is recognized comprehensive income includes gains and losses that are not included in net earnings, but are in profit or loss, and is reversed if there has been a favorable change in the estimates used to Equity-accounted investees recorded directly in equity. Provisions determine the recoverable amount. Non-financial assets Provisions are recognized when the company has a present obligation (legal or constructive) as a At each reporting date, the company reviews the carrying amounts of its non-financial assets (other result of a past event, it is probable that the company will be required to settle the obligation, and a than inventories and deferred tax assets) to determine whether there is any indication of impairment. reliable estimate can be made of the amount of the obligation. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill is tested Provisions are determined by discounting the expected future cash flows at a pre-tax rate that annually for impairment. reflects current market assessments of the time value of money and the risks specific to the liability. For impairment testing, assets are grouped together into the smallest group of assets that generates The unwinding of the discount is recognized as finance cost. cash inflows from continuing use that are largely independent of the cash inflows of other assets or Impairment Non-derivative financial assets CGUs. Goodwill arising from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination. Financial assets not classified as at fair value through profit or loss, including an interest in an equity- The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less accounted investee, are assessed at each reporting date to determine whether there is objective costs to sell. Value in use is based on the estimated future cash flows, discounted to their present evidence of impairment. value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. Objective evidence that financial assets are impaired includes default or delinquency by a debtor, restructuring of an amount due to the company on terms that the company would not consider otherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the payment ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 133 An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable Revenue streams amount. The company generates revenue primarily from the sales of equipment and sales of spares & services. The products & services described below by nature, can be part of both revenue streams. Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying The revenue streams are disclosed in Note 21 Revenue. amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. Nature of goods and services The following is a description of principal activities from which the group generates its revenue. An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. Commitments and contingencies The company has various contractual obligations such as purchase commitments and commitments for capital expenditure. These obligations are generally not recognized as liabilities on the company's statement of financial position but are disclosed in the notes to the consolidated financial statements. Cash flow statement The cash flow statement has been prepared using the indirect method. The company has made several changes within the presentation of cash flows from operating activities to align with internal management information. These changes concern updated account names, grouping of operational Products and services Equipment Installation cash flow items and adding subtotals as the company believes that these subtotals are relevant to the understanding of the Group’s financial performance. These changes are reflected in the Spares comparative figures to improve comparability. Revenue recognition Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. The company recognizes revenue when it transfers control over a product or service to a customer. Depending on the contract, we obtain normally a right to payment for our equipment upon shipment and on completion of installation. Right to payment for our spares and services occurs upon shipment or completion of the service unless described otherwise. Nature, timing of satisfaction of performance obligation and significant payment terms Revenue from equipment is recognized at a point in time when the performance obligation is satisfied, when control transfers. This is usually upon shipment depending on incoterms. The amount of revenue recognized is based on the amount of the transaction price that is allocated to the performance obligation. The total consideration of the contract is allocated between all distinct performance obligations in the contract based on their stand-alone selling prices. The stand-alone selling prices are mostly determined based on other stand-alone sales that are directly observable or based on the expected cost plus a margin approach. Any customer discounts and credits, within volume purchase agreements or bundled agreements, are considered as a reduction of the transaction price. The customer simultaneously consumes and receives the benefits provided by the performance of the installation. As such, transfer of control takes place over the period of installation from delivery through customer acceptance, measured on a straight-line basis, as our performance is satisfied evenly over this period of time. Revenue from spares is recognized at a point in time when the performance obligation is satisfied, when the control transfers. This is usually upon shipment depending on incoterms. The amount of revenue recognized is based on the amount of the transaction price that is allocated to the performance obligation. Any customer discounts and credits, within a volume purchase agreements, are considered as a reduction of the transaction price. Revenue on royalties and licenses for technology included in equipment and/or spares The fixed price royalty is a right to use the licenses and revenue is recognized at a point in time that the license is transferred to the customer. For the sales-based royalty, the performance obligation is satisfied when the license is transferred to the customer. Given this is earlier than when the sales occur, revenue should be recognized when the sales occur. Support services The customer simultaneously consumes and receives the benefits provided by the performance of the support. For the majority of support services transfer of control takes place over the period of support. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 134 We applied the practical expedient of IFRS 15.121 and therefore have not disclosed information on The company has applied judgment to determine the lease term for some of the lease contracts the remaining performance obligations of a contract (in aggregate) as the performance obligation is in which it is a lessee that includes renewal options. The assessment of whether the company is part of a contract that has an original expected duration of one year or less. Generally, the remaining reasonably certain to exercise such options impacts the lease term, which significantly affects the performance obligations of a contract concern the installation which is recognized over time. amount of lease liabilities and right-of-use assets recognized. Cost of sales The company has applied the exception not to recognize right-of-use assets and lease liabilities Cost of sales comprises direct costs such as labor, materials, cost of warranty, depreciation, for short-term leases (lease term of 12 months or less) and leases of low-value assets (up to shipping and handling costs, and related overhead costs. Cost of sales also includes depreciation the amount of €5 thousand asset value, such as water purifiers and air cleaners). The company expenses of evaluation tools at customers, royalty payments, and costs relating to prototype and recognizes the lease payments associated with these leases as an expense on a straight-line basis experimental products, which the company may subsequently sell to customers. over the lease term. Warranty Income tax We provide maintenance on our systems during the warranty period, on average one year. Costs Income tax expense comprises current and deferred tax. It is recognized in the statement of profit of warranty include the cost of labor and material necessary to repair a product during the warranty or loss except to the extent that it relates to a business combination, or items recognized directly in period. We accrue for the estimated cost of the warranty on products shipped in a provision for equity or in other comprehensive income. warranty, upon recognition of the sale of the product. The costs are estimated based on historical expenses incurred and on estimated future expenses related to current revenue, and are updated Current tax periodically. Actual warranty costs are charged against the provision for warranty. The actual The current corporate income tax charge recognized in the consolidated statement of profit or warranty costs may differ from estimated warranty costs, and we adjust our provision for warranty loss is calculated in accordance with the prevailing tax regulations and rates, taking into account accordingly. Future warranty costs may exceed our estimates, which could result in an increase of non-taxable income and non-deductible expenses. The current income tax expense reflects the our cost of sales. Leases amount for the current reporting period that the company expects to recover from or pay to the tax authorities. Current income tax related to items recognized directly in equity is recorded in equity and not in the consolidated statement of profit or loss. ASMI’s management periodically evaluates The company leases many assets, including land, buildings, houses, motor vehicles, machinery and positions taken in the tax returns regarding situations in which applicable tax regulations are subject furniture. to interpretation, and establishes provisions when deemed appropriate. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that The company recognizes a right-of-use asset and a lease liability at the lease commencement date. reflects uncertainty related to income tax, if any. Measurement of the tax payable or receivable for The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated uncertain tax positions is based on management’s best estimate of the amount of tax benefit that depreciation and impairment losses, and adjusted for certain remeasurement of the lease liability. will be lost. Current tax also includes any tax arising from dividends and royalties. Current tax assets and liabilities are offset only if certain criteria are met (IAS 12). The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the company’s incremental borrowing rate. The lease Deferred tax liability is subsequently increased by the interest cost on the lease liability and decreased by the Deferred income tax positions are recognized for temporary differences between the tax basis of lease payment made. It is remeasured when there is a change in future lease payments arising assets and liabilities and their carrying values in ASMI’s consolidated statement of financial position. from a change in a rate or changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 135 Deferred tax assets are recognized for deductible temporary differences, the carry forward of primarily represent the increase in the actuarial present value of the obligation for pension benefits unused tax credits, and any unused tax losses. Deferred tax assets are recognized only to the based on employee service during the year and the interest on this obligation in respect to employee extent that it is probable that future taxable profits will be available against which the temporary service in previous years, net of the expected return on plan assets. differences can be utilized. Both the recognized and unrecognized deferred tax assets are reassessed at each reporting date. Deferred tax assets are recorded for deductible temporary For the defined benefit plan, the company recognizes in its consolidated statement of financial differences associated with investments in subsidiaries and are recorded only to the extent that it is position an asset or a liability for the plan's over funded status or underfunded status respectively. probable that the temporary differences will reverse in the foreseeable future, and taxable profit will Actuarial gains and losses are recognized when incurred. be available against which the temporary differences can be utilized. Deferred tax liabilities are recognized for taxable temporary differences except when they affect provided. Prepaid contributions are recognized as an asset to the extent that a cash refund or a Obligations for contributions to defined contribution plans are expensed as the related service is neither the profit or loss reported in the consolidated statement of profit or loss nor the taxable profit reduction in future payments is available. or loss. Also, no deferred tax liabilities are recorded for taxable temporary differences associated with investments in subsidiaries when the timing of the reversal of the temporary differences can be Share-based payments controlled and it is probable that the temporary differences will not reverse in the foreseeable future. The costs relating to employee stock options and shares (compensation expense) are recognized Deferred tax positions are stated at nominal value and are measured at the corporate income based upon the grant date fair value of the stock options or the shares. The fair value at grant tax rates the company expects to be applicable in the year when the asset is realized or liability date of employee stock options is estimated using a Black-Scholes option valuation model. This is settled based on enacted or substantially enacted tax laws and reflects uncertainty related to model requires the use of assumptions including expected stock-price volatility, the estimated life income tax, if any. of each award, and the estimated dividend yield. The risk-free interest rate used in the model is determined, based on a euro government bond with a life equal to the expected life of the options. Deferred income tax assets and liabilities are netted if there is a legally enforceable right to set off The estimated fair value at grant date of shares is based on the share price of the ASMI share at current tax assets against current tax liabilities, deferred income tax assets and deferred income tax grant date minus the discounted value of expected dividends during the vesting period. liabilities related to income taxes levied by the same taxation authority on the same taxable entity, and there is an intention to settle on a net basis. The grant date fair value of the stock options and shares is expensed on a straight-line basis over Retirement benefit costs the vesting period, based on the company’s estimate of stock options and shares that will eventually vest. The impact of the true-up of the estimates is recognized in the consolidated statement of The company has retirement plans covering substantially all employees. The principal plans are profit or loss in the period in which the revision is determined. The total estimated share-based defined contribution plans, except for the plans of the company's operations in the Netherlands and compensation expense, determined under the fair value-based method is amortized proportionally Japan. The company's employees in the Netherlands participate in a multi-employer defined benefit over the option vesting periods. plan. Payments to defined contribution plans and the multi-employer plan are recognized as an expense in the consolidated statement of profit or loss as they fall due. The company accounts for the multi-employer plan as if it were a defined contribution plan, since the manager of the plan is not able to provide the company with the required company-specific information to enable the company to account for the plan as a defined benefit plan. The company's employees in Japan participate in defined benefit plans. Pension costs in respect to this defined benefit plan are determined using the projected unit credit method. These costs ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 136 Amounts recognized in statement of cash flows  (EUR thousand) Total cash outflow for leases Extension options 2020 7,819 2021 7,854 The extension options held are exercisable only by the company and not by the lessors. The company assesses at lease commencement date whether it is reasonably certain to exercise the extension options. The company reassesses whether it is reasonably certain to exercise the options at year-end for material lease components, if there is a significant event or significant changes in circumstances within its control. NOTE 2. RIGHT-OF-USE ASSETS The company leases many assets, including land, buildings, houses, motor vehicles, machinery and equipment. Leases typically run up to a period of five years, some with an option to renew the lease after the end of the non-cancelable period. Lease payments are renegotiated on a periodic basis; timing is dependent on the region and type of lease. The company has not entered into any sub- lease arrangements. Right-of-use assets (EUR thousand) Balance January 1, 2020 Additions Modifications and reassessments Depreciation for the year Foreign currency translation effect Balance December 31, 2020 Additions Modifications and reassessments Depreciation for the year Foreign currency translation effect Balance December 31, 2021 Land and buildings 25,049 3,100 551 (6,285) (1,337) 21,078 2,060 6,812 (6,563) 1,065 24,452 Motor vehicles Other machinery and equipment Total 2,142 1,359 (158) (1,159) (36) 2,148 879 (101) (1,210) 53 1,769 356 27,547 – (15) 4,459 378 (167) (7,611) (13) (1,386) 161 23,387 323 619 3,262 7,330 (416) (8,189) 30 717 1,148 26,938 Amounts recognized in profit or loss  (EUR thousand) Leases under IFRS 16 Interest on lease liabilities Depreciation expenses Expenses relating to short-term leases Expenses relating to low-value leases Total 2020 2021 561 7,611 254 16 8,442 523 8,189 48 16 8,776 ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 137 The company divested its property in Nagaoka, Japan in February 2021, and another property in Singapore in November 2021. The assets at costs (€9.1 million) and accumulated depreciation (€7.9 million) are disposed. Net income on disposal of these assets of €4.1 million is recognized as ‘other income’ in the consolidated statement of profit or loss. NOTE 3. PROPERTY, PLANT AND EQUIPMENT The changes in the amount of property, plant and equipment are as follows: Land, buildings and leasehold improvements Machinery and equipment Furniture and fixtures and other equipment Assets under construction Total At cost Balance January 1, 2020 Additions Disposals Transfer from assets under construction Transfer to intangible assets Foreign currency translation effect Balance December 31, 2020 Additions 1) Disposals Transfer from assets under construction Foreign currency translation effect Balance December 31, 2021 Accumulated depreciation and impairment Balance January 1, 2020 Depreciation for the year Impairment charges Disposals Foreign currency translation effect Balance December 31, 2020 Depreciation for the year Impairment charges Disposals Foreign currency translation effect Balance December 31, 2021 Carrying amounts December 31, 2020 December 31, 2021 Useful lives in years 87,349 411 (196) 51,287 – (4,173) 134,678 7,129 (9,230) 669 3,587 235,020 3,528 (23,378) 34,317 – (14,352) 235,135 13,381 (6,598) 40,444 10,948 136,833 293,310 33,859 4,406 – (193) (1,974) 36,098 6,559 – (7,989) 1,167 35,835 163,780 25,647 – (21,122) (10,056) 158,249 31,530 – (6,070) 7,339 191,048 98,580 76,886 100,998 102,262 1-25 2-10 30,781 1,752 (3,196) 5,705 (92) (1,359) 33,591 1,287 (3,612) 3,994 677 35,937 22,022 2,974 – (3,107) (927) 20,962 3,849 – (3,312) 251 21,750 12,629 14,187 2-10 31,374 384,524 89,750 95,441 – (26,770) (91,309) – – (92) (3,943) (23,827) 25,872 429,276 57,525 79,322 – (19,440) (45,107) – 1,280 16,492 39,570 505,650 – – – – – – – – – – – 219,661 33,027 – (24,422) (12,957) 215,309 41,938 – (17,371) 8,757 248,633 25,872 213,967 39,570 257,017 1  The €79 million additions in FY 2021 includes €7 million of prepaid capex with no cash flow impact during the year. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 138 NOTE 4. GOODWILL The carrying amount of the goodwill is related to acquisitions in the following cash-generating units: These estimates are consistent with the plans and estimated costs we use to manage the underlying business. We expect the demand for these technologies to continue beyond a period of five years and therefore we have included perpetuity growth rates in our assumptions. Based on this ALD PEALD Total December 31, analysis, management concluded that as per December 31, 2021 the recoverable amount of the 2020 2,611 8,659 11,270 2021 2,611 8,659 11,270 CGUs exceeded the carrying value. The excess was over 100% for each of the CGUs. Sensitivity analysis demonstrated that no reasonable possible change in estimated cash flows or the discount rate used in calculating the fair value would cause the carrying value of goodwill to exceed the fair value. We perform an annual impairment test in the fourth quarter of each year or if events or changes in circumstances indicate that the carrying amount of the assets at risk (goodwill, other non-current assets and liabilities, capitalized development, working capital) exceeds its recoverable amount. For our impairment test and the determination of the recoverable amount, a discounted future cash flow approach is used which makes use of our estimates of future revenues, driven by assumed market growth and estimated costs as well as appropriate discount rates. The material assumptions used for the discounted future cash flows of the cash-generating units (CGUs) are: an average discount rate of 7.6% (2020: 9.5%) representing the pre-tax weighted average cost of capital; external market segment data, historical data and strategic plans to estimate cash flow growth per product line; and cash flow calculations are limited to four years of cash flow; after these four years, perpetuity growth rates are set based on the market maturity of the products. For a maturing product, the perpetuity growth rates used are 1% or less, and for enabling technology products the rate used is 3% or less.     ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 139 NOTE 5. OTHER INTANGIBLE ASSETS Other intangible assets include capitalized development expenditure, software developed or purchased (including licenses) for internal use, and purchased technology from third parties. The changes in the amount of other intangible assets are as follows: Development costs Software Purchased technology and other intangible assets Total At cost Balance January 1, 2020 Additions Transfer from property, plant and equipment Disposals Foreign currency translation effect Balance December 31, 2020 Additions Disposals Foreign currency translation effect Balance December 31, 2021 Accumulated amortization and impairment losses Balance January 1, 2020 Amortization for the year Impairments Disposals Foreign currency translation effect Balance December 31, 2020 Amortization for the year Impairments Disposals Foreign currency translation effect Balance December 31, 2021 Carrying amounts December 31, 2020 December 31, 2021 295,868 64,126 – – (18,309) 341,685 81,973 – 12,867 436,525 113,372 21,187 10,126 – (7,319) 137,366 25,184 1,967 – 4,332 168,849 204,319 267,676 33,651 3,230 92 (3,459) (650) 32,864 2,680 (22) 458 35,980 27,228 3,863 – (3,459) (353) 27,279 1,424 – (22) 152 28,833 5,585 7,147 8,884 338,403 – – – 67,356 92 (3,459) (63) (19,022) 8,821 383,370 – – 84,653 (22) (32) 13,293 8,789 481,294 8,579 285 – – (63) 149,179 25,335 10,126 (3,459) (7,735) 8,801 173,446 10 – – (32) 26,618 1,967 (22) 4,452 8,779 206,461 20 10 209,924 274,833 ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 140 We perform an annual impairment test in the fourth quarter of each year or if events or changes in circumstances indicate that the carrying amount of development costs exceeds its recoverable NOTE 6. INVESTMENTS IN ASSOCIATES The location included below is the principal place of business of the specified associates. amount. A discounted future cash flow approach is used which makes use of our estimates of future There is no difference between the principal place of business and country of incorporation. Name Associates Levitech BV ASM Pacific Technology Ltd Location % ownership December 31, 2020 2021 Almere, the Netherlands Kwai Chung, Hong Kong, People’s Republic of China 26.64% 26.64% 25.07% 24.96% Levitech BV is valued at nil (2020: nil). revenues, driven by assumed market growth and estimated costs as well as appropriate discount rates. For the impairment test, reference is made to Note 4. Impairment charges on capitalized development costs are included in operating expenses under research and development. Impairment of capitalized development expenses primarily related to development of new hardware for which customer demand has shifted out in time, new process technologies that were not successful, and purchased technology which became obsolete. The impairment charges for 2020 and 2021 related to customer-specific projects. Capitalized development costs are amortized over their estimated useful lives of five years. Amortization starts when the developed asset is ready for its intended use. For the company, this occurs when the application is transferred to high-volume manufacturing. Other intangible assets are amortized over their estimated useful lives of three to seven years. Estimated amortization expenses relating to other intangible assets are as follows: Development costs Software Purchased technology and other intangible assets 2022 2023 2024 2025 2026 Years thereafter Amortization estimated Amortization not yet started Total carrying amounts 26,823 24,517 19,341 11,082 1,981 – 83,744 183,932 2,947 2,426 1,772 2 – – 7,147 – 267,676 7,147 10 – – – – – 10 – 10 Total 29,780 26,943 21,113 11,084 1,981 – 90,901 183,932 274,833 ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 141 The changes in the investment in associates are as follows: Balance January 1, 2020 Share in net earnings of investments in associates Other comprehensive income of investments in associates Amortization recognized (in)tangible assets Dividends Dilution ASMPT share to 25.07% Foreign currency translation effect Balance December 31, 2020 Share in net earnings of investments in associates Other comprehensive income of investments in associates Amortization recognized intangible assets Dividends Dilution ASMPT share to 24.96% Foreign currency translation effect Balance December 31, 2021 Net equity share Other (in)tangible assets ASMPT 334,870 44,813 (2,296) – (16,142) 2,059 (16,216) 347,088 86,595 11,833 – (36,297) 3,205 23,034 435,458 45,752 – – (12,863) – – (2,873) 30,016 – – (12,213) – – 1,766 19,569 Goodwill 397,646 – – – – – (32,036) 365,610 – – – – – 28,175 393,785 Total ASMPT 778,268 44,813 (2,296) (12,863) (16,142) 2,059 (51,125) 742,714 86,595 11,833 (12,213) (36,297) 3,205 52,975 848,812 On March 15, 2013, the company divested a controlling stake in its subsidiary ASM Pacific If the fair value of an investment is less than its carrying value at the balance sheet date, the Technology Ltd (ASMPT). After the initial accounting of the sale transaction and related gains, future company determines whether the impairment is temporary or prolonged. The amount per share income from ASMPT was adjusted for the fair value adjustments arising from the basis differences recognized as per December 31, 2021, under equity accounting amounts to HK$72.79, whereas as if a business combination had occurred under IFRS 3R, Business Combinations, i.e. a purchase the level 1 fair value per share (being the market price of a share on the Hong Kong Stock price allocation (PPA). Exchange) was HK$84.25 as per December 31, 2021. Management concluded that based on quantitative analysis no impairment of its share in ASMPT existed as per December 31, 2021. The purchase of the associate has been recognized at fair value, being the value of the ASMPT shares on the day of closing of the purchase transaction. The composition of this fair value was In December 2021, 1,907,900 common shares of ASMPT were issued, for cash at par value of determined through a PPA. The PPA resulted in the recognition of intangible assets for customer HK$0.10 per share, pursuant to the Employee Share Incentive Scheme of ASMPT. The shares relationship, technology, trade name, product names, and goodwill. For inventories and property, issued under the plan in 2021 have diluted ASMI’s ownership in ASMPT to 24.96% as of plant & equipment, a fair value adjustment was recognized. December 31, 2021. The ASMPT investment is accounted for under the equity method on a go-forward basis. Equity Per December 31, 2021, the book value of our equity method investment in ASMPT was method investments are tested for prolonged impairment. An investment is considered impaired €848.8 million. The historical cost basis of our 24.96% share of net assets on the books of if the fair value of the investment is less than its carrying value. ASMPT under IFRS was €435.5 million as of December 31, 2021, resulting in a basis difference ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 142 of €413.4 million. €19.6 million of this basis difference has been allocated to intangible assets. Shareholder’s equity of ASMPT per December 31, 2021, translated into euros at a rate of 0.11321 The remaining amount was allocated to equity method goodwill. Each individual, identifiable asset was €1,745 million (our 24.96% share: €435 million). will periodically be reviewed for any indicators of potential impairment. We amortize the basis differences allocated to the assets on a straight-line basis, and include the impact within the results The ASMPT Board is responsible for ongoing monitoring of the performance of ASMPT. of our equity method investments. Amortization and depreciation are adjusted for related deferred The actual results of ASMPT are discussed with the ASMPT Audit Committee, which includes tax impacts. Included in net income attributable to ASMI for 2021 was an after-tax expense of the representative of ASMI. The ASMI representative reports to the ASMI Management Board €12.2 million, representing the depreciation and amortization of the basis differences. and the Audit Committee of ASMI on a quarterly basis. The market value of our 24.96% investment in ASMPT on December 31, 2021, approximates Our share of income taxes incurred directly by the associates is reported in income of investments in €982 million. associates and as such is not included in income taxes in our consolidated financial statements. Summarized 100% earnings information for ASMPT equity method investment excluding basis adjustments (foreign currency exchange rate average 2021: 1 HK$: €0.10863, for NOTE 7. EVALUATION TOOLS AT CUSTOMERS The changes in the amount of evaluation tools are as follows: December 31, 2020: 1 HK$: €0.11272). (HK$ million) Revenues Income before income tax Net earnings from continuing operations Other comprehensive income Total comprehensive income 2020 16,887 1,857 1,631 370 2,001 2021 21,948 4,092 3,175 (171) 3,004 Summarized 100% statement of financial position information for ASMPT equity method investment excluding basis adjustments (foreign currency exchange rate per December 31, 2021, was 1 HK$: €0.11321 for December 31, 2020: 1 HK$: €0.10511). At cost Balance at beginning of year Evaluation tools shipped Evaluation tools sold and returns Foreign currency translation effect Balance at end of year Accumulated depreciation Balance at beginning of year Depreciation for the year Evaluation tools sold and returns (HK$ million) Current assets Non-current assets Current liabilities Non-current liabilities Total equity December 31, Foreign currency translation effect 2020 14,799 8,365 5,336 4,634 13,194 2021 18,251 8,250 6,889 4,200 15,412 Balance at end of year Carrying amount at beginning of year Carrying amount at end of year Useful lives in years: December 31, 2020 2021 73,637 59,729 (26,420) (6,172) 100,774 26,390 12,930 (6,401) (1,619) 31,300 47,247 69,474 100,774 35,409 (41,708) 3,877 98,352 31,300 16,868 (14,279) 746 34,635 69,474 63,717 5 ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 143 Evaluation tools enable ASMI to win new business and expand ASMI’s technological footprint by The additions for 2020 and 2021 mainly relate to inventory items which ceased to be used due to penetration at new customers and with new applications. The year-on-year decrease in evaluation technological developments and design changes resulting in obsolescence of certain parts. tools shipped to customer sites is indicative of ASMI’s evaluation success due to won business from 2020 evaluation tools shipped, minimizing the need for incremental evaluation shipments in The cost of inventories recognized as costs and included in cost of sales amounted to 2021. The shipments of evaluation tools continue to highlight ASMI’s market growth ambitions and €727.9 million (2020: €554.8 million). remains a key component in ASMI’s growth strategy. The majority of evaluation tools shipped to customers result in the sale of the tool. NOTE 8. INVENTORIES Inventories consist of the following: Components and raw materials Work in progress Finished goods Total inventories, gross Allowance for obsolescence Total inventories, net The changes in the allowance for obsolescence are as follows: Balance at beginning of year Charged to cost of sales Reversals Utilization of the provision Foreign currency translation effect Balance at end of year 2020 118,849 39,925 17,902 176,676 (14,477) 162,199 December 31, 2020 (12,527) (9,775) 830 6,200 795 (13,604) 211,841 2021 (14,477) (5,728) 2,013 5,383 (795) (14,477) (13,604) On December 31, 2021, our allowance for inventory obsolescence amounted to €13,604, which is 6.0% of total inventory. The major part of the allowance is related to components and raw materials. NOTE 9. ACCOUNTS RECEIVABLE A significant percentage of our accounts receivable is derived from sales to a limited number of large multinational semiconductor device manufacturers located throughout the world. In order to monitor potential expected credit losses, we perform ongoing credit evaluations of our customers’ financial December 31, condition. The carrying amount of accounts receivable is as follows: 2021 175,317 31,631 18,497 225,445 Current Overdue <30 days Overdue 31-60 days Overdue 61-120 days Overdue >120 days Total December 31, 2020 249,032 23,063 4,283 1,727 1,956 2021 418,195 18,089 2,166 7,244 1,030 280,061 446,724 An allowance for doubtful accounts receivable is maintained for potential expected credit losses based upon management’s assessment of the expected collectability of all accounts receivable. The allowance for doubtful accounts is reviewed periodically to assess the adequacy of the allowance. In making this assessment, management takes into consideration any circumstances of which we are aware regarding a customer’s inability to meet its financial obligations, and our judgments as to potential prevailing economic conditions in the industry and their potential impact on the company’s customers. COVID-19 did not have, and is not expected to have a significant impact on the customers in the industry (see also Note 1 COVID-19 paragraph), and hence on the allowance for doubtful accounts.     ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 144 The changes in the allowance for doubtful accounts receivable are as follows: Bank guarantees exist for an amount of €1.0 million at December 31, 2021 (€2.4 million as per Balance at beginning of year Charged to selling, general and administrative expenses Utilization of the provision Foreign currency translation effect Balance at end of year December 31, 2020 (278) (83) – – 2021 (361) (83) – – December 31, 2020). These guarantees mainly relate to lease and tax payments. Cash and cash equivalents have insignificant interest-rate risk and remaining maturities of maximum three months or can be converted into cash without no more than 30 days’ notice. Except for an amount of €4.9 million (2020: €4.1 million), there are no restrictions on usage of cash and cash equivalents. The carrying amount of these financial assets approximates their fair value. The company has not recognized a provision for expected credit loss for cash and cash equivalents (361) (444) due to the insignificance of the amount. Accounts receivable are impaired and provided for on an individual basis. As of December 31, 2021, accounts receivable of €29 million were past due but not impaired. These balances are still NOTE 12. EQUITY Our Management Board has the power to issue ordinary shares and (financing) preferred shares considered to be recoverable because they relate to customers for whom there is neither recent insofar as the Management Board has been authorized to do so by the Annual General Meeting of history of default nor expectation that this will incur. For further information on credit risk see Shareholders (AGM). The Management Board requires the approval of the Supervisory Board for Note 17. NOTE 10. OTHER CURRENT ASSETS Other current assets consist of the following: Prepayments VAT receivable Amounts to be invoiced Others Total such an issue. The authorization by the AGM can only be granted for a certain period. In the case that the AGM has not authorized the Management Board to issue shares, the AGM shall have the power to issue shares. COMMON SHARES, PREFERRED AND FINANCING PREFERRED SHARES Following the amendment of the articles of association on August 3, 2018, the authorized capital of the company amounts to 82,500,000 common shares of €0.04 par value, 88,500 preferred shares of €40 par value and 6,000 financing preferred shares of €40 par value. The AGM of May 17, 2021 approved the cancellation of 500,000 treasury shares and this cancellation became effective as per July 21, 2021. December 31, 2020 14,485 12,818 33,813 11,829 72,945 2021 8,449 12,114 21,915 8,494 50,972 Amounts to be invoiced mainly relates to accrued revenue. For further information see Note 21 contract balances. As per December 31, 2021, 49,297,394 common shares with a nominal value of €0.04 each were issued and fully paid up, of which 728,717 common shares are held by us in treasury. All shares have one vote per €0.04 par value. Treasury shares held by the company cannot be voted on. Of NOTE 11. CASH AND CASH EQUIVALENTS Cash and cash equivalents at December 31, 2021 include bank deposits and investments in money our 48,568,677 outstanding common shares at December 31, 2021, 48,282,085 are registered with our transfer agent in the Netherlands, ABN AMRO Bank N.V., and 286,592 are registered with our market funds that invest in marketable debt obligations and securities of governments, corporates transfer agent in the United States, Citibank, NA, New York. and financial institutions. The amount invested in deposits and money market funds at the end of 2021 was €83 million (2020: €9 million) and interest-bearing bank accounts of €409 million Financing preferred shares are designed to allow ASMI to finance equity with an instrument paying (2020: €426 million). Our cash and cash equivalents are predominantly denominated in US dollars, a preferred dividend, linked to EURIBOR loans and government loans, without the dilutive effects of and partly in euros, Singapore dollars, Korean won, and Japanese yen. issuing additional common shares. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 145 Preferred and financing preferred shares are issued in registered form only and are subject On February 25, 2020, ASMI announced a share buyback program to purchase up to an amount of to transfer restrictions. Essentially, a preferred or financing preferred shareholder must obtain €100 million of its own shares within the 2020-2021 time frame. The 2020-2021 program started on the approval of the company’s Supervisory Board to transfer shares. If approval is denied, the June 2, 2020, and was completed on March 2, 2021. Supervisory Board will provide a list of acceptable prospective buyers who are willing to purchase the shares at a cash price to be fixed by consent of the Supervisory Board and seller within two months after the approval is denied. If the transfer is approved, the shareholder must complete the Period transfer within three months, at which time the approval expires. Share buyback program 2020-2021: Total number of shares purchased Average price paid per share (EUR) Cumulative number of shares purchased Preferred shares are entitled to a cumulative preferred dividend based on the amount paid up on such shares. Financing preferred shares are entitled to a cumulative dividend based on the par value and share premium paid on such shares. As per December 31, 2021, no preferred shares and no financing preferred shares are issued. PURCHASES OF COMMON SHARES BY THE ISSUER AND AFFILIATED PURCHASERS On May 17, 2021, the AGM authorized the company, for an 18-month period, to be calculated from the date of the AGM, to repurchase its own shares up to 10% of the issued capital, at a price at least equal to the shares’ nominal value and at most a price equal to 110% of the shares’ average closing price according to the listing on the Euronext Amsterdam stock exchange during the five trading days preceding the purchase date. On July 23, 2019, ASMI announced a share buyback program to purchase up to an amount of €100 million of its own shares within the 2019-2020 time frame. The 2019-2020 program started on November 1, 2019, and was completed on February 17, 2020. Period Share buyback program 2019-2020: Total number of shares purchased Average price paid per share (EUR) Cumulative number of shares purchased November, 2019 December, 2019 January, 2020 February, 2020 Total 639,665 313,237 22,661 8,716 984,279 €100.95 €101.67 €112.32 €118.61 €101.60 639,665 952,902 975,563 984,279 June, 2020 July, 2020 August, 2020 September, 2020 October, 2020 November, 2020 December, 2020 January, 2021 February, 2021 March, 2021 Total 57,700 21,648 66,086 140,736 34,118 102,020 58,500 78,389 73,587 13,396 646,180 €119.16 €144.31 €127.15 €121.74 €130.83 €135.72 €169.64 €207.04 €231.18 €223.07 €154.76 57,700 79,348 145,434 286,170 320,288 422,308 480,808 559,197 632,784 646,180 On April 20, 2021, ASMI announced a share buyback program to purchase up to an amount of €100 million of its own shares within the 2021 time frame. The 2021 program started on July 28, 2021, and was completed on December 17, 2021. Period Share buyback program 2021: July, 2021 August, 2021 September, 2021 October, 2021 November, 2021 December, 2021 Total Total number of shares purchased Average price paid per share (EUR) Cumulative number of shares purchased 10,093 74,680 87,223 43,292 33,531 43,297 292,116 €295.48 €314.22 €343.70 €318.51 €404.89 €374.34 €342.33 10,093 84,773 171,996 215,288 248,819 292,116 ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 146 The following table shows the change in number of treasury shares and outstanding shares: Number of shares Balance at beginning of year Purchase common shares Exercise stock options out of treasury shares Vesting restricted shares out of treasury shares Cancellation treasury shares Balance at end of year Treasury shares Outstanding shares 1,082,712 48,714,682 462,988 (123,521) (193,462) (500,000) (462,988) 123,521 193,462 – 728,717 48,568,677 ASMI intends to use part of the shares for commitments under the employee share-based compensation schemes and the performance shares and option program for the Management Board. The share buyback programs were executed by intermediaries through on-exchange purchases or through off-exchange trades. ASMI updated the markets on the progress of the share buyback programs on a weekly basis. The repurchase programs are part of ASMI’s commitment to use excess cash for the benefit of its shareholders. TREASURY SHARES On December 31, 2021, we had 48,568,677 outstanding common shares excluding 728,717 treasury shares. This compared to 48,714,682 outstanding common shares and 1,082,712 treasury shares at year-end 2020. Besides the cancellation of 500,000 treasury shares in July 2021, the change in the number of treasury shares in 2021 was the result of 462,988 repurchased shares and 316,983 treasury shares that were used as part of share-based payments. As per January 1: Issued shares Treasury shares Outstanding shares Changes during the year: Cancellation of treasury shares Share buybacks Treasury shares used for share-based performance programs As per December 31: Issued shares Treasury shares Outstanding shares 2020 2021 51,297,394 49,797,394 2,431,174 1,082,712 48,866,220 48,714,682 1,500,000 508,685 357,147 500,000 462,988 316,983 49,797,394 49,297,394 1,082,712 728,717 48,714,682 48,568,677 RETAINED EARNINGS Distributions to common shareholders are limited to the extent the total amount of shareholders’ equity exceeds the amounts of nominal paid-in share capital (exclusive any share premium) and any reserves to be formed pursuant to law or the company’s Articles of Association. The amounts are derived from the company financial statements of ASMI. ASMI aims to pay a sustainable annual dividend. The Supervisory Board, upon proposal of the Management Board, will annually assess the amount of dividend that will be proposed to the AGM. The decision that a dividend be proposed to the AGM will be subject to the availability of distributable profits as well as retained earnings and may be affected by our potential future funding requirements. Accordingly, dividend payments may fluctuate and could decline or be omitted in any year. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 147 Over 2020, we paid in total a dividend of €2.00 per common share as regular dividend and was Multi-employer plan paid after the 2021 AGM in May 2021. We will propose to the forthcoming 2022 AGM to declare a There are 157 eligible employees in the Netherlands. These employees participate in a multi- regular dividend of €2.50 per share over 2021. employer union plan (pension fund Metalektro PME) determined in accordance with the collective Results on dilution of investments in associates are accounted for directly in equity. For 2021 and plan, accounted for as a defined contribution plan, covers approximately 1,430 companies and 2020, these dilution results were €3,205 and €2,059, respectively. approximately 165,800 contributing members. Our contribution to the multi-employer union plan bargaining agreements effective for the industry in which we operate. This multi-employer union OTHER RESERVES The changes in the amounts of other reserves are as follows: Proportionate share in other comprehensive income of investments in associates 1) Remeasure- ment on net defined benefit Foreign currency translation reserve Total other reserves Balance January 1, 2020 (10,208) (113) 137,261 126,940 Proportionate share in other comprehensive income of investments in associates Remeasurement on net defined benefit Foreign currency translation effect on foreign operations (2,296) – – Balance December 31, 2020 (12,504) Proportionate share in other comprehensive income of investments in associates Remeasurement on net defined benefit Foreign currency translation effect on foreign operations Balance December 31, 2021 11,833 – – (671) – 374 – 261 – 181 – 442 – – (2,296) 374 (98,833) (98,833) 38,428 26,185 – – 11,833 181 91,273 91,273 129,701 129,472 1  Proportionate share in other comprehensive income investments in associates, remeasurement on net defined benefit and translation reserve, items may be subsequently reclassified to profit or loss. NOTE 13. EMPLOYEE BENEFITS PENSION PLANS The company has retirement plans covering substantially all employees. The principal plans are defined contribution plans, except for the plans of the company’s operations in the Netherlands and Japan. was less than 5% of the total contribution to the plan. The plan monitors its risks on a global basis, not by participating company or employee, and is subject to regulation by Dutch governmental authorities. By law (the Dutch Pension Act), a multi-employer union plan must be monitored against specific criteria, including the coverage ratio of the plan’s assets to its obligations. As of January 1, 2015, new pension legislation has been enacted. This legislation results in, amongst others, an increase of legally required coverage levels. The coverage percentage is calculated by dividing the funds capital by the total sum of pension liabilities and is based on actual market interest rates. The coverage ratio as per December 31, 2021, of 107.9% (December 31, 2020: 97.2%) is calculated giving consideration to the pension legislation. We have no obligation to pay off any deficits the pension fund may incur, nor do we have any claim to any potential surpluses. Every company participating in the PME contributes a premium calculated as a percentage of its total pensionable salaries, with each company subject to the same contribution rate. The premium can fluctuate yearly based on the coverage ratio of the multi-employer union plan. For 2021, the contribution percentage was 27.59%. The pension rights of each employee are based upon the employee’s average salary during employment. Our net periodic pension cost for this multi-employer union plan for any period is the amount of the required employer contribution for that period minus the employee contribution. Defined benefit plan The company’s employees in Japan participate in a defined benefit plan. The company makes contributions to defined benefit plans in Japan that provide pension benefits for employees upon retirement. These are average-pay plans, based on the employees’ years of service and compensation near retirement. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 148 The most recent actuarial valuations of plan assets and the present value of the defined benefit The defined benefit cost consists of the following: obligation were carried out on December 31, 2021. The present value of the defined benefit obligation and the related current service cost and past service cost were measured using the projected unit credit method. Significant actuarial assumptions for the determination of the defined obligation are discount rate, future general salary increases, and future pension increases. The net liability (asset) of the plan developed as follows: Defined benefit obligations Fair value of plan assets Net liability (asset) for defined benefit plans December 31, 2020 11,083 12,514 (1,431) 2021 11,925 13,907 (1,982) The changes in defined benefit obligations and fair value of plan assets are as follows: Current service cost Net interest cost Net defined benefit cost Remeasurement on net defined benefit for the year Remeasurement on net defined benefit Total defined benefit cost December 31, 2020 928 (3) 925 (498) (498) 427 2021 842 (10) 832 (257) (257) 575 The assumptions in calculating the actuarial present value of benefit obligations and net periodic benefit cost are as follows: December 31, 2020 2021 Discount rate for defined benefit obligations Discount rate for defined benefit cost 2020 0.50% 0.25% 2021 0.50% 0.50% Defined benefit obligations Balance January 1 Current service cost Interest on obligation Remeasurement result Benefits paid Foreign currency translation effect Balance December 31 Fair value of plan assets Balance January 1 Interest income Return on plan assets Company contribution Benefits paid Foreign currency translation effect Balance December 31 11,446 11,083 Ministry of Health, Labour and Welfare of Japan. Assumptions regarding life expectancy are based on mortality tables published in 2020 by the 928 28 (437) (470) (412) 842 53 463 (181) (335) The main risk concerning the pension plan relates to the discount rate. The defined benefit obligation is sensitive to a change in discount rates. A relative change of the discount rate of 25 basis points would have resulted in a change in the defined benefit obligation of -2.5% to 2.6%. 11,083 11,925 The allocation of plan assets is as follows: 12,025 12,514 31 61 1,333 (470) (466) 63 720 1,170 (181) (379) 12,514 13,907 Cash and cash equivalent Equity instruments Debt instruments Assets held by insurance company December 31, 2020 2021 191 1,904 1,276 9,143 2% 15% 10% 73% 265 2,482 1,346 9,814 2% 18% 10% 70% Total 12,514 100% 13,907 100%                   ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 149 The investment strategy is determined based on an asset-liability study in consultation with investment advisors and within the boundaries given by the regulatory bodies for pension funds. MANAGEMENT BOARD AND EMPLOYEE AND LONG-TERM INCENTIVE PLAN The company has adopted various share plans (e.g. a restricted share plan, and a performance Equity instruments consist primarily of publicly traded Japanese companies and common collective share plan) and has entered into share agreements with the Management Board and various funds. Publicly traded equities are valued at the closing prices reported in the active market in which employees. Under the stock option plans, the Management Board and employees may purchase the individual securities are traded (level 1). Common collective funds are valued at the published per the vesting date a specific number of shares of the company’s common stock at a certain price. price (level 1) per share multiplied by the number of shares held as of the measurement date. Options are priced at market value in euros on the date of grant. Under the restricted share plan, Debt instruments consist of government bonds and are valued at the closing prices in the active employees receive per the vesting date a specific number of shares of the company’s common markets for identical assets (level 1). Assets held by the insurance company consist of bonds and stock. Under the performance share plan, the Management Board receives per the vesting date, loans, government securities and common collective funds. Corporate and government securities and provided the performance criteria have been met, a specific number of shares of the company’s are valued by third-party pricing sources (level 2). Common collective funds are valued at the net common stock. asset value per share (level 2) multiplied by the number of shares held as of the measurement date. Authority to issue options and shares The plan assets do not include any of the company’s shares. By resolution of the Annual General Meeting of Shareholders (AGM) of May 17, 2021, the formal Retirement plan costs authority to issue options and shares was allocated to the Management Board subject to the approval of the Supervisory Board. This authority is valid for 18 months and needs to be refreshed ASMI contributed €1,170 to the defined benefit plan in 2021 (€1,333 in 2020). The company by the 2022 AGM to allow the continued application of the long-term incentive (LTI) plans beyond expects to pay benefits for years subsequent to December 31, 2021 as follows: November 17, 2022. The company hasn’t granted new options since its last grant date per 2022 2023 2024 2025 2026 Aggregate for the years 2027-2031 Total Expected contribution defined benefit plan April 2017. 1,052 702 460 209 668 5,411 8,502 The ASMI 2014 long-term incentive plan for employees (ELTI) is principally administered by the Management Board and the ASMI 2014 long-term incentive plan for members of the Management Board (MLTI) is principally administered by the Supervisory Board. This complies with applicable corporate governance standards. However, the Supervisory Board has no power to represent the company. For external purposes, the Management Board remains the competent body under both LTI plans. The LTI plans envisage that the Supervisory Board, or in the case of the ELTI the Management Board with the approval of the Supervisory Board, will determine the number of options and shares to be granted to the Management Board members and to employees. The company does not provide for any significant post-retirement benefits other than pensions. 2014 long-term incentive plan In 2014, a new long-term incentive plan was adopted. In the new plan to limit potential dilution, the amount of outstanding (vested and non-vested) options and shares granted to the Management Board and to other employees will not exceed 5% of the issued ordinary share capital of ASMI. The new long-term incentive plan 2014 consists of two sub-plans: the ELTI and the MLTI. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 150 Options and performance shares are issued to Management Board members and restricted shares Options outstanding are issued to employees once per annum on the date following the publication of the first-quarter The following table is a summary of changes in options outstanding under the 2014 long-term results of the relevant year. Possible grant to newly hired employees can be issued once a quarter, incentive plan. on the date following the publication of the financial results of the relevant quarter. The number of options and shares outstanding under the long-term incentive plans or under any other plan or arrangement in aggregate may never exceed 5% of ASMI’s share capital. Performance and restricted shares outstanding The following table is a summary of changes in performance shares and restricted shares outstanding under the 2014 long-term incentive plan. Number of performance shares Number of restricted shares Fair value at grant date (weighted average) Status Balance January 1, 2020 69,740 367,841 Shares granted, employees – 150,686 Unconditional Shares granted, Management Board Shares granted, Management Board 13,646 5,446 – – Conditional Unconditional Shares vested Shares forfeited (58,835) (170,988) – (21,728) Balance December 31, 2020 29,997 325,811 Shares granted, employees – 86,357 Unconditional Shares granted, Management Board Shares granted, Management Board 6,343 4,504 – – Conditional Unconditional Shares vested Shares forfeited (26,414) (167,048) – (10,708) Balance December 31, 2021 14,430 234,412 €105.37 €113.85 €51.75 €260.77 €261.25 €49.78 In 2021, treasury shares were sold for the vesting of 193,462 restricted shares. Balance January 1, 2015 Options granted, April 24, 2015 Balance December 31, 2015 Options granted, April 22, 2016 Balance December 31, 2016 Options granted, April 21, 2017 Balance December 31, 2017 Adjustment following capital repayment Balance December 31, 2018 Options exercised, 2021 Balance December 31, 2021 In 2021, no options were granted. Number of options Exercise price in € Fair value at grant date – 42,659 42,659 62,555 105,214 24,963 130,177 11,593 141,770 (123,521) 18,249 44.24 €17.33 37.09 €12.64 51.55 €14.57 – – – – At December 31, 2021, the aggregate intrinsic value of all options outstanding under the 2014 long-term incentive plan is €7,093 (2020: €25,512). Share-based payments expenses The grant date fair value of the stock options, the restricted shares and the performance shares is expensed on a straight-line basis over the vesting period, based on the company’s estimate of stock options, restricted shares, and performance shares that will eventually vest. The impact of the true-up of the estimates is recognized in the consolidated statement of profit or loss in the period in which the revision is determined. We recorded compensation expenses of €17,242 for 2021 (2020: €12,792). ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 151 NOTE 14. PROVISION FOR WARRANTY The changes in the amount of provision for warranty are as follows: NOTE 15. ACCRUED EXPENSES AND OTHER PAYABLES Accrued expenses and other payables consist of the following: December 31, December 31, Balance January 1 Charged to cost of sales Deductions Releases of expired warranty Foreign currency translation effect Balance December 31 2020 16,424 18,814 (14,115) (884) (1,252) 18,987 2021 18,987 24,911 (11,660) (6,112) 1,055 27,181 Provision is made for estimated warranty claims in respect of products sold which are still under Personnel-related items Deferred revenue Financing-related items Current portion lease liabilities Advanced payments from customers Supplier-related items Marketing-related items Other warranty at the end of the reporting period. Costs of warranty include the cost of labor and materials Total accrued expenses and other payables to repair a product during the warranty period. The main term of the warranty period is one year. 2020 50,637 46,999 991 6,221 4,137 6,010 1,228 12,704 128,927 2021 72,252 68,723 – 7,574 14,837 9,627 1,575 15,976 190,564 The company accrues for the estimated cost of the warranty on its products shipped in the Personnel-related items comprise accrued management bonuses, accrued vacation days, accrued provision for warranty, upon recognition of the sale of the product. The costs are estimated based wage tax, social securities, and pension premiums. Deferred revenue consists of the revenue on actual historical expenses incurred and on estimated future expenses related to current revenue, relating to the undelivered elements of the arrangements, see Note 21 for more information. and are updated periodically. Actual warranty costs are charged against the provision for warranty. This part of revenue is deferred at their relative selling prices until delivery of these elements. The assumptions made in relation to the current period are consistent with those in the prior year. Other includes accruals for VAT, other taxes, and invoices to be received for goods and services. Factors that could impact the estimated claim information include the success of the group’s productivity and quality initiatives, as well as parts and labor costs. The main part of the claims is expected to be settled in the next financial year. NOTE 16. CREDIT FACILITY As per December 31, 2021, ASMI was debt-free. ASMI may borrow under separate short-term lines of credit with banks under an unsecured €150 million standby credit facility with a consortium of banks. Total short-term lines of credit amounted to €150 million on December 31, 2021. The amount outstanding as at December 31, 2021 was nil, so the undrawn portion totaled €150 million. The undrawn portion represents the company’s standby revolving credit facility of €150 million with a consortium of banks. The facility will be available through December 16, 2023. The credit facility of €150 million includes two financial covenants: minimum consolidated tangible net worth; and consolidated total net debt/total equity ratio.       ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 152 These financial covenants are measured twice each year on June 30 and December 31. NOTE 17. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT The minimum level of consolidated tangible net worth for the year ended December 31, 2021 required was €450 million, the consolidated tangible net worth as per that date was €1,542 million. Consolidated tangible net worth is defined as the net assets, deducting any amount shown in respect of goodwill or other intangible assets (including any value arising from any valuation of ASMPT). Total equity is defined as the aggregate of: the amounts paid up on the issued common shares; share capital in excess of par value; retained earnings; accumulated other comprehensive income and loss; and deducting any amount shown in respect of goodwill or other intangible assets. FINANCIAL INSTRUMENTS Financial instruments include: Financial assets: Cash and cash equivalents Accounts receivable Financial liabilities: Accounts payable December 31, 2020 2021 435,228 280,061 491,507 446,724 124,507 175,436 The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable equal their fair values because of the short-term nature of these instruments. The net debt/total equity ratio should not exceed 1.5. For the year ended December 31, 2021, Gains or losses related to financial instruments are as follows: the company has no net debt, cash and cash equivalents of €492 million, and total equity equals the amount of consolidated tangible net worth. The company is in compliance with these financial covenants as of December 31, 2021. Interest income Interest expense Result from foreign currency exchange ASMI does not provide guarantees for borrowings of ASMPT and there are no guarantees from Addition to allowance for doubtful accounts receivable 2020 141 (2,008) (23,157) (83) 2021 23 (2,012) 33,473 (83) ASMPT to secure indebtedness of ASMI. Under the rules of the Stock Exchange of Hong Kong, ASMPT is precluded from providing loans and advances other than trade receivables in the normal course of business, to ASMI or its non-ASMPT subsidiaries. FINANCIAL RISK FACTORS ASMI is exposed to a number of risk factors: market risks, credit risk, liquidity risk, and equity price risk. The company may use forward exchange contracts to hedge its foreign exchange risk. The company does not enter into financial instrument transactions for trading or speculative purposes. Market risk Market risk includes changes in market prices, foreign exchange rates and interest rates, which will affect the group’s income or the value of its holdings of financial instruments. The objective of market-risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.       ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 153 Foreign exchange risk Furthermore, we may manage the currency exposure of certain receivables and payables using ASMI and its subsidiaries conduct business in a number of foreign countries, with certain derivative instruments, such as forward exchange contracts (fair value hedges) and currency transactions denominated in currencies other than the functional currency of the company swaps, and non-derivative instruments, such as debt borrowings in foreign currencies. The gains (euro) or one of its subsidiaries conducting the business. The purpose of the company’s foreign or losses on these instruments provide an offset to the gains or losses recorded on receivables and currency management is to manage the effect of exchange-rate fluctuations on income, expenses, payables denominated in foreign currencies. The derivative instruments are recorded at fair value cash flows, and assets and liabilities denominated in selected foreign currencies, in particular and changes in fair value are recorded in earnings under foreign currency exchange gains (losses) denominated in US dollars. in the consolidated statement of profit or loss. Receivables and payables denominated in foreign currencies are recorded at the exchange rate at the balance sheet date, and gains and losses as a We may use forward exchange contracts to hedge our foreign exchange risk of anticipated sales or result of changes in exchange rates are recorded in earnings under foreign currency exchange gains purchase transactions in the normal course of business which occur within the next twelve months, (losses) in the consolidated statement of profit or loss. for which we have a firm commitment from a customer or to a supplier. The terms of these contracts are consistent with the timing of the transactions being hedged. The hedges related to forecasted We do not use forward exchange contracts for trading or speculative purposes. Financial assets transactions are designated and documented at the inception of the hedge as cash flow hedges, and financial liabilities are recognized on the company’s consolidated statement of financial position and are evaluated for effectiveness on a quarterly basis. The effective portion of the gain or loss on when the company becomes a party to the contractual provisions of the instrument. these hedges is reported as a component of accumulated other comprehensive income (loss) net of taxes in equity, and is reclassified into earnings when the hedged transaction affects earnings. To the extent that exchange rate fluctuations impact the value of the company’s investments in its Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the reported in consolidated equity. Reference is made to Note 12. ineffective portion of any hedges, are recognized in earnings. We record all derivatives, including forward exchange contracts, on the statement of financial position at fair value in accrued expenses Per December 31, 2020 there were no forward exchange contracts outstanding. Per December 31, and payables. Should contracts extend beyond one year, these are classified as long-term. 2021 one FX option was outstanding with a fair value of €37 thousand. foreign subsidiaries, they are not hedged. The cumulative effect of these fluctuations is separately The foreign currency exchange results in 2021 related only to translation gain of €33.5 million, compared to translation loss of €23.2 million in 2020. A substantial part of ASMI’s cash position is denominated in US dollar, which is the key driver of the exchange gain in 2021. The following table analyzes the company’s exposure to currency risk in our major currencies. (thousand) Accounts receivable Cash and cash equivalents Accounts payable Total USD 275,247 306,855 (72,087) 510,015 2020 JPY 4,019,525 2,142,789 KRW 1,551,385 35,060,828 (3,486,230) (16,031,125) 2,676,084 20,581,088 December 31, SGD 134 42,710 (28,875) 13,969 USD 394,915 417,704 (97,705) 714,914 2021 JPY 6,890,314 1,864,776 KRW 9,091,916 29,215,789 (4,057,736) (23,626,477) 4,697,354 14,681,228 SGD 395 27,003 (41,541) (14,143)     ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 154 The following table analyzes the company’s sensitivity to a hypothetical 10% strengthening and 10% Our customers are semiconductor device manufacturers located throughout the world. We perform weakening of the US dollar, Singapore dollar, Korean won and Japanese yen against the euro as of ongoing credit evaluations of our customers’ financial condition. We take additional measures December 31, 2020, and December 31, 2021. This analysis includes foreign currency-denominated to mitigate credit risk when considered appropriate by means of down payments or letters of monetary items and adjusts their translation at year-end for a 10% increase and 10% decrease credit. We generally do not require collateral or other security to support financial instruments with against the euro. credit risk. (EUR thousand) 10% increase of US dollar versus euro 10% decrease of US dollar versus euro 10% increase of Singapore dollar versus euro 10% decrease of Singapore dollar versus euro 10% increase of Korean won versus euro 10% decrease of Korean won versus euro 10% increase of Japanese yen versus euro 10% decrease of Japanese yen versus euro Impact on financial instruments Concentrations of credit risk (whether on- or off-balance sheet) that arise from financial instruments 2020 41,563 (41,563) 861 (861) 1,544 (1,544) 2,117 (2,117) 2021 63,121 (63,121) (926) 926 1,086 (1,086) 3,603 (3,603) exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. We derive a significant percentage of our revenue from a small number of large customers. The 10 largest customers accounted for approximately 78.9% of revenue in 2021 (2020: 85.1%). The three largest customers accounted for approximately 59.4% of revenue in 2021 (2020: 59.1%). In 2021, we had three customers (2020: three customers) who contributed more than 10% of total revenue. Revenue to these large customers may also fluctuate significantly from time to time, depending on the timing and level of purchases by these customers. Significant orders A hypothetical 10% strengthening or 10% weakening of any other currency against the euro as from such customers may expose the company to a concentration of credit risk, and difficulties of December 31, 2020 and December 31, 2021 could have a material impact on net earnings for in collecting amounts due, which could harm the company’s financial results. However, given certain currencies. Interest risk the creditworthiness of our customers and historical experience, we have not accounted for an expected credit loss over the outstanding balances in general, for further details we refer to Note 9. We are exposed to interest rate risk through our cash deposits. The company does not enter into We invest our cash and cash equivalents in short-term deposits, money-market funds, and financial instrument transactions for trading or speculative purposes, or to manage interest-rate derivative instruments with high-rated financial institutions. We only enter into transactions with a exposure. As per December 31, 2021, the company had no debt and was not exposed to interest limited number of major financial institutions that have high credit ratings, and we closely monitor the rate risk on borrowings. Credit risk creditworthiness of our counterparties. Concentration risk is mitigated by not limiting the exposure to a single counterparty. Financial instruments that potentially subject the company to concentrations of credit risk consist The maximum credit exposure is equal to the carrying values of cash and cash equivalent, and primarily of cash and cash equivalents, accounts receivable, and derivative instruments. These accounts receivable. instruments contain a risk of counterparties failing to discharge their obligations. We monitor credit risk and manage credit risk exposure by type of financial instrument by assessing the Liquidity risk creditworthiness of counterparties. We do not anticipate non-performance by counterparties, given Our policy is to maintain a strong capital base so as to maintain investor-, creditor- and market their high creditworthiness. confidence and to sustain future development of the business.   ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 155 Our liquidity needs are affected by many factors, some of which are based on the normal ongoing operations of the business, and others that relate to the uncertainties of the global economy and NOTE 18. COMMITMENTS AND CONTINGENCIES Per December 31, 2021, the company entered into purchase commitments with suppliers the semiconductor industry. Although our cash requirements fluctuate based on the timing and in the amount of €650,775 (2020: €183,949) for purchases within the next 12 months and extent of these factors, we believe that cash generated from operations, together with our principal €7,986 (2020: €2,170) after 12 months. Commitments for capital expenditures and other sources of liquidity, are sufficient to satisfy our current requirements, including our expected capital commitments per December 31, 2021 were €6,965 (2020: €10,495) within the next 12 months expenditures in 2022. and €0 (2020: €568) after 12 months. The increase in commitments to suppliers is mainly caused by an overall increase in business volume and due to issuance of purchase orders to ensure We intend to return cash to our shareholders on a regular basis in the form of dividend payments continuity of supply. and, subject to our actual and anticipated liquidity requirements and other relevant factors, share buybacks. NOTE 19. LITIGATION ASMI is, and may become, a party to various legal proceedings incidental to its business. As is The following table summarizes the company’s contractual and other obligations as at the case with other companies in similar industries, the company faces exposure from actual or December 31, 2021. Accounts payable Income tax payable 175,436 175,436 14,519 14,519 Accrued expenses and other payables 190,564 190,564 – – – – – – Total Less than 1 year 1-5 years More than 5 years Non-current lease liabilities Pension liabilities Purchase obligations: 15,885 8,502 – 1,052 12,524 2,039 3,361 5,411 Purchase commitments to suppliers 658,761 650,775 7,986 Capital expenditure and other commitments 6,965 6,965 – – – Total contractual obligations 1,070,632 1,039,311 22,549 8,772 Total short-term lines of credit amounted to €150 million at December 31, 2021. The amount outstanding at December 31, 2021 was nil and the undrawn portion totaled €150 million. The standby revolving credit facility of €150 million with a consortium of banks will be available through December 16, 2023. For the majority of purchase commitments, the company has flexible delivery schedules depending on the market conditions, which allows the company, to a certain extent, to delay delivery beyond originally planned delivery schedules. potential claims and legal proceedings. Although the ultimate result of legal proceedings cannot be predicted, and in many events cannot be reasonably estimated, it is the opinion of the company’s management that the outcome of any claim which is currently pending, either individually or on a combined basis, will not have a material effect on the financial position of the company, its cash flows and result of operations. NOTE 20. SEGMENT DISCLOSURE Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer (CEO), who is the Chief Operating Decision Maker (CODM). Previously, the company organized its activities in two operating segments, Front-end and Back-end. In the second half of 2021, the company removed the Back-end segment (ASMPT) as a separate operating segment. We refer to Note 1 for further considerations on the change in operating segments. The accounting policies used to measure the net earnings and total assets in each segment are consistent with those used in the consolidated financial statements. The measurement methods used to determine reported segment earnings are consistently applied for all periods presented. There were no asymmetrical allocations to segments. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 156 Geographical information is summarized as follows: Revenue stream Year ended December 31, 2020 2021 Revenue 332,981 141,300 853,841 1,328,122 Non-current assets 1) 208,780 59,765 265,879 534,424 Revenue 454,148 172,442 1,103,321 1,729,911 Non-current assets 1) 276,414 74,377 289,776 640,567 The company generates revenue primarily from the sales of equipment and sales of spares & services. The products and services are described by nature in Note 1, and are recognized within these revenue streams as follows: Equipment revenue: This revenue stream captures the sale of equipment and installation services. Revenues from royalties and licenses are included to the extent that these licenses relate to equipment. Spares & service revenue: The revenues included under this line relate to the sale of spares and support services. Revenues from royalties and licenses are included to the extent that these (EUR thousand) United States Europe Asia Total 1  Other than financial instruments, deferred tax assets and post-employment benefit assets licenses relate to spares. We refer to Note 17. Financial instruments and financial risk management for information on the extent of reliance on major customers. NOTE 21. REVENUE Geographical information is summarized as follows: (EUR thousand) Equipment revenue Spares & services revenue Total Year ended December 31, 2020 2021 1,051,463 1,408,102 276,659 321,809 1,328,122 1,729,911 (EUR thousand) United States Europe Asia Total Year ended December 31, 2020 2021 Revenue 332,981 141,300 853,841 1,328,122 Revenue 454,148 172,442 1,103,321 1,729,911 Total revenue increased by 30%, driven by solid increases in our ALD business. Contract balances Accrued revenue Deferred revenue 2020 33,813 46,999 2021 21,915 68,723 For geographical reporting, the revenue is attributed to the geographical location in which the customer’s facilities are located. The increase in the contract balances is the result of the higher activity level of the company. The accrued revenue included in the ‘Amounts to be invoiced’ primarily relate to the company’s right to consideration for work completed and revenue recognized but not billed at the reporting date. The accrued revenue is transferred to accounts receivables when the rights become unconditional. This usually occurs when the company issues an invoice to the customer.             ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 157 Deferred revenue relates to the advance consideration received from customers for which revenue is Reconciliation of effective tax rate not yet recognized because the performance obligation has not been satisfied yet. Deferred revenue The provisions for income taxes as shown in the consolidated statements of profit or loss differ from consists of the revenue relating to undelivered elements of the arrangement with customers. the amounts computed by applying the Dutch statutory income tax rate to earnings before taxes. This part of the revenue is deferred at the transaction price allocated to the performance obligations A reconciliation of the provisions for income taxes and the amounts that would be computed using until shipment. An amount of €21 million included in the deferred revenue at December 31, 2020, the Dutch statutory income tax rate is set forth as follows: has been recognized in 2021. NOTE 22. INCOME TAXES Amounts recognized in profit or loss The components of the result before income taxes consist of: The Netherlands Other countries Result before income taxes The income tax expense consists of: Current: The Netherlands Other countries Deferred: The Netherlands Other countries Year ended December 31, 2020 212,795 121,274 334,069 2021 358,039 239,285 597,324 Year ended December 31, 2020 2021 (25,462) (17,754) (43,216) (3,348) (2,109) (72,032) (7,718) (79,750) (5,948) (16,917) Income tax expense (48,673) (102,615) Result before income taxes from continuing operations Income tax provision based on Dutch statutory income tax rate Non-deductible expenses Foreign taxes at a rate other than the Dutch statutory rate Tax incentives and non-taxable income 1) Adjustments in respect of prior years' current taxes Other 2) Year ended December 31, 2020 2021 334,069 100.0% 597,324 100.0% (83,517) 25.0% (149,331) (1,892) 0.6% (2,098) 5,575 24,961 4,525 1,675 (1.7)% (7.5)% (1.4)% (0.5)% 8,484 37,708 3,818 (1,196) 25.0% 0.4% (1.4)% (6.3)% (0.6)% 0.2% 17.2% Tax income (expense) (48,673) 14.6% (102,615) 1  Non-taxable income consists of revenues deriving from the share in income of investments in associates which are exempted under the Dutch participation exemption. 2  Other mainly consists of tax credits, withholding taxes, changes in (enacted) tax laws and revaluation of certain assets. Tax incentives relate to the Netherlands (Innovation Box), Singapore (Pioneer Certificate) and South Korea. On June 8, 2009, the Singapore Economic Development Board (EDB) granted a Pioneer Certificate to ASM Front-end Manufacturing Singapore Pte Ltd (FEMS), a principal subsidiary of the Group, to the effect that profits arising from certain manufacturing activities by FEMS of equipment will in principle be exempted from tax for a period of 10 years effective from July 1, 2008, subject to fulfillment of certain criteria during the period. This exemption has been extended for a period of five years, until July 2023. The Dutch statutory tax rate is 25%. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions. During 2021, there was no significant change in the statutory tax rates of the relevant jurisdictions. The company’s deferred tax assets and liabilities have been determined in accordance with these statutory income tax rates including the increased Dutch statutory rate of 25.8% per 2022.             ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 158 Movement in deferred tax balances Right-of-use assets & lease liabilities Property plant and equipment Other intangible assets Evaluation tools Employee benefits Inventories Provision for warranty Accrued expenses Tax losses carried forward R&D tax credits Total deferred tax Right-of-use assets & lease liabilities Property plant and equipment Other intangible assets Evaluation tools Employee benefits Inventories Provision for warranty Accrued expenses Tax losses carried forward R&D tax credits Total deferred tax Net balance at January 1, 2020 Consolidated statement of profit and loss Equity Exchange differences Net balance at December 31, 2020 Deferred tax assets at December 31, 2020 Deferred tax liabilities at December 31, 2020 45 771 (36,920) 2,993 (320) 1,143 3,235 1,290 – 10,691 (17,072) 51 (146) (8,065) 2,343 (131) (61) 830 2,012 – (2,290) (5,457) – – – – (112) – – – – – (112) (5) (72) 2,358 (136) 14 (81) (231) (54) – (848) 945 91 553 (42,627) 5,200 (549) 1,001 3,834 3,248 – 7,553 (21,696) – – – – – 134 – 62 – – 196 91 553 (42,627) 5,200 (549) 867 3,834 3,186 – 7,553 (21,892) Net balance at January 1, 2021 Consolidated statement of profit and loss Equity Exchange differences Net balance at December 31, 2021 Deferred tax assets at December 31, 2021 Deferred tax liabilities at December 31, 2021 91 553 (42,627) 5,200 (549) 1,001 3,834 3,248 – 7,553 (21,696) 109 (3,370) (16,471) (1,097) (69) 203 1,593 2,845 – (6,608) (22,865) – – – – (79) – – – – – 12 (11) (1,687) (154) 17 74 224 203 – 283 212 (2,828) (60,785) 3,949 (680) 1,278 5,651 6,296 – 1,228 (79) (1,039) (45,679) – – – – – – – 69 – – 69 212 (2,828) (60,785) 3,949 (680) 1,278 5,651 6,227 – 1,228 (45,748) Deferred tax assets and/or liabilities for temporary differences are mainly recognized in the Netherlands, United States, Japan, South Korea and Singapore.     ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 159 Income tax receivable and income tax payable Other taxes During 2021, the company paid income taxes of €151.6 million (2020: €8.1 million) for tax The company has not provided for deferred foreign withholding taxes, if any, on undistributed assessments relating to the years 2019, 2020 and 2021. earnings of its foreign subsidiaries. At December 31, 2021, the undistributed earnings of subsidiaries, subject to withholding taxes, were approximately €117,101. These earnings could Income taxes paid in 2021, turned out being overpaid by €18.1 million, therefore resulting in an become subject to foreign withholding taxes if they were remitted as dividends and/or if the income tax receivable ultimo 2021. The tax payable decreased to €14.5 million (2020: €67.9 million) company should sell its interest in the subsidiaries. as a result of income tax paid in 2021. Unrecognized deferred tax assets NOTE 23. EXPENSES BY NATURE Expenses by nature were as follows: The credits concern R&D credits generated in the US, in the state of Arizona. However, ASMI does not recognize these credits stemming from prior years due to the fact that utilization of prior-year credits is only possible if and when the credits generated in the current year are fully utilized. Given the level of R&D activity in the US, the company does not expect it could fully utilize the credits generated in the current year and, hence, does not expect to benefit from the available credits generated in prior years. Materials and supplies Personnel expenses Depreciation and amortization 2021 Impairments Gross amount Tax effect Other personnel-related expenses Credits Unrecognized deferred tax assets 18,442 18,442 18,442 18,442 Professional fees Other 1) Year ended December 31, 2020 554,829 255,814 78,903 10,126 51,661 24,397 25,249 2021 727,910 322,226 93,614 1,967 63,938 27,520 5,349 Summary of open tax years A summary of open tax years by major jurisdiction is as follows: Total cost of sales, selling, general and administrative and research and development expenses 1,000,979 1,242,524 1  Other relates to facility expenses, IT expenses and other expenses minus capitalized expenses. Jurisdiction Japan The Netherlands Singapore United States of America South Korea 2016 - 2021 2020 - 2021 2016 - 2021 2001 - 2021 2016 - 2021 Research and development consists of the following: Gross research and development expenses Capitalization of development expenses Amortization of capitalized development expenses Research and development grants and credits Year ended December 31, 2020 171,842 (64,126) 21,187 (27) 2021 206,019 (81,973) 25,184 – The calculation of the company’s tax liabilities involves dealing with uncertainties in the application Total research and development expenses 128,876 149,230 of complex tax laws. The company’s estimate for the potential outcome of any unrecognized tax benefits is highly judgmental. Settlement of unrecognized tax benefits in a manner inconsistent Impairment of capitalized development expenses Net research and development expenses 10,126 139,002 1,967 151,197 with the company’s expectations could have a material impact on the company’s financial position, net earnings and cash flows. The company is subject to tax audits in its major tax jurisdictions, and The impairment expenses in 2020 and 2021 are related to customer-specific projects. local tax authorities may challenge the positions taken by the company.               ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 160 Personnel expenses for employees were as follows: The number of employees, exclusive of temporary workers, by function at year-end was as follows: Wages and salaries Social security Pension expenses Share-based payment expenses Restructuring expenses Total December 31, December 31, 2020 216,832 17,200 8,948 12,792 42 2021 Per function 273,394 Research and development 20,333 11,257 17,242 Manufacturing Marketing and sales Customer service – Corporate and support functions 255,814 322,226 Total 2020 613 531 341 884 214 2,583 2021 649 879 396 1,090 298 3,312 Personnel expenses are included in cost of sales and in operating expenses in the consolidated statement of profit or loss. NOTE 24. EARNINGS PER SHARE Basic net earnings per common share is calculated by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding for that period. The The number of employees, exclusive of temporary workers, by geographical area at year-end was dilutive effect is calculated using the treasury stock method. The calculation of diluted net income as follows: Geographical location Europe: - the Netherlands - EMEA United States Japan South Korea Singapore Asia, other Total per share assumes the exercise of options issued under our stock option plans (and the issuance of shares under our share plans) for periods in which exercises (or issuances) would have a dilutive December 31, 2020 2021 effect. 146 221 714 283 302 524 393 161 240 814 295 392 854 556 2,583 3,312 The calculation of basic and diluted net income per share attributable to common shareholders is based on the following data: December 31, 2020 2021 Net earnings used for purposes of calculating net income per common share Net earnings from operations 285,396 494,709 Basic weighted average number of shares outstanding during the year Effect of dilutive potential common shares from stock options and restricted shares Dilutive weighted average number of shares outstanding Basic net earnings per share: from operations Diluted net earnings per share: from operations 48,907 48,645 452 49,359 264 48,909 5.84 10.17 5.78 10.11         ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 161 NOTE 25. BOARD REMUNERATION During 2021, the company considered the members of the Management Board and the Supervisory Board to be the key management personnel. Total remuneration for key management personnel NOTE 26. SHARE OWNERSHIP AND RELATED PARTY TRANSACTIONS The ownership or controlling interest of outstanding common shares of ASMI by members of the in 2021 amounts to €4,800 (2020: €7,181). ASMI does not provide any loans, deposits or related Management Board and Supervisory Board or members of their immediate family are as follows: P.A.M. van Bommel (former member of the Management Board) 1)  P.F.M. van der Meer Mohr (member of the Supervisory Board) D. Lamouche (member of the Supervisory Board) M.J.C. de Jong (member of the Supervisory Board) Shares owned 26,177 n.a. n.a. December 31, 2020 December 31, 2021 Percentage of common shares outstanding Shares owned Percentage of common shares outstanding 0.05% n.a. n.a. n.a. 200 390 n.a. 0.00% 0.00% 0.01% 4,050 0.01% 4,050 1  This information is not disclosed for 2021 as Mr. P.A.M. van Bommel had stepped down from the ASMI Board on May 17, 2021. The company has a related party relationship with its subsidiaries, equity-accounted investees, and members of the Supervisory Board and the Management Board. Related party transactions, if any, are conducted on an arm’s-length basis with terms comparable to transactions with third parties. guarantees to the members of the Management Board or the Supervisory Board. MANAGEMENT BOARD The remuneration of members of the Management Board has been determined by the Supervisory Board according to the following table that sets out information concerning all remuneration from the company (including its subsidiaries) for services in all capacities to all current members of the Management Board of the company. The remuneration of the Management Board consists of the remuneration of current and former managing directors. Short-term employee benefits Post-employment benefits Other long-term benefits Termination benefits Share-based payment 1) Total Management Board remuneration before additional payroll tax Other 2) Total Management Board remuneration December 31, 2020 2,410 216 – – 1,804 4,430 2,400 6,830 2021 2,856 190 – – 1,391 4,437 – 4,437 1   The amounts included for share-based payment in the total remuneration represent the vesting expenses related to the financial year. 2  Represents an additional payroll tax to the company due to vesting of already granted shares in previous years related to the retirement of a member of the Management Board subject to article 32bb of the Dutch Wage Tax Act. SUPERVISORY BOARD The total remuneration (base compensation, no bonuses or pensions were paid) from the company (including its subsidiaries) for services in all capacities to all current and former members of the Supervisory Board of the company in 2021 amounts to €363 (2020: €351). No stock options or performance shares have been granted to members of the Supervisory Board.   ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 162 NOTE 27. PRINCIPLE AUDITOR’S FEES AND SERVICES KPMG Accountants N.V. has served as our external auditor for the years 2021 and 2020. The table Audit services Management submits to the Audit Committee for preapproval the scope and estimated fees for sets out the aggregate fees for professional audit services and other services rendered by the specific services directly related to performing the independent audit of our consolidated financial external auditors and its member firms and/or affiliates in 2021 and 2020. The fees mentioned in statements for the current year. the table for the audit of the financial statements 2021 (2020) relate to the total fees for the audit of the financial statements 2021 (2020), irrespective of whether the activities were performed during Audit-related services the financial year 2021 (2020). Other audit-related fees are related to assurance services on non- The Audit Committee may preapprove expenditures up to a specified amount for services included financial information. The following fees were charged by KPMG Accountants N.V. to the company, in identified service categories that are related extensions of audit services and are logically its subsidiaries and other consolidated companies, as referred to in Section 2:382a(1) and (2) of the performed by the auditors. Additional services exceeding the specified preapproved limits require Dutch Civil Code. specific Audit Committee approval. 2020 2021 Tax services KPMG Accountants NV KPMG network KPMG total KPMG Accountants NV KPMG network KPMG total 623 245 868 – – – – – – – – – 676 50 – – 264 – – – 940 50 – – The Audit Committee may preapprove expenditures up to a specified amount per engagement and in total for identified services related to tax matters. Additional services exceeding the specified preapproved limits, or involving service types not included in the preapproved list, require specific Audit Committee approval. 623 245 868 726 264 990 Other services Audit fees Audit-related fees Tax fees Other fees Total AUDIT COMMITTEE PREAPPROVAL POLICIES The Audit Committee has determined that the provision of services by KPMG described in the In the case of specified services for which utilizing our external auditor creates efficiencies, minimizes disruption, or preserves confidentiality, or for which management has determined that our external auditor possesses unique or superior qualifications to provide such services, the Audit Committee may preapprove expenditures up to a specified amount per engagement and in total. Additional preceding paragraphs is compatible with maintaining KPMG’s independence. All audit and permitted services exceeding the specified preapproved limits, or involving service types not included in the non-audit services provided by KPMG during 2021 were preapproved by the Audit Committee. preapproved list, require specific Audit Committee approval. The Audit Committee has adopted the following policies and procedures for preapproval of all audit and permitted non-audit services provided by our external auditor:     ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 163 NOTE 28. SUBSIDIARIES Unless otherwise indicated, these are, directly or indirectly, wholly-owned subsidiaries. The location included below is the principal place of business of the specified subsidiaries. There is no difference between the principal place of business and country of incorporation. Name Subsidiaries (consolidated) ASM Europe BV 1) ASM IP Holding BV 1) ASM Pacific Holding BV 1) 2) ASM Netherlands Holding BV 1) ASM United Kingdom Sales BV 1) ASM Germany Sales BV 1) ASM France SARL ASM Italia Srl ASM Belgium NV ASM Services and Support Ireland Ltd ASM Services and Support Israel Ltd ASM Microchemistry Oy ASM America Inc ASM NuTool Inc ASM Japan KK ASM Wafer Process Equipment Singapore Pte Ltd ASM Front-End Manufacturing Singapore Pte Ltd ASM Services & Support Malaysia SDN BHD Location Almere, the Netherlands Almere, the Netherlands Almere, the Netherlands Almere, the Netherlands Almere, the Netherlands Almere, the Netherlands Crolles, France Milano, Italy Leuven, Belgium Dublin, Ireland Kiryat Gat, Israel Helsinki, Finland Phoenix, Arizona, United States of America Phoenix, Arizona, United States of America Tokyo, Japan Singapore Singapore Kulim, Malaysia ASM Korea Ltd Dongtan, South Korea ASM Front-End Sales & Services Taiwan Co Ltd Hsin-Chu, Taiwan ASM China Ltd Shanghai, People’s Republic of China % ownership December 31, 2020 2021 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 1  For these subsidiaries, ASM International N.V. has filed statements at the Dutch Chamber of Commerce assuming joint and several liability in accordance with Article 403, Part 9 of Book 2 of the Dutch Civil Code. 2  ASM Pacific Holding BV holds 24.96% of the shares in ASM Pacific Technology Ltd. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 164 NOTE 29. SUBSEQUENT EVENTS Subsequent events were evaluated up to March 3, 2022, which is the issuance date of this Annual Report 2021. There are no subsequent events to report. SIGNING Almere, the Netherlands March 3, 2022 SUPERVISORY BOARD M.C.J. van Pernis S. Kahle-Galonske D.R. Lamouche M.J.C. de Jong P.F.M. van der Meer Mohr A.T. Sanchez M. de Virgiliis MANAGEMENT BOARD G.L. Loh P.A.H. Verhagen ASM International N.V. financial statements ASM International N.V. financial statements Company balance sheet Company balance sheet ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 165 COMPANY BALANCE SHEET (before proposed appropriation of net earnings for the year) (EUR thousand) Non-current assets Right-of-use assets Property, plant and equipment Goodwill Other intangible assets Investments in subsidiaries and associates Loans to subsidiaries Other non-current assets Total non-current assets Current assets Loans to subsidiaries Amounts due from subsidiaries Income tax receivable Other current assets Cash and cash equivalents Total current assets Total assets Equity Common shares Capital in excess of par value Treasury shares Legal reserves Translation reserve Other legal reserves Accumulated net earnings Net earnings current year Total equity Non-current liabilities Lease liabilities Total non-current liabilities Current liabilities Accounts payable Amounts due to subsidiaries Income tax payable Accrued expenses and other payables Total current liabilities Total liabilities Total equity and liabilities The notes on the following pages are an integral part of these company financial statements. Notes 2020 2021 December 31, 2 3 3 3 6 7 4 5 6 7 172 148 11,270 197 1,831,446 39,689 6,166 1,889,088 2,071 71,562 – 685 – 74,318 1,963,406 1,992 34,502 (104,962) 26,185 908,910 702,701 285,396 1,854,724 69 69 295 49,950 52,714 5,654 108,613 108,682 1,963,406 402 70 11,270 29 2,433,956 40,518 5,977 2,492,222 2,180 104,032 18,098 929 89,527 214,766 2,706,988 1,972 25,281 (155,397) 129,472 1,051,972 693,745 494,709 2,241,754 261 261 1,503 458,756 – 4,714 464,973 465,234 2,706,988     Company statement of profit or loss Company statement of profit or loss ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 166 COMPANY STATEMENT OF PROFIT OR LOSS (EUR thousand) Operating expenses: Selling, general and administrative Research and development Total operating expenses Result from operations Finance income Finance expense Foreign currency exchange gain (loss) Result before income taxes Income taxes Net earnings from holding activities Net earnings from subsidiaries and associates Total net earnings The notes on the following pages are an integral part of these company financial statements. Year ended December 31, Notes 2020 2021 8 (26,408) (4,074) (30,482) (29,987) (672) (30,659) (30,482) (30,659) 2,576 (1,211) 34,975 5,858 (2,325) 3,533 281,863 285,396 2,124 (1,483) (28,493) (58,511) 16,727 (41,784) 536,493 494,709   Notes to the company financial statements Notes to the company financial statements ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 167 NOTES TO THE COMPANY FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ASM International N.V. (ASMI or the company) is a Dutch public liability company. Statutory seat: Versterkerstraat 8, 1322 AP Almere, the Netherlands. Settlement within the fiscal unity between the company and its subsidiaries takes place through current account positions. Participating interests in group companies The description of our activities and our structure, as included in the notes to the consolidated Group companies are all entities in which the company has directly or indirectly control. The financial statements, also apply to the company financial statements. company controls an entity when it is exposed, or has rights, to variable returns from its involvement with the group company and has the ability to affect those returns through its power over the group The accompanying company financial statements are stated in thousands of euros unless otherwise company. Group companies are recognized from the date on which control is obtained by the indicated. company and derecognized from the date that control by the company over the group company ceases. Participating interests in group companies are accounted for in the company financial ACCOUNTING POLICIES APPLIED The financial statements of the company included in this section are prepared in accordance statements according to the equity method, with the principles for the recognition and measurement of assets and liabilities and determination of results as set out in the notes to the consolidated with Part 9 of Book 2 of the Dutch Civil Code. For setting the principles for the recognition and financial statements. measurement of assets and liabilities and determination of results for the company financial statements, the company makes use of the option provided in section 2:362(8) of the Dutch Participating interests with a negative net asset value are valued at nil. This measurement also Civil Code. This means that the principles for the recognition and measurement of assets and covers any receivables provided to the participating interests that are, in substance, an extension of liabilities and determination of the result (hereinafter referred to as principles for recognition and the net investment. In particular, this relates to loans for which settlement is neither planned nor likely measurement) of the company financial statements of the company are the same as those applied to occur in the foreseeable future. A share in the profits of the participating interest in subsequent for the consolidated EU-IFRS financial statements. These principles also include the classification years will only be recognized if and to the extent that the cumulative unrecognized share of loss has and presentation of financial instruments, being equity instruments or financial liabilities. In been absorbed. If the company fully or partially guarantees the debts of the relevant participating case no other principles are mentioned, refer to the accounting principles as described in the interest, or if has the constructive obligation to enable the participating interest to pay its debts consolidated financial statements. For an appropriate interpretation of these statutory financial (for its share therein), then a provision is recognized accordingly to the amount of the estimated statements, the company financial statements should be read in conjunction with the consolidated payments by the company on behalf of the participating interest. financial statements. Information on the use of financial instruments and on related risks for the group is provided in The share in the result of participating interests consists of the share of the company in the result the notes to the consolidated financial statements of the group. of these participating interests. Results on transactions involving the transfer of assets and liabilities Corporate income tax between the company and its participating interests and mutually between participating interests themselves, are eliminated to the extent that they can be considered as not realized. The company is the head of the Dutch fiscal unity. The company recognizes the portion of corporate income tax that it would owe as an independent taxpayer, taking into account the allocation of the advantages of the fiscal unity. NOTE 2. GOODWILL Reference is made to Note 4 of the consolidated financial statements. Share of result of participating interests ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 168 NOTE 3. INVESTMENTS AND LOANS TO SUBSIDIARIES Investments in subsidiaries Loans to subsidiaries Total NOTE 4. CASH AND CASH EQUIVALENTS The amounts of cash and cash equivalents are mainly related to the cash pool and in-house bank operated by the company. At December 31, 2021, the cash pool and in-house bank arrangement Balance January 1, 2020 1,662,442 47,500 1,709,942 resulted in a liability which is recorded in amounts due to subsidiaries. The amount presented as cash and cash equivalents at December 31, 2021 include bank deposits and investments in money market funds that invest in marketable debt obligations and securities of governments, corporates and financial institutions. The amount invested in deposits and money market funds at the end of 2021 was €83 million and interest-bearing bank accounts of €7 million. Our cash and cash equivalents are predominantly denominated in US dollars and partly in euros. Bank guarantees exist for an amount of €1.0 million at December 31, 2021. These guarantees mainly relate to lease and tax payments. Cash and cash equivalents have insignificant interest-rate risk and remaining maturities of maximum three months or can be converted into cash without no more than 30 days’ notice. Except for an amount of €4.4 million, there are no restrictions on usage of cash and cash equivalents. The carrying amount of these financial assets approximates their fair value. The company has not recognized a provision for expected credit loss for cash and cash equivalents due to the insignificance of the amount. Net result of subsidiaries and associates Other comprehensive income investments Dividend received Repayment of loans Dilution Foreign currency translation effect 281,863 (1,922) (16,961) – 2,059 (96,035) Balance December 31, 2020 1,831,446 Net result of subsidiaries and associates Other comprehensive income investments Dividend received Repayment of loans Dilution Foreign currency translation effect 536,493 12,015 (38,140) – 3,205 88,937 Balance December 31, 2021 2,433,956 Loans due from subsidiaries – non-current portion Loans due from subsidiaries – current portion Total – – – (2,071) – (3,669) 41,760 – – – (2,272) – 3,210 42,698 281,863 (1,922) (16,961) (2,071) 2,059 (99,704) 1,873,206 536,493 12,015 (38,140) (2,272) 3,205 92,147 2,476,654 December 31, 2020 39,689 2,071 41,760 2021 40,518 2,180 42,698 The interest on the loans due from subsidiaries is based on the Bank of America’s prime rate plus two percent points. The repayment schedule of the loan is as follows: 24 annual installments of US$2 million, started December 31, 2018, followed by a final installment of US$5.3 million on December 31, 2043.     ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 169 Capital in excess of par value Treasury shares Accumulated net earnings Legal reserves Translation reserve 126,940 Other legal reserves 932,105 NOTE 5. EQUITY The changes in equity are as follows: (EUR thousand) Balance as of January 1, 2020 Appropriation of net earnings: Components of comprehensive income Net earnings Other comprehensive income Total comprehensive income (loss) Dividend paid to common shareholders Compensation expense share-based payments Exercise stock options out of treasury shares Vesting restricted shares out of treasury shares Purchase of common shares Common shares 2,052 – – – – – – – – – Cancellation of common shares out of treasury shares (60) Change in retained earnings subsidiaries Fair value accounting investments Capitalized development expenses subsidiaries Other movements in investments in associates: Dilution – – – – 43,676 (169,707) – – – – – 12,792 (5,923) (16,043) – – – – – – – – – – – – 8,697 16,043 (67,505) 107,510 – – – – Balance as of December 31, 2020 1,992 34,502 (104,962) Appropriation of net earnings Components of comprehensive income: Net earnings Other comprehensive income Total comprehensive income (loss) Dividend paid to common shareholders Compensation expense share-based payments Exercise stock options out of treasury shares Vesting restricted shares out of treasury shares Purchase of common shares – – – – – – – – – Cancellation of common shares out of treasury shares (20) Change in retained earnings subsidiaries Fair value accounting investments Capitalized development expenses subsidiaries Other movements in investments in associates: Dilution – – – – – – – – – 17,242 (7,344) (19,119) – – – – – – – – – – – – 11,974 19,119 (139,150) 57,622 – – – – Balance as of December 31, 2021 1,972 25,281 (155,397) 554,572 329,013 – – – (98,688) – – – – (107,450) (2,733) 47,772 (21,844) 2,059 702,701 285,396 – – – (96,893) – – – – (57,602) (61,998) (17,728) (63,336) 3,205 693,745 Net earnings current year 329,013 (329,013) 285,396 – 285,396 – – – – – – – – – – – – (100,755) (100,755) – – – – – – – – – – Total equity 1,818,651 – 285,396 (100,755) 184,641 (98,688) 12,792 2,774 – (67,505) – – – – – – – – – – – – – – 2,733 (47,772) 21,844 – 2,059 285,396 26,185 908,910 1,854,724 (285,396) 494,709 – 494,709 – – 103,287 103,287 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 61,998 17,728 63,336 – 494,709 103,287 597,996 (96,893) 17,242 4,630 – (139,150) – – – – – 3,205 494,709 129,472 1,051,972 2,241,754 ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 170 COMMON SHARES, PREFERRED AND FINANCING PREFERRED SHARES Following the amendment of the articles of association on August 3, 2018, the authorized capital of the company amounts to 82,500,000 common shares of €0.04 par value, 88,500 preferred shares of €40 par value, and 6,000 financing preferred shares of €40 par value. Changes in other legal reserves in 2020 and 2021 were as follows: The AGM of May 17, 2021, approved the cancellation of 500,000 treasury shares. This became Balance as of January 1, 2020 effective as per July 21, 2021. As per December 31, 2021, 49,297,394 common shares with a nominal value of €0.04 each were issued and fully paid up, of which 728,717 common shares are held by us in treasury. All shares have one vote per €0.04 par value. Treasury shares held by the company cannot be voted on. Of Retained earnings subsidiaries and investments Fair value accounting investments Development expenditures Balance as of December 31, 2020 our 48,568,677 outstanding common shares at December 31, 2021, 48,282,085 are registered with Retained earnings subsidiaries and investments our transfer agent in the Netherlands, ABN AMRO Bank N.V., and 286,592 are registered with our Fair value accounting investments transfer agent in the United States, Citibank, NA, New York. Development expenditures Balance as of December 31, 2021 As at December 31, 2021, no preferred shares and no financing preferred shares are issued. Reserve for participating interests, regarding retained earnings 749,609 2,733 (47,772) – 704,570 61,998 17,728 – 784,296 Reserve for participating interests, regarding capitalized development expenses Other legal reserves 182,496 932,105 – – 21,844 2,733 (47,772) 21,844 204,340 908,910 – – 63,336 61,998 17,728 63,336 267,676 1,051,972 For more detailed information, reference is made to Note 12 to the consolidated financial TREASURY SHARES With respect to treasury shares, reference is made to Note 12 to the consolidated financial statements. statements. OTHER LEGAL RESERVES The other legal reserve for participating interests regarding retained earnings, which amounts to EMPLOYEE STOCK PLAN, OPTION PLAN AND EMPLOYEE RESTRICTED SHARES PLAN The company has adopted various stock option plans and restricted share plans, and has entered into related agreements with various employees. For detailed information, reference is made to Note €784,296 (2020: €704,570), pertains to participating interests that are accounted for according 13 to the consolidated financial statements. to the equity accounting method. The reserve represents the difference between the participating interest retained earnings and direct changes in equity, as determined on the basis of the company’s accounting policies, and the share thereof that the company may distribute. As to the latter share, APPROPRIATION OF RESULT It is proposed that net earnings for the year 2021 are carried to the accumulated net earnings. this takes into account any profits that may not be distributed by participating interests that are Dutch limited companies based on the distribution tests to be performed by the management of those companies. The legal reserve is determined on an individual basis. NOTE 6. AMOUNTS DUE FROM / TO SUBSIDIARIES The amounts due from subsidiaries are mainly related to the settlement of the income tax of the Dutch fiscal unity. In accordance with applicable legal provisions, a legal reserve for the carrying amount of €267,676 (2020: €204,340) has been recognized for capitalized development costs. The amounts due to subsidiaries are mainly related to the cash pool and in-house bank operated by the company. The amounts due to subsidiaries increased as a result of cash generated by higher activities. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 171 NOTE 7. INCOME TAX RECEIVABLE / PAYABLE The income tax payable or receivable reflects the amount due or owed by the Dutch fiscal For information on the parent company’s defined benefit pension plan, the remuneration of the Management Board and the Supervisory Board, and the parent company’s share-based unity regarding the preliminary tax assessments and payments for the years 2020 and 2021. compensation plans, see Notes 13 and 25 to the consolidated financial statements. The company is severally liable for the tax payables of the Dutch fiscal unity. The income tax liability ultimo 2020 changed to an income tax receivable ultimo 2021 as a result of an overpayment of NOTE 10. COMMITMENTS AND CONTINGENCIES With respect to certain Dutch subsidiaries, ASMI has assumed joint and several liability in accordance with Article 403, Part 9 of Book 2 of the Dutch Civil Code. These Dutch subsidiaries are disclosed in Note 28 of the consolidated financial statements. estimated preliminary income tax. NOTE 8. EXPENSES BY NATURE Expenses by nature were as follows: Personnel expenses Depreciation and amortization Other personnel-related expenses Professional fees Other Total operating expenses Year ended December 31, Dutch subsidiaries for purposes of Dutch tax laws and is as such jointly and severally liable for the ASMI forms a fiscal unity (tax group for corporate income tax purposes) together with its 2020 11,263 3,736 3,651 8,247 3,585 30,482 2021 12,588 413 2,994 10,039 4,625 30,659 tax debts of the unity. The tax unity consists of ASM International N.V. and the following subsidiaries: ASM Europe BV; ASM IP Holding BV; ASM Pacific Holding BV; ASM Netherlands Holding BV; ASM United Kingdom Sales BV; and ASM Germany Sales BV. NOTE 9. PERSONNEL EXPENSES The average number of employees of ASMI during 2021 was 29 (2020: 24). All employees have corporate and support functions and were based in the Netherlands. For VAT purposes in the Netherlands, ASMI forms a fiscal unity together with ASM Europe BV and ASM IP Holding BV. Salaries Social security charges Pension expenses Share-based payment expenses Total Year ended December 31, 2020 7,943 294 666 2,360 11,263 2021 9,097 346 786 2,359 12,588 NOTE 11. SHARE OWNERSHIP OF THE MANAGEMENT BOARD AND SUPERVISORY BOARD With respect to share ownership of the Management Board and Supervisory Board, reference is made to Note 26 to the consolidated financial statements. NOTE 12. AUDITOR’S FEES AND SERVICES For information regarding auditor’s fees and services we refer to Note 27 to the consolidated financial statements. Further information concerning the number of employees can be found in Note 23 to the consolidated financial statements.     ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 172 NOTE 13. SUBSEQUENT EVENTS Subsequent events were evaluated up to March 3, 2022, which is the issuance date of this Annual Report 2021. There are no subsequent events to report. SIGNING Almere, the Netherlands March 3, 2022 SUPERVISORY BOARD M.C.J. van Pernis S. Kahle-Galonske D.R. Lamouche M.J.C. de Jong P.F.M. van der Meer Mohr A.T. Sanchez M. de Virgiliis MANAGEMENT BOARD G.L. Loh P.A.H. Verhagen Independent auditor’s report Independent auditor’s report ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 173 INDEPENDENT AUDITOR’S REPORT To: the General Meeting of Shareholders and the Supervisory Board of ASM International N.V. The company financial statements comprise: Report on the audit of the financial statements 2021 included in the annual report Our opinion In our opinion: 1.  the company balance sheet as December 31, 2021; 2.  the company statement of profit or loss for 2021; and 3.  the notes comprising a summary of the accounting policies and other explanatory information. Basis for our opinion We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. - the accompanying consolidated financial statements give a true and fair view of the financial Our responsibilities under those standards are further described in the ‘Our responsibilities for the position of ASM International N.V. as at December 31, 2021 and of its result and its cash flows for Audit of the Financial statements’ section of our report. the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code. We are independent of ASM International N.V. in accordance with the ‘Verordening inzake de - the accompanying company financial statements give a true and fair view of the financial position onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO, Code of Ethics for Professional of ASM International N.V. as at December 31, 2021 and of its result for the year then ended in Accountants, a regulation with respect to independence) and other relevant independence accordance with Part 9 of Book 2 of the Dutch Civil Code. regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en What we have audited We have audited the financial statements 2021 of ASM International N.V. (the Company) based in Our audit procedures were determined in the context of our audit of the financial statements as Almere. The financial statements include the consolidated financial statements and the company a whole. Our observations in respect of going concern, fraud and non-compliance with laws and financial statements. regulations, climate and the key audit matters should be viewed in that context and not as separate beroepsregels accountants’ (VGBA, Dutch Code of Ethics). The consolidated financial statements comprise: opinions or conclusions. 1.  the consolidated statement of financial position as at December 31, 2021; We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for 2.  the following consolidated statements for 2021: the statement of profit or loss, the statements of our opinion. comprehensive income, changes in equity and cash flows; and 3.  the notes comprising a summary of the significant accounting policies and other explanatory information. KPMG Accountants N.V., a Dutch limited liability company registered with the trade register in the Netherlands under number 33263683, is a member firm of the global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 174 Audit approach Summary Materiality Materiality of EUR 25 million 4.2% of result before income taxes Group audit Audit coverage of 95% of total assets Audit coverage of 94% of revenue Going concern, Fraud/Noclar and Climate - Going concern: no significant going concern risks identified We agreed with the Supervisory Board that misstatements identified during our audit in excess of EUR 1.25 million would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds. Scope of the group audit ASM International N.V. is at the head of a group of components. The financial information of this group is included in the financial statements of ASM International N.V.. Our group audit mainly focused on significant components where account balances are of significant size, have significant risks of material misstatement to the group associated with them or are considered significant for other reasons. - Fraud & Non-compliance with laws and regulations (Noclar): management override of controls, revenue recognition and risk of non-compliance with laws and regulations with an indirect effect We have: on the financial statements. Our audit procedures did not reveal indications and/or reasonable suspicion of fraud and non-compliance that are considered material for our audit. - Climate: management’s response to possible future effects of climate change and their - selected components for which an audit of the complete reporting package is performed and components for which an audit of specific items is performed. Furthermore, we have determined the nature and extent of the audit procedures that we perform at the group level and at the anticipated outcomes have been disclosed. We have considered the impact of climate-related company’s Shared Service Center (“SSC”); risks on our identification and assessment of risks of material misstatement in the financial statements and have not identified a risk of material misstatement. Key audit matters Revenue recognition Accounting for capitalized development costs Opinion Unqualified - performed procedures that cover the significant operations in Singapore, the United States of America, Japan, Korea and the Netherlands, all mainly through our audit procedures at the SSC, supplemented with local audits by KPMG member firms of specific items. In addition, we have made use of the work of non-KPMG member firm auditors of ASM Pacific Technology Ltd. (“ASMPT”) as part of our procedures that cover the (results from) investments in associates. The remaining balances are covered by additional procedures at group level; - sent detailed instructions to all component auditors, including the significant areas that should be covered (which included the relevant risks of material misstatement detailed below) and set out the information required to be reported to the group auditor. We performed file reviews of components ASMPT (Hong Kong) and ASM Japan KK and held various telephone calls with the Materiality Based on our professional judgement we determined the materiality for the financial statements as auditors of the components, to discuss the group audit, significant risks, audit approach and instructions, as well as the audit findings and observations reported to the group auditor. a whole at EUR 25 million (2020: EUR 15 million). The materiality is determined with reference to result before income taxes (4.2%). We consider result before income taxes as the most appropriate In view of restrictions on the movement of people across borders, and also within significantly benchmark because the company is a profit oriented company and the key users of the financial affected countries, we considered changes to the planned audit approach to evaluate the statements are primarily focused on result before income taxes. We have also taken into account component auditors’ communications and the adequacy of their work. We have requested misstatements and/or possible misstatements that in our opinion are material for the users of the component auditors to provide us with access to audit workpapers to perform these evaluations, financial statements for qualitative reasons. subject to local law and regulations. In addition, due to the inability to arrange in-person meetings ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 175 with such component auditors, we have increased the use of alternative methods of communication - we analyzed the company’s financial position as at year-end and compared it to the previous with them, including through written instructions, exchange of emails and virtual meetings. financial year in terms of indicators that could identify significant going concern risks, taking into account developments in the business sector and any information of which we are aware as For the residual population not in scope we performed analytical procedures in order to corroborate a result of our audit. that our scoping remained appropriate throughout the audit. By performing the procedures mentioned above at group components, together with additional procedures on management’s going concern assessment. The outcome of our risk assessment procedures did not give reason to perform additional audit procedures at group level, we have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an opinion about the financial statements. The audit coverage as stated in the section ‘Summary’ can be further specified as follows: Total assets 83% Audit of the complete reporting package 12% Audit of specific items 5% Covered by additional procedures at group level Revenue 87% Audit of the complete reporting package 7% Audit of specific items 6% Covered by additional procedures at group level Audit response to going concern – no significant going concern risks identified The Management Board has performed its going concern assessment and has not identified Audit response to the risk of fraud and non-compliance with laws and regulations In the ‘Risk management’ section of the annual report, the Management Board describes its procedures in respect of the risk of fraud and non-compliance with laws and regulations. As part of our audit, we have gained insights into the Company and its business environment, and assessed the design and implementation of the Company’s risk management in relation to fraud and non-compliance with laws and regulations. Our procedures included, among other things, assessing the Company’s code of conduct, whistleblowing procedures, incidents register and its procedures to investigate indications of possible fraud and non-compliance. Furthermore, we performed relevant inquiries with management, those charged with governance and other relevant functions, such as Internal Audit and Legal Counsel. As part of our audit procedures, we furthermore: - evaluated the Ethics committee reports on indications of possible fraud and non-compliance; - evaluated correspondence with supervisory authorities and regulators as well as legal confirmation letters. In addition, we performed procedures to obtain an understanding of the legal and regulatory frameworks that are applicable to the Company and identified the following areas as those could have a material effect on the financial statements: - Trade sanctions and export controls laws and regulations (reflecting the company’s exposure to international trading restrictions); and - Anti-bribery and corruption laws and regulations (reflecting the company’s significant and any significant going concern risks. To evaluate the Management Board’s assessment, we have geographically diverse operations). performed, inter alia, the following procedures: - we considered whether the Management Board’s assessment of the going concern risks includes We, together with our forensics specialists, evaluated the fraud and non-compliance risk factors to all relevant information of which we are aware as a result of our audit; consider whether those factors indicate a risk of material misstatement in the financial statements. - we evaluated whether the Management Board’s assessment of going concern is adequately disclosed in the financial statements; ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 176 Based on the above and on the auditing standards, we identified the following fraud risks that are relevant to our audit, including the relevant presumed risks laid down in the auditing standards, and responded as follows: Audit response to climate-related risks The Management Board is responsible for preparing the financial statements in accordance with the applicable financial reporting framework, including considering whether the implications from -   Management override of controls (a presumed risk) climate-related risks and commitments have been appropriately accounted for and disclosed. Risk: - Management is in a unique position to manipulate accounting records and prepare fraudulent The Management Board has performed its analysis of the impact of climate-related risks on the financial statements by overriding controls that otherwise appear to be operating effectively. company’s business and operations going forward and on its accounting in the current financial Responses: statements. In the climate adaptation chapter of the annual report, the company concluded that the - We evaluated the design and the implementation of internal controls that mitigate fraud risks, effect of climate-related risks do not have a material impact on accounts and disclosures, including such as processes related to journal entries. judgements and estimates in the financial statements. - We performed a data analysis of high-risk journal entries and investigated journal entries debiting revenue with an unexpected associated credit, and evaluated key estimates and The evaluation of the effectiveness of management’s strategy against internal or external goals set judgments for bias by the Company’s management. Where we identified instances of is not in scope of our audit of the financial statements. As part of our audit we consider potential unexpected journal entries or other risks through our data analytics, we performed additional effects of climate-related risks on the accounts and disclosures, including estimates and judgements audit procedures to address each identified risk, including testing of transactions back to in the current year’s financial statements to determine whether the financial statements are free from source information. material misstatements. This includes discussion of the company’s strategy in relation to climate - We incorporated elements of unpredictability in our audit by among others, 1) implementing change with management and those charged with governance and inspecting minutes and external a data analytics approach to test cost of goods sold focusing on outliers and non-routine communications for significant climate related commitments, strategies and plans made by the transactions 2) modifying the timing and extent of audit procedures on sales cut-off management board. 3) modifying the extent of fraud inquiries with individuals involved in the financial reporting process about inappropriate or unusual activity relating to journal entries and other Our risk assessment procedures did not identify risks of material misstatement in accounts and disclosures especially with respect to critical judgements and estimates, in the financial statements. adjustments. -   Revenue recognition (a presumed risk) Risk: - We identified a cut-off risk in relation to completeness of equipment sales as a result of recognition in the incorrect period. This risk inherently includes the fraud risk that management deliberately understates revenue, as management may feel pressure to achieve planned results (risk of fraud). Responses: - We refer to key audit matter ‘Revenue recognition’. We communicated our risk assessment, audit responses and results to management and the Audit Committee of the Supervisory Board. Our audit procedures did not reveal indications and/or reasonable suspicion of fraud and non-compliance that are considered material for our audit. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 177 Our key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in population of journal entries from the local ERP system with the involvement of our IT auditors and verifying the appropriateness of the identified high risk journal entries through verification with our audit of the financial statements. We have communicated the key audit matters to the Supervisory supporting documentation; and Board. The key audit matters are not a comprehensive reflection of all matters discussed. - assessing the adequacy of the revenue disclosures included in note 1 and note 21 of the financial Revenue recognition statements. Description As disclosed in note 1 to the consolidated financial statements, equipment sales are measured Our observation The results of our procedures related to the revenue recognition of equipment sales are satisfactory. taking into account multiple element arrangements as contracts with customers typically include We consider the disclosure in note 1 and note 21 of the financial statements as adequate. separately identifiable performance obligations that are recognized based on their relative selling price. Typically, this includes a single sales transaction that combines the delivery of goods and rendering of (installation) services. Furthermore, equipment sales is recognized when the customer obtains control of the products and services, often coinciding with shipment or delivery of goods. We identified a cut-off risk that equipment sales could be misstated as a result of recognition in the incorrect period. This risk inherently includes the fraud risk that management deliberately understates revenue, as management may feel pressure to achieve planned results (risk of fraud). We consider revenue recognition a key audit matter, due to the thereto related risk of management override of controls, as well as the fraud risk concerning the completeness of equipment sales in the cut-off period of the financial year. Our response Our audit procedures to address this key audit matter included, among others: Accounting for capitalized development costs Description Capitalized development costs are deemed to be significant to our audit, given the significance of the capitalized balance of EUR 268 million including additions of EUR 82 million in 2021, as well as the specific criteria that have to be met for capitalization. This involves management judgment on capitalized development costs not in use including the additions for the year, with respect to technical feasibility, intention and ability to complete the intangible asset, the ability to use or sell the asset, the generation of future economic benefits and the ability to measure the costs reliably. Our response Our audit approach includes the following procedures over capitalized development costs: - assessing the appropriateness of the company’s accounting policies relating to internal and - assessing the appropriateness of the company’s accounting policies relating to revenue external cost capitalization and assess compliance with IFRS; recognition and assessing compliance with IFRS 15; - evaluating the design and implementation of the company’s internal control in the sales process that would identify a misstatement as a result of revenue recognition in the incorrect accounting period; - assessing the completeness of sales by selecting samples during the cut-off period, with specific focus on the equipment sales recorded from January 1, 2022 through February 7, 2022, to agree - evaluating the design and implementation of the company’s internal control in the R&D process that would identify a misstatement as an incorrect capitalization of development expense; - challenging the key assumptions used, or judgments made, in capitalizing development costs, such as the technical feasibility, intention and ability to complete the intangible asset, the ability to use or sell the asset and generation of future economic benefits, the accuracy of costs included and the useful economic life attributed to the asset based on development plans, pre-orders and the timing of revenue recognition to underlying supporting documents such as shipping customer communications; and documents; - assessing the adequacy of the Other intangible assets disclosures included in note 5 of the - inquiring with management / those who have responsibilities for initiating, preparing or authorizing financial statements. journal entries at period end whether there was inappropriate or unusual activity relating to the processing of journal entries and other adjustments during the period, identifying high-risk journal entries (such as journal entries debiting revenue with an unexpected associated credit) from the Our observation The results of our procedures related to the accounting for capitalized development costs are satisfactory. We consider the disclosure in note 5 of the financial statements as adequate. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 178 Report on the other information included in the annual report In addition to the financial statements and our auditor’s report thereon, the annual report contains other information. Report on other legal and regulatory requirements and ESEF Engagement We were engaged by the Annual General Meeting of Shareholders as auditor of ASM International N.V. on May 21, 2014, as of the audit for the year 2015 and have operated as statutory auditor ever Based on the following procedures performed, we conclude that the other information: since that financial year. - is consistent with the financial statements and does not contain material misstatements; and - contains the information as required by Part 9 of Book 2 of the Dutch Civil Code for the management report and other information. We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements. No prohibited non-audit services We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements regarding statutory audits of public-interest entities. European Single Electronic Format (ESEF) ASM International N.V. has prepared its annual report in ESEF. The requirements for this format are set out in the Commission Delegated Regulation (EU) 2019/815 with regard to regulatory technical By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch standards on the specification of a single electronic reporting format (these requirements are Civil Code and the Dutch Standard 720. The scope of the procedures performed is less than the hereinafter referred to as: the RTS on ESEF). scope of those performed in our audit of the financial statements. The Management Board of the company is responsible for the preparation of the other information, consolidated financial statements as included in the reporting package by ASM International N.V., including the information as required by Part 9 of Book 2 of the Dutch Civil Code. has been prepared in all material respects in accordance with the RTS on ESEF. In our opinion, the annual report prepared in the XHTML format, including the partially tagged The Management Board is responsible for preparing the annual report including the financial statements in accordance with the RTS on ESEF, whereby management combines the various components into a single reporting package. Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package, is in accordance with the RTS on ESEF. Our procedures taking into consideration Alert 43 of NBA (the Netherlands Institute of Chartered Accountants), included amongst others: - obtaining an understanding of the entity’s financial reporting process, including the preparation of the reporting package; - obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance document and the XBRL extension taxonomy files have been prepared in accordance with the technical specifications as included in the RTS on ESEF; - examining the information related to the consolidated financial statements in the reporting package to determine whether all required taggings have been applied and whether these are in accordance with the RTS on ESEF. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 179 Description of responsibilities regarding the financial statements Responsibilities of the Management Board and the Supervisory Board of the company for the financial statements The Management Board is responsible for the preparation and fair presentation of the financial Our responsibilities for the audit of the financial statements Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion. statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, Our audit has been performed with a high, but not absolute, level of assurance, which means we the Management Board is responsible for such internal control as management determines may not detect all material errors and fraud during our audit. is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. In that respect the Management Board, under Misstatements can arise from fraud or error and are considered material if, individually or in the supervision of the Supervisory Board of the company, is responsible for the prevention and aggregate, they could reasonably be expected to influence the economic decisions of users taken detection of fraud and non-compliance with laws and regulations, including determining measures on the basis of these financial statements. The materiality affects the nature, timing and extent of our to resolve the consequences of it and to prevent recurrence. audit procedures and the evaluation of the effect of identified misstatements on our opinion. As part of the preparation of the financial statements, the Management Board is responsible for A further description of our responsibilities for the audit of the financial statements is located at assessing the company’s ability to continue as a going concern. Based on the financial reporting the website of de ‘Koninklijke Nederlandse Beroepsorganisatie van Accountants’ (NBA, Royal frameworks mentioned, the Management Board should prepare the financial statements using Netherlands Institute of Chartered Accountants) at http://www.nba.nl/ENG_oob_01. This description the going concern basis of accounting unless the Management Board either intends to liquidate forms part of our auditor’s report. the company or to cease operations, or has no realistic alternative but to do so. The Management Board should disclose events and circumstances that may cast significant doubt on the company’s Amstelveen, March 3, 2022 ability to continue as a going concern in the financial statements. KPMG Accountants N.V. The Supervisory Board of the company is responsible for overseeing the company’s financial F.A.M. Croiset van Uchelen RA reporting process. Partner NON-FINANCIAL SUMMARY ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 180 NON-FINANCIAL SUMMARY Non-financial performance data Assurance report of the independent auditor 181 184 Our new state-of-the art facility Woodlands Height Singapore At ASMI, sustainability is about understanding our impact and increasing our value as an integral part of our business strategy. We engage with stakeholders to assess and understand our impact on society. Aligning our strategy and sustainability focus with their priorities, we strive to maximize long-term value creation. In 2021, we accelerated our focus on sustainability and defined the following focus areas: innovation; people; planet; responsible supply chain, and governance. Our commitment to help fight climate change and care for our planet means we take steps to reduce greenhouse gas emissions, use water and other resources responsibly, and limit waste production. Reducing our environmental footprint goes hand in hand with steps towards a circular business model. Non-financial performance data Non-financial performance data ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 181 NON-FINANCIAL PERFORMANCE DATA CATEGORIES EMPLOYEES INDICATORS Employees DIVERSITY & INCLUSION OTHER SEGMENTATION Employees including temp New hires Employees Supervisory Board Management Board Gender pay ratio CEO pay ratio Nationalities Workforce split Foreign nationals workforce split Employees in R&D Employees covered by collective bargaining (only NL) Percent of worker under collective bargaining Voluntary attrition rate Total attrition rate % performance management completion Units or definition Number Number Number Male (% globally) Female (% globally) % Female / % Male % Female / % Male Female-Male (total) Number Asia US Europe Asia US Europe Percent Number Percent Percent Percent Percent 2017 1,900 2,043 487 85% 15% 20 / 80% 0 / 100% n.a. 25 29 54% 29% 17% 65% 24% 11% 26% 141 2018 2,181 2,327 659 85% 15% 2019 2,337 2,444 407 85% 15% 2020 2,583 2,689 515 85% 15% 2021 Reference 3,312 People 3,462 1,146 85% People 15% People 20 / 80% 0 / 100% 101% 20 / 80% 0 / 100% 100% 27 29 58% 26% 16% 65% 25% 10% 25% 149 31 29 58% 27% 15% 60% 30% 10% 26% 143 33 / 67% 0 / 100% 43 / 57% Supervisory Board 0 / 100% Management Board 99% 27 40 58% 28% 14% 59% 29% 12% 24% 142 Remuneration report People 95% 29 47 63% 25% 12% 66% (SASB) 23% (SASB) 11% (SASB) 20% 157 Note 13 of consolidated statements 11.8% 9.1% 10.8% 11.7% 7.7% 10.4% 13.9% 87.1% 9.9% 13.9% 92.6% 8.7% 10.7% 98.0% 8.3% 10.8% 98.8% 11.1% People 12.5% 99.7% ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 182 CATEGORIES INDICATORS HEALTH AND SAFETY Injury rate Recordable injury rate Number of recordable injuries Lost time injury rate (LTIR) Fatality rate Efforts to assess, monitor, reduce exposures Units or definition per 100 employees per 100 employees Number Asia Europe US per 100 employees per 100 employees 2017 0.62 0.26 5 1 2 2 0.21 0 2018 0.55 0.18 4 1 1 2 0.05 0 2019 0.42 0.17 4 2 1 1 0.13 0 2020 0.58 0.23 6 3 0 3 0.16 0 2021 Reference 0.50 0.26 People People 8 2 2 4 0.17 0 Qualitative *See ‘Health & safety’, ‘People’ section (SASB) TRAINING Ethics training (bi-annual) Ethics training All employees New hire employees Technical training hours of ASMI employees Hours annually 99.8% 99.7% 17,784 99.9% 100.0% 37,836 100.0% 100.0% 48,075 100.0% 99.2% 28,624 97.2% 97.6% 46,727 ENVIRONMENTAL Electrical consumption kWh 33,088,557 35,878,759 43,401,473 44,915,401 54,998,421 (SASB) Grid electricity Renewable EACs purchased Renewable electricity Scope 1 and 2 (market-based) GHG emissions 1 Gross global Scope 1 GHG emissions Gross global Scope 2 (location-based) GHG emissions Gross global Scope 2 (market-based) GHG emissions 1 Scope 1 and 2 (market-based) GHG per revenue (emission intensity) 1 Scope 1 and 2 (market-based) GHG per R&D spend (emission intensity) 1 Percent from grid MWh (or EAC units) Percent from renewable sources mtCO2e mtCO2e mtCO2e mtCO2e mtCO2e/million EUR mtCO2e/million EUR Water withdrawn absolute m3 Water withdrawn from water-stressed regions Percent from high or extremely high water-stressed regions Water intake per revenue (water intensity) m3/million EUR Water intake per R&D spend (water intensity) m3/million EUR 100% n.a. 10.8% 100% n.a. 10.7% 100% n.a. 9.2% 100% 366 9.9% 100% (SASB) 41,563 75.6% (SASB) 18,083.2 19,562.0 24,031.9 24,976.9 8,347.0 419.2 508.4 920.8 987.0 941.8 (SASB) 17,664.0 19,053.6 23,111.1 23,989.9 24,666.5 17,664.0 19,053.6 23,111.1 23,989.9 7,405.2 25.0 23.9 18.7 18.8 4.8 Planet 158.5 156.1 159.5 145.4 40.5 Planet 177,913 81.4% 129,243 72.8% 122,505 52.8% 121,434 50.4% 156,123 Planet (SASB) 47.6% (SASB) 241 1,559 158 1,031 95 813 91 707 90 758 Planet ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 183 CATEGORIES INDICATORS Units or definition ENVIRONMENTAL (continuED) Significant chemicals spills or releases to the environment Number Non-hazardous solid waste recycle Non-hazardous solid waste landfill metric tons metric tons Non-hazardous reuse - ASMI diversion metric tons Landfill diversion rate (ASMI operations) 2 Landfill diversion (all product packaging reuse) 3 Reported confidential concerns via SpeakUp! Reported concerns from other channels Confirmed cases of non-conformity to our Code of Business Conduct RBA self-assessment rating % solid waste recycle or reuse metric tons (through all reuse sectors) Number Number Number RBA rating (corporate + all applicable facilities) ETHICS COMPLIANCE RBA RISK ASSESSMENT SUPPLY CHAIN Supplier spend by region Asia percent North America percent Europe percent SUPPLY CHAIN (CRITICAL, STRATEGIC SUPPLIERS) RBA Code of Conduct acknowledgement Percentage RBA self-assessment questionnaire (SAQ) with low/medium risk Percentage 2017 0 668 198 92 79% 92 1 5 3 Low 74% 20% 6% 85% 78% 2018 0 789 255 95 78% 95 1 4 2 Low 71% 22% 7% 100% 100% 2019 0 664 166 114 82% 139 5 2 3 Low 75% 20% 5% 100% 40% 2020 0 714 156 122 84% 163 5 4 2 Low 75% 21% 4% 100% 77% 2021 Reference 0 Planet 1,403 Planet 335 158 Planet Planet 82% Planet (SASB) 259 Planet Business ethics Business ethics Business ethics 4 4 1 Low 77% Global operations 18% 5% 99% Global operations 84% Global operations MATERIAL SOURCING Description of the management of risks associated with the use of critical materials Qualitative See Conflict minerals discussion in the ‘Supply chain’ section (SASB) INTELLECTUAL PROPERTY Critical/strategic suppliers conflict minerals CMRT received Percentage Patents in force Number Intellectual property protection & competitive behavior Monetary losses as a result of legal proceedings associated with anti-com- petitive behavior regulations 90% 1,604 0 81% 100% 100% 100% 1,692 0 1,959 0 2,094 0 2,250 Innovation and products 0 (SASB) 1   For 2017-2020, ASMI did not procure market-based renewable electricity. For those years the data included in the table represent location-based sourcing. 2  ASMI manufacturing generates negligible hazardous waste and we do not manufacture chips/wafers. Our manufacturing waste is predominantly non-hazardous solid waste, thus solid waste is our waste-management indicator. 3  For 2020, we reported 41 metric tons of combined packaging waste. This only represented the customer shipping-container reuse, which is just one of the sectors where we reuse packaging. This year, we are reporting all the sectors where packaging is reused. Assurance report of the independent auditor Assurance report of the independent auditor ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 184 ASSURANCE REPORT OF THE INDEPENDENT AUDITOR To: General Meeting of Shareholders and the Supervisory Board of ASM International N.V. Our conclusion We have reviewed the non-financial indicators in the Annual Report 2021 (hereafter: Basis for our conclusion We performed our review in accordance with Dutch law, including Dutch Standard 3000A ’Assurance-opdrachten anders dan opdrachten tot controle of beoordeling van historische financiële informatie (attest-opdrachten)’ (assurance engagements other than audits or reviews the Annual Report) for the year 2021 of ASM International N.V. (hereafter: the Company). of historical financial information (attestation engagements)). This engagement is aimed to obtain A review is aimed at obtaining a limited level of assurance. limited assurance. Based on the procedures performed nothing has come to our attention that causes us to believe Our responsibilities in this regard are further described in the ‘Auditor’s responsibilities’ section of that the non-financial indicators are not prepared, in all material respects, in accordance with the our report. reporting criteria as described in the ‘Reporting criteria’ section of our report. We are independent of ASM International N.V. in accordance with the ‘Verordening inzake de The non-financial indicators in scope consist of the following: onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO, Code of Ethics for Professional - Diversity & Inclusion: Gender pay ratio, CEO pay ratio, Voluntary attrition rate and Involuntary Accountants, a regulation with respect to independence). Furthermore, we have complied with attrition rate; the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics). - Health & Safety: Injury rate, Recordable injury rate, Number of recordable injuries, Lost time injury rate (LTIR) and Fatality rate; We believe the assurance evidence we have obtained is sufficient and appropriate to provide a basis - Ethics compliance: Reported Confidential Concerns via SpeakUp! and Reported Concerns from for our conclusion. other channels; - Training: Ethics training; - Environmental: Renewable EACs purchased, Scope 1 and 2 (market-based) GHG emissions, Reporting Criteria The non-financial indicators need to be read and understood together with the reporting criteria. Gross global Scope 2 (location based) GHG emissions, Gross global Scope 2 (market-based) The Company is solely responsible for selecting and applying these reporting criteria, taking into GHG emissions, Water Withdrawn Absolute, Non-Hazardous solid waste recycle, Non-Hazardous account applicable law and regulations related to reporting. solid waste landfill, Non-Hazardous reuse ASM Diversion, and Landfill Diversion Rate; - Supply Chain: RBA Self-Assessment (SAQ) with Low/Medium Risk; The reporting criteria used for the preparation of the non-financial indicators are the internal - Material Sourcing: Critical/Strategic Suppliers Conflict Minerals CMRT received. reporting criteria of the Company as disclosed in the section ‘Value creation’ of the Annual Report. The non-financial indicators are disclosed in the ‘Non-financial performance data’ section of the Annual Report (pages 181-183). KPMG Accountants N.V., a Dutch limited liability company registered with the trade register in the Netherlands under number 33263683, is a member firm of the global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 185 Materiality Based on our professional judgement we determined materiality levels for each non-financial indicator. When evaluating our materiality levels, we have taken into account quantitative and Responsibilities of the Management Board and Supervisory Board for the non-financial indicators The Management Board is responsible for the preparation of the non-financial indicators in qualitative considerations as well as the relevance of information for both stakeholders and accordance with the applicable criteria as described in the ‘Reporting criteria’ section of our report. the Company. We agreed with the supervisory board that misstatements which are identified during the review is necessary to enable the preparation of the non-financial indicators that is free from material and which in our view must be reported on quantitative or qualitative grounds, would be reported misstatement, whether due to fraud or error. Furthermore, the Management Board are responsible for such internal control as it determines to them. The Supervisory Board is, amongst other things, responsible for overseeing the Company’s Scope of the group review ASM International N.V. is the parent company of a group of entities. The non-financial indicators reporting process. incorporate the consolidated information of the full group. Auditor’s responsibilities Our responsibility is to plan and perform our review in a manner that allows us to obtain sufficient Our group review procedures consisted of both review procedures at corporate (consolidated) level and appropriate assurance evidence for our conclusion. and at site level. Our selection of sites in scope of our review procedures is primarily based on the site’s individual contribution to the consolidated information. Procedures performed in this context consist primarily of making inquiries with employees of the entity and determine the plausibility of the information included on the non-financial indicators. By performing our review procedures at site level, together with additional review procedures at Therefore, these procedures differ in nature and timing, and extent, compared to a reasonable corporate level, we have been able to obtain sufficient and appropriate assurance evidence about assurance engagement. the group’s Non-financial indicators to provide a conclusion about the non-financial indicators. Limitations to the scope of our review The Non-financial information includes prospective information such as ambitions, strategy, plans, expectations and estimates. Inherently the actual future results are uncertain. We do not provide The level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. any assurance on the assumptions and achievability of prospective information in the non-financial We apply the ‘Nadere Voorschriften Kwaliteitssystemen’ (NVKS, Regulations for Quality information. References to external sources or websites in the non-financial information are not part management systems) and accordingly maintain a comprehensive system of quality control of the non-financial information itself as reviewed by us. Therefore, we do not provide assurance on including documented policies and procedures regarding compliance with ethical requirements, this information. professional standards and applicable legal and regulatory requirements. We have exercised professional judgement and have maintained professional scepticism throughout the review, in accordance with the Dutch Standard 3000A, ethical requirements and independence requirements. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 186 Our review included among others: - Performing an analysis of the external environment and obtaining an understanding of relevant societal themes and issues, and the characteristics of the Company; - Evaluating the appropriateness of the reporting criteria used, their consistent application and related disclosures on the non-financial indicators. This includes the evaluation of the results of stakeholder dialogue and the reasonableness of estimates made by the Management Board; - Obtaining an understanding of the reporting processes for the non-financial indicators, including obtaining a general understanding of internal control relevant to our review; - Identifying areas of the non-financial indicators with a higher risk of misleading or unbalanced information or material misstatements, whether due to fraud or error. Designing and performing assurance procedures aimed at determining the plausibility of the non-financial indicators responsive to this risk analysis. These procedures included, among others: - Interviewing management and relevant staff at corporate level responsible for the strategy, policy and results; - Interviewing relevant staff responsible for providing the information for, carrying out internal control procedures over and consolidating the data on the non-financial indicators; - Reviewing, on a limited test basis, relevant internal and external documentation; - Performing an analytical review of the data and trends. - Evaluating the consistency of the non-financial indicators with the information in the Annual Report which is not included in the scope of our review; - Evaluating the presentation, structure and content of the non-financial indicators. We have communicated with the Management Board and the Supervisory Board regarding, among other matters, the planned scope and timing of the review and significant findings that we identify during our review. Amstelveen, March 3, 2022 KPMG Accountants N.V. F.A.M. Croiset van Uchelen RA GENERAL INFORMATION ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 187 GENERAL INFORMATION Product description Other information Glossary and definitions Locations worldwide Safe harbor statement 188 190 192 196 198 Our products include wafer- processing deposition systems for ALD, CVD, epitaxy, and batch diffusion/oxidation systems, and services and spare parts for these systems. This section also included information about locations and a glossary and definitions. Product description Product description ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 188 PRODUCT DESCRIPTION Our products include wafer-processing deposition systems for ALD, epitaxy, PECVD, and vertical furnace systems, and services and spare parts for these systems. PRODUCT APPLICATIONS AND DESCRIPTIONS Atomic layer deposition (ALD) ASMI offers ALD tools in two technology segments: thermal ALD and plasma enhanced DEPOSITION APPLICATION ASMI PRODUCT PLATFORM ASMI PRODUCTS PROCESS APPLICATION ALD (PEALD). Pulsar XP ALD system Pulsar XP is a 300mm thermal ALD tool designed for depositing extremely thin high-k dielectric materials required for advanced transistor gates and other applications. Pulsar is the benchmark ALD high-k gate dielectric tool for the industry. Up to four Pulsar process modules can be configured on a Pulsar XP system. EmerALD XP ALD system EmerALD XP is a 300mm thermal ALD tool designed for depositing metal gate layers for advanced high-k metal gate transistors and other applications. Up to four EmerALD process modules can be configured on an EmerALD XP system. Eagle XP8 PEALD system Eagle XP8 is a high-productivity 300mm tool for PEALD applications. The system can be configured with up to four dual chamber modules (DCM), enabling eight chambers in high-volume production within a very compact footprint. The system is capable of a broad range of dielectric PEALD processes, including low-temperature spacers for multiple patterning applications and low-temperature silicon nitride. Synergis ALD system XP 1) Pulsar XP ALD system EmerALD XP ALD system High-k gate dielectric Metal gate layers ALD XP8 1) Synergis ALD system PEALD XP8 1) Eagle XP8 PEALD system XP8 QCM PEALD system PECVD XP8 1) Dragon XP8 PECVD system Metal oxides Metal nitrides Metals Patterning layers Gate spacers and liners Gap-fill Low-k and TEOS oxide Silicon nitride Diffusion Oxidation LPCVD ALD Epitaxy Vertical furnace XP 1) Epsilon A412 batch vertical furnace system A400 DUO batch vertical furnace system Diffusion, oxidation Polysilicon Silicon oxide/nitride Aluminum oxide Intrepid ES epitaxy Intrepid ESA epitaxy Epsilon 2000 single-wafer epitaxy system Silicon channel Source/drain layers CMOS wafers Analog/power Synergis is a high-productivity 300mm tool for thermal ALD applications. The system can be 1 The XP is our standard single-wafer processing platform designed to accommodate multiple process configured with up to four dual chamber modules (DCM), enabling eight chambers in high-volume production within a very compact footprint. The system is capable of depositing a broad range of thermal ALD films including metal oxides, metal nitrides, dielectrics, and pure metals. application modules with common platform standards. In 2012, ASMI launched the XP8 high-productivity platform for PECVD and PEALD, based on our common XP platform standard with an expanded configuration that enables integration of up to eight chambers on one wafer handling platform. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 189 XP8 QCM PEALD system Dragon XP8 PECVD system XP8 QCM is a 300mm tool for high-productivity PEALD applications. XP8 QCM allows for the DragonXP8 is a high-productivity 300mm tool for PECVD applications. The system can be integration of up to four modules, each containing four process reactors, enabling 16 chambers configured with up to four dual chamber modules (DCM), enabling eight chambers in high-volume in high-volume production within a compact footprint. The system is capable of a broad range of production within a very compact footprint. Processes include a broad range of dielectric PECVD dielectric PEALD processes, including silicon oxide gap-fill. films for applications such as interconnect low-k dielectric layers, passivation layers, etch stop, and EPITAXY We offer two families of epitaxy tools: Intrepid and Epsilon. Intrepid epitaxy system hardmask layers. VERTICAL FURNACES ASMI offers vertical furnaces in a batch configuration where a large number of wafers are processed at the same time for productivity and cost savings. Our furnace tools are designed with dual-batch Intrepid ES is a 300mm epitaxy tool using our XP platform, and is designed for depositing critical reactors for even more productivity. Our furnace tools are capable of running low pressure CVD transistor source/drain and channel layers. Processes include silicon (Si), silicon-germanium (SiGe), (LPCVD), as well as diffusion and oxidation applications. Various thermal ALD films can be deposited silicon-carbon (SiC), and other silicon-based compounds. Up to four Intrepid process modules can using batch furnaces for high productivity. be configured on an Intrepid ES system. A412 Vertical Furnace system The Previum process module, which can be integrated with epitaxy modules on the Intrepid The A412 is a 300mm batch vertical furnace capable of both atmospheric and low pressure thermal platform, is available for 300mm Epi applications that require pre-deposition surface cleaning, which wafer processing. Atmospheric thermal applications include diffusion and activation of dopants, improves the performance of deposited films. Previum surface cleaning enables quality epitaxial annealing to affect material properties by heating to a specific temperature, and oxidation to form depositions for advanced node channel and source/drain engineering applications. silicon oxide. LPCVD applications include polysilicon, silicon nitride, and silicon oxide. Intrepid ESA for 300mm is based on the Intrepid ES system, operating in atmospheric mode for A400 DUO Vertical Furnace system analog and power applications, as well as silicon epitaxy for wafer manufacturing. A400 DUO is a batch vertical furnace for 200mm and smaller wafers, and focuses on applications in Epsilon epitaxy system the markets for power, analog, RF, and MEMS devices. The new A400 DUO is compatible with the original A400, so existing process recipes can be easily transferred, accelerating system acceptance The Epsilon series is a single-wafer, single-chamber tool that deposits silicon-based materials for production. Atmospheric thermal applications include diffusion and activation of dopants, for many applications, ranging from high-temperature silicon for wafer manufacturing, to low- annealing to affect material properties by heating to a specific temperature, and oxidation to form temperature silicon for analog and power applications. Epsilon is the market leader for epitaxy silicon oxide. LPCVD applications include polysilicon, silicon nitride, and silicon oxide. applications in the analog and power devices market. PLASMA ENHANCED CHEMICAL VAPOR DEPOSITION (PECVD) We offer single-wafer plasma enhanced CVD (PECVD) systems for various low-temperature deposition applications. Services and spare parts Services and spare parts are important product offerings for our business. We provide service support to our customers with technical service personnel that are trained to maintain our systems at customers’ fabrication plants around the world. Our service teams are located at regional and local service centers to assure prompt availability. We sell spare parts for our equipment from parts stocks located at local distribution centers. Other information Other information ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 190 OTHER INFORMATION The additional information below includes a brief summary of the most significant provisions of our Articles of Association. INFORMATION ON THE PROVISIONS IN THE ARTICLES OF ASSOCIATION RELATING TO THE APPROPRIATION OF PROFIT The Articles of Association of ASM International N.V. (the company) provide the following with regard SPECIAL STATUTORY CONTROL RIGHTS Article 27 of the Articles of Association provides that each common share gives the right to cast one vote, each preferred financing share to cast 1,000 votes, and each preferred share to cast to distribution of profit and can be summarized as follows: 1,000 votes. From the profits, distributions shall in the first place, if possible, be made on the preferred shares equal to the EURIBOR rate for six-months loans, increased by one and a half, on the paid-up Article 29 of the Articles of Association provides that meetings of holders of preferred shares or amount which had to be paid on the preferred shares, weighted to the number of days to which of financing preferred shares shall be convened as often and insofar as a decision of the meeting this was applicable. If profits are insufficient, the dividend will be paid from the reserves with of holders of preferred shares or financing shares desires this, and furthermore as often as the priority over any dividends. If the reserves are insufficient, the dividend deficit has to be made up Management Board and or the Supervisory Board shall decide to hold such a meeting. At the in future years; meeting, resolutions will be passed with an absolute majority of the votes. In the event that there Second, a dividend, if possible, is distributed on financing preferred shares. The dividend is a percentage of the par value, plus share premium paid, on the financing preferred shares. is a tie of votes, no resolution will take effect. The percentage is determined by the Management Board, subject to approval of the Supervisory The following resolutions and actions can only be taken on a proposal by the Management Board Board. The percentage is related to the average effective yield on government loans with a and the Supervisory Board: weighted average remaining term of no more than 10 years, if necessary increased or decreased by no more than 3%, subject to the then prevailing market conditions. If profits are insufficient, the dividend shall be paid from the reserves. If the reserves are insufficient, the dividend deficit any amendment to the Articles of the company; and the dissolution of the company. has to be made up in future years; For the complete text, please see our website. With the approval of the Supervisory Board, the Management Board will determine which part of the profit remaining after adoption of the provisions of the previous paragraphs will be reserved. The profit after reserving will be at the disposal of the Annual General Meeting of Shareholders; STICHTING CONTINUÏTEIT ASM INTERNATIONAL The objective of Stichting Continuïteit ASM International (Stichting) is to serve the interests of the The company may only make distributions to the shareholders and other persons entitled to company. To that objective, Stichting may, amongst others, acquire, own and vote on our preferred profit insofar as its equity exceeds the amount of the paid-up and called amounts of the share shares in order to maintain our independence and/or continuity and/or identity. capital increased with the reserves that must be kept by virtue of law; and Article 33, paragraph 3 of the Articles of Association provides that dividend claims expire after The members of the board of Stichting are: the lapse of five years. For the full text, please see our website. Dick Bouma (Chairman); retired chairmen Pels Rijcken & Droogleever Fortuijn; Rob Ruijter, former Chairman Supervisory Board Delta Lloyd; and Rinze Veenenga Kingma, President Archeus Consulting BV. ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 191 NON-IFRS PERFORMANCE MEASURES Certain parts of this Annual Report contain non-IFRS financial measures, which are not recognized measures of financial performance or liquidity under IFRS. These are commonly referred to as non-IFRS financial measures. ASMI uses items such as working capital and free cash flow as internal measures of performance. ASMI’s definition of these measures may not be comparable with similarly titled performance measures and disclosures by other entities. These measures may not be indicative of the company’s historical operating results nor are such measures meant to be predictive of the company’s future results. The presentation of the non-IFRS measures and non-financial operating data in this report should not be construed as an implication that ASMI’s future results will be unaffected by exceptional or non-recurring items. ASMI presents non-IFRS financial measures in this Annual Report because it monitors these performance measures at a consolidated level and it believes that these measures are relevant to an understanding of the group’s financial performance. Please see Glossary and definitions for clarification on how these measures calculated. Glossary and definitions Glossary and definitions ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 192 GLOSSARY AND DEFINITIONS ESG/SUSTAINABILITY DEFINITIONS Indicators CDP CLIMATE ADAPTATION CLIMATE CHANGE CMRT CONFLICT MINERALS Definitions CDP is a not-for-profit charity running the global disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts. Covered in Sustainability/Planet Changes in company processes, practices, and structures to mitigate priority risks moderate potential damages or to benefit from opportunities associated with climate change. Sustainability/Planet Climate change is a long-term change in the average weather patterns that have come to define earth's local, regional and global climates. These changes have a broad range of observed effects upon the earth. Sustainability/Planet The Conflict Free Sourcing Initiative (CFSI) Conflict Minerals Reporting Template (CMRT) is an industry widely adopted standard template used by companies to collect conflict minerals due diligence data. Global operations Tin, tantalum, tungsten and gold (3TGs) containing mineral ores that originate in the Democratic Republic of the Congo or the 10 adjoining areas and are sold illicitly to fund armed conflict in the region. Global operations CRITICAL AND STRATEGIC SUPPLIERS Suppliers that are determined to be critical or strategic to our business either because the business spends, or critical components or critical materials, or strategic technical partnership. Global operations CSR DATA NORMALIZATION (AS A FUNCTION OF R&D SPEND) DRC EHS EKOENERGY Corporate social responsibility (CSR) is a self-regulating business model that helps a company be socially accountable – to itself, its stakeholders, and the public. Sustainability Total power or water purchases divided by total number of millions of dollars in R&D spend during that calendar year. Sustainability/Planet The Democratic Republic of Congo. Environmental, health, and safety (EHS) is a general term used to refer to laws, rules, regulations, professions, programs, and workplace efforts to protect the health and safety of employees and the public as well as the environment from hazards associated with the workplace. Global operations Sustainability A global, nonprofit ecolabel for renewable energy, gas, and heat which certifies renewable energy projects to their sustainability criteria. Sustainability/Planet EMPLOYEES BASED ON NATIONALITIES The number of nationalities of employees on the last reporting day of the period. EMPLOYEES COVERED BY COLLECTIVE BARGAINING AGREEMENTS The percentage of employees that are covered by collective bargaining agreements per local labor requirement divided by the total number of employees at reporting year-end. EMPLOYEES IN R&D The number of employees on the last day of the reporting period whose work is directly related to the research and development of the product during a reporting year. People People People ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) The three primary factors for measuring the sustainability and societal impact of a company and/or business. Sustainability ETHICS CONCERNS REPORTED FROM ANONYMOUS GLOBAL REPORTING PROGRAM SPEAKUP! The number of any ethics concerns reported by employees through our anonymous employee reporting channel SpeakUp!; that may be related to a potential violation of the Code of Business Conduct (COBC) and Business Principles or Policies in the reporting year. People ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 193 Indicators Definitions Covered in ETHICS CONCERNS REPORTED THROUGH OTHER CHANNELS The number of any ethics concerns reported by employees through other means, including directly to management or the Compliance Officer, that may be related to a potential violation of the COBC Business Principles or Policies in the reporting year. People EU GOOS An energy certificate defined in article 15 of the European Directive 2009/28/EU that evidences the origin of electricity from renewable sources. Sustainability/Planet FLBL: FORCED LABOR/BONDED LABOR Forced labor refers to situations in which persons are coerced to work through the use of violence or intimidation, or by more subtle means such as accumulated debt, retention of identity papers or threats of denunciation to immigration authorities. Bonded labor, also known as debt bondage and peonage, happens when people give themselves into slavery as security against a loan or when they inherit a debt from a relative. The cyclical process begins with a debt, whether acquired or inherited, that cannot be paid immediately. Global operations FOREIGN NATIONAL A foreign national is any person who is not a national of a specific country. People GREENHOUSE GAS (GHG) EMISSIONS Greenhouse gas emissions from human activity, which strengthens the greenhouse effect causing climate change. See Scope 1, Scope 2, Scope 3 emissions below for more information. Sustainability/Planet GRI The Global Reporting Initiative (GRI) is an international independent standards organization that helps businesses, governments and other organizations understand and communicate their impacts on issues such as climate change, human rights and corruption (www.globalreporting.org). The GRI standard was used to guide our materiality assessment and non-financial data summary. Sustainability INFORMATION RIGHTS MANAGEMENT (IRM) A subset of digital rights management (DRM) which includes processes and technologies that protect sensitive information from unauthorized access. Innovation and products INJURY RATE ISO 14001 J-CREDITS LANDFILL DIVERSION RATE LIVING WAGE The injury rate is a measure of all first aid or greater (more serious) injuries per every 100 employees in the reporting period. People The ISO 14001 environmental management system (EMS) standard is an internationally recognized environmental management standard. Sustainability A Japanese government program that certifies the amount of greenhouse gas emissions (such as CO2) reduced or removed through implementation of energy-saving devices or sustainable forestry. Sustainability/Planet The percentage of solid waste diverted from landfill via recycling and reuse efforts in the reporting period as generated at ASMI key manufacturing, engineering, and R&D sites. Sustainability/Planet A living wage is defined as the minimum income necessary for a worker to meet the basic needs of an average sized family, including food, housing, and other essential needs such as clothing. People People NUMBER (#) OF EMPLOYEES COMPLETING BI-ANNUAL ETHICS TRAINING All employees completing the online compliance training courses bi-annually during our compliance month within the reporting year. We track # of employees and % of the total that completed the training. It is applicable to all employees. OECD PFAS Organization for Economic Cooperation and Development is an international organization helping governments tackle the economic, social and governance challenges of a globalized economy. It publishes guidance and frameworks such as OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Global operations A broad family of per and polyfluoroalkyl substances such as Teflon used in engineering applications requiring high thermal stability and non-stick properties. Innovation and products PRODUCT LIFE CYCLE (PLC) The entire lifecycle of a product from its initial introduction to eventual withdrawal from the market. Innovation and products ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 194 Indicators Definitions PRODUCT LIFECYCLE MANAGEMENT (PLM) Product lifecycle management (PLM) refers to the handling of a good as it moves through the typical stages of its product life: development and introduction, growth, maturity/stability, and decline. This handling involves both the manufacturing of the good and the marketing of it. Covered in Innovation and products RBA CODE OF CONDUCT The RBA Code of Conduct is a set of social, environmental and ethical industry standards for governing how companies conduct business. (www.responsiblebusiness.org/code-of-conduct) Global operations RBA SAQ SUPPLIER RISK RANKING The percent of critical/strategic RBA scorecard suppliers who completed the required supplier RBA self-assessment questionnaire (SAQ) and resulted with low or medium risks. RBA SELF-ASSESSMENT QUESTIONNAIRE (RBA SAQ) The self-assessment questionnaire is one of the RBA’s standardized risk assessment tools that is useful for assessing a companies commitment to ethical business conduct and compliance with the RBA Code of Conduct. RBA SELF-ASSESSMENT QUESTIONNAIRE (SAQ) RISK RATING/RESULT We adopted the RBA standard tool for risk assessment self-assessment questionnaire (SAQ) to assess our own and supply chain risk. This rate applies to our own operation SAQ results with our major sites. Global operations Global operations Global operations REACH An EU Regulation of chemical substances intended to protect human health, improve the environment and reduce chemical-related risks. Innovation and products RECORDABLE INJURY RATE The recordable injury rate measures the number of cases that require a response greater than first aid (or serious injuries) per 100 employees in the reporting period. People RENEWABLE ELECTRICITY Electricity derived from sources that are not depleted upon use, such as wind or solar power. RESPONSIBLE BUSINESS ALLIANCE (RBA) World's largest industry coalition seeking to create a industry-wide standards on social, environmental and ethical issues in the industry supply chain. Rebranded from the Electronics Industry Citizenship Coalition (EICC) in October 2017. ASMI is a member of the RBA. (responsiblebusiness.org) Sustainability/Planet Global operations RMI: RESPONSIBLE MINERALS INITIATIVE The Responsible Minerals Initiative provides companies with tools and resources to make sourcing decisions that improve regulatory compliance and support responsible sourcing of minerals from conflict-affected and high-risk areas. Global operations ROHS SASB SCOPE 1, SCOPE 2, SCOPE 3 EMISSIONS SEMI SEMI MOD SPEAK UP! STAFF (EMPLOYEE) A regulation that originated in the European Union which restricts the use of hazardous materials found in electrical and electronic products. Innovation and products The Sustainability Accounting Standards Board (SASB) is an independent nonprofit organization that sets standards to guide the disclosure of financially material sustainability information by companies to their investors. (www.sasb.org/about/) Non-financial summary Terms used to define the source of greenhouse gas (GHG) emissions of a corporation. Scope 1 are emissions that the company produces from its operations through use of chemicals, boilers and vehicles. Scope 2 are GHG emissions associated the purchase of electricity or energy. Scope 3 emissions are all other GHG emissions associated with the company's value chain and use of its products that occur outside the scope 1 and 2 boundary. Sustainability/Planet Global industry association representing the semiconductor manufacturing and design supply chain connecting over 2,400 member companies and 1.3 million professionals worldwide. Innovation and products Semiconductor Manufacturing Ownership Diversity (SEMI MOD) is a special interest group dedicated to increasing the number of diverse owned and led suppliers serving the semiconductor industry. Global operations Globally available anonymous reporting channel to report ethics concerns or whistleblower concerns. Staff (employee) is a person with a fixed contract, excluding temporary labor. Definition may be varied by country per local and country labor law. The number of employees at the last day of the reporting period. People People ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 195 Covered in Global operations Global operations Indicators Definitions SUPPLIER CODE OF CONDUCT COMMITMENT % The percent of critical and strategic suppliers that have acknowledged their commitment to RBA code or whose code of conduct is assessed to be acceptable as it covers the similar principles of the RBA Code of Conduct. SUPPLY CHAIN SPEND BY REGION SUPPLY CHAIN SPENDS PER REGION (IN EURO AND %) TCFD TIGR'S TOTAL ATTRITION RATE UN SDG Total amount of euros spent with our global suppliers for the materials, components and services that are used to produce our products and services for our customers and for non-product related products services that enable our operations globally in the reporting period. Total euro amount we spent and equivalent to the % of total spends with suppliers by each region. Global operations The Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD) is a market-driven initiative, set up to develop a set of recommendations for voluntary and consistent climate-related financial risk disclosures in mainstream filings. (www.fsb-tcfd.org) Sustainability/Planet Tradeable Instrument for Global Renewables (TIGR) is a global standard for the documenting and tracking renewable energy certificates (RECS) as tradable instruments/assets. Sustainability/Planet The percentage of employees in a workforce that leave voluntarily or involuntarily during a reporting period. Non-financial summary United Nations Sustainable Development Goals provides an global agenda and plan of action for people, planet and prosperity. It also seeks to strengthen universal peace and freedom. (https://sdgs.un.org/goals) Sustainability VOLUNTARY ATTRITION RATE The percentage of employees in a workforce that leave voluntarily during a reporting period. WATER CONSUMPTION ZERO HARM! The total amount of water consumption in cubic meters for a reporting period. Refers to ASMI striving to prevent harm to people, reduce our impact on the environment, and make positive contributions to society. People Sustainability Sustainability/Planet NON IFRS FINANCIAL MEASURES Financial measures Definitions CASH FLOWS FROM OPERATING ACTIVITIES AFTER INVESTING ACTIVITIES Cash flows from operating activities after investing is also referred to as free cash flow. OPERATING CASH FLOWS BEFORE CHANGES IN WORKING CAPITAL Cash flows from operating activities excluding the impact of movements in working capital during the period. WORKING CAPITAL The sum of accounts receivable, other current assets, inventories, provision for warranty, accounts payable, accrued expenses and other payables. Locations worldwide Locations worldwide ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 196 LOCATIONS WORLDWIDE EUROPE THE NETHERLANDS ASM International NV (HEADQUARTERS) Versterkerstraat 8 1322 AP Almere T: +31 88 100 8810 F: +31 88 100 8820 ASM Europe BV Versterkerstraat 8 1322 AP Almere T: +31 88 100 8711 F: +31 88 100 8710 ASM IP Holding BV Versterkerstraat 8 1322 AP Almere T: +31 88 100 8810 F: +31 88 100 8820 BELGIUM ASM Belgium NV Kapeldreef 75 3001 Leuven T: +32 472 570 961 FINLAND ASM Microchemistry Oy Pietari Kalmin katu 3 F 2 00560 Helsinki T: +358 9 525 540 FRANCE ASM France SARL 223 Rue des Bécasses 38920 Crolles T: +33 4 7692 2824 F: +33 4 3892 0472 GERMANY ASM Germany Sales BV Bretonischer Ring 16 85630 Grasbrunn T: +49 89 462 3650 F: +49 89 462 36566 ASM Germany Sales BV Hohenbusch Markt 1 01108 Dresden T: +49 351 3238330 F: +49 351 3238332 NORTH AMERICA IRELAND ASM Services & Support Ireland Ltd UNITED STATES ASM America, Inc Unit 23, Hills Industrial Estate 3440 East University Drive Lucan, K78 P661 Co. Dublin T: +353 1 621 9100 F: +353 1 628 0206 ISRAEL ASM Service & Support Israel Ltd 2 Hazaron St Kiryat-Gat 82109 T: +972 8 612 3077 Phoenix, AZ 85034 T: +1 602 470 5700 Regional Sales/Service Office 2083 East Hospitality Lane Suite 200 Boise, ID   83716 T: +1 208 424-9534 Regional Service Office 7235 NE Evergreen Parkway Suite 200 Hillsboro, OR 97124 T: +1 503 629 1360 ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 197 ASIA CHINA ASM China Ltd Room 201A, Building D Changtai Plaza 2889 Alley Jinke Road, Pudong Shanghai, China, 201203 T: +86 21 50 368 588 F: +86 21 50 368 878 JAPAN ASM Japan KK 23-1, 6-chome Nagayama Tama-shi Tokyo 206-0025 T: +81 42 337 6311 F: +81 42 389 7555 Yokkaichi Service Center 3F, Kosco-Yokkaichi-Nishiura Building 5-10, 1-chome, Yasujima, Yokkaichi-shi SINGAPORE ASM Front-End Manufacturing Singapore Pte Ltd 4 Woodlands Height Singapore 737860 T: +65 6512 2922 F: +65 6512 2966 SOUTH KOREA ASM Korea Ltd Head Office Mie 510-0075 T: +81 59 340 6100 F: +81 59 340 6099 Hiroshima Service Center 402, Higashi-Hiroshima Sea Place 10-30, Saijosakae-machi Higashi-Hiroshima-shi Hiroshima 739-0015 T: +81 42 315 0195 Kitakami Service Center 2F B-C, Iriyama kita Build 3-27, 1-chome Odori, ASM Front-End Sales & Services Taiwan Co, Ltd Lin-Kuo Office 2F, No 50, Fuxing 3rd Rd Guishan Dist, Taoyuan City 333 T: +886 3 211 5279 F: +886 3 328 5358 ASM Front-End Sales & Services Taiwan Co, Ltd Tai-Nan Office 63-11, Dongtan Cheomdan Saneop 1-Ro 3F., No. 3, Nanke 3rd Rd., Xinshi Dist., Tainan City 744, Taiwan T: +886 3 666 7722 F: +886 6 589 2710 Hwaseong-Si Gyeonggi-Do, 18469 T: +82 31-5176-0000 TAIWAN ASM Front-End Sales & Services Taiwan Co, Ltd Hsin-Chu Office 2F-5, No 1, Jinshan 8th St East Dist, Hsinchu City 300 T: +886 3 666 7722 F: +886 3 564 8899 Daini Technology Center Kitakami-shi, Iwate-ken 024-0061 7-2, 2-chome, Kurigi Asao-ku, Kawasaki-shi Kanagawa 215-0033 T: +81 44 712 3681 F: +81 44 712 3682 T: +81 42 337 6326 MALAYSIA ASM Services & Support Malaysia Sdn Bhd Suite 17 and 18, First Floor Kumamoto Service Center Incubator Block, Kulim Techno Centre 3F, Mayfair-Suizenji 21-30, 1-chome, Suizenji Chuo-ku, Kumamoto-shi Kumamoto, 862-0950 T: +81 96 387 7300 Kulim Hi-Tech Park 09000, Kulim Kedah Darul Aman T: +604 408 0140 Safe harbor statement Safe harbor statement ABOUT VALUE CREATION GOVERNANCE FINANCIAL STATEMENTS NON-FINANCIAL SUMMARY GENERAL INFORMATION ASMI ANNUAL REPORT 2021 198 SAFE HARBOR STATEMENT In addition to historical information, some of the information posted or referenced herein or on the website contains statements relating to our future business and/or results, including, among others, statements regarding future revenue, sales, income, expenditures, sufficiency of cash generated from operations, maintenance of interest in ASM Pacific Technology Ltd, business strategy, product development, product acceptance, market penetration, market demand, return on investment in new products, facility completion dates and product shipment dates, corporate transactions, restructurings, liquidity and financing matters, outlooks, and any other non-historical information. These statements include certain projections and business trends, which are ‘forward-looking’. We caution readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward- looking statements. You can identify forward-looking statements by the use of words like ‘may’, ‘could’, ‘should’, ‘project’, ‘believe’, ‘anticipate’, ‘expect’, ‘plan’, ‘estimate’, ‘forecast’, ‘potential’, ‘intend’, ‘continue’, and variations of these words or comparable words. Forward-looking statements do not guarantee future performance and involve risks and uncertainties. You should be aware that our actual results may differ materially from those contained in the forward-looking statements as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to, economic conditions and trends in the semiconductor industry and the duration of industry downturns, currency fluctuations, the timing of significant orders, market acceptance of new products, competitive factors, litigation involving intellectual property, shareholder or other issues, commercial and economic disruption due to natural disasters, terrorist activity, armed conflict or geopolitical tensions or political instability, changes in import/export regulations, epidemics and other risks indicated in our most recently filed Annual Report and other filings from time to time. The risks described are not the only ones. Some risks are not yet known and some that we do not currently believe to be material could later become material. Each of these risks could materially affect our business, revenues, income, assets, liquidity, and capital resources. All statements are made as of the date of posting unless otherwise noted, and we assume no obligation to update or revise any forward-looking statements to reflect future developments or circumstances. ASM International N.V. Versterkerstraat 8 1322 AP Almere The Netherlands Published on March 3, 2022 

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