ASM's 2027 outlook needs a 16% jump from its Q4 guide

ASM reported a record quarter and Corning its strongest growth since its Springboard plan began, both on AI demand. ASM's 2027 outlook now asks for a jump its own fourth quarter guide does not show.

ASM's 2027 revenue outlook sets the valuation question this week. The chip tool maker projects revenue of more than EUR5.7bn, which needs EUR1,425m a quarter. Its own fourth quarter guide is EUR1,230m.

ASM calls demand "very strong" and supply chain conditions "increasingly tight". ASM identifies delivery capacity as the limit, even with demand this strong. Customer fab budgets decide whether the step happens, so the 16% gap is the number to watch in every shipment update.

The gap between Q4 and 2027

ASM's results set a record. Revenue reached EUR1,159.4m in the third quarter, up 45% on a year earlier. The fourth quarter guide is EUR1,230m, plus or minus 5% at constant currency.

Margins held: gross margin was 52.0% and adjusted operating margin 33.4%.

Profit grew faster than sales. Adjusted net earnings were EUR315.4m, against EUR206.2m a year earlier. Revenue was at the upper end of the July guide of EUR1,100m plus or minus 5%.

Quarter on quarter the climb is flattening. Revenue rose 24% from the fourth quarter to the first, 16% in the second and 16% in the third. The fourth quarter guide adds only 6%.

The 2027 outlook requires faster growth. ASM's own numbers imply 2026 revenue of about EUR4,255m, the three reported quarters plus the EUR1,230m guide. EUR5.7bn is 34% more. That is EUR1,425m a quarter, 16% above the fourth quarter guide.

The outlook says "more than", so EUR1,425m is a floor, not a midpoint. ASM says it reaches its 2030 Investor Day target three years early. It names advanced logic and foundry as the strongest growth driver in 2027, with strong memory growth too.

ASM's own 2026 growth is about 35% at constant currency, with equipment revenue up more than 40%. Adjusted operating profit rose 56% on a year earlier. Mature logic and foundry sales, mainly from China, are expected to stay relatively stable in 2027.

The product mix will determine how ASM reaches its 2027 total. ASM expects 2nm-related sales to rise and calls momentum at 1.4nm strong. It cites a solid double-digit increase in its served market at 1.4nm compared with 2nm, with higher market share. That is where the extra EUR1,425m a quarter has to come from.

CEO Hichem M'Saad said capacity "remains tight across our customer base, and customers are moving quickly to increase output". Memory sales rose strongly in the quarter, "particularly in HBM-related DRAM, reflecting higher levels of customer investment". HBM is the stacked memory used beside AI accelerators.

Supply can cap shipments before demand does. ASM guided H2 more than 20% above H1 in July, so the ramp is already steep. ASM says it is working with suppliers and customers on "the planned ramp in shipments". A miss would show as quarters stalling near EUR1.2bn while customers keep ordering.

ASM keeps returning cash meanwhile. It authorised a new buyback of up to EUR300m. The previous EUR150m programme finished on 14 September, with 185,522 shares bought at an average EUR808.53.

How Corning shares expansion costs

Corning is expanding with customer funding. Its release reports third quarter core sales of $5.08bn, up 19%. Core sales are its adjusted sales measure. Growth was the strongest since the Springboard plan began.

Optical Communications added $727m of the $809m rise in core sales. Its sales were $2,379m against $1,652m a year earlier, and the segment is now 47% of core sales. Corning's net income was $532m, a 22.4% margin against 17.9%.

Customers share the cost of that expansion. CFO Ed Schlesinger said Corning has "steadily added capacity, backed by long-term customer agreements that share the cost and risk of expansions". It secured four long term, multibillion dollar agreements in the quarter, including with Verizon and AT&T.

Corning spent more than half a billion dollars on capital expenditure in the quarter and still reported adjusted free cash flow of $661m. Adjusted free cash flow was $2.27bn for the first nine months. The fourth quarter core sales guide is $5.2bn to $5.3bn, against $4.9bn to $5.0bn guided for the third.

AI products contributed to that growth. Enterprise Networks sales rose 84%, and generative AI product sales grew more than 100% year on year. Core operating margin was 22.7%, up 310 basis points.

The large customer deals date from the second quarter. Amazon signed a multiyear, multibillion dollar agreement. Under its NVIDIA partnership Corning will expand US optical connectivity capacity tenfold and US fiber capacity by more than 50%.

SK hynix's funding options

SK hynix owns Solidigm, an enterprise SSD business. Solidigm's existing plants have limited capacity, so it needs more US production. In its 23 October notice SK hynix halted a review of an IPO meant to "finance a new fab in the U.S. to meet growing AI memory demand".

Solidigm cited capital market conditions and share price trends when it ended the review. The need to invest "remains unchanged", and SK hynix "will also continue to assess investment timing, scale, and financing methods". SK hynix broke ground on its Indiana fab on 27 August.

SK hynix can build without the IPO. Its second quarter results show cash of 88tn won against debt of 18.6tn won. That is net cash of 69.4tn won at 30 June.

The cash is growing fast. Second quarter revenue was 79.3tn won and operating profit 60.5tn won, a 76% margin. Cash rose 33.6tn won in the quarter.

ASM names advanced logic and foundry as its 2027 driver and says memory customers are raising investment, particularly in HBM-related DRAM. SK hynix's net cash shows the balance sheet strength that can support that spending.

SK hynix reports third quarter results before 09:00 in Seoul on Wednesday 28 October and takes questions at 09:00. Net cash above June's 69.4tn won would show the parent can carry a Solidigm fab beside its other investment. ASM's call follows at 15:00 CET the same day. The question for management is how quarterly shipments will reach EUR1,425m, a 16% step above the fourth quarter guide.