20-F

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

[   ]	Registration Statement pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
[X]	Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the fiscal year ended December 31, 2002
[   ]	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from                   to                  .

Commission File Number: 0-13355

ASM INTERNATIONAL N.V.

fka ADVANCED SEMICONDUCTOR MATERIALS INTERNATIONAL N.V.

(Exact name of Registrant as specified in its charter)

The Netherlands
(Jurisdiction of incorporation or organization)

Jan van Eycklaan 10, 3723 BC Bilthoven, the Netherlands
(Address of principal executive offices)

Securities registered or to be registered pursuant to
Section 12(b) of the Act: None

Securities registered or to be registered pursuant to
Section 12(g) of the Act: Common Shares

Securities for which there is a reporting obligation
pursuant to Section 15(d) of the Act: None

     Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 49,370,308 common shares; no preferred shares.

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

     Yes  [x]                  No  [  ]

     Indicate by check mark which financial statement item the registrant has elected to follow:

     Item [17]               Item 18  [x]

TABLE OF CONTENTS

Part I
	Item 1. Identity of Directors, Senior Management and Advisors
	Item 2. Offer Statistics and Expected Timetable
	Item 3. Key Information
	Item 4. Information on the Company
	Item 5. Operating and Financial Review and Prospects
	Item 6. Directors, Senior Management and Employees
	Item 7. Major Shareholders and Related Party Transactions
	Item 8. Financial Information
	Item 9. The Offer and Listing.
	Item 10. Additional Information.
	Item 11. Quantitative and Qualitative Disclosures about Market Risk
	Item 12. Description of Securities Other Than Equity Securities
Part II
	Item 13. Defaults, Dividend Arrearages and Delinquencies
	Item 14. Material Modification to the Rights of Security Holders and Use of Proceeds
	Item 15. Controls and Procedures
SIGNATURES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
EX-4.13
EX-4.14
EX-4.15
EX-4.16
EX-8.1
EX-10.1
EX-10.2
EX-10.3

Part I.

Item 1. Identity of Directors, Senior Management and Advisors

     Not applicable.

Item 2. Offer Statistics and Expected Timetable

     Not applicable.

Item 3. Key Information

A. Selected Consolidated Financial Data

     You should read the following selected financial data in conjunction with “Operating and Financial Review and Prospects” and our financial statements and the notes thereto included elsewhere in this report. The selected consolidated financial data presented below as of December 31, 2001 and 2002 and for each of the three years ended December 31, 2002 have been derived from the audited consolidated financial statements of ASM International included elsewhere herein. The selected consolidated financial data presented below as of December 31, 1998, 1999 and 2000 and for each of the two years in the period ended December 31, 1999 have been derived from the audited consolidated financial statements of ASM International which are not included herein.

			1998			1999			2000			2001			2002
			(Euros in thousands, except per share data (1))
Consolidated Statements of Operations Data:
Net sales			€	288,111		€	414,495		€	935,212		€	561,064		€	518,802
Costs of sales				(179,326	)		(244,485	)		(518,027	)		(337,743	)		(328,077	)
Gross profit				108,785			170,010			417,185			223,321			190,725
Operating expenses:
	Selling, general and administrative			(59,924	)		(83,170	)		(147,318	)		(111,851	)		(108,393	)
	Research and development, net			(36,277	)		(47,145	)		(73,800	)		(79,661	)		(88,334	)
	Amortization of goodwill			(93	)		(340	)		(4,295	)		(7,558	)		—
		Total operating expenses		(96,294	)		(130,655	)		(225,413	)		(199,070	)		(196,727	)
Earnings (loss) from operations				12,491			39,355			191,772			24,251			(6,002	)
Net interest and other financial income (expenses)				(5,350	)		(8,608	)		(1,595	)		(984	)		(10,416	)
Income taxes				(648	)		(1,274	)		(22,830	)		(4,711	)		1,165
Minority interest				(6,485	)		(18,519	)		(71,107	)		(13,373	)		(15,890	)
Gain on dilution of investment in subsidiary				224			145			1,822			915			1,281
Net earnings (loss) before cumulative effect of change in accounting principle				232			11,099			98,062			6,098			(29,862	)
Cumulative effect of change in accounting principle, net of tax(2)				—			—			(3,790	)		—			—
Net earnings (loss)			€	232		€	11,099		€	94,272		€	6,098		€	(29,862	)
Basic net earnings (loss) per share from operations			€	0.37		€	1.06		€	4.10		€	0.50		€	(0.12	)
Diluted net earnings (loss) per share from operations			€	0.36		€	0.98		€	3.95		€	0.49		€	(0.12	)
Basic net earnings (loss) per share:
Before cumulative effect of change in accounting principle			€	0.01		€	0.30		€	2.09		€	0.12		€	(0.61	)
Cumulative effect of change in accounting principle(2)				—			—			(0.08	)		—			—
After cumulative effect of change in accounting principle			€	0.01		€	0.30		€	2.01		€	0.12		€	(0.61	)
Diluted net earnings (loss) per share:
Before cumulative change of accounting principle			€	0.01		€	0.29		€	2.02			0.12			(0.61	)
Cumulative change of accounting principle				—			—			(0.08	)		—			—

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After cumulative effect of change in accounting principle	€	0.01	€	0.29	€	1.94	€	0.12	€	(0.61	)
Basic weighted average number of shares		33,794		37,301		46,810		48,944		49,170
Diluted weighted average number of shares		34,743		40,664		48,703		49,958		49,170

		1998		1999		2000		2001		2002
Pro forma amounts assuming the new accounting principle is applied retroactively (2)
Net earnings (loss)		€	585	€	8,881	€	98,062	€	6,098	€	(29.862	)
Net earnings (loss) per share:
	Basic	€	0.02	€	0.24	€	2.09	€	0.12	€	(0.61	)
	Diluted	€	0.02	€	0.23	€	2.02	€	0.12	€	(0.61	)

	December 31,
	1998		1999		2000		2001		2002
	(Euros in thousands (1))
Consolidated Balance Sheet Data:
Cash and cash equivalents		11,724		14,153		106,805		107,577		70,991
Total assets		282,950		425,035		777,940		757,065		653,841
Total debt		148,756		119,893		76,280		160,858		147,057
Total shareholders’ equity		20,464		65,552		308,322		320,910		265,542

(1)         Amounts prior to January 1, 1999 were restated from Netherlands guilders into euros using the fixed exchange rate as of January 1, 1999 (€ 1.00 = NLG 2.20371). The comparative amounts reported in euros depict the same trends as would have been presented if the Company had continued to present amounts in Netherlands guilders. Amounts prior to January 1, 1999 are not comparable to the amounts of other companies that report in euros having restated amounts from a different currency than Netherlands guilders.

(2)         The cumulative effect of the change in the accounting principle relates to the effect on prior years of the impact of the adoption of SEC Staff Accounting Bulletin 101, effective as of January 1, 2001, which sets forth guidelines on the timing of revenue recognition of sales. The pro forma amounts presented assume that these accounting principles were applied retroactively.

Exchange Rate Information

     The following table sets forth, for each period indicated, the high and low exchange rates based on the noon buying rate of New York City for cable transfers payable in Euros as certified for customs purposes by the Federal Reserve Bank of New York, which is often referred to as the “noon buying rate.” On February 18, 2003, the noon buying rate was 1.0708 United States dollar per euro.

US Dollar Equivalent of Euro
(except where noted)

	Months of
	8/02		9/02		10/02		11/02		12/02		1/03
High		.9882		.9959		.9881		1.0139		1.0485		1.0861
Low		.9640		.9685		.9708		.9895		.9927		1.0361

	Years Ended December 31,
	1998			1999		2000		2001		2002
Average High/Low exchange rate (1)		1.1224	(2)		1.0588		0.9207		0.8909		0.9453

(1)	Average high/low exchange rate calculation is based on the average of the exchange rates on the last day of each month during the year.
(2)	Exchange rate is given in United States dollar per European Currency Unit for 1998.

B. Capitalization and Indebtedness

     Not applicable.

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C. Reasons for the offer and Use of Proceeds

     Not applicable.

D. Risk Factors

     Some of the information in this report constitutes forward-looking statements within the meaning of the United States federal securities laws, including the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, among others, statements regarding future expenditures, sufficiency of cash generated from operations, maintenance of majority interest in ASM Pacific Technology Ltd. (“ASM Pacific Technology”), business strategy, product development, product acceptance, market penetration, market demand, return on investment in new products and product shipment dates. These statements may be found under “Operating and Financial Review and Prospects,” and elsewhere in this report. Forward-looking statements typically are identified by use of terms such as “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “will,” “may” and similar words, although some forward-looking statements are expressed differently. You should be aware that these statements involve risks and uncertainties and our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including the matters discussed in “Item 4. Information on the Company” and the following discussions of risks.

RISKS RELATED TO OUR INDUSTRY

Our business could be adversely affected by the cyclical nature of the semiconductor industry.

     We sell our products to the semiconductor industry, which is subject to sudden, extreme, cyclical variations in product supply and demand. Since late 2000, the semiconductor industry has been in a cyclical downturn characterized by reduced demand for products, lower average selling prices, reduced investment in semiconductor capital equipment and other factors all of which have resulted in lower sales and earnings for our business. The timing, length and severity of these cycles are difficult to predict. In some cases, these cycles have lasted more than a year. The current downturn has lasted longer than past cycles and the market remains volatile and hard to predict. Semiconductor manufacturers may contribute to the serenity of these cycles by misinterpreting the conditions in the industry and over-investing or under-investing in semiconductor manufacturing capacity and equipment. We may not be able to respond effectively to these industry cycles.

     Downturns in the semiconductor industry often occur in connection with, or anticipation of, maturing product cycles and declines in general economic conditions. Industry downturns have been characterized by reduced demand for semiconductor devices and equipment, production over-capacity and accelerated decline in average selling prices. During a period of declining demand, we must be able to quickly and effectively reduce expenses and motivate and retain key employees. Our ability to reduce expenses in response to any downturn in the semiconductor industry is limited by our need for continued investment in engineering and research and development and extensive ongoing customer service and support requirements. In addition, the long lead time for production and delivery of some of our products creates a risk that we may incur expenditures or purchase inventories for products, including subassemblies, which we cannot sell. During periods of extended downturn, a portion of our inventory may be written down if it is not sold.

     Industry upturns have been characterized by abrupt increases in demand for semiconductor devices and equipment and insufficient production capacity. During a period of increasing demand and rapid growth, we must be able to quickly increase manufacturing capacity to meet customer demand and

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hire and assimilate a sufficient number of additional qualified personnel. Our inability to quickly respond in times of increased demand could harm our reputation and cause some of our existing or potential customers to place orders with our competitors rather than us.

Our industry is subject to rapid technological change and we may not be able to forecast or respond to commercial and technological trends in time to avoid competitive harm.

     Our growth strategy and future success depend upon commercial acceptance of products incorporating technologies we are developing, such as atomic layer chemical vapor deposition, rapid thermal processing, low-k dielectrics and silicon germanium epitaxy. The semiconductor industry and the semiconductor equipment industry are subject to rapid technological change and frequent introductions of enhancements to existing products. Technological changes have had and will continue to have a significant impact on our business. Our operating results and our ability to remain competitive are affected by our ability to accurately anticipate customer and market requirements and develop technologies and products to meet these requirements. Our success in developing, introducing and selling new and enhanced products depends upon a variety of factors, including:

• successful innovation of processes and equipment;

• accurate technology and product selection;

• timely and efficient completion of product design and development;

• timely and efficient implementation of manufacturing and assembly processes;

• successful product performance in the field;

• effective and timely product support and service; and

• effective product sales and marketing.

     We may not be able to accurately forecast or respond to commercial and technical trends in the semiconductor industry or to the development of new technologies and products by our competitors. Our competitors may develop technologies and products that are more effective than ours or that may be more widely accepted. In addition, we may incur substantial unanticipated costs to ensure the functionality and reliability of our current and future products. If our products are unreliable or do not meet our customers’ expectations, then we may experience reduced orders, higher manufacturing costs, delays in collecting accounts receivable, and/or additional service and warranty expense. We have experienced delays from time to time in the introduction of, and some technical and manufacturing difficulties with, some of our systems and enhancements. We may also experience delays and technical and manufacturing difficulties in future introductions or volume production of new systems or enhancements. Significant delays can occur between a product’s introduction and the commencement of volume production of that product. Any of these events could negatively impact our ability to generate the return we intend to achieve on our investments in new products.

If we fail to adequately invest in research and development, or lose our relationships with independent research institutes and universities, we may be unable to compete effectively.

     We have limited resources to allocate to research and development, and must allocate our resources among a wide variety of projects in our Front-end and Back-end businesses. Because of intense competition in our industry, the cost of failing to invest in strategic products is high. In order to enhance the benefits obtained from our research and development expenditures, we have contractual and other relationships with independent research institutes. If we fail to adequately invest in research and

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development or lose our ability to collaborate with these independent research entities, we may be unable to compete effectively in the Front-end and Back-end markets in which we operate.

We face intense competition and potential competition from companies which have greater resources than we do, and if we are unable to compete effectively with these companies, our market share may decline and our business could be harmed.

     We face intense competition in both the Front-end and Back-end segments of the semiconductor equipment industry from other established companies. Our primary competitors in the Front-end business include Applied Materials, Novellus, Tokyo Electron, and Kokusai. Our primary competitors in the Back-end business include Kulicke & Soffa, ESEC, Shinkawa, Apic Yamada, BE Semiconductor, Towa, Shinko and Mitsui. A number of our competitors have significantly greater financial, technological, engineering, manufacturing, marketing and distribution resources than we do. Their greater capabilities in these areas may enable them to:

• better withstand periodic downturns in the semiconductor industry;

• compete more effectively on the basis of price and technology;

• more quickly develop enhancements to, and new generations of products; and

• more effectively retain existing customers and attract new customers.

In addition, new companies may enter the markets in which we compete, further increasing competition in the semiconductor equipment industry.

     We believe that our ability to compete successfully depends on a number of factors, including:

• our success in developing new products and enhancements;

• performance of our products;

• quality of our products;

• ease of use of our products;

• reliability of our products;

• cost of owning our products;

• our ability to ship products in a timely manner;

• quality of the technical service we provide;

• timeliness of the services we provide;

• responses of our competitors to changing market and economic conditions; and

• price of our products and our competitors’ products.

     Some of these factors are outside our control. We may not be able to compete successfully in the future, and increased competition may result in price reductions, reduced profit margins, loss of market share, and inability to generate cash flows that are sufficient to maintain or expand our development of new products.

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RISKS RELATED TO OUR BUSINESS

Our quarterly revenues and operating results fluctuate due to a variety of factors, which may result in volatility or a decrease in the price of our common shares.

     Our quarterly revenues and operating results have varied significantly in the past and may vary in the future due to a number of factors, including:

• cyclicality and other economic conditions in the semiconductor industry;

• production capacity constraints;

• the timing of customer orders, cancellations and shipments;

• the length and variability of the sales cycle for our products;

• the introduction of new products and enhancements by us and our competitors;

• the emergence of new industry standards;

• product obsolescence;

• disruptions in sources of supply;

• our ability to time our expenditures in anticipation of future orders;

• our ability to fund our capital requirements;

• changes in our pricing and pricing by our suppliers and competitors;

• our product and revenue mix;

• seasonal fluctuations in demand for our products;

• exchange rate fluctuations; and

• economic conditions generally or in various geographic areas where we or our customers do business.

     In addition, we derive a substantial portion of our net sales from products that have a high average selling price and significant lead times between initial order and delivery of the product. The timing and recognition of net sales from customer orders can cause significant fluctuations in our operating results from quarter to quarter. Gross margins realized on product sales vary depending upon a variety of factors, including the mix of products sold during a particular period, negotiated selling prices, the timing of new product introductions and enhancements and manufacturing costs. A delay in a shipment near the end of a fiscal quarter or year, due, for example, to rescheduling or cancellations by customers or to unexpected manufacturing difficulties experienced by us, may cause sales in a particular period to fall significantly below our expectations and may materially adversely affect our operating results for that period. Further, our need to continue expenditures for research and development and engineering make it difficult for us to reduce expenses in a particular quarter even if our sales goals for that quarter are not met. Our inability to adjust spending quickly enough to compensate for any sales shortfall would magnify the adverse impact of a sales shortfall on our operating results. In addition, announcements by us or our competitors of new products and technologies could cause customers to defer purchases of our existing systems, which could negatively impact our earnings and our financial position.

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     As a result of these factors, our operating results may vary significantly from quarter to quarter. Any shortfall in revenues or net income from levels expected by securities analysts and investors could cause a decrease in the trading price of our common shares.

Our products generally have long sales cycles and implementation periods, which increase our costs in obtaining orders and reduce the predictability of our earnings.

     Our products are technologically complex. Prospective customers generally must commit significant resources to test and evaluate our products and to install and integrate them into larger systems. In addition, customers often require a significant number of product presentations and demonstrations, in some instances evaluating equipment on site, before reaching a sufficient level of confidence in the product’s performance and compatibility with the customer’s requirements to place an order. As a result, our sales process is often subject to delays associated with lengthy approval processes that typically accompany the design and testing of new products. The sales cycles of our products often last for many months or even years. Longer sales cycles require us to invest significant resources in attempting to make sales and delay the generation of revenue.

     Long sales cycles also subject us to other risks, including customers’ budgetary constraints, internal acceptance reviews and cancellations. In addition, orders expected in one quarter could shift to another because of the timing of customers’ purchase decisions. The time required for our customers to incorporate our products into their systems can vary significantly with the needs of our customers and generally exceeds several months, which further complicates our planning processes and reduces the predictability of our operating results.

We derive a significant percentage of our revenue from sales to a small number of large customers, and if we are not able to retain these customers, or they reschedule, reduce or cancel orders, our revenues would be reduced and our financial results would suffer.

     Our largest customers account for a significant percentage of our revenues. Our largest customer accounted for 13.9% and our ten largest customers accounted for 39.6% of our net sales in 2002. Sales to and the relative importance of these large customers have varied significantly from year to year and will continue to fluctuate in the future. These sales also may fluctuate significantly from quarter to quarter. We may not be able to retain our key customers or they may cancel purchase orders or reschedule or decrease their level of purchases from us. Any substantial decrease or delay in sales to one or more of our key customers could harm our sales and financial results. In addition, any difficulty in collecting amounts due from one or more key customers could harm our financial results.

We may need additional funds to finance our future growth, and if we are unable to obtain such funds, we may not be able to expand our business as planned.

     In the past, we have experienced severe capital constraints that adversely affected our operations and ability to compete. We may require substantial additional capital to finance our future growth and fund our ongoing research and development activities beyond 2003. Our capital requirements depend on many factors, including acceptance of and demand for our products, and the extent to which we invest in new technology and research and development projects.

     If we raise additional funds through the issuance of equity securities, the percentage ownership of our existing shareholders would be diluted. If we finance our capital requirements we may incur significant interest costs. Additional financing may not be available to us when needed or, if available, may not be available on terms acceptable to us.

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     If we are unable to raise needed additional funds, we may have to reduce the amount we spend on research and development, slow down our introduction of new products, reduce capital expenditures necessary to support future growth and/or take other measures to reduce expenses which could limit our growth and ability to compete.

The sale of common stock pursuant to our equity line may dilute the interests of other security holders.

     Under our equity line financing agreement with Canadian Imperial Holdings, Inc., we may sell up to US$ 65.0 million in the aggregate of our common shares. We may sell up to US$ 10.0 million of our common shares (but not more than 25% of the previous week’s trading volume) as often as every five business days. The purchase price of the shares will be equal to 95.5% of the simple average of the daily volume weighted average sale price during the five trading days preceding the date of sale. Because the price of the shares that may be sold under the equity line is based on the market value of the common shares at the time of the sale, the number of shares sold will be greater if the price of the common shares declines, which would cause greater ownership dilution. The equity line agreement does not limit the price at which common shares may be sold.

     The total number of shares that may be issued under the equity line depends on the market price of our common shares at the time that the shares are sold and whether we choose to sell shares, although under no circumstances can we sell an aggregate number of shares greater than 19.9% of the number of common shares outstanding at July 2, 2002, or 9,781,250 shares. Our decision to choose to sell all possible shares under the equity line would be influenced by, among other things, whether it is in the best interests of the shareholders to sell at lower market prices. We registered 4,330,446 common shares for sale with the Securities and Exchange Commission, which represented 8.77% of our outstanding common shares as of December 31, 2002.

The sale of material amounts of our common shares could reduce the price of our common stock and encourage short sales.

     Sales of our common stock under our equity line may cause the price of our common shares to decrease due to the additional selling pressure in the market. In addition, this downward pressure on our stock price could cause some market participants to engage in short sales of our common shares, which may cause the price of our stock to decline even further. The equity line agreement does not impose a minimum price at which our common shares may be sold. If the price of our common shares declines below the Nasdaq National Market minimum bid requirement, our continued listing on the Nasdaq National Market could be jeopardized.

Although we are a majority shareholder, ASM Pacific Technology is not obligated to pay dividends to us and may take actions or enter into transactions that are detrimental to us.

     ASM Pacific Technology is a Cayman Islands limited liability company that is based in Hong Kong and listed on the Hong Kong Stock Exchange. As of December 31, 2002, we owned 54.11% of ASM Pacific Technology through our wholly-owned subsidiary, ASM Netherlands Antilles N.V., a Netherlands Antilles company, and the remaining 45.89% was owned by the public.

     Although three of the five directors of ASM Pacific Technology are affiliates of ASM International, they are under no obligation to take any actions that are beneficial to us. Issues and conflicts of interest therefore may arise which might not be resolved in our best interests.

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     In addition, the directors of ASM Pacific Technology are under no obligation to declare a payment of dividends to shareholders. As a shareholder of ASM Pacific Technology, we can approve the payment of dividends, but cannot compel their payment or size. With respect to the payment of dividends, the directors must consider the financial position of ASM Pacific Technology after the dividend. Since a portion of our cash flows is derived from the dividends we receive from ASM Pacific Technology, its failure to declare dividends in any year would negatively impact the cash position of our Front-end segment for that year and reduce cash available to service our indebtedness. Cash dividends received from ASM Pacific Technology totaled € 15.4 million, € 35.7 million, and € 29.5 million in 2000, 2001, and 2002, respectively.

     The directors of ASM Pacific Technology owe their fiduciary duties to ASM Pacific Technology, and may approve transactions to which we are a party only if the transactions are commercially beneficial to ASM Pacific Technology. Further, under the listing rules of the Hong Kong Stock Exchange, directors who are on the boards of both ASM Pacific Technology and ASM International are not permitted to vote on a transaction involving both entities. This would disqualify all three of the affiliates of ASM International who currently serve on the board of ASM Pacific Technology from voting on any such transaction.

     As a shareholder of ASM Pacific Technology, we can vote our shares in accordance with our own interests. However, we may not be entitled to vote on transactions involving both us and ASM Pacific Technology under the listing rules of the Hong Kong Stock Exchange and the Hong Kong Takeover Code. For example, under the Hong Kong Takeover Code, we would be excluded from voting if we were directly involved in a takeover of ASM Pacific Technology in a transaction requiring a shareholder vote.

Our reliance on a primary supplier could result in disruption of our operations.

     We outsource a substantial majority of the manufacturing of our Front-end business to a single supplier, Philips High Tech Electronics Group (formerly Philips Machinefabrieken Nederland B.V.) based in the Netherlands. Purchases from Philips represented approximately 24.9% of our total cost of sales in the Front-end segment in fiscal 2002. A limited portion of this amount represents manufacturing for which Philips is the sole supplier. We are in the process of developing additional internal and external sources of supply for these manufacturing processes in the future. If Philips were unable or unwilling to deliver products to us in the quantities we require for any reason, including natural disaster, labor unrest, capacity constraints, supply chain management problems or contractual disputes, we may be unable to fill customer orders on a timely basis, which could negatively affect our financial performance and customer relationships.

Because the costs to semiconductor manufacturers of switching from one semiconductor equipment supplier to another can be high, it may be more difficult to sell our products to new customers which could limit our growth in
sales and market share.

     We believe that once a semiconductor manufacturer has selected a supplier’s equipment for a particular product line, that manufacturer generally continues to rely on that supplier for future equipment requirements, including new generations of similar products. Changing from one equipment supplier to another is expensive and requires a substantial investment of resources by the customer. Accordingly, it is difficult to achieve significant sales to a customer currently using another supplier’s equipment. Our inability to sell our products to potential customers who currently use another supplier’s equipment could adversely affect our ability to increase revenue and market share.

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Our ability to compete could be jeopardized if we are unable to protect our intellectual property rights from challenges by third parties; claims or litigation regarding intellectual property rights could require us to incur significant costs.

          Our success and ability to compete depend in large part upon protecting our proprietary technology. We rely on a combination of patent, trade secret, copyright and trademark laws, nondisclosure and other contractual agreements and technical measures to protect our proprietary rights. These agreements and measures may not be sufficient to protect our technology from third party infringements, or to protect us from the claims of others. In addition, patents issued to us may be challenged, invalidated or circumvented, rights granted to us under patents may not provide competitive advantages to us, and third parties may assert that our products infringe their patents, copyrights or trade secrets. Third parties could also independently develop similar products or duplicate our products.

          In addition, monitoring unauthorized use of our products is difficult and we cannot be certain that the steps we have taken will prevent unauthorized use of our technology. The laws of some countries in which our products are or may be developed, manufactured or sold, including various countries in Asia, may not protect our products or intellectual property rights to the same extent as do the laws of the Netherlands and the United States and thus make the possibility of piracy of our technology and products more likely in these countries. If competitors are able to use our technology as their own, our ability to compete effectively could be harmed.

          In recent years, there has been substantial litigation regarding patent and other intellectual property rights in semiconductor-related industries. We are currently involved in patent litigation proceedings in the United States with Applied Materials, Inc. involving claims and counter-claims over certain patent infringement and in April 2003 we and our subsidiary, ASM America, entered into a binding memorandum of settlement settling mutual patent infringement claims between ASM America and Genus, Inc. See Note O of Notes to Consolidated Financial Statements contained elsewhere in this report. These claims involving Applied Materials are unrelated to our 1997 settlement with Applied Materials discussed below. In the future, additional litigation may be necessary to enforce patents issued to us, to protect trade secrets or know-how owned by us or to defend us against claimed infringement of the rights of others and to determine the scope and validity of the proprietary rights of others. Patent litigation can result in substantial cost and diversion of effort by us, which may adversely affect our business, financial condition and operating results.

          Claims that our products infringe the proprietary rights of others would force us to defend ourselves and possibly our customers or suppliers against the alleged infringement. Such claims, if successful, could subject us to significant liability for damages and invalidate our proprietary rights. Regardless of the outcome, patent infringement litigation is time-consuming and expensive to resolve and diverts management time and attention.

          Intellectual property litigation could force us to do one or more of the following, any one of which could severely harm our business:

• forfeit our proprietary rights;

• stop manufacturing or selling our products that incorporate the challenged intellectual property;

• obtain from the owner of the infringed intellectual property right a license to sell or use the relevant technology, which license may not be available on reasonable terms or at all or may involve significant royalty payments;

• pay damages, including treble damages and attorney’s fees in some circumstances; or

• redesign those products that use the challenged intellectual property.

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We license the use of some patents from a competitor pursuant to a settlement agreement; if the agreement is terminated, our business could be adversely affected.

          In October 1997, we entered into an agreement to settle mutual patent infringement litigation with Applied Materials, Inc., which was amended and restated in 1998, pursuant to which Applied Materials agreed to grant us a worldwide, non-exclusive and royalty-bearing license to use all of the litigated patents and certain additional patents that were not part of the litigation. In return, we agreed to pay Applied Materials US$ 80.0 million and to grant it a worldwide, non-exclusive license to use a number of our patents that we were enforcing in the litigation. All licenses expire at the end of the life of the underlying patents. In addition, the settlement agreement includes covenants for limited periods during which the parties will not litigate the issue of whether certain of our products infringe any of Applied Materials’ patents that were not licensed to us under the settlement agreement. The covenants last for different periods of time for different products and have already expired as to some products. Applied Materials can file new litigation after these covenants expire. Upon the occurrence of an event of default or other specified events, including, among other things, our failure to pay royalties, a change of control of ASM International, and improper use of the licenses, Applied Materials may terminate the settlement agreement, including the licenses and covenants not to sue included in the agreement.

          We are currently involved in patent infringement litigation with Applied Materials involving claims that are unrelated to and patents which are not the subject of our settlement agreement with Applied Materials. Additional litigation with Applied Materials regarding other matters or the operation of the settlement agreement itself could occur. Litigation with Applied Materials, which has greater financial resources than we do, could negatively impact our earnings and financial position.

We operate worldwide; economic, political, military or other events in a country where we make significant sales or have significant operations could interfere with our success or operations there and harm our business.

          We market and sell our products and services throughout the world. We have assembly facilities in the Netherlands, the United States, Japan, Hong Kong and Singapore, and manufacturing facilities in the People’s Republic of China and Malaysia. We are subject to risks inherent in doing business internationally. In particular, the September 11, 2001 attacks in New York and Washington, D.C. disrupted commerce throughout the United States and other parts of the world. The continued threat of similar attacks throughout the world and military action taken and to be taken by the United States and other nations in Iraq and elsewhere, as well as the threat of military confrontation on the Korean peninsula, may cause significant disruption to commerce throughout the world. In addition, the recent outbreak of severe acute respiratory syndrome (SARS) in the People’s Republic of China and concerns overs its spread in Asia and elsewhere could have a similar negative effect on business activity. Given the importance of our Asia sales, manufacturing operations and supply relationships, especially in the People’s Republic of China, our business may be more exposed to this risk than the global economy generally. To the extent that such disruptions further slow the global economy or, more particularly, result in delays or cancellations of purchase orders, our business and results of operations could be materially and adversely affected. We are unable to predict whether these risks or the responses thereto will result in any long-term commercial disruptions or if such activities or responses will have a long-term material adverse effect on our business, results of operations or financial condition.

          We are subject to other risks related to international business, including:

• unexpected changes in regulatory requirements or changes in one country in which we do business which are inconsistent with regulations in another country in which we do business;

• fluctuations in exchange rates and currency controls;

• political conditions and instability, particularly in the countries in which our manufacturing facilities are located;

• economic conditions and instability;

• tariffs and other trade barriers, including current and future import and export restrictions, and freight rates;

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• difficulty in staffing, coordinating and managing international operations;

• burden of complying with a wide variety of foreign laws and licensing requirements;

• difficulty in protecting intellectual property rights in some foreign countries;

• limited ability to enforce agreements and other rights in some foreign countries;

• longer accounts receivable payment cycles in some countries; and

• business interruption and damage from natural disasters.

We may not be able to recruit or retain qualified personnel or integrate qualified personnel into our organization. Consequently, we could experience reduced sales, delayed product development and diversion of management resources.

          Our business and future operating results depend in part upon our ability to attract and retain qualified management, technical, sales and support personnel for our operations on a worldwide basis. Competition for qualified personnel is intense, and we cannot guarantee that we will be able to continue to attract and retain qualified personnel. Availability of qualified technical personnel varies from country to country, and may affect the operations of our subsidiaries in some parts of the world. Our operations could be negatively affected if we lose key executives or employees or are unable to attract and retain skilled executives and employees as needed. In particular, if our growth strategies are successful, we may not have sufficient personnel to manage that growth and may not be able to attract the personnel needed. We do not maintain insurance to protect against the loss of key executives or employees. Further, we have agreements with some, but not all, employees, restricting their ability to compete with us after their employment terminates. Our future growth and operating results will depend on:

• our ability to continue to broaden our senior management group;

• our ability to attract, hire and retain skilled employees; and

• the ability of our officers and key employees to continue to expand, train and manage our employee base.

          In response to current market conditions, we have enacted a hiring freeze and have reduced personnel. Although we are not currently focused on attracting new key personnel, we have in the past experienced the intense competition for skilled personnel during market expansions and believe competition will again be intense when the semiconductor market rebounds. Consequently, we generally attempt to minimize reductions in skilled personnel as a reaction to industry downturns, which reduces our ability to lower costs by payroll reduction. We continue to monitor market and economic developments and are ready to implement further measures if circumstances warrant.

Our operational results could be negatively impacted by currency fluctuations.

          Our assets, liabilities and operating expenses and those of our subsidiaries are to a large extent denominated in the currency of the country where each entity is established. Our financial statements, including our consolidated financial statements, are expressed in euros. The translation exposures that result from the inclusion of financial statements of our subsidiaries that are expressed in the currencies of the countries where the subsidiaries are located are not hedged. As a result, our operational results are exposed to fluctuations of various exchange rates. These net translation exposures are taken into account in determining shareholders’ equity.

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          In addition, foreign currency fluctuations may affect the prices of our products. Prices for our products are currently denominated in United States dollars, euros and Japanese yen for sales to our customers throughout the world. If there is a significant devaluation of the currency in a specific country, the prices of our products will increase relative to that country’s currency and our products may be less competitive in that country. Also, we cannot be sure that our international customers will continue to be willing to place orders denominated in these currencies. If they do not, our revenue and operating results will be subject to additional foreign exchange rate fluctuations.

          Although we monitor our exposure to currency fluctuations, these fluctuations could negatively impact our earnings, cash flow and financial position.

If our products are found to be defective, product liability claims may be asserted against us and we may not have sufficient liability insurance or resources available to satisfy such claims.

          One or more of our products may be found to be defective after we have already shipped the products in volume, requiring a product replacement or recall. We may also be subject to product returns that could impose substantial costs and have a material and adverse effect on our business, financial condition and results of operations.

          Product liability claims may be asserted with respect to our products. Although we currently have product liability insurance, we cannot assure you that we have obtained sufficient insurance coverage, that we will have sufficient insurance coverage in the future or that we will have sufficient resources to satisfy any product liability claims should our insurance coverage be unavailable, insufficient or denied.

Environmental laws and regulations may expose us to liability and increase our costs.

          Our operations are subject to many environmental laws and regulations wherever we operate governing, among other things, air emissions, wastewater discharges, the use and handling of hazardous substances, waste disposal and the investigation and remediation of soil and groundwater contamination. In February 2003, the European Commission published a directive on waste electrical and electronic equipment (“WEEE”). In principal, the directive results in “take-back” obligations of manufacturers and/or the responsibility of manufacturers for the financing of the collection, recovery and disposal of electrical and electronic equipment by requiring that European Union Member States adopt appropriate measures to minimize WEEE disposal and achieve high levels of collection separation of WEEE by August 13, 2004. Producers of WEEE will have to provide for the financing of the collection, treatment, recovery and environmentally sound disposal of WEEE by August 13, 2005. A further proposal of the European Commission provides for a ban on the use of lead and some flame retardants in manufacturing electronic components. These measures could adversely affect our manufacturing costs or product sales by forcing us or our suppliers to change production processes or use more costly materials. Our customers may require us to conform to the new standards in advance of their implementation by the European Union Member States.

          As with other companies engaged in similar activities, we face inherent risks of environmental liability in our current and historical manufacturing activities. Costs associated with future environmental compliance or remediation obligations could adversely affect our business.

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Although we currently are a 54.11% shareholder of ASM Pacific Technology, we may not be able to maintain our majority interest, which, if other circumstances are such that we do not control ASM Pacific Technology, would prevent us from consolidating its results of operations with ours; moreover, if we cease to own 50.1% of its shares we would be in default under our revolving credit facility. Either of these events would have a significant negative effect on our consolidated net earnings from operations and liquidity.

          We derive a significant portion of our net sales, earnings from operations and net earnings from the consolidation of the results of operations of ASM Pacific Technology with our results. If we do not maintain our majority interest in ASM Pacific Technology, and if other circumstances are such that we do not control it through other means, we would no longer be able to consolidate its results of operations with ours. Any such determination of whether we could continue to consolidate would be based on whether we still have a “controlling financial interest” within the meaning of United States generally accepted accounting principles. If we were to become unable to consolidate the results of operations of ASM Pacific Technology with our results, the results of operations of ASM Pacific Technology would no longer be included in our earnings from operations. Instead, our proportionate share of ASM Pacific Technology’s earnings would be reflected as a separate line-item called “share of results from investments” in our consolidated statements of operations. We would no longer be able to consolidate the assets and liabilities of ASM Pacific Technology and would have to reflect the net investment in ASM Pacific Technology in the line-item “investments” in our consolidated balance sheet. In addition, decrease in our equity ownership interest in ASM Pacific Technology below 50.1% is an event of default under our € 60.0 million revolving credit facility. These events would have a significant negative effect on our consolidated earnings from operations and liquidity, although our net earnings would be reduced only by an amount that reflects the reduction of our ownership interest in ASM Pacific Technology.

          We maintain our majority interest in ASM Pacific Technology by purchasing shares from time to time as necessary. ASM Pacific Technology has an employee share incentive program pursuant to which it can issue up to an aggregate of 5.0% of its total issued shares, excluding shares subscribed for or purchased under the program, to directors and employees as an incentive. When ASM Pacific Technology issues shares pursuant to this program, our ownership interest is diluted. If the current maximum amount of shares are issued under this program, our ownership interest would continue to be above 50.0%. However, our interest could further be diluted if ASM Pacific Technology issues additional equity. Any such decision by ASM Pacific Technology to issue additional shares requires the approval of a majority of shareholders, which means that, at present, our approval would be required. Although we intend to continue to purchase shares of ASM Pacific Technology if necessary to maintain our majority interest, we may be unable to do so if we do not have sufficient financial resources at that time.

Our directors and officers control approximately 25% of our voting power which gives them significant influence over matters voted on by our shareholders, including the election of directors, and may make it more difficult for a shareholder group to remove or elect directors not supported by management.

          Our directors and officers controlled approximately 25% of our voting power as of December 31, 2002. Accordingly, in the event they were to vote together in connection with matters submitted to a shareholder vote, such as the appointment of our management board by the shareholders, they would have significant influence on the outcome of those matters and on our direction and future operations. This makes it more difficult for a group of shareholders to remove or elect directors not supported by management.

Any investments we may make could disrupt our business and harm our financial condition.

          We intend to consider investments in complementary businesses, products or technologies. In the

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third quarter of 2001, we invested US$ 18.0 million (€ 20.3 million) in NuTool, Inc., a semiconductor equipment company that develops copper deposition technologies. In 2001, we also entered into a strategic technology and marketing agreement with Genitech, Inc. in which we committed to provide US$ 5.0 million over a period of three years for technology development. While we have no other current agreements or specific investment plans, we may acquire businesses, products or technologies in the future. In the event of any future acquisitions, we could:

• issue shares that would dilute our current shareholders’ percentage ownership;

• incur debt;

• assume liabilities;

• incur impairment expenses related to goodwill and other intangible assets; or

• incur large and immediate accounting write-offs.

Our operation of any acquired business will also involve numerous risks, including:

• problems integrating the purchased operations, technologies or products;

• unanticipated costs and liabilities for which we are not able to obtain indemnification from the sellers;

• diversion of management’s attention from our core business;

• adverse effects on existing business relationships with customers;

• risks associated with entering markets in which we have no, or limited, prior experience; and

• potential loss of key employees, particularly those of the acquired organizations.

          We may not be able to successfully integrate any businesses, products or technologies or personnel that we might acquire in the future and also may not realize any anticipated benefits from those acquisitions.

Our anti-takeover provisions may prevent a beneficial change of control.

          Our shareholders have granted to Stichting Continuïteit ASM International, or Stichting, a non-membership organization with a board composed of our President and Chief Executive Officer, the Chairman of our Supervisory Board and three independent members, the right to acquire and vote our preferred shares to maintain the continuity of our company. Toward that objective, Stichting will evaluate, when called for, whether a takeover offer is in our best interest, and may, if it determines that such action is appropriate, acquire preferred shares with voting power equal to 50.0% of the voting power of the outstanding common shares. This is likely to be sufficient to enable it to prevent a change of control from occurring. For additional information regarding Stichting, see Item 7 – Major Shareholders and Related Party Transactions.

          These provisions may prevent us from entering into a change of control transaction that may otherwise offer our shareholders an opportunity to sell shares at a premium over the market price.

We must offer a possible change of control transaction to Applied Materials, Inc. first.

          Pursuant to our 1997 settlement agreement with Applied Materials, Inc., one of our competitors,

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as amended and restated in 1998, if we desire to effect a change of control transaction, as defined in the settlement agreement, with a competitor of Applied Materials, we must first offer the change of control transaction to Applied Materials on the same terms as we would be willing to accept from that competitor pursuant to a bona fide arm’s-length offer made by that competitor.

Our stock price has fluctuated and may continue to fluctuate widely.

          The market price of our common shares has fluctuated substantially in the past. Between January 1, 2002 and December 31, 2002, the sales price of our common shares, as reported on the Nasdaq National Market, ranged from a low of US$ 6.48 to a high of US$ 28.92. The market price of our common shares will continue to be subject to significant fluctuations in the future in response to a variety of factors, including the risk factors discussed in this report.

          Furthermore, stock prices for many companies, and high technology companies in particular, fluctuate widely for reasons that may be unrelated to their operating results.

          Those fluctuations and general economic, political and market conditions, such as recessions or international currency fluctuations, may adversely affect the market price of our common shares.

You may have difficulty protecting your rights as an investor and in enforcing civil liabilities because we are a Netherlands limited liability company.

          Our affairs are governed by our articles of association and by the laws governing limited liability companies formed in the Netherlands. Our executive offices and the majority of our assets are located outside the United States. In addition, most of the members of our management board and supervisory board and executive officers are residents of jurisdictions other than the United States. As a result, it may be difficult for investors to serve process within the United States upon us, members of our management board or supervisory board or our executive officers or to enforce against them in United States courts judgments of those courts, to enforce outside the United States judgments obtained against them in United States courts, or to enforce in United States courts judgments obtained against them in courts in jurisdictions outside the United States, in any action, including actions that derive from the civil liability provisions of the United States securities laws. In addition, it may be difficult for investors to enforce, in original actions brought in courts in jurisdictions located outside the United States, liabilities that derive from the United States securities laws.

Item 4. Information on the Company

          The Information in this Item 4 should be read in conjunction with the risks discussed under Item 3.D. “Risk Factors.”

          As used in this report, the terms “we,” “us,” “our,” “ASM” and “ASM International” mean ASM International N.V. and its subsidiaries, unless the context indicates another meaning, and the term “common shares” means our common shares, par value € 0.04 per share. Since we are a Netherlands company, the par value of our common shares is expressed in euros (“€”).

A. History and Significant Transactions

          ASM International N.V. was incorporated on March 4, 1968 as a Netherlands naamloze vennootschap, or public limited liability company, and was known as Advanced Semiconductor Materials International N.V. until November 1996. Our principal executive offices are located at Jan van Eycklaan 10, 3723 BC Bilthoven, the Netherlands. Our telephone number at that location is (011) (31) 30 229 84

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11.     Our authorized agent in the United States is our subsidiary, ASM America, Inc., a Delaware corporation, located at 3440 East University Drive, Phoenix, Arizona 85034.

          Effective in July 1999, we purchased all of the outstanding shares of Microchemistry, a company located in Finland, for a € 3.9 million promissory note convertible at US$ 10.00 per share into our common shares and renamed the company ASM Microchemistry. Prior to our purchase, Microchemistry developed the process to grow or deposit films one layer at a time by means of a process called Atomic Layer Chemical Vapor Deposition (“ALCVD”), and marketed ALCVD processes to manufacturers of flat panel displays and tape magnetic head products. Following our acquisition, ASM Microchemistry is shifting its focus to manufacturers of semiconductor devices.

          In December 1999, we purchased a 24.0% interest in NanoPhotonics AG, a German supplier of precision thin film metrology equipment for € 407,000. The technology supplied by NanoPhotonics allows for the integration of high-resolution, ellipsometric thin film metrology directly in a wafer-processing tool. This investment has enhanced our ability to equip our batch and single wafer equipment with integrated thin film metrology.

          In early July 2000, we acquired 4.7% of the outstanding shares of ASM Pacific Technology, our Back-end subsidiary, for US$ 67.3 million (€ 73.0 million) in cash. The financing of this acquisition came from our own cash resources and from the loan facility we received from Canadian Imperial Bank of Commerce (“CIBC”) of which we used US$ 69 million.

          In October 2001, we entered into a strategic alliance with and made an equity investment in NuTool, Inc., a privately held semiconductor technology company located in Milpitas, California. NuTool provides innovative copper deposition technologies to the semiconductor industry. Its patented electrochemical mechanical deposition technology offers new process solutions for copper deposition and planarization, providing significant savings in integrated circuit manufacturing and enabling new integrated circuit designs and new process technologies. We made a total equity investment of US$ 18.0 million (€ 20.3 million), giving us an equity interest of approximately 15.4%.

B. Business Overview

Introduction

          We design, manufacture and sell equipment and systems used to produce semiconductor devices, or integrated circuits. Our production equipment and systems are used by both the Front-end and Back-end segments of the semiconductor manufacturing industry. Front-end equipment performs various fabrication processes in which multiple thin films, or layers, of electronically insulating or conductive material are grown or deposited onto a round slice of silicon, called a wafer. Back-end equipment separates these processed wafers into numerous individual dies, each containing the circuitry of a single semiconductor device, and assembles, packages and tests the dies in order to create semiconductor devices. We believe that the Front-end and Back-end react differently to market forces in the highly cyclical semiconductor industry and that operating in both segments reduces the impact of business cycles on our operations.

          Our Front-end facilities in the Netherlands, the United States and Japan enable us to interact closely with customers in the world’s major semiconductor design and wafer processing markets: Europe, North America and Asia. Our products in the Front-end market segment grow or deposit thin films onto wafers primarily using a process called chemical vapor deposition, or CVD. CVD deposits films on the wafer’s surface through chemical reactions using gases at high temperatures. Front-end operations accounted for 60.0% of our net sales in 2001 and 51.4% of our net sales in 2002.

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          Our Back-end business is conducted through our facilities in Hong Kong, Singapore, the People’s Republic of China and Malaysia, close to where most assembly and packaging operations are located. Our products in the Back-end market assemble and package individual dies into finished semiconductor devices using stand alone and automated lines of equipment. We also manufacture leadframes, copper carriers on which dies are mounted as part of the Back-end assembly process. We are in the process of relocating our leadframe facilities from Hong Kong to mainland China. Back-end operations accounted for 40.0% of our net sales in 2001 and 48.6% of our net sales in 2002.

          Our Front-end business is conducted through wholly-owned subsidiaries, the most significant of which are ASM Europe B.V., located in the Netherlands, ASM America, Inc., located in the United States, and ASM Japan K.K., located in Japan. Our Back-end business is conducted through a majority-owned subsidiary, ASM Pacific Technology, with principal operations in Hong Kong, Singapore and the People’s Republic of China. As of December 31, 2002, we owned 54.11% of the outstanding equity of ASM Pacific Technology.

Industry and Products

     General

          The Semiconductor and Semiconductor Equipment Industries

          Semiconductor devices are the key enablers of the electronic age. Starting with the invention of the transistor, constant advances in design and manufacture of these devices have made possible the extraordinary variety of smart products widely available today but unheard of just a few years ago. Two products in particular were spawned by the evolution in semiconductor technology: the personal computer and the mobile telephone, which together have revolutionized communication and information sharing. These products were made possible by advances in integrated circuits (large numbers of individual transistors and components designed as a system) that allow increasingly large numbers of operations to be performed by increasingly small devices in decreasing fractions of a second. The markets for personal computers and mobile phones demand increased performance and functionality. This, plus the constant increase in the number of applications for semiconductor devices, has created continuing demand for devices that are smaller, faster, more energy efficient and cheaper. The mobile phone and other wireless communication devices have accelerated this demand because smaller size and lower power consumption are particularly important.

          In the early stages of the semiconductor industry, semiconductor device manufacturers developed their own production equipment. However, the diverging skill sets of increasingly complex electronic circuit design and the physics and material science aspect of semiconductor manufacturing gave rise to specialized equipment manufacturers that focus on specific areas of semiconductor equipment design and production. The semiconductor equipment industry has grown with the demand for semiconductor devices and developed specialized expertise to address the technological challenges in the manufacturing process.

          The primary focus in achieving better performing integrated circuits has been to reduce the size of individual transistors to increase the number of transistors that can fit within a given size device. Shrinking also reduces the power needed to activate the transistors and increases speed by reducing the distance between, and within, transistors. The primary focus in reducing cost has been to increase the size of the wafer (the silicon substrate upon which semiconductors are built) so that more devices can be produced in each production cycle. In order to implement these advances in technology through shrinking devices or increasing wafer size, device manufacturers must upgrade their equipment. As a result, semiconductor equipment companies develop tools along a broadly defined technology roadmap and once tools for each step of the new production process have been established, semiconductor

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manufacturers can build new lines to incorporate the latest technology. Because semiconductor manufacturers are subject to business and consumer purchase patterns that are driven by demand for new products or applications and larger macroeconomic factors, they attempt to time the large increase in supply created by a new fabrication facility with the demand factors for their end products. The inherent difficulty in matching new supply and the ever-shortening product life-cycles results in the high volatility associated with the semiconductor industry.

          Semiconductor equipment sales depend significantly upon the level of capital expenditures by semiconductor manufacturers, which in turn depends significantly upon the current and anticipated market supply and demand for semiconductor devices and products using semiconductor devices. Growth in the semiconductor market is being fueled by expanding end-user demand for smaller, less-expensive and better-performing electronic products which has led to an increased concentration of semiconductor devices in electronic products.

Semiconductor Manufacturing Processes

          The semiconductor equipment market is composed of two segments: the Front-end and the Back-end. The Back-end is also referred to as assembly and packaging. In the Front-end, three subsegments can be considered: wafer manufacturing, Front-End-of-Line (FEOL) wafer processing and Back-End-of-Line (BEOL) wafer processing.

          In the wafer manufacturing segment a large single crystal of very pure silicon is grown from molten silicon. The crystal is then sliced into a large number of thin slices, or wafers, of single crystalline silicon. These slices are polished to an atomic level flatness before the next steps are executed. For advanced applications, some layers are deposited on the wafer for later use, either by epitaxy or diffusion/oxidation (see below). Epitaxial wafers are even flatter and contain less defects at the surface than polished wafers. Some wafers are made with an embedded electrically insulating layer, such as silicon oxide, just below a very thin top layer of pure silicon. These special wafers are called Silicon-on Insulator or SOI wafers and will be used in the near future for very advanced microprocessors. The finished wafers, still without pattern on them, are shipped to the integrated device manufacturers’ wafer processing factories or “fabs.”

          During FEOL and BEOL wafer processing, multiple thin films of either electrically insulating material, also called dielectrics, or conductive material are grown or deposited on a silicon wafer. First, several material deposition and processing cycles are used in the FEOL to build the basic transistor. Second, several deposition and processing cycles are used in the BEOL to electrically connect the hundreds of millions of transistors. Patterning of the layers with lithography and etching (see below) creates the transistors and connecting wires, which together make up the integrated circuit. Each integrated circuit is a “chip” or a “die” on the wafer. A finished wafer may contain a few dozen to several thousand individual dies. Front-end processes are performed either one wafer at a time in single wafer processing systems or many wafers at a time in batch processing systems. Multiple processes are repeated on each layer as the wafer is processed. The number and precise order of the process steps vary depending upon the complexity and design of the device. The performance of the device is determined in part by the various electrical characteristics of the materials used in the layers of the device and the wafer. The Front-end production phase is capital intensive, requiring multiple units and a range of different types of processing equipment in a fabrication line.

          In the Back-end, or assembly and packaging, segment wafers are cut into individual dies or chips. These chips or dies are mounted in a package with electrical connections to the outside world, while still hermetically sealing the chip in the package.

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          The primary steps involved in wafer processing are described below. These steps are repeated depending on the function of the device which determines its complexity. Complex microprocessors typically are composed of more than 50 layers of conducting, insulating or semiconducting material.

          ASM is mostly active in the deposition processes, i.e. those steps which involve creation of insulating, conducting and semiconducting layers on the wafer surface.

• Atomic Layer Deposition (ALD) is an advanced technology which deposits single atomic layers on wafers one at a time at low temperatures. This process is used to create ultra-thin films of exceptional quality and flatness.

• Chemical Mechanical Polishing (CMP) is a technology which planarizes, or levels, layers deposited on wafers by polishing them with a chemical solution called slurry. Planarization reduces the vertical height differences of the various layers. This increases the number of layers which can be processed without introducing reliability problems.

• Chemical Vapor Deposition (CVD) is a technique in which one or more gaseous reactors are used to form a solid insulating or conducting layer on the surface of a wafer. Several forms of CVD exist, each used for a particular application. These different forms are explained below.

• Clean removes undesirable contaminants from the wafer’s surface.

• Diffusion and Oxidation are high-temperature processes that change the electrical characteristics of layers. Diffusion is used to make impurities introduced by ion implantation electrically active. Oxidation forms a silicon oxide layer on the wafer’s surface, which acts as an insulative or protective layer over the wafer’s surface.

• Electro Chemical Mechanical Deposition (ECMD) deposits a layer of metal through a process called electroplating, while simultaneously planarizing the surface.

• Epitaxy involves the deposition of silicon or silicon compounds on the wafer, continuing and perfecting the crystal structure of the bare wafer underneath. Epitaxy improves the electrical characteristics of the wafer surface, making it suitable for highly complex microprocessors and memory devices.

• Etch reproduces the pattern imprinted by lithography by removing excess material from the uppermost layer of the wafer.

• Ion Implantation is a process in which wafers are bombarded with ions to introduce dopant atoms, or impurities, into the wafer to improve its electrical characteristics. Silicon conducts little or no electricity. In order to have electrical current within a layer, it is necessary to place small amounts of impurities into the layer.

• Lithography is used to print the various layer patterns of the semiconductor device on the uppermost layer of the wafer. These patterns determine the functions of the semiconductor device.

• Low Pressure Chemical Vapor Deposition (LPCVD) performs CVD under high temperature, low pressure conditions to deposit insulating or conductive layers.

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• Metal Organic Chemical Vapor Deposition (MOCVD) is a special CVD process which employs metal-organic compounds to deposit metal films. Metal-organic compounds are used to more easily turn the metals into a metal containing vapor.

• Metrology is used to measure the width of lines on semiconductor devices, the thickness of layers, the surface profiles of layers, and certain electrical properties of layers.

• Plasma Enhanced Chemical Vapor Deposition (PECVD) performs CVD by the use of a vapor containing electrically charged particles or plasma. The plasma makes the vapor more reactive.

• Physical Vapor Deposition (PVD) deposits a thin layer of metal on the wafer surface for electrical contacts and wires through a process called “sputtering.”

• Probing is a process in which electrical and functional tests are performed on each die and defective ones are marked.

• Rapid Thermal Chemical Vapor Deposition (RTCVD) is a technique similar to LPCVD, but deposits a film on one wafer at a time.

• Rapid Thermal Processing (RTP) is used to expose single wafers to heat over a short period of time.

          The Front-end process is complete when all of the layers have been deposited and patterned on the wafer. The introduction of even trace levels of foreign particles can make a device or even an entire wafer unusable. To reduce the level of foreign particles, Front-end processing is performed in clean rooms with ultra low contaminant levels. Once the Front-end processing is complete, the entire wafer is shipped to a Back-end facility where it is assembled, packaged and tested before final shipment of the semiconductor chip to the end customer. Back-end processes do not require the same level of contaminant control and are performed in different facilities than Front-end processes.

          The assembly and packaging or Back-end process consists of sawing or dicing the processed wafer into individual dies, mounting them on carriers such as leadframes and connecting them to the appropriate electrical leads. Wire bonding onto leadframes is the most common interconnection method, although alternative interconnection techniques and materials, such as ceramic packages, flip chips and different chip-scale packaging methods, are available. After the assembly process, the dies are packaged to protect them from environmental influences and prepare them for use, resulting in completed semiconductor devices.

          The primary processes in the Back-end, or assembly and packaging segment are described below. ASM is active in providing assembly and packaging equipment, as well as in the manufacturing of materials such as leadframes.

• Die Bonding mounts the dies onto carriers such as leadframes using a die bonder.

• Die Inspection inspects every die or proper performance before the next steps are undertaken.

• Die Separation separates the dies on the wafer into individual units using wafer saws.

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• Encapsulation or Molding encases the dies in a protective housing, often epoxy, using transfer molds.

• Leadframes are produced by stamping a pattern through a strip of copper or iron-nickel alloy. For high precision (and fast turnaround purposes) leadframes are usually produced by an etching process. This is required when the space between the leads is finer than the thickness of the material.

• Leadframe plating deposits a thin layer of gold or silver on appropriate places.

• Packaging deals with the housing of the chip to protect it from environmental influences and to finalize the product for industrial use.

• Product Testing tests the performance of the completed semiconductor device.

• Trim and Form cuts away the excess portion of the leadframe and bends the leads into the desired shape, resulting in the completed semiconductor device.

• Unit Inspection inspects every mounted chip before encapsulation and inspects each die throughout the assembly process and prior to packaging.

• Wire Bonding attaches extremely thin gold or aluminum wires between the die and the leadframe for electrical connections using a wire bonder.

Industry Trends

          The continuous demand for smaller, faster and cheaper semiconductors drives the technology advances in the material fabrication process. The size of the transistors is measured by the individual feature sizes, or line widths, and current leading-edge devices are produced with line widths as small as 130 nanometers (one billionth of a meter). The industry will soon be ramping up from pilot to high volume production of devices with 90nm feature sizes and critical process equipment is now being developed and tested for line widths at or below 65 nm. Today, we support 130nm technology equipment and are supporting the 90nm technology ramp. In addition, we are working on developing 65nm and even some 45nm technology in our laboratories.

          In developing and piloting these advanced tools, the industry has encountered new physical barriers that require different solutions. In lithography, the most advanced light sources are based on 193nm wavelengths resulting in feature sizes that now are smaller than the wavelength of the light source. This is similar to painting a thin line with a thick brush. In order to increase transistor speeds, the focus has shifted to the interconnection layer between the transistors. This layer historically has been aluminum, but the superior performance of copper has resulted in a shift toward copper. Copper is not as easy to work with because it cannot be deposited using the same processes as aluminum. Instead, it must be electroplated. Additionally, copper can contaminate and needs to have a barrier layer placed around it to avoid contamination of the other layers. New methods of depositing ultra-thin layers, including Atomic Layer Deposition are being developed to address these challenges.

          The move to copper and low-k (high insulating) materials is still in its infancy, with less than a few percent of semiconductor wafers currently using copper connections. Most microprocessors with 90nm feature size transistors now use copper and low-k technology. The trend is toward harder dielectrics and lower k-values. Harder dielectrics are more resistant to the necessary polishing step. Still lower forces

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during the polishing step are desirable. NuTool, in which we have an equity investment, manufactures low force copper deposition and CMP equipment to address the need.

          Understanding the mechanical forces inherent in packaging processes is a key consideration in the industry’s transition to copper and low-k interconnect structures. For example, applying force that exceeds the cohesive strength of the low-k dielectric, or the adhesive strength of one of the interfaces in a stack, will result in failure. ASM has a team exploring these and other integration issues.

          An optimized holistic approach to wafer processing and assembly-packaging may become increasingly important in the not too distant future. As the only company in the industry with both Front-end and Back-end segments, ASM is uniquely positioned to benefit from further synergies between these segments, and to provide an ultimate seamless solution that could improve semiconductor production processes.

          The industry seeks to improve transistor performance as well by introducing new materials and device designs. For example, recently introduced Silicon-Germanium (SiGe) now is critical to the formation of high-frequency transistors used in broadband and wireless telecommunications. An even more advanced form of this process, Silicon Germanium Carbon, further reduces power consumption of RF chips, while maintaining operating frequency.

          The next generation of ultra-thin transistors will require new process technology such as the use of silicon-on-insulator, or SOI wafers. SOI is an advanced isolation technology, which will be used in advanced, low power microprocessors. Either on SOI wafers or on regular silicon wafers, layers of SiGe and strained Silicon are also deposited to further increase the speed of transistors. It has been found that electrons move faster through a strained Silicon layer. Strained Silicon technology also uses the SiGe knowledge developed for Bipolar Complementary Metal Oxide Semiconductor (BiCMOS) technology, thus effectively leveraging related research and development investments.

          For line-widths below 100 nm, new and extremely thin gate dielectrics are needed. New gate insulators of high-k dielectric materials, with reduced leakage, require atomic layer deposition. For electronic manufacturers, the lower power advantages provided by high-k gate insulator electronics will extend the battery-life of electronic products, which in turn will accelerate advances in portable electronics.

          Semiconductor manufacturers are also seeking to reduce the cost of producing semiconductor devices by increasing the diameter of the wafers on which the semiconductor devices are being layered. The maximum diameter of wafers is increasing from the current industry standard introduced in the early 1990s of 200mm, or eight inches, to 300mm, or twelve inches. The move toward larger wafer sizes is driven by cost efficiency, since a 300mm wafer holds more than 2.25 times more dies than a conventional 200mm wafer. Presently, most large semiconductor companies have committed to 300mm facilities or have teamed with others to undertake the 300mm transition.

          The industry faces the dual challenges of increasingly small line widths and larger wafer sizes. Historically, once a manufacturer has been designed into a production line it is very difficult for a new manufacturer to displace them. In the current environment however, the massive shifts in technology and size create an opportunity to replace incumbent suppliers. Most of the equipment for 90 nm technology has now been selected for ramp-up, and ASM is participating in this ramp with its platforms for vertical furnaces, epitaxy, and low-k materials. For 65 nm technology, we are fully involved in the industry leaders’ development programs. Thus our investments in technology over the last five years have provided us with a strong technology platform from which we have and, we believe, will continue to successfully compete for orders.

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          To achieve improved yield, semiconductor equipment manufacturers have focused on in-process metrology as a way to isolate and improve specific steps in the manufacture of devices. The measurements conducted by metrology equipment are becoming a more integral part of the semiconductor manufacturing process. Semiconductor manufacturers are requiring equipment that can make more precise and new kinds of measurements, and provide results of these measurements faster by integration of the measurement tools into the processing equipment. We have responded by integrating certain metrology functions in our A412 vertical furnaces and plan to expand integrated metrology to more products.

          Technological developments in the Front-end process have resulted in the need for new technology in the Back-end process. The ability to place millions of transistors onto a thumbnail size device has created the opportunity to place entire systems on a chip. Instead of many individual components and simple circuits interconnected on a printed circuit board, these systems can now be constructed into one integrated circuit. In addition, computer systems are more interactive with the external environment and therefore require a greater number of input/output (I/O) pins. The challenge for Back-end equipment providers is to connect an increasing number of I/O pins on a package that is constantly decreasing in size. Wire bonding has been at the forefront of this transition as this process connects each of the I/O pins on the individual dies to the external package. Wire bonding must not only address decreasing wire diameters but also increasing throughput to reduce the overall cost of the device. For integrated circuits with very high I/O counts, the industry has developed ball grid array (BGA) and flip-chip packaging that use the entire surface of a die and not just the periphery of the device to attach I/Os. In addition, semiconductor manufacturers are looking to automation and integration of Back-end equipment as ways to reduce costs and increase productivity.

          We believe the steady advance of semiconductor technology in Front-end and Back-end processes will continue and will consequently drive the demand for new equipment systems.

Products

          We design, manufacture and sell products used in both Front-end wafer processing and Back-end assembly, packaging and materials. The following table sets forth the main manufacturing processes used in the Front-end and Back-end market segments and indicates the markets in which we participate.

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FRONT-END			BACK-END
Deposition	Other Processes	Testing	Materials	Assembly	Packaging
Epitaxy*	Diffusion and Oxidation*	Metrology*	Leadframe Manufacture*	Die Separation	Encapsulation*
Low Pressure CVD* Rapid Thermal CVD, and Metal Organic CVD*	Ion Implantation	Probing	Manufacture of Other Materials	Die Bonding*	Package Plating
Plasma Enhanced CVD*	Lithography			Wire Bonding*	Trim and Form*
Atomic Layer Deposition and Plasma Enhanced ALD*	Etch			Unit* Inspection	Product Testing
Physical Vapor Deposition (PVD)	Clean**
Rapid Thermal Processing* (RTP)	Chemical Mechanical Polishing (CMP)***
Electro Chemical Mechanical Deposition (ECMD)***

*Indicates markets in which we participate.

**We participate by integrating advanced cleaning technologies into our deposition equipment.

***We participate through our investment in NuTool.

          Front-end Products

          We combine hardware, software and processes to develop innovative products for the creation of thin films on silicon wafers. These films, etched in certain well-defined sub-micron patterns, form transistors and interconnection circuitry connecting those transistors, see the discussion above under “Semiconductor Manufacturing Processes.” Our equipment controls the properties of such films and assures that they are deposited on atomically clean surfaces.

          Films can be formed in several ways. For example, the surface of a wafer can be exposed to oxygen to form a layer of silicon oxide, an insulator. A film can also be deposited onto the heated surface of a wafer by introducing gas compounds, usually at low pressure, in a CVD process. The CVD process can be used to deposit conductive or insulating films. To deposit films at lower temperatures other technologies such as PECVD is used. ALD or ALCVD^TM processes grow the films one atomic layer at a

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time, and is used when extremely high quality and very flat films are required. We have products which perform all of these deposition processes.

          The following table lists our principal Front-end equipment and the years in which initial production units were first made available to customers.

	KEY		YEAR
PRODUCT FAMILY	PROCESSES	PRODUCTS	INTRODUCED
Single Wafer Thermal CVD Systems	• Epitaxy • CVD • RTCVD	Epsilon® One(1) Thermal CVD System Epsilon® Two(1) Thermal CVD System Epsilon® 2000 Thermal CVD System Epsilon® 2500 Thermal CVD System Epsilon® 3000 (300mm) Thermal CVD System	1988 1990 1997 1997 1997
Vertical Batch Processing Systems	• LPCVD • Diffusion • Oxidation • ALD	A400™ processing system A600 UHV™ processing system A412™ processing system (200 and 300mm) A4ALD™ processing system	1994 1996 1998 2002
Single Wafer Plasma Enhanced CVD Systems	• PECVD	Eagle® 10 system (2 chambers) Eagle® 10 Trident system (3 chambers) Eagle® 12 Rapid Fire system (300mm) Dragon™ 2300 system	1993 1997 1998 2002
Single Wafer Atomic Layer Deposition Systems	• ALD	F 120(2) reactor F 450 and F 950(2) reactors Pulsar® 2000 reactor	1998 1997 1999
Single Wafer RTP Systems	• Anneal • Oxidation	Levitor® 4000 reactor	2000
Single Wafer Cluster Systems and Modules	• Clean • RTCVD • ALD	HF Vapor Clean Module Epsilon® 2500 Module (3) Pulsar® 2000 Module(3) Pulsar® 3000 Module (300 mm)	1999 1997 1999 2001
Platforms	• Clustered    processes	Polygon™ 8200, platform Polygon™ 8300, platform	1997 2001
Single Wafer and Batch Process Chemistries	• RTCVD • LPCVD	New Technology™	2002

(1)	This product has been replaced by the Epsilon 2000 and Epsilon 2500. Although it is no longer sold, it still forms an important part of our installed base and generates service and spare parts revenue.
(2)	Used for non-wafer applications such as flat panel displays and magnetic heads.
(3)	The Epsilon and Pulsar modules share the same reactor section as the Epsilon and Pulsar single wafer stand-alone systems.
(4)	Epsilon®, Advance®, Dragon™, Eagle®, Pulsar®, Levitor®, Aurora™, ALCVD™, Atomic Layer CVD™, Polygon™, Trident™, Rapidfile™, A400™, A412™, A4ALD™ and New Technology™, are used, pending or registered as ASM trademarks in the US and/or other countries.

          Single Wafer Thermal CVD Systems

          Our Epsilon® products heat wafers to high temperatures using infrared lamps, forming a film on the surface of a single wafer by applying CVD. The main current use of the Epsilon® is for epitaxy of silicon and silicon-germanium alloys.

          The high productivity version of the Epsilon®, the Epsilon® 2500, offers the highest throughput in the industry for epitaxial silicon applications. Our Epsilon® 3000 is the first 300 mm SiGe System used for manufacturing of strained silicon layers. We offer both stand-alone equipment and modules that can be integrated with our Polygon™ system.

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          Vertical Batch Processing Systems

          The Advance® 400 series vertical batch processing systems process up to 150 wafers at a time to high temperatures. These reactors load wafers into a carrier, which is pushed into the heated reactor for diffusion, oxidation or CVD processing. The A400™ vertical batch processing system and the A412™ 300 mm version have demonstrated to be the most productive systems of their kind in the industry. A special boat was introduced in 2002 that enables the A412™ to operate at very high temperatures for 300 mm SOI wafer production without introducing defects in the wafers. Moreover, the A4ALD™ processing system, enabling ALD technology specifically developed for a batch reactor, is a good alternative for thicker films to the Pulsar® single wafer ALCVD™ products. Thus, the availability of A4ALD effectively extends the application area of ALD.

          Single Wafer Plasma Enhanced CVD Systems

          The Eagle® series reactors are single wafer systems that deposit films on wafers using a plasma. The Eagle® 10 Trident™ systems are most often utilized for depositing insulators, such as silicon oxide, silicon nitride, and low-k dielectric films used in interconnect circuits. The Eagle® 12 Rapidfire™ (300mm) has three chambers configured for enhanced productivity. The simplicity of these systems results in low cost, high reliability and low maintenance. Our Aurora™ low-k films are made in the Eagle® PECVD systems and are now being used in 90nm device manufacturing. The Dragon™ 2300, introduced in 2002, demonstrates high wafer throughput, high uptime, low energy consumption and cost of operating, while offering the smallest footprint of any high volume manufacturing tool.

          Atomic Layer Deposition Systems

          Our Pulsar® ALCVD™ product for atomic layer deposition is already in commercial production in the markets for flat panel displays and magnetic heads. It is currently being selected for advanced (<100 nm) device manufacturing. With the Pulsar® 2000 and the Pulsar® 3000 reactors (300 mm), we offer both stand-alone equipment and modules that can be integrated with our Polygon™ cluster systems.

          Single Wafer RTP Systems

          In our new RTP product, the Levitor® reactor, the wafer floats on a cushion of gas and does not require lamps for heating. Compared to existing lamp-based RTP systems, the Levitor® reactor allows very fast heating and cooling of the wafers and a more efficient and cost-effective solution. The product is currently being evaluated by two European research and development labs and two end-users. Large numbers of demonstrations have been run in our application labs, including demonstrations on transparent glass wafers for displays.

          Single Wafer Cluster Systems and Modules

          At times, several processes must be performed sequentially on the wafer without allowing them to be contaminated by air. Our Polygon™ single wafer cluster systems (Polygon™ 8200 for 200mm and Polygon™ 8300 for 300mm) allow the integration of up to four modules on a single vacuum handler. We currently have Epsilon®, Pulsar® and vapor clean modules available, the latter to clean unwanted oxide from the incoming wafer with a patented process.

          Process Chemistries

          In 2002, ASM introduced an enabling chemical vapor deposition (CVD) technology, named “New Technology™” that can utilize the hardware of ASM’s Epsilon® reactor, Polygon™ cluster tools,

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or A400 series batch processing systems in combination with proprietary software and chemistry solutions. Based on a new precursor, called Silcore™, New Technology™ can produce silicon containing layers with better properties, and at higher rates of deposition.

          Back-end or Assembly Packaging Products

          The following table lists our principal Back-end products, and the years in which initial production units were first made available to customers.

	KEY		YEAR
PRODUCT FAMILY	PROCESSES	PRODUCTS	INTRODUCED
		AD809		1990
		AD829A		1999
		AD819		1998
	Die Bonding	AD889A		1999
		AD898		2000
Assembly		AD8912		2002
		AD900		2002
		AB510		2000
		AB559A		1997
	Wire Bonding	Eagle60		2002
		AB339 Eagle		2000
		AB339		1997
	Encapsulation and Packaging Processing	PMC139		1999
		IDEALmold™		2000
		MP209		1996
		BGA289		1998
Packaging		CS500		1999
	Trim and Form	CS8000		2002
		BPLine		2000
		DS500		2000
Automated Systems	Full integration of the above assembly and packaging steps into one system	IDEALine™		1999
Materials	Manufacture of carriers on which dies are mounted	Leadframes		1980

          Eagle®, IDEALmold™ are used, pending or registered as ASM trademarks in the US and/or other countries.

          Die bonding

          We manufacture several die bonding models to address various markets including semiconductor and optoelectronic devices. The AD 8912 epoxy die bonder for 12” wafers continues the path undertaken by ASM to provide customers with the highest quality and best cost/performance systems on the market. With its capability to handle up to 12” wafers, fully automatic operation, epoxy writer, pre and post bond inspection and wafer mapping, the AD 8912 is able to provide the customer with exceptional operational results. A new and innovative system is the AD900, high speed flip chip die bonder for ic applications. The AD829A and AD898 models address the large market for die sizes under 30 mils square. A mil is 1/1000 of an inch. In addition to the semiconductor device market, the small die category includes optoelectronic devices. The model AD819 is a high precision machine designed for laser diode optoelectronic devices. Machines may be configured to operate stand-alone or connected to epoxy curing ovens and wire bonders.

          Wire bonding

          We introduced our Eagle60® gold wire bonder in 2002. This is the successor to our acclaimed AB339Eagle generation bonder. The Eagle60® offers significant output increase over existing models. It has the industry leading ultra fine pitch capability and favorable price/performance ratio as well as an ultralight bond head, advanced pattern recognition software and automatic wire bonder inspection

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capability. The AB510 and AB559A are ultrasonic wedge bonders used for aluminum wire bonding at room temperature on printed circuit boards. These machines address the consumer products’ market which focuses on cost effective solutions.

          Encapsulation

          The IDEALmold™, introduced in 2000, specifically designed to be manufactured in a modular format allowing customers to specify the system capacity from two to eight leadframes. This product specifically addresses the in-line market which requires molding systems of varying capacities to allow for proper line balancing. The IDEALmold can be configured as a very flexible stand-alone system as well. The PMC139 allows customers to directly transfer encapsulated semi-conductor devices to a high capacity multi-chamber oven for continuous automatic post mold curing of epoxy molding compound.

          Trim and Form

          Our MP209 is a high speed, motorized trim and form equipment catering to different packages. The modular set-up of the system allows integration of third party testing marking and inspection functions, which in turn allows more cost-efficient production for our customers. The CS8000 is an Integrated Singulation System linked to the customer’s chosen singulation tool to provide Pick and Place with Vision Inspection capability for processing of QFN, Chip Array or CSPBGA packages. It can be configured for package inspection, ball inspection, market inspection or all.

          Automated Systems

          The IDEALine™ integrates Back-end assembly and packaging equipment. We believe we are the only manufacturer of Back-end equipment capable of offering such an extensive integrated line using our own equipment. These lines integrate serial process steps with mechanical and software linkages. Offered in a modular format, customers may integrate some or all of the following processes that we supply: die bonding and inspection, epoxy curing, wire bonding and inspection, encapsulation, post mold curing and trimming and forming. In addition, we work with third party suppliers to offer various additional processes.

Research and Development

          We believe that our future success depends to a large extent upon our ability to develop new products and add improved features to existing products. Accordingly, our centralized product development policies and local activities are directed toward expanding and improving present product lines to incorporate technology advances and enable timely penetration of new markets for automated semiconductor processing, assembly and packaging equipment. These activities require the application of physics, chemistry, process technology, electrical engineering, precision mechanical engineering and software development. We are also continuing to develop new applications as well as software and hardware for our Back-end products.

          Our net research and development expenses, as a percentage of net sales, were 7.9%, 14.2% and 17.0% during 2000, 2001 and 2002, respectively. We expect to continue investing significant resources in research and development to enhance our product offerings.

          Our research and development activities are conducted in the principal semiconductor markets of the world, which enables us to draw on innovative and technical capabilities on an international basis. Each geographic center provides expertise for specific products or technologies. This approach, combined

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with interactions between the individual centers, permits efficient allocation of technical resources and allows for customer orientation combined with the necessary product specialization.

		NUMBER OF R & D
		EMPLOYEES AS OF
BUSINESS SEGMENT	LOCATION	DECEMBER 31, 2002
	Bilthoven, the Netherlands		87
	Leuven, Belgium (IMEC)		22
Front-end	Espoo, Finland		24
	Phoenix, Arizona, United States		82
	Tama, Japan		69
Back-end	Hong Kong, the People’s Republic of China		321
	Singapore		233

          As part of our research and development activities, we are engaged in various formal and informal arrangements with customers and institutes. These arrangements are made on a development program basis and allow us to develop products that meet customer requirements and obtain access to new technology and expertise. We currently are engaged in joint development programs with several customers for 300mm applications of our Eagle, Polygon and Epsilon products. In cooperation with NuTool, Inc., a United States supplier of copper plating and CMP equipment, in which we have an equity investment, we are developing production solutions for copper applications.

          We participate in European programs focusing on developing the production technology for semiconductor devices with line widths of 90, 65 and 45nm. We are the project manager in a number of projects that were awarded under the IST (Information Society Technologies) program, as part of Framework 5 and 6, an initiative of the European Union. We are a leading partner in several development programs sponsored by Micro Electronics Development for European Applications, MEDEA+, a Eureka initiative. In MEDEA+ we are currently working on the development of contactless RTP processing, integration of metrology in batch processing systems and on a multitude of process solutions for the 65nm generation. Mr. Arthur H. del Prado, our President and Chief Executive Officer, is a member of the board of MEDEA+.

          The integration of new product solutions into process modules is done in ASM Europe’s application laboratory, which shares the Interuniversity MicroElectronics Center (IMEC) clean rooms in Leuven, Belgium. This integration within IMEC’s facilities gives us access to all the additional process steps needed to create sub-micron devices, including sub-micron patterning. Development of customer applications usually occurs with the active participation of IMEC, suppliers of complementary and non-critical equipment, and end-users of our products.

          In addition to cooperating with third parties such as customers and other equipment companies in research and development projects, we enter into projects with technical universities, particularly in the Netherlands, Japan and Finland. As part of these projects, we may sell our equipment to customers who will use grants or research loans to acquire these products or we may receive grants or research loans directly. We have received such loans in the past from the Netherlands government, of which € 11.0 million was outstanding at December 31, 2002. These loans have to be repaid only from the sales proceeds of the products developed with this assistance at repayment rates of up to 100% of the amounts of the loans. Our subsidiary, ASM Microchemistry, has received similar loans from the Finnish government.

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Manufacturing and Suppliers

          Our manufacturing operations consist of the fabrication and assembly of various critical components, product assembly, quality control and testing.

          In the Front-end process, we outsource the manufacture of major subsystems and subassemblies and some design, assembly and testing functions to specialized companies. We believe that outsourcing enables us to minimize our fixed costs and capital expenditures while also providing the ability to rapidly increase production capacity. We also work closely with our suppliers to achieve mutual cost reduction through joint design efforts.

          Philips High Tech Electronics Group (formerly Philips Machinefabrieken Nederland B.V.) supplies a substantial part of the major subassemblies used in the manufacture of our Advance A400 and Advance A412 vertical batch processing systems. Although we work with a limited number of suppliers, we seek not to rely on a sole supplier, and have back-up suppliers for most subsystems and subassemblies that are outsourced.

          In addition, we purchase the metrology equipment that we integrate into some of our Front-end products from NanoPhotonics. As of February 17, 2003 we had a 24.0% equity interest in NanoPhotonics and our Chief Executive Officer had a 44.5% interest. See “Item 5. Operating and Financial Review and Prospects” and “Item 7. Related Party Transactions.”

          Our Back-end operations are vertically integrated to insure quality production of component parts where the quality of subassemblers does not otherwise meet our standards. The manufacturing activities in Hong Kong and Singapore consist primarily of assembling and testing components and subassemblies manufactured at our main manufacturing facilities in the People’s Republic of China and Malaysia.

Marketing and Sales

          We sell and market our products with the objective of developing and maintaining an ongoing, highly interactive service and support relationship with our customers. Our marketing strategy includes advertising and participating in various industry trade shows. We provide prospective customers with extensive process and product data, provide opportunities for tests on demonstration equipment and, if required, install evaluation equipment at the customer’s site. Once equipment has been installed, we support our customers with, among other things, extensive training, on-site service, spare parts and process support. All of this is further supported by in-house development to enhance the productive life of existing equipment. We make hardware improvements available in the form of retrofit kits as well as joint development with our customers of new applications. We encourage our engineers to submit technical papers to relevant magazines and to give lectures in symposia.

          Because of the significant investment required to purchase our systems and their highly technical nature, the sales process is complex, requiring interaction with several levels of a customer’s organization and extensive technical exchanges, product demonstrations and commercial negotiations. As a result, the full sales cycle can be as long as 12 to 18 months for sales of Front-end equipment and three to six months for sales of Back-end equipment. Purchase decisions are generally made at a high level within a customer’s organization, and the sales process involves broad participation across our organization, from senior executive management to the engineers who designed the product.

          Our sales process usually starts with high-level introduction meetings. Early in the process we also meet with operational personnel to discuss the intended uses of our equipment, technical requirements, solutions, and the overall production process of the customer. Demonstrations and

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evaluation of test results take time. Once we agree upon the technology elements of the sale, the process continues with price and delivery negotiations and, when completed successfully, with the issuance by the customer of a letter of intent to secure a slot in the manufacturing and assembly planning schedule, followed by a purchase order.

          To market our products, we operate demonstration and training centers where customers can examine our equipment in operation and can, if desired, process their wafers or individual dies for further in-house evaluation. Customers are also trained to properly use purchased equipment.

          Each of our major product lines has a dedicated product manager, responsible for positioning the product in the market, developing it over time and evaluating its relative performance compared to the competition. Each product manager sets priorities in terms of technical development and sales support.

          To execute the sales and service functions, we have established a direct, integrated sales force for Front-end products reporting on a geographical basis to the managers in charge of Europe, North America, Korea, Taiwan, Southeast Asia and Japan. At the end of 2002, the Front-end units had 96 employees fully dedicated to sales and marketing, representing 7.8% of total Front-end staff. Dedicated support and sales forces are maintained for our various geographic units, enabling us to serve our global customers with an equally global organization. Each of our geographic Front-end units is responsible for sales of all of our Front-end products in its region. We believe the integration of our sales force promotes cross selling of Front-end products.

          In addition to the sales activities undertaken at the principal offices of our various manufacturing units, we have sales offices located in Europe (in the United Kingdom, France, Italy and Germany), and in the United States (in California, Texas and Pennsylvania). In Japan, our sales offices are located in Tokyo and Osaka.

          We use independent sales agents in Malaysia and the People’s Republic of China for Front-end products and to support our sales efforts for ALCVD equipment in the non-semiconductor markets, such as flat panel displays and magnetic heads.

          Sales of Back-end equipment and materials are provided by our principal offices in Hong Kong and Singapore, through direct sales offices in Taiwan, the Philippines, Malaysia, Thailand, Japan, Europe and North America, and through sales representatives in Korea and some parts of the United States. At the end of 2002, there were 181 staff members employed in sales and marketing of Back-end products, representing 3.4 % of total Back-end staff.

Customers

          We sell our products predominantly to manufacturers of semiconductor devices and manufacturers of silicon wafers. Our customers include most leading semiconductor and wafer manufacturers. Our customers vary from independent semiconductor manufacturers that sell their products on the open market, to large electronic system companies that manufacture semiconductor devices for their own use.

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          The following table lists a sample of customers of ours:

CUSTOMERS

Agere Group	IBM	Philips
Agilent	InfineonTechnologies	Powerchip Semiconductor
AMD		Promos Technologies
Amkor Technology	Intel	Samsung
ASE	Jiangsu Chanjiang Electronics	Siliconware Precision Ind.
Carsem	Matsushita Electronics	Sony
Chartered	MEMC	Seiko Epson
Chippac	Micron	ST Microelectronics
Fairchild Semiconductors	Mitsubishi	Texas Instruments
Fujitsu	Motorola	Toshiba
Hana	NEC	TSMC
Hitachi	Nichia Kagaku Chemical	UMC

          Our largest customer accounted for approximately 14.2%, 7.2% and 13.9% of our net sales in 2000, 2001 and 2002, respectively. Our ten largest customers accounted for approximately 45.2%, 35.5% and 39.6% of our net sales in 2000, 2001 and 2002, respectively. Historically, a significant percentage of our net sales in each year has been attributable to a limited number of customers; however, the largest customers for our products may vary from year to year depending upon, among other things, a customer’s budget for capital expenditures, plans for new fabrication facilities and new product introductions.

          The following table shows the distribution of net sales, by segment and geographic destination of the product:

		PERCENTAGE		GEOGRAPHIC
	SEGMENT	OF NET SALES		DESTINATION	PERCENTAGE OF NET SALES
					Front-end		Back-end
	Front-end	51.4	%	S.E. Asia	8.5	%	41.3	%
				Europe	10.5	%	1.1	%
2002
	Back-end	48.6	%	North and South America	25.0	%	4.4	%
				Japan	7.4	%	1.8	%

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		PERCENTAGE			GEOGRAPHIC
	SEGMENT	OF NET SALES			DESTINATION	PERCENTAGE OF NET SALES
						Front-end			Back-end
2001	Front-end		60.0	%	S.E. Asia		8.5	%		34.0	%
					Europe		18.1	%		2.0	%
	Back-end		40.0	%	North and South America		18.5	%		1.5	%
					Japan		14.9	%		2.5	%

		PERCENTAGE			GEOGRAPHIC
	SEGMENT	OF NET SALES			DESTINATION	PERCENTAGE OF NET SALES
						Front-end			Back-end
2000	Front-end		40.6	%	S.E. Asia		7.8	%		54.2	%
					Europe		9.3	%		2.4	%
	Back-end		59.4	%	North and South America		11.8	%		1.8	%
					Japan		11.7	%		1.0	%

Customer Service

          We provide responsive customer technical assistance to support our marketing and sales. Technical assistance is becoming an increasingly important factor in our business as most of our equipment is used in critical phases of semiconductor manufacturing. Field engineers install the systems, perform preventive maintenance and repair services, and are available for assistance in solving customer problems. Our global presence permits us to provide these functions in proximity to our customers. We also maintain local spare part supply centers to facilitate quick support.

          We provide maintenance during the product warranty period, usually one to two years, and thereafter perform maintenance pursuant to individual orders issued by the customer. In addition to providing ongoing service, our customer service operations are responsible for customer training programs, spare parts sales and technical publications. In appropriate circumstances, we will send technical personnel to customer locations to support the customer for extended periods of time to optimize the use of the equipment for the customer’s specific processes. For our Front-end business, where the availability of field support is particularly important for a sale, there are approximately 398 support staff employees, or 32.5% of our total Front-end employees.

          VLSI Research Inc.’s 2002 Customer Satisfaction Survey ranked ASM International the number one Large Supplier of Chip Making Equipment. The survey ranks the 15 largest semiconductor equipment suppliers as determined by sales irrespective of the type of equipment produced. The survey respondents are representatives of chip-making companies around the world who rate their suppliers in thirteen categories that exemplify a supplier’s relationship with its customers.

Competition

          The semiconductor equipment industry is intensely competitive, and is fragmented among companies of varying size, each with a limited number of products serving a particular segment of the

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semiconductor process. Technical specifications of the individual products are an important competitive factor, especially concerning capabilities for manufacturing of new generations of semiconductor devices. As each product category encompasses a specific blend of different technologies, our competitive position from a technology standpoint may vary within each category. Customers are evaluating manufacturing equipment based on a mixture of technical performance and cost of ownership over the life of the product. Main competitive factors include overall product performance, yield, reliability, maintainability, service, support and price. We believe that we are competitive with respect to each of these factors, and that our products are cost effective.

          As the variety and complexity of available machinery increases, some semiconductor manufacturers are attempting to limit their suppliers. In addition, semiconductor manufacturers are located throughout the world, and expect their equipment suppliers to have offices worldwide to meet their supply and service needs. Semiconductor equipment manufacturers with a more limited local presence are finding it increasingly difficult to compete in an increasingly global industry.

          Our primary competitors in the Front-end business are from the United States and Japan. Our primary competitors in the Back-end business are from the United States, Europe and Japan. In each of our product lines, we compete primarily with two or three companies which vary from small to large firms in terms of the size of their net sales and range of products. Our primary competitors in the Front-end business include Applied Materials, Novellus, Tokyo Electron and Kokusai. Our primary competitors in the Back-end business include Kulicke & Soffa, ESEC, Shinkawa, Apic Yamada, BE Semiconductor, Towa, Shinko and Mitsui.

Intellectual Property

          Because of the rapid technological advances in the microelectronics field, we believe that our products will be subject to continuing change and enhancement. Accordingly, we believe that our success will depend upon the technical competence and creative ability of our personnel and the ownership of our intellectual property rights.

          We own and license patents which cover some of the key technologies, features and operations of our major Front-end products and are registered in the principal countries where semiconductor devices or equipment are manufactured. The following table shows the number of patents for which we made an initial filing during the indicated period and the number of patents in force as of the end of the indicated period:

	Year		Year		Year		Year		Year
	1998		1999		2000		2001		2002
Initial patent filings		34		40		58		49		96
Issued patents		N/A		167		215		277		367

          We have entered into worldwide, non-exclusive, non-transferable and non-assignable licenses with Applied Materials for patents related to epitaxy and some chemicals used to deposit insulating layers for PECVD. To maintain these licenses, we pay Applied Materials a royalty on sales of equipment that use the patented technology. These patents expire at various times between 2003 and 2010. Upon expiration of the patents, the technology may be used royalty-free by the public, including us.

          In the Back-end market segment, companies generally compete on the basis of their cumulative expertise in applying well known technologies to improve productivity and cost-efficiency. As a result, we file fewer patents related to our Back-end business but where possible, we file for protection of innovations made by our Back-end subsidiary. We also own certain trademarks and other proprietary information that we consider important to our business.

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          There has been substantial litigation regarding patent and other intellectual property rights in semiconductor-related industries. We currently are involved in two such matters and, in the future, additional litigation may be necessary to enforce patents issued to us, to protect trade secrets or know-how owned by us or to defend us against claimed infringement of the rights of others and to determine the scope and validity of the proprietary rights of others. Any such litigation could result in substantial cost and diversion of effort by us, which could have a material adverse effect on our business, financial condition and operating results. Adverse determinations in such litigation could result in our loss of proprietary rights, subject us to significant liabilities to third parties, require us to seek licenses from third parties or prevent us from manufacturing or selling our products, any of which could have a material adverse effect on our business, financial condition and operating results.

          At present, we are not involved in any litigation which we believe is likely to have a materially adverse effect on our financial position. However, we are involved in two proceedings, the outcome of which cannot be determined at present.

          Genus Litigation

          In June 2001, our subsidiary, ASM America, filed a lawsuit against Genus, Inc. in the U.S. District Court for the Northern District of California alleging infringement of three patents involving sequential chemical vapor deposition (U.S. Patent No. 5,916,365), methods for growing thin films (U.S. Patent No. 6,015,590) and ASM America’s “showerhead” patent (U.S. Patent No. 4,798,165, entitled “Apparatus for Chemical Vapor Deposition Using an Axially Symmetric Gas Flow”). Genus responded by denying the allegations and bringing a counterclaim against ASM America and ASM International alleging antitrust violations and infringement of U.S. Patent No. 5,294,568 involving selective etching of native oxide. Genus’ antitrust claims were stayed until after trial on the patents at issue. In August 2002, the court ruled that Genus did not infringe the ‘365 patent. In January 2003, the court ruled that Genus did not infringe the ‘590 patent.

          In April 2003, ASM International and ASM America entered into a binding memorandum of settlement with Genus settling this litigation. Pursuant to the memorandum:

• Genus granted to ASM International and ASM America a nonexclusive, worldwide, fully paid-up license under the ‘568 patent and directly related patents;

• ASM America granted to Genus a nonexclusive, worldwide, fully paid-up license under the ‘165, ‘365 and ‘590 patents and directly related patents, provided that the license for the ‘365 and ‘590 patents will be effective only upon completion of the appeal by ASM America of the lower court’s summary judgment rulings as described below;

• ASM America will have the right to appeal the summary judgment rulings in respect of the ‘365 and ‘590 patents and, if the appeals courts vacates either summary judgment ruling on the basis of a change in the lower court’s claim construction, Genus will pay ASM America the sum of US$1.0 million in respect of the above licenses for the ‘365 and ‘590 patents; and

• Genus, on the one hand, and ASM International and ASM America on the other hand, agreed to refrain for a five year period from litigating patent and antitrust claims, although each party retains the right to recover damages incurred during the five year period if a suit is brought after the expiration of such period.

          Applied Materials Litigation

          In response to a letter by Applied Materials, Inc. that our Eagle reactors infringe various Applied Materials patents, ASM International and ASM America filed a declaratory judgment action against Applied Materials on August 27, 2002 in the U.S. District Court for the District of Arizona. The lawsuit seeks a declaration of non-infringement or invalidity of six Applied Materials patents relating to cleaning of reaction chambers and deposition of silicon nitride. Applied Materials responded on December 16, 2002 by denying the allegations and counterclaiming for a declaratory judgment of infringement and validity of two of the patents related to cleaning of reaction chambers and for damages, a preliminary or permanent injunction and costs. Applied Materials also moved to dismiss the complaint with respect to four of the patents and for a more definitive statement with respect to two of ASM International’s causes of action. No trial date has been set. Given the stage of the proceedings, it is not possible to predict the outcome of the claims and counterclaims at this time, or the range of potential recovery or loss.

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C. Organizational Structure

          The following chart presents the jurisdiction of incorporation of our significant subsidiaries and our percentage of ownership interest in those subsidiaries as of February 17, 2003:

		Percentage Owned by
Subsidiary Name and Location	Country of Incorporation	ASM International, N.V.
ASM Europe, B.V. Bilthoven, the Netherlands	The Netherlands		100	%
ASM Microchemistry, Ltd. Espoo, Finland	Finland		100	%
ASM America, Inc. Phoenix, Arizona, United States	State of Delaware, United States of America		100	%
ASM Japan, K.K. Tama, Japan	Japan		100	%
ASM Pacific Technology Ltd. Hong Kong, the People’s Republic of China	The Cayman Islands		54.11	%

D. Property, Plants and Equipment

          To develop and manufacture products to local specifications and to market and service products more effectively in the worldwide semiconductor market, our Front-end manufacturing facilities are located in Europe, the United States and Japan and our Back-end facilities are located in Hong Kong, the People’s Republic of China, Singapore and Malaysia. Our principal facilities are summarized below:

			APPROXIMATE
BUSINESS			AGGREGATE
SEGMENT	LOCATION	PRIMARY USES	SQUARE FOOTAGE
Front-end	Bilthoven, The Netherlands	Wafer processing equipment manufacturing, marketing, research and executive offices		231,000
	Tama and Niigata, Japan	Wafer processing equipment manufacturing, marketing, research and offices		334,000
	Phoenix, Arizona, USA	Wafer processing equipment manufacturing, marketing, research and offices		179,000
	Almere, The Netherlands	Wafer processing equipment manufacturing and offices		80,000
	Espoo, Finland	Wafer processing equipment manufacturing, marketing, research and offices		33,000
Back-end	Hong Kong, People’s Republic of China	Assembly and encapsulation equipment manufacturing, leadframe plating, marketing, research and offices		250,000
	Shenzhen, People’s Republic of China	Precision metal part and subassembly fabrication, stamped leadframe manufacturing and offices		935,000
	Singapore	Assembly equipment and etched leadframe manufacturing, marketing, research and offices		333,000
	Johor Bahru, Malaysia	Precision metal part and subassembly fabrication, and offices		38,000

          Our principal facilities in the Netherlands, the United States, Finland, Hong Kong, the People’s Republic of China, Singapore and Malaysia are subject to leases expiring at various times from 2003 to 2026. The facilities we own are subject to mortgages. We believe that our facilities are maintained in good operating condition and are adequate for our present level of operations.

Item 5. Operating and Financial Review and Prospects

Overview

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          We design, manufacture and sell equipment and systems used to produce semiconductor devices, or integrated circuits. Our production equipment and systems are used by both the Front-end and Back-end segments of the semiconductor market. Front-end equipment performs various fabrication processes in which multiple thin films of electrically insulating or conductive material are grown or deposited onto a round slice of silicon, called a wafer. Back-end equipment separates these processed wafers into numerous individual dies, each containing the circuitry of a single semiconductor device, and assembles, packages and tests the dies in order to create semiconductor devices. We conduct our Front-end business, which accounted for 51.4% of our net sales in 2002, through our principal facilities in the Netherlands, the United States and Japan. We conduct our Back-end business, which accounted for 48.6% of our net sales in 2002, through our principal facilities in Hong Kong, the People’s Republic of China, Singapore and Malaysia. Our Back-end operations are conducted through our 54.11% majority-owned subsidiary, ASM Pacific Technology Limited (“ASMPT”).

          We sell our products worldwide to the semiconductor industry, which is subject to sudden and extreme cyclical variations in product supply and demand. Since late 2000, the semiconductor industry has been impacted by a severe cyclical downturn characterized by reduced demand for products, lower average selling prices across certain product lines, reduced investment in semiconductor capital equipment and other factors, all of which have led to lower sales and earnings for our business, in particular for capacity-driven purchases. Despite the decline in capacity-driven demand we have seen a continued interest and orders for new technology and 300mm equipment in 2002 in our Front-end operations, due to our firm commitment to research and development and new design-in wins at top-tier customers. Our established position as a leading supplier of a full spectrum of innovative products in our Back-end operations contributed positively.

          In the Front-end segment, we are able to reduce manufacturing costs in a market downturn because we outsource a substantial portion of our manufacturing requirements and because part of our European and Japanese workforce is composed of temporary contract employees, the number of which can be reduced as necessary. In the Back-end segment, where we are highly vertically integrated, we are able to reduce labor costs quickly in adverse market conditions. Since we enjoy a cost advantage in our Back-end operations due to the location of our manufacturing facilities, a tightening market for our Back-end products may also present opportunities for market penetration.

          The current transition in the industry to new processes and materials and to a larger, 300mm wafer size from the current 200mm wafer requires equipment providers to develop entirely new sets of tools and presents us with an opportunity to displace existing suppliers to major semiconductor manufacturers. We believe that we are well positioned and that our firm commitment to research and development, our readiness in new technologies, design-in wins at top-tier customers, as well as our strategic partnerships provide us with a broad basis for substantial long-term market share gains.

Sales

          The sales cycle from quotation to shipment for our Front-end equipment generally takes several months, depending on capacity utilization and the urgency of the order. The acceptance period after installation may be as short as four to five weeks. However, if customers are unfamiliar with our equipment or are receiving new product models, the acceptance period may take as long as ten weeks or more. The sales cycle is longer for equipment which is installed at the customer’s site for evaluation prior to sale. The typical trial period ranges from six months to one year after installation.

          The sales cycle for Back-end products is typically shorter than for Front-end products. Generally, the majority of our Back-end equipment is built in standard configurations. We build Back-end products

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that are approximately 85% complete in anticipation of customer orders. Upon receipt of a customer’s order and specifications, the remaining 15% of the manufacturing is completed. This allows us to complete the assembly of our equipment in a short period of time. We therefore require between two to six weeks for final manufacturing, testing, crating, and shipment of our Back-end equipment. Our Back-end customers’ acceptance periods generally are shorter than those for Front-end equipment. We provide installation, training and technical support to our customers with local staff in all of our major markets.

               Our Front-end sales are concentrated in the United States, Europe, Japan and Southeast Asia and our Back-end sales are concentrated in Southeast Asia. The following table shows the geographic distribution of our Front-end and Back-end sales for 2001 and 2002:

	Year ended December 31,
Region:	2001			2002
Front-end:
United States		30.9	%		48.6	%
Europe		30.2			20.5
Japan		24.8			14.4
Southeast Asia		14.1			16.5
		100.0	%		100.0	%
Back-end:
Taiwan		16.7	%		22.8	%
Malaysia		14.9			12.0
People’s Republic of China		13.2			14.5
Korea		5.1			8.8
Singapore		10.1			7.3
Hong Kong		7.6			7.1
Thailand		6.8			5.7
Philippines		9.0			5.2
Other		16.6			16.6
		100.0	%		100.0	%

          A substantial portion of our Front-end sales is for equipping new or upgraded fabrication plants where device manufacturers are installing a complete complement of fabrication equipment. As a result, our Front-end sales tend to be uneven across customers and financial periods. Sales to our ten largest Front-end customers accounted for 48.6% of Front-end net sales in 2001 and 62.7% in 2002. The composition of our ten largest Front-end customers changes from year to year. The largest Front-end customer accounted for 12.1% of Front-end net sales in 2001 and the largest Front-end customer accounted for 27.1% of Front-end net sales in 2002.

          Back-end sales per customer tend to be more level over time than Front-end sales, because Back-end operations can be scaled up in smaller increments at existing facilities. Sales to our ten largest Back-end customers accounted for 39.6% of Back-end sales in 2001 and 35.3% in 2002. Because our Back-end customer’s needs are more level over time, the composition of our ten largest customers is more stable from year to year than in the Front-end. Our largest Back-end customer accounted for 10.7% of Back-end net sales in 2001 and 7.1% in 2002.

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Research and Development

          We invested € 79.7 million in research and development during 2001 and € 88.3 million in 2002. As part of our research and development activities, we are engaged in various development programs with customers and research institutes that allow us to develop products that meet customer requirements and to obtain access to new technology and expertise. We expense rather than capitalize our research and development expenses. We charge to costs of sales the costs relating to prototype and experimental models, which we may subsequently sell to customers.

          Our reported research and development expenses are net of research and development credits, which were € 5.6 million in 2001 and € 3.0 million in 2002. Our Netherlands, Belgium, Finland and Singapore research and development operations receive research and development grants and credits from various governmental sources.

          Some of the research and development grants we received in the Netherlands are contingently repayable to the extent we recognize sales of products to which the credit is related. We do not recognize a liability on our balance sheet in respect of these credits until we recognize sales of products to which the credit relates. These repayments vary and range from 1.0% to 4.0% of the realized sales, depending on the products sold. Our actual and contingent repayments accrue at interest rates ranging from 5.0% to 8.0% per annum. Our contingent liability related to possible future repayments was € 10.1 million at December 31, 2001 and € 11.0 million at December 31, 2002. In 2000, 2001 and 2002 we made repayments in the amount of € 1.5 million, € 2.9 million and € 0.1 million, respectively.

Acquisitions and Strategic Investments

          In October 2001, we entered into a strategic alliance with and made a 15.4% equity investment of $18.0 million (€ 20.3 million) in NuTool, Inc. (“NuTool”), a privately held semiconductor technology company located in Milpitas, California. The purchase price of the investment was determined in part by reference to prices paid by other recent strategic investors. NuTool provides innovative copper deposition technologies to the semiconductor industry. Its patented electrochemical mechanical deposition technology offers new process solutions for copper deposition and planarization, providing significant savings in integrated circuit manufacturing and enabling new integrated circuit designs and new process technologies. The strategic alliance with NuTool provides us with additional competitive solutions to address the industry’s transition to copper metallization.

          In 2000, we purchased in various transactions 5.0% of the outstanding common shares of ASMPT to maintain a majority interest in the shares of ASMPT of 54.88% after the 5.0% acquisition. The total purchase price of the acquired shares amounted to € 74.8 million. At December 31, 2002, we owned 54.11% of the outstanding common shares of ASMPT.

Issuance of Shares and Convertible Subordinated Notes

          In November and December 2001, we sold US$ 115.0 million in principal amount of 5.0% Convertible Subordinated Notes due on November 15, 2005 in a private offering. Interest is payable on May 15 and November 15 of each year. The notes are subordinated in right of payment to our existing and future senior indebtedness. The notes are convertible into common shares at any time before their maturity unless we have previously redeemed or repurchased them at a conversion rate of 53.0504 shares per each US$ 1,000 principal amount of notes, subject to adjustment in certain circumstances. This is equivalent to an initial conversion price of approximately US$ 18.85 per share. The proceeds of the sale were used to fund our strategic investment in NuTool, to repay outstanding debt and for general corporate purposes, including working capital and capital expenditures.

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          In April 2000, we completed a public offering of 4,250,000 common shares at a price of US$ 29.00 per share. The net proceeds of € 119.7 million were used to repay outstanding loans and fund our working capital needs.

Critical Accounting Policies

          Our discussion and analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these Consolidated Financial Statements requires us to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

          Revenue Recognition

          Our revenue recognition policy is significant because our revenue is a key component of our results of operations. We follow very specific and detailed guidelines in measuring revenue following principles of revenue recognition described in Staff Accounting Bulletin No. 101 “Revenue Recognition in Financial Statements” (SAB 101), issued by the staff of the Securities and Exchange Commission (the “SEC”) in December 1999, and adopted by us effective January 1, 2000. However, certain judgments affect the application of our revenue policy. Our transactions frequently involve the sale of complex equipment, which may include customer-specific criteria, transactions to new customers or transactions with new technology, as well as payment terms, linked to achieving certain milestones. Management must make the determination whether such a transaction is recognized as revenue based on the merits of the contractual agreements with a customer, the experience with a particular customer, the technology and the number of similarly configured equipment previously delivered. Revenue results are difficult to predict, and any shortfall in revenue or delay in recognizing revenue could cause our operating results to vary significantly from quarter to quarter and could result in future operating losses.

          Our net sales include product revenues derived primarily from sales of Front-end and Back-end equipment used by both segments of the semiconductor equipment market. We recognize revenue from equipment sales upon shipment of our products when it is proven prior to shipment that the equipment has met all of the customers’ criteria and specifications. The installation process is not believed to be essential to the functionality of our products. However, since under most of our sales contracts the timing of payment of a portion of the sales price is coincident with installation, such installation is not considered to be inconsequential or perfunctory under the guidance of SAB 101. Therefore, at the time of shipment, we defer that portion of the sales price related to the fair value of installation. We believe we have an enforceable claim for the portion of the sales price not related to the fair value of the installation should we not fulfill our installation obligation. If this belief were changed by industry developments in the future, this portion would be deferred in future periods until final acceptance by the customer or until contractual conditions lapse. The fair value of the installation process is measured based upon the per-hour amounts charged by third parties for similar installation services. When we can only satisfy the customer acceptance criteria or specifications at the customer’s location, revenue is deferred until final acceptance by the customer or until contractual conditions lapse.

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          We provide training and technical support to customers. Revenue related to such services is recognized when the service is completed. Revenue from the sale of spare parts and materials is recognized when the goods are shipped.

          Valuation of Goodwill

          Goodwill represents the excess of the cost of businesses acquired over the fair market value of identifiable net assets on the date of acquisition. As from January 1, 2002 we adopted Statement of Financial Accounting Standard (“SFAS”) No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets,” issued by the Financial Accounting Standards Board (“FASB”), which requires that goodwill and intangible assets with indefinite lives will not be amortized, but will rather be tested at least annually for impairment. Any impairment loss incurred is recorded as a charge to current period earnings. At the adoption of SFAS No. 142 as of January 1, 2002, we have assessed whether acquired goodwill was impaired and whether an impairment loss should have been recognized. Based on the tests performed, no impairment loss was recorded upon adoption of this standard as of January 1, 2002, nor as of December 31, 2002. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. Determination of the implied fair value includes certain management judgments and use of valuation techniques, and may be different if other assumptions are used. In future periods we may be required to record an impairment loss based on the impairment test performed, which may significantly affect our result of operations at that time.

          Valuation of Long-Lived Assets

          In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” long-lived assets and certain recognized intangible assets (except those not being amortized) to be held and used, and long-lived assets and certain recognized intangible assets (including those not being amortized) to be disposed of, are required to be reviewed for impairment, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, we have to estimate the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. In 2002, we reviewed our long-lived assets, including our 15.4% strategic investment in NuTool, which we acquired for $18.0 million (€20.3 million) in October 2001, for facts or circumstances, both internal and external, that may suggest impairment, including performance compared to historical or projected future operating results, negative industry or economic trends and the technological value as compared to the market. In 2002, no such impairment was indicated. Our cash flow estimates used were based on our best estimates and projections at the time of our review. In future periods, however, we may be required to record an impairment loss based on the impairment test performed, which may significantly affect our result of operations at that time.

          Valuation of Inventory

          Inventories are valued at the lower of cost or market. We regularly evaluate the value of our inventory of components and raw materials, work in progress and finished goods, based on a combination of factors including the following: forecasted sales, historical usage, product end of life cycle, estimated current and future market values, service inventory requirements and new product introductions, as well as other factors. Purchasing requirements and alternative uses for the inventory are explored within these processes to mitigate inventory exposure. We record writedowns for inventory based on the above factors and take into account worldwide quantities and demand into our analysis. If circumstances related to our inventories change, our estimates of the value of inventory could materially change.

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          Accounting for Income Taxes

          We currently have significant deferred tax assets, which resulted primarily from operating losses incurred in prior years as well as other temporary differences. SFAS No. 109, “Accounting for Income Taxes,” requires the establishment of a valuation allowance to reflect the likelihood of the realization of deferred tax assets. Based on available evidence, we regularly evaluate whether it is more likely than not that the deferred tax assets will be realized. This evaluation includes our judgment on the future profitability and our ability to generate taxable income, changes in market conditions and other factors. At December 31, 2002, we believe that there is insufficient evidence to substantiate recognition of substantially all net deferred tax assets with respect to net operating loss carryforwards, and we have established a valuation allowance accordingly. Future changes in facts and circumstances, if any, may result in a change of the valuation allowance to these deferred tax asset balances which may positively influence our result of operations at that time.

Results of Operations

Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

          Net Sales. The semiconductor equipment market is still impacted by the severe downturn in the industry, which started in late 2000. This has resulted in low capital spending by semiconductor manufacturers, in particular for capacity-driven purchases. Our consolidated net sales for 2002 decreased 7.5% to € 518.8 million compared to € 561.1 million for the year 2001. Front-end sales decreased 20.7% from € 336.6 million in 2001 to € 266.9 million in 2002. Back-end sales increased 12.2% from € 224.5 million in 2001 to € 251.9 million in 2002. Despite a decline in capacity-driven demand, we have seen a continued interest and orders for new technology and 300mm systems in 2002, in particular for our Front-end operations, where we were able to gain from design-in wins at top-tier customers. Sales in our Back-end operations grew primarily due to increased customer interest in our new generation wire bonders and other equipment. Overall, the increased order activity and customer demand has resulted in a growth in sales levels in the second half of 2002 as compared to the first half of 2002 and the second half of 2001, while sales levels in the first half of 2001 were still benefiting from our backlog at the end of 2000.

          Gross Profit. Our consolidated gross profit margin for 2002 amounted to 36.8% of net sales, 3.0 percentage points below the consolidated gross profit margin of 39.8% for 2001. The Front-end operations gross profit decreased 6.9 percentage points from 39.1% of net sales in 2001 to 32.2% of net sales in 2002, and the Back-end business gross profit increased from 40.8% of net sales in 2001 to 41.6% of net sales in 2002. The decrease in gross profit margin for our Front-end operations is the result of lower sales volumes, low margins on new technology shipments for 300mm systems, which were approximately 52% of our 2002 net sales, and the impact of a lower exchange rate of the US dollar in 2002 as compared to 2001. The increase in gross profit margin for our Back-end operations is the result of the higher sales volume in 2002 compared to 2001, the effect of which was partially offset by lower sales prices.

          Selling, General and Administrative. Our selling, general and administrative expenses decreased from € 111.9 million in 2001 to € 108.4 million in 2002. As a percentage of net sales, selling, general and administrative expenses increased from 19.9% for 2001 to 20.9% for 2002. Front-end selling, general and administrative expenses decreased from € 72.3 million in 2001 to € 65.6 million in 2002, while Back-end selling, general and administrative expenses increased from € 39.6 million in 2001 to € 42.8 million in 2002. In our Front-end operations we were able to reduce our expenses from the high level in the first half of 2001, by reducing headcount and other cost cutting programs, while in the second half of 2002, increasing demand for our new products required increased support staff and accompanying higher expenses. In our Back-end operations, expenses of € 2.5 million were recorded related to the relocation of production facilities from Hong Kong to the mainland of the People’s Republic of China.

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          Research and Development. Research and development expenses were € 88.3 million in 2002, an increase of 10.9%, compared to € 79.7 million in 2001. Front-end research and development expenses increased by 12.5% from € 55.8 million in 2001 to € 62.8 million in 2002, while Back-end research and development expenses increased by 6.7% from € 23.9 million in 2001 to € 25.5 million in 2002. Net research and development expenses increased from 14.2% of net sales in 2001 to 17.0% of net sales in 2002. The offset of research and development credits against research and development expenses amounted to € 5.6 million in 2001 and € 3.0 million in 2002. We continued to keep the research and development expenses at a high level despite the market circumstances and concentrated our investments in research and development on equipment and product solutions for the next generations of semiconductor devices.

          Amortization of Goodwill. As of January 1, 2002, we adopted SFAS No. 142 “Goodwill and Other Intangible Assets.” This new accounting standard requires that goodwill not be amortized, but rather tested at least annually for impairment. Consequently, we stopped amortizing goodwill as of January 1, 2002. No impairment loss was recorded upon adoption of SFAS No. 142. We also tested goodwill for impairment at December 31, 2002, and concluded that goodwill was not impaired. Amortization of goodwill for the full year 2001 amounted to € 7.6 million.

          Net Interest and Other Financial Income (Expenses). Net interest and other financial income (expenses) increased from a net expense of € 1.0 million 2001 to a net expense of € 10.4 million in 2002. The increase in net expense in 2002 was the result of increased borrowings and the full impact of our US$ 115.0 million 5% convertible notes issued in November and December 2001, € 1.5 million of amortization of debt issuance costs related to these convertible notes, and a € 2.1 million foreign exchange loss as a result of the changes in foreign exchange rates between the euro, the US dollar, the Hong Kong dollar and the Japanese yen in 2002, compared to a small foreign exchange gain in 2001.

          Income Taxes. We recorded a € 1.2 million tax benefit during 2002, compared to a tax expense of € 4.7 million in 2001. The reduced income taxes reflect our reduced net earnings. As of December 31, 2002, we have a € 296.6 million net operating loss carryforward, which we can apply primarily against future earnings reported in the United States and the Netherlands. At December 31, 2002, the related deferred tax asset for the net operating loss carryforward amounted to € 100.2 million, for which we provided a valuation allowance of € 91.5 million.

          Net Earnings (Loss). We realized a net loss of € 29.9 million in 2002 compared to net earnings of € 6.1 million in 2001, primarily due to the lower sales volumes. Our Front-end operations reported a net loss of € 48.8 million in 2002 compared to a net loss of € 10.0 million in 2001. Our portion of our Back-end operation’s net earnings was € 18.9 million compared to € 16.1 million in 2001.

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

          Net Sales. The market for semiconductor equipment weakened substantially in 2001. Our consolidated net sales for 2001 decreased 40.0% to € 561.1 million compared to € 935.2 million for the year 2000. Front-end sales decreased 11.2% from € 379.3 million in 2000 to € 336.6 million in 2001. Back-end sales decreased 59.6% from € 555.9 million in 2000 to € 224.5 million in 2001. The decrease in net sales reflects the impact of the extraordinarily severe downturn in the semiconductor industry, as semiconductor manufacturers delayed purchases and cut capital spending, thus reducing the demand for semiconductor equipment during 2001. Our sales in the first half of 2001 were still at high levels as a result of our backlog at the end of 2000, with a contraction in the second half of the year. Sales in Front-end were strong in our vertical furnaces product line, where we were able to gain from design-in wins at first tier customers for the 300mm vertical furnace, and in our thin film product line. Sales in other

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product lines declined substantially due to contraction, in particular in 200mm equipment. The decline in Back-end sales was primarily due to a decrease in sales of wire bonding and die bonding equipment and, to a somewhat lesser extent, leadframes.

          Gross Profit. Our consolidated gross profit decreased from 44.6% of net sales in 2000 to 39.8% of net sales in 2001. The Front-end business gross profit decreased 1.2 percentage points from 40.3% of net sales in 2000 to 39.1% of net sales in 2001, and the Back-end business gross profit decreased from 47.6% of net sales in 2000 to 40.8% of net sales in 2001. The decrease in gross profit for 2001 as a percentage of sales is the result of the significantly lower sales volumes, in particular in the second half of 2001, which resulted in underutilization of our manufacturing capacity. We have implemented programs to reduce fixed costs to respond to the lower sales volumes.

          Selling, General and Administrative. Our selling, general and administrative expenses decreased from € 147.3 million in 2000 to € 111.9 million in 2001. As a percentage of net sales, selling, general and administrative expenses increased from 15.8% for 2000 to 19.9% for 2001. Front-end selling, general and administrative expenses increased from € 66.2 million in 2000 to € 72.3 million in 2001, while Back-end selling, general and administrative expenses decreased from € 81.1 million in 2000 to € 39.6 million in 2001. The increase in Front-end was partly due to the continued high level of sales in the first half of 2001 and the related growth in supporting staff functions offset by expense reduction programs in the second half of 2001, including temporary reduction in management salaries and a hiring freeze. In our Back-end operations we were able to respond to the market conditions and to reduce our selling, general and administrative expenses in line with the lower sales volumes through cost cutting programs resulting in lower bonus and incentive expenses, lower sales commissions and reduction of staff.

          Research and Development. Research and development expenses increased by 7.9% from € 73.8 million in 2000 to € 79.7 million in 2001. Front-end research and development expenses increased by 16.4% from € 47.9 million in 2000 to € 55.8 million in 2001, while Back-end research and development expenses decreased 7.7% from € 25.9 million in 2000 to € 23.9 million in 2001. Net research and development expenses increased from 7.9% of net sales in 2000 to 14.2% of net sales in 2001 due to substantially lower sales. The amounts of research and development credits offset against research and development expenses amounted to € 2.2 million in 2000 and € 5.6 million in 2001. We focused our investment in research and development on the equipment and products for the next generations of semiconductor devices. In our Front-end, these investments were concentrated on Silicon Germanium, high-k dielectrics, low-k dielectrics, ALCVD, 300mm applications and the Levitor RTP system. Research and development in the Back-end is concentrated on performance improvements and new products such as our next generation, high speed integrated circuit die bonders for 300mm and 200mm wafers and our high precision, eutectic solder process bonder for flip chip packaging applications. Despite our lower sales levels, we have kept our research and development expenditures at a high level in 2001 and continue to invest heavily in the research and development of new generation technology.

          Amortization of Goodwill. The amortization of goodwill increased from € 4.3 million in 2000 to € 7.6 million in 2001. This increase relates to the amortization of goodwill resulting from the acquisition of an additional 4.7% interest in ASMPT in July 2000, resulting in a full year of amortization during the year 2001.

          Net Interest and Other Financial Income (Expenses). Net interest and other financial income (expenses) decreased by 38.3% from a net expense of € 1.6 million in 2000 to a net expense of € 1.0 million in 2001 due principally to the repayment of relatively higher interest rate loans with the proceeds of the public offering of common shares we completed in April 2000, lower interest rates on our credit lines and with cash generated from operations. The strength of the United States dollar and the Hong Kong dollar versus the Euro, our reporting currency, resulted in transaction exchange gains.

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          Income Taxes. We incurred € 4.7 million in income taxes during 2001, compared to € 22.8 million in 2000. As of December 31, 2001, we have a € 280.0 million net operating loss carryforward, which we can apply primarily against future earnings reported in the United States and the Netherlands. At December 31, 2001, the related deferred tax asset for the net operating loss carryforward amounted to € 97.7 million, for which we provided a valuation allowance of € 90.6 million

          Net Earnings. Our net earnings in 2001 were € 6.1 million compared to € 94.3 million in 2000, primarily due to decreased net sales. The 2000 net earnings were reduced by a cumulative effect of change in accounting principle of € 3.8 million due to the adoption of new accounting guidelines for revenue recognition. Our Front-end operations reported a net loss of € 10.0 million in 2001 compared to net earnings before the cumulative effect of change in accounting principle of € 18.6 million in 2000. Our portion of our Back-end operations’ net earnings before the cumulative effect of change in accounting principle was € 16.1 million compared to € 79.5 million in 2000.

Backlog

          New orders received in the year 2002 increased 52.0% to € 529.1 million from € 348.0 million in the year 2001. Overall backlog at December 31, 2002 was € 142.9 million, a 7.8% increase from € 132.6 million at December 31, 2001. Of our backlog at December 31, 2002, € 109.9 million relates to our Front-end operations and € 33.0 million to our Back-end operations as compared to € 107.2 million and € 25.4 million at December 31, 2001, respectively. The largest part of the backlog in Front-end relates to 300mm equipment. Our backlog consists of orders of products by purchase orders or letters of intent for future periods, typically for up to one year. In some markets, such as Japan, it is common practice for letters of intent to be used instead of firm purchase orders. Under specific circumstances, customers can cancel or reschedule deliveries. In addition, purchase orders are subject to price negotiations and changes in quantities of products ordered as a result of changes in customers’ requirements. Depending on the complexity of an order, we generally ship our products from one to six months after receipt of an order. We include in the backlog only orders for which a delivery schedule has been specified and to which the customer has assigned an order number. Rescheduled deliveries are included in backlog if they have a firm delivery date.

Liquidity and Capital Resources

          Our liquidity is affected by many factors, some of which are related to our ongoing operations and others of which are related to the semiconductor and semiconductor equipment industries and to the economies of the countries in which 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 twelve months. The cyclicality of the industry, the duration of the current downturn and the uncertain economic environment could result in lower customer demand and continued fixed costs and, as a result, cash generated by operations may be lower than forecasted. In such a situation we might need to further utilize our short-term credit facilities or investigate additional financing.

          At December 31, 2002, our principal sources of liquidity consisted of € 71.0 million in cash and cash equivalents and € 143.2 million in undrawn bank lines, the utilization of which is subject to satisfaction of certain financial and other covenants. Approximately € 57.1 million of the cash and cash equivalents and € 48.7 million of the undrawn bank lines are restricted to use in our Back-end operations. In addition, we have an equity line with Canadian Imperial Holdings, Inc. (“CIHI”), pursuant to which we may sell up to an aggregate of US$ 65.0 million of newly issued common shares to CIHI from time to time. We may sell up to US$ 10.0

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million of our common shares (but not more than 25% of the previous week’s trading volume) as often as every five business days. The purchase price of the shares is equal to 95.5% of the average of the daily volume weighted average sale price during the five trading days proceeding the date of sale. Our initial equity line expired unused on July 6, 2002. Prior to that time, we entered into a substantially identical agreement, which expires July 6, 2003. As of December 31, 2002, we had not issued any common shares under the new equity line. We believe we can renew this facility on terms acceptable to us.

          In December 2002, we entered into a multicurrency revolving credit facility with a consortium of banks in the amount of € 70.0 million (subsequently reduced to € 60.0 million under revised conditions more favorable to us) to be utilized solely for our Front-end operations, excluding Japan. The credit facility consists of one € 30.0 million facility with a term of 18 months and one € 30.0 million facility with a term of 12 months. The utilization of the credit facility requires us to maintain certain financial covenants with respect to solvency and for our Front-end operations a minimum level of earnings from operations plus depreciation plus dividends received from our subsidiary ASMPT. Our subsidiaries ASM America, Inc., ASM Europe B.V., ASM Microchemistry Oy and Advanced Semiconductor Materials (Netherlands Antilles) N.V. have issued guarantees for all obligations in connection with the credit facility. At December 31, 2002, the amount outstanding under the facility was € 10.0 million at a one-month interest rate of 4.26%. At April 17, 2003, the amount outstanding under the facility was € 17.8 million at a one month weighted average interest rate of 4.14%, and we had additional availability of € 42.2 million. The credit facility is secured by a varying portion of our shareholding in ASMPT. The facility was a renewal of an existing € 45.0 million facility, which expired on December 27, 2002.

          At December 31, 2002, ASM Japan had € 34.0 million available for borrowing under its bank lines, the proceeds of which are restricted to use in the ASM Japan business and ASMPT had €48.7 million of additional availability under its bank lines, the proceeds of which are restricted to use in our Back-end operations.

          We expect to receive the final 2002 dividend from ASM Pacific Technology of approximately €16.0 million in late April 2003, which funds will be available for use in our Front-end segment. We expect to use these funds to repay outstanding balances on our revolving credit facility. This dividend has been proposed by ASM Pacific Technology to its shareholders for approval at its annual general meeting in April 2003 and, as a majority shareholder, our vote is sufficient to approve the payment.

          During 2002, we generated net cash flows from operating activities of € 16.4 million, compared to cash flows from operating activities of € 40.4 million for 2001. The decrease was primarily the result of the net loss due to lower sales, partially offset by a lower net cash outflow of € 7.9 million in other assets and liabilities in 2002 compared to a € 26.3 million net cash outflow in 2001. At December 31, 2002 we have entered into purchase commitments for delivery in 2003 with suppliers in the amount of € 70.1 million.

          During 2002, we invested € 33.2 million in capital equipment and facilities, particularly for new development and demonstration equipment and to keep our facilities up to standard. Investments in capital equipment and facilities in 2001 were € 71.6 million, when we made investments in our new 300mm A412 assembly and testing facility in the Netherlands, and new clean rooms in the United States and Japan. We expect capital expenditure in 2003, to be approximately at the same level as in 2002. Our capital expenditure commitments at December 31, 2001 were € 3.4 million, and at December 31, 2002 were € 3.3 million. In 2001, we also made a strategic equity investment of $18.0 million (€ 20.3 million) in NuTool, a privately held semiconductor technology company located in Milpitas, California.

          Net cash used in financing activities was € 13.5 million in 2002. During that period, we repaid € 3.1 million of long-term debt and received proceeds of € 0.6 million in new long-term loans and received € 2.1 million from the issuance of common shares. We paid € 24.5 million dividend to minority shareholders of our subsidiary ASMPT. In 2001 net cash provided by financing activities was € 47.6 million, mainly resulting from the sale of US$ 115.0 million of convertible subordinated notes and the repayment of € 55.4 million of long term debt and the payment of a € 29.8 million dividend to minority shareholders of our subsidiary ASMPT.

          In November and December 2001 we sold US$ 115.0 million in principal amount of 5.0% convertible subordinated notes due on November 15, 2005 in a private offering. Interest is payable on May 15 and November 15 of each year. The notes are subordinated in right of payment to our existing and future senior debt. The notes are convertible into common shares at any time before their maturity at

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a conversion rate of 53.0504 shares per each US$ 1,000 principal amount of notes, subject to adjustment in certain circumstances. This is equivalent to an initial conversion price of approximately US$ 18.85 per share. The outstanding principal balance of the convertible subordinated notes amounted to € 130.7 million (US$ 115.0 million) at December 31, 2001 and € 109.7 million (US$ 115.0 million) at December 31, 2002. The proceeds of the convertible subordinated notes offering were used to fund our strategic investment in NuTool, to repay outstanding balances under our multicurrency revolving credit facility and for general corporate purposes, including working capital and capital expenditures.

          We finance the operation of our Front-end business from operating cash flows, from borrowings and equity offerings. We support borrowings of our Front-end subsidiaries with guarantees. We have also granted security interests in our land and buildings and our shareholdings in ASMPT to secure Front-end borrowings.

          Our Back-end operations, which are conducted through our 54.11%-owned subsidiary ASMPT, are entirely self-financed by ASMPT. However, the earnings, cash resources and borrowing capacity of ASMPT are not available to our Front-end operations due to restrictions imposed by the Hong Kong Stock Exchange, on which the ASMPT common shares are listed.

          We rely on dividends from ASMPT for a portion of our cash flow for use in our Front-end operations. Cash dividends received from ASMPT during 2000, 2001 and 2002 were € 15.4 million, € 35.7 million and € 29.5 million, respectively. We expect ASMPT to continue its dividend policy.

          Although several of the directors of ASMPT are affiliates of ASM International, they are under no obligation to declare dividends to shareholders or enter into transactions that are beneficial to us. As a majority shareholder, we can approve the payment of dividends, but cannot compel their payment or size.

          The market value of our investment in ASMPT at the end of 2002 was approximately € 390.7 million, which is lower than the market value at the end of 2001, which was approximately € 464.2 million.

Contractual Obligations, Contingent Liabilities and Commitments

          The following table summarizes our contractual obligations as at December 31, 2002 aggregated by type of contractual obligation:

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		December 31, 2002
				Less than						More than
		Total		1 year		1-3 years		3-5 years		5 years
Notes payable to banks			26.5		16.5		10.0		—		—
Long-term debt:
	Long-term debt		10.8		2.7		6.0		1.4		0.7
	Convertible Subordinated debt		109.7		—		109.7		—		—
Operating leases			40.5		9.5		11.4		6.9		12.7
Purchase Obligations:
	Purchase commitments to suppliers		70.1		70.1		—		—		—
	Capital expenditure commitments		3.3		3.3		—		—		—
Total contractual obligations			260.9		102.1		137.1		8.3		13.4

          For a discussion of our contractual obligations for notes payable to banks, long-term debt, convertible subordinated debt and commitments and contingencies reference is made to Note H, I, J and N to the Consolidated Financial Statements.

          We outsource a substantial portion of the manufacturing of our Front-end operations to certain suppliers. As our products are technologically complex, the leadtimes for purchases from our suppliers can vary up to nine months, and generally contractual commitments are made for multiple modules or systems in order to reduce our purchase prices per module or system. For the majority of our purchase commitments we do have flexible delivery schedules depending on the market conditions, which allow us, to a certain extent, to delay delivery beyond originally planned delivery schedules.

          At December 31, 2002 we had contingent payables of € 11.0 million related to research and development grants received. The grants received are repayable only to the extent we recognize sales of products to which the grants receive related.

New Accounting Pronouncements

          In June 2001, the FASB issued SFAS 143 “Accounting for Asset Retirement Obligations.” SFAS 143 establishes accounting standards for the recognition and measurement of legal obligations associated with the retirement of tangible long-lived assets and requires recognition of a liability for an asset retirement obligation in the period in which it is incurred. The provisions of this statement are effective for financial statements issued for fiscal years beginning after June 15, 2002. The adoption of SFAS No. 143 did not have a material impact on our financial position or results of operations.

          In June 2002, the FASB issued SFAS 146, “Accounting for Costs Associated with the Exit or Disposal Activities.” This statement defines the accounting and reporting for costs associated with exit or disposal activities and is effective for exit and disposal activities that are initiated after December 31, 2002. We do not anticipate that the adoption of SFAS No. 146 will have a material impact on our financial position or results of operations.

          In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation, Transition and Disclosure.” SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS No. 148 also requires that disclosures of the pro forma effect of using the fair value method of accounting for stock-based employee compensation be displayed more prominently and in a tabular

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format. Additionally, SFAS No. 148 requires disclosure of the pro forma effect in interim financial statements. The transition and annual disclosure requirements of SFAS No. 148 are effective for fiscal year 2002. SFAS No. 148 does not have a material effect on our financial position or results of operations.

          In November 2002, the FASB issued FASB Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” The disclosure provisions of FIN 45 are effective for financial statements of interim or annual periods that end after December 15, 2002. The provisions for initial recognition and measurement are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002, irrespective of a guarantor’s year-end. We are currently evaluating the effect that the adoption of FIN 45 will have on our financial position or results of operations.

          In November 2002, the EITF reached a consensus on Issue 00-21, “Revenue Arrangements with Multiple Deliverables.” The provisions of EITF 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. We are currently evaluating the effect that the adoption of EITF 00-21 will have on our financial position or results of operations.

Item 6. Directors, Senior Management and Employees

A.         Directors and Senior Management

          The names of our directors and senior management and those of our significant subsidiaries and the years of their birth are as follows:

Name	Year of Birth		Position
Paul C. van den Hoek*		1939	Chairman of the Supervisory Board (Expiring 2005)
Eric A. van Amerongen		1953	Supervisory Director (Expiring 2006)
Adri Baan*		1942	Supervisory Director (Expiring 2005)
Johan M.R. Danneels		1949	Supervisory Director (Expiring 2004)
Jacobus den Hoed RA*		1937	Supervisory Director (Expiring 2003)
Arthur H. del Prado		1931	Chairman of the Management Board, President and Chief Executive Officer
Patrick Lam See-Pong		1948	Member of the Management Board, Vice President Back-end Operations and Managing Director ASM Pacific Technology Ltd.
Robert L. de Bakker		1950	Member of the Management Board and Chief Financial Officer
Daniel G. Queyssac		1940	Chief Operating Officer Front-end Operations (until March 11, 2003)
Chuck D. del Prado		1961	Regional Manager Front-end Operations U.S.A., General Manager ASM America, Inc. (as from February 1, 2003)
Fukumi Tomino		1949	Regional Manager Front-end Operations Asia and Managing Director ASM Japan K.K.
Han F.M. Westendorp		1956	Chief Operating Officer Front-end Operations (as from March 11, 2003) and Regional Manager Front-end Operations ASM Europe B.V.
Ivo M.M. Raaijmakers		1957	Director of Research and Development and Chief Technology Officer of Front-end Operations

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*     Member of Audit Committee

          Paul C. van den Hoek became a Supervisory Director in March 1981 and is now Chairman of the Supervisory Board. Mr. van den Hoek is a partner in the European law firm of Stibbe, which is our general legal counsel and has been with Stibbe since 1965. Mr. van den Hoek also serves on the boards of directors of various European companies. At December 31, 2002, Mr. van den Hoek owned 300,000 of our common shares.

          Eric A. van Amerongen was elected to the Supervisory Board in May 2002. Mr. van Amerongen serves as Chief Executive Officer of Koninklijke Swets & Zeitlinger. Before accepting this position, he had been active over 10 years in the position of Group Director of Thomson-CSF (France), Chief Executive Officer of Hollandse Signaal Apparaten B.V. and President and Chief Executive Officer Europe, Middle East and Africa for Lucent Technologies.

          Adri Baan was elected to the Supervisory Board in May 2001. Mr. Baan, who holds a master’s degree in physics from the University of Amsterdam, served as the Chief Executive Officer of the Business Electronics Division of Philips, N. V. from 1993 until March 2001, and served as a member of Philips Group Management Committee from 1996 and Board of Management from 1998 until March 2001. Mr. Baan further serves on the board of directors of various European Companies and is a director of PSA Corporation Limited, Port Singapore Authority and Hesse-Noord Natie “Antwerpen"(Belgium).

          Johan M.R. Danneels was elected to the Supervisory Board in May 2000. Mr. Danneels spent most of his career with Alcatel, and served most recently as Director of Industrial Coordination and Chief Executive Officer of Alcatel Microelectronics. Mr. Danneels serves as Vice President STMicroelectronics Belgium N.V.

          Jacobus den Hoed RA became a Supervisory Director in June 1999. Mr. den Hoed is a certified accountant. He joined AKZO Nobel N.V., a global chemical company in 1969, and served in various financial management positions, most recently as Vice President and Chief Financial Officer from 1996 to 1998 when he retired. Mr. den Hoed serves on the board of directors of various European companies.

          Arthur H. del Prado, our founder, has served as a Managing Director, President and Chief Executive Officer since our formation in 1968. Mr. del Prado is also a founder of ASM Lithography N.V. through a joint venture with Philips Electronics N.V. He serves as a director of MEDEA+, and previously served for many years as a director of its predecessor, JESSI. Mr. del Prado also serves on the board of directors of various European companies and on the board of the Netherlands-Japanese Trade Federation. Mr. del Prado is Chuck D. del Prado’s father.

          Patrick Lam See-Pong became Vice President of our Asian Operations in March 1981 and a Managing Director in June 1995. Mr. Lam has been employed in various capacities with us since 1975. He holds a B.Sc. degree in electrical engineering from the University of Manitoba in Canada and an MBA from the Chinese University of Hong Kong.

          Robert L. de Bakker joined us as Chief Financial Officer in January 2001. Prior to his joining ASM International, Mr. de Bakker was Chief Financial Officer of NKF Holding N.V., a Netherlands multinational public company, where he continued his activities after its merger at the end of 1999 with Draka Holding N.V., another Dutch multinational public company in the same sector of activity, industrial cables.

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          Daniel G. Queyssac joined us as Chief Operating Officer for Front-end operations and President of ASM America in November 1996. Mr. Queyssac joined us after a career at Motorola and SGS Thomson, now STMicroelectronics. His previous positions included Vice President and Assistant General Manager of the New Venture Group of SGS Thomson Microelectronics from 1993 to 1996, and President of SGS Thomson Microelectronics in Phoenix, Arizona from 1980 to 1991.

          Chuck D. del Prado has been appointed as General Manager ASM America as of February 1, 2003. He joined us as Director Marketing, Sales & Service of ASM Europe in March 2001. Mr. del Prado worked with IBM Nederland N.V. at the marketing and sales department from 1989 to 1996. He worked in various management capacities at ASM Lithography from February 1996 to 2001 having roles in production, sales, manufacturing and logistics. Mr. Del Prado holds a Master of Science degree from the University of Twente in the Netherlands. Mr. Chuck D. del Prado is the son of Arthur H. del Prado.

          Fukumi Tomino became Vice President Japanese Operations and Managing Director of ASM Japan in 1994 after having held roles in sales, marketing, engineering and process development since the founding of ASM Japan in 1982. He holds a Bachelor’s Degree in electro-communication from the University of Electro-Communication (Tokyo).

          Han F. M. Westendorp joined us as General Manager of ASM Europe in July 1999. Mr. Westendorp worked in various management capacities at Tokyo Electron Massachusetts from 1991 to mid-1999, most recently as Vice President of Metal CVD and Administration General Manager. Before joining Tokyo Electron, he worked with us on the development of our ion implantation technology. Mr. Westendorp holds a Ph.D. in Physics and Mathematics from the University of Utrecht in the Netherlands.

          Ivo M.M. Raaijmakers became Director of Research and Development and Chief Technology Officer of Front-end Operations in July 1999. He served as Vice President of Development for ASM America from July 1996 to July 1999. He previously held various positions of increasing responsibility in technology development and management at Philips Research Labs, Novellus and Applied Materials since 1982, most recently with Applied Materials from 1993 to 1996. Mr. Raaijmakers holds a Ph.D and Master’s Degree in Physics from Eindhoven University of Technology in the Netherlands.

          Under Netherlands law, supervisory directors have the duty to supervise and advise the managing directors. The supervisory directors are appointed by our shareholders generally for terms of four years. The supervisory directors can be re-elected twice, but are subject to mandatory retirement under our Articles of Association.

          The managing directors are entrusted with our management under the supervision of the supervisory board and have the general authority to enter into binding agreements with third parties. Managing directors are nominated by the supervisory directors and elected by the common shareholders at the general meeting of shareholders. The shareholders may reject a binding nomination at the general meeting of shareholders by a supermajority vote of two-thirds of the total issued and outstanding shares eligible to vote. The shareholders may at any time suspend and dismiss managing directors by a super majority vote of two-thirds of the total issued and outstanding shares eligible to vote. A managing director can be suspended at any time by the supervisory board. There is no statutory term of office for managing directors. Compensation of managing directors is determined by the supervisory board. Currently, our managing directors are Arthur H. del Prado, Patrick Lam See-Pong and Robert L. de Bakker. We expect that Mr. Haijo D.J. Pietersma will be nominated for appointment as a managing director at the annual general meeting of shareholders in May 2003

          Our other officers serve at the discretion and under the direction of the managing directors.

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B.       Compensation

          The following table sets forth as to all executive officers and directors information concerning all remuneration from us (including our subsidiaries) for services in all capacities during the fiscal year ended December 31, 2002:

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Annual Compensation For The Year Ended December 31, 2002⁽¹⁾

Name and								Long-Term			All Other
Principal Position	Annual Compensation							Compensation			Compensation
								Securities Under
		Base						Options/SARS
	Compensation			Bonus		Other		Granted
Paul C. van den Hoek			41		—		—		—			—
Eric A. van Amerongen			7		—		—		—			—
Adri Baan			14		—		—		—			—
Johan M.R. Danneels			14		—		—		—			—
Jacobus den Hoed RA			14		—		—		—			—
Arthur H. del Prado			300		—		2		—			—
Patrick Lam See-Pong			458		316		91		349	(3)		—
Robert L. de Bakker			181		—		15		—			—
All other officers and directors as a group (4 persons)(2)			889		16		47		—			—

(1)  In thousands of euros unless indicated otherwise.

(2)  Sets forth as to all executive officers and directors, for which individual disclosure in the Netherlands, our home country, is not required, as a group, information concerning all remuneration from us (including our subsidiaries) for services in all capacities during the fiscal year ended December 31, 2002.

(3)  Represents the value, on the date of grant, of shares of ASM Pacific Technology common stock granted to Mr. Lam See-Pong in December 2002 under the ASM Pacific Technology Employee Share Incentive Scheme, which shares will vest in December 2003.

          We generally contribute to investment funds managed by outside fund managers on behalf of all of our employees. None of the funds so contributed are separately earmarked for directors or senior management.

          We have granted stock options to certain key employees. For information regarding such options see Note L to the Consolidated Financial Statements. Options to purchase an aggregate of 884,500 common shares are held by our executive officers and directors at December 31, 2002. As of February 17, 2003, options to acquire 884,500 common shares were held by executive officers and directors at exercise prices ranging from US$ 0.50, with expiration dates from December 6, 2003 to December 20, 2010.

C. Board Practices

          The supervisory directors are elected by the shareholders of common stock at the annual general meeting of the shareholders and serve for a term of four years. The supervisory directors may be re-elected twice, but under our Articles of Association the supervisory director must resign at the end of the term in which he or she attains the age of 72.

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          A managing director is nominated by the supervisory directors and elected by the shareholders of common stock at the general meeting of shareholders. The shareholders may reject a binding nomination at the general meeting of the shareholders by a supermajority vote of two-thirds of the total issued and outstanding shares eligible to vote. The shareholders may at any time suspend and dismiss managing directors by a super majority vote of two-thirds of the total issued and outstanding shares eligible to vote. A managing director can be suspended at any time by the supervisory board. There is no statutory term of office for managing directors.

          We have not entered into any service contracts providing for benefits upon termination of employment with our directors.

          We have an audit committee composed of Messrs. van den Hoek, Baan and den Hoed. The audit committee meets periodically to recommend a firm to be appointed as independent auditors to audit the financial statements and to perform services related to the audit, review the scope and results of the audit with the independent auditors, review with management and the independent auditors our annual operating results and consider the adequacy of the internal accounting procedures and the effect of the procedures relating to the auditors’ independence.

D. Employees

          As of December 31, 2002, we had 6,554 employees, including 838 employees primarily involved in research and development activities, 297 in marketing and sales, 670 in customer service, 337 in finance and administration, and 4,412 in manufacturing.

          The following table lists the total number of our employees and the number of our employees in our Front-end and Back-end business at the dates indicated.

Geographic Location			December 31, 2000						December 31, 2001						December 31, 2002
			Front-end		Back-end		Total		Front-end		Back-end		Total		Front-end		Back-end		Total
Europe
	The Netherlands			312		8		320		377		10		387		341		11		352
	Other European countries			133		—		133		124		—		124		128		—		128
United States of America				327		10		337		327		10		337		429		10		439
Japan				217		11		228		226		17		243		245		19		264
Southeast Asia				75		5,997		6,072		71		4,785		4,856		83		5,280		5,363
Other				—		1		1		—		8		8		—		8		8
		Total		1,064		6,027		7,091		1,125		4,830		5,955		1,226		5,328		6,554

          Our Netherlands operation, which employs approximately 352 persons, is subject to standardized industry bargaining under Netherlands law, and is required to pay wages and meet conditions established as a result of negotiations between all Netherlands employers in their industry and unions representing employees of those employers. Additionally, management personnel in the Netherlands facilities meet as required by Netherlands law with a works council consisting of elected representatives of the employees to discuss working conditions and personnel policies as well as to explain major corporate decisions and to solicit their advice on major issues.

          Many of our employees are highly skilled, and our continued success will depend in part upon our ability to continue to attract and retain these employees, who are in great demand. Because of the

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current market conditions in the semiconductor industry, we have enacted a worldwide hiring freeze and reduced our work force. We believe that our employee relations are good.

E. Share Ownership

          The following table presents information regarding the share ownership and option ownership of our share capital stock as of February 17, 2003 by our directors and senior management:

					Percentage of Shares
Name	Shares Owned		Options for Shares		Outstanding(1)
Paul C. van den Hoek		*		—		*
Eric A. van Amerongen		—		—		—
Adri Baan		—		—		—
Johan M.R. Danneels		—		—		—
Jacobus den Hoed RA		—		—		—
Arthur H. del Prado		11,454,292		275,000		23.20	%
Patrick Lam See-Pong		*		*		*
Robert L. de Bakker		*		*		*
Daniel G. Queyssac		*		*		*
Chuck del Prado		—		*		—
Fukumi Tomino		*		*		*
Han F.M. Westendorp		—		*		—
Ivo M.M. Raaijmakers		*		*		*

*     Less than 1%.

(1)  Calculated on the basis of each individual’s actual shares held.

Item 7. Major Shareholders and Related Party Transactions

A. Major Shareholders

          The following table sets forth information with respect to the ownership of our common shares as of February 17, 2003 certain information with respect to the ownership of our outstanding common shares by each beneficial owner of more than 5% of our common shares and by all of our officers and directors as a group:

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	Number of Shares		Percent
Stichting Administratiekantoor ASM International(1)		7,692,039		15.6	%
Capital Group International, Inc. and Capital Guardian Trust Company.(2)		3,530,510		7.2	%
Capital Research and Management Co. and SMALL CAP World Fund Inc.(2)		2,746,800		5.6	%
All officers and directors as a group (13 persons)(3)		12,282,592		24.9	%

(1)	Trust controlled by our President, Arthur H. del Prado.
(2)	Derived from Schedule 13G filings as of February 14, 2003.
(3)	Includes the 7,692,039 common shares shown in the table above that are owned by Stichting Administratiekantoor ASM International, a trust controlled by our President, Arthur H. del Prado, and 3,762,253 common shares owned by Mr. del Prado or members of his immediate family.

          On May 28, 1997, we entered into an agreement with Stichting Continuïteit ASM International, or Stichting, pursuant to which Stichting was granted an option to acquire up to that number of our preferred shares that has a total par value equal to 50% of the par value of our common shares issued and outstanding at the date of the exercise. Stichting is a non-membership organization organized under Netherlands law. The objective of Stichting is to own and vote our preferred shares in order to maintain our continuity in case of a takeover attempt. Toward that objective, Stichting will evaluate, when called for, whether a takeover offer is in our best interests. The Euronext Amsterdam Market in Amsterdam requires that a majority of the board members of Stichting be unrelated to us. As of December 31, 2002, the members of the board of Stichting are:

Arthur H. del Prado	President and Chief Executive Officer, ASM International N.V.
Paul C. van den Hoek	Chairman of the Supervisory Board, ASM International N.V.
Michiel J.C. van Galen	Former Managing Director, Breevast N.V.
Rinze Veenenga Kingma	President Archeus Consulting B.V.
Laurus Traas	Emeritus Professor, Vrije Universiteit Amsterdam

          We are unaware of any arrangement which we anticipate will result in a change in control of ASM International. All shares of our common stock entitle the holder to the same voting rights.

          Of our 49,371,258 outstanding common Shares at February 17, 2003, 9,070,039 are registered with us in the Netherlands, 17,516,322 shares are registered with a transfer agent in the Netherlands, ABN AMROBANK N. V., and 22,784,897 are registered with a transfer agent in the United States, Citibank,

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N. A., New York. Our common shares registered with Citibank, N.A., New York are quoted on the Nasdaq National Market under the symbol “ASM International.” As of February 17, 2003 there were approximately 213 record holders in the United States. The common shares registered with ABN AMRO Bank, Breda, the Netherlands, are in bearer form and are traded on the Euronext Amsterdam Market in Amsterdam under the symbol “ASM.”

B. Related Party Transactions

          In December 1999, we acquired 24.0% of the outstanding equity of NanoPhotonics AG, a German supplier of precision metrology equipment, for € 0.4 million, and our Chief Executive Officer also purchased a 44.5% interest in NanoPhotonics AG. We have a five-year option to purchase the 44.5% interest from our Chief Executive Officer at the same price he paid for his interest in the initial transaction. At December 31, 2001 and December 31, 2002, we provided NanoPhotonics with additional financing of € 1.2 million and € 2.9 million, respectively. In 2001 and 2002, we purchased equipment from NanoPhotonics in the amount of € 0.7 million and € 0.2 million, respectively.

          In December 1997, we loaned our Chief Operating Officer Front-end operations € 0.2 million at an average interest rate for 2002 of 2.6%. This interest-bearing loan is outstanding at December 31, 2002 and is repayable upon the exercise of stock options or termination of his employment.

          In March 2000, we made an interest-bearing loan to our Chief Executive Officer in connection with the exercise of stock options at an average interest rate for 2002 of 4.9%. The loan, amounting to € 2.2 million, is outstanding at December 31, 2002 and is secured by the shares received in the stock option exercise. We have custody of the shares until the loan is repaid.

          In October 2001, we entered into a strategic alliance with and made a 15.4% equity investment of $18.0 million (€ 20.3 million) in NuTool, Inc., a privately held semiconductor technology company located in Milpitas, California. The purchase price of the investment was determined by reference to prices paid by other recent strategic investors. NuTool provides innovative copper deposition technologies to the semiconductor industry. Its patented electrochemical mechanical deposition technology offers new process solutions for copper deposition and planarization, providing significant savings in integrated circuit manufacturing and enabling new integrated circuit designs and new process technologies. The strategic alliance with NuTool provides us with additional competitive solutions to address the industry’s transition to copper metalization. We have a seat on the board of NuTool, Inc. In 2002, we sold equipment to NuTool in the amount of € 0.7 million.

          The Chairman of the Supervisory Board, Mr. van den Hoek, is a partner in the European law firm of Stibbe. Another partner at Stibbe serves as our general legal counsel. Mr. van den Hoek has been with Stibbe since 1965. Mr. van den Hoek also serves on the boards of directors of various European companies.

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Item 8. Financial Information

Financial Highlights and Selected Comparative Financial Data

In Euros and US Dollars(1)			Year Ended December 31,
(millions, except per share data and full-time equivalents)			1998			1999			2000			2001			2002			2002
			EUR			EUR			EUR			EUR			EUR			US$
Operations:
	Net sales:			288.1			414.5			935.2			561.1			518.8			544.0
		Front-end		132.9			181.7			379.3			336.6			266.9			279.9
		Back-end		155.2			232.8			555.9			224.5			251.9			264.1
	Earnings (loss) from operations:			12.5			39.4			191.8			24.3			(6.0	)		(6.3	)
		Front-end		(1.6	)		(0.8	)		34.5			(3.7	)		(42.7	)		(44.7	)
		Back-end		14.1			40.2			157.3			28.0			36.7			38.4
	Net earnings (loss) before cumulative effect of change in accounting principle			0.2			11.1			98.1			6.1			(29.9	)		(31.3	)
	Cumulative effect of change in accounting principle, net of tax(2)			—			—			(3.8	)		—			—			—
	Net earnings (loss)			0.2			11.1			94.3			6.1			(29.9	)		(31.3	)
Balance sheet:
	Net working capital(3)			103.9			116.9			212.3			214.6			199.8			209.5
	Total assets			282.9			425.0			777.9			757.1			653.8			685.6
	Net debt(4)			137.0			105.7			(30.5	)		53.3			76.1			79.8
Backlog:				52.8			183.7			345.6			132.6			142.9			149.8
		Front-end		27.0			72.5			211.6			107.2			109.9			115.2
		Back-end		25.8			111.2			134.0			25.4			33.0			34.6
Number of staff
	Full-time equivalents:			4,436			5,426			7,091			5,955			6,554			6,554
		Front-end		756			798			1,064			1,125			1,226			1,226
		Back-end		3,680			4,628			6,027			4,830			5,328			5,328
Per share data:
	Net earnings (loss) per share from operations:
		Basic		0.37			1.06			4.10			0.50			(0.12	)		(0.13	)
		Diluted		0.36			0.98			3.95			0.49			(0.12	)		(0.13	)
	Net earnings (loss) per share before cumulative effect of change in accounting principle(2) :
		Basic		0.01			0.30			2.09			0.12			(0.61	)		(0.64	)
		Diluted		0.01			0.29			2.02			0.12			(0.61	)		(0.64	)
	Net earnings (loss) per share after cumulative effect of change in accounting principle(2):
		Basic		0.01			0.30			2.01			0.12			(0.61	)		(0.64	)
		Diluted		0.01			0.29			1.94			0.12			(0.61	)		(0.64	)
	Weighted average number of shares used in computing per share amounts (in thousands):
		Basic		33,794			37,301			46,810			48,944			49,170			49,170
		Diluted		34,743			40,664			48,703			49,958			49,170			49,170
Pro forma amounts assuming the new accounting principle is applied retroactively(2)
	Net earnings (loss)			0.6			8.9			98.1			6.1			(29.9	)		(31.3	)
	Net earnings (loss) per share:
		Basic		0.02			0.24			2.09			0.12			(0.61	)		(0.64	)
		Diluted		0.02			0.23			2.02			0.12			(0.61	)		(0.64	)

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(1)	For the convenience of the reader, Financial Highlights and Selected Comparative Financial Data for 2002 have been converted into US dollars at the exchange rate of 1.0485 United States dollar per euro, which was the noon buying rate in New York City for cable transfers payable in euros at December 31, 2002. Balances prior to January 1, 1999 were restated from Netherlands guilders into euros using the fixed exchange rate as of January 1, 1999 (€ 1.00 = NLG 2.20371). The comparative amounts reported in euros depict the same trends as would have been presented if the Company had continued to present amounts in Netherlands guilders. Amounts prior to January 1, 1999 are not comparable to the balances of other companies that report in Euros having restated amounts from a different currency than Netherlands guilders.
(2)	The cumulative effect of change in accounting principle relates to the effect on prior years of the impact of the adoption of Staff Accounting Bulletin 101. This Bulletin, effective as of January 1, 2000, sets forth guidelines on the timing of revenue recognition of sales. See Note A to the Notes to Consolidated Financial Statements.
(3)	Accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from customers and deferred revenue.
(4)	Net debt includes long-term debt, convertible subordinated debt and notes payable to banks, less cash and cash equivalents.

SCHEDULE I
CONDENSED FINANCIAL STATEMENTS
ASM INTERNATIONAL N.V., HOLDING COMPANY

(Thousands of Euro)

Condensed Balance Sheets of ASM International N.V.

	December 31,
	2000		2001		2002
Assets:
Total current assets		98,173		186,974		117,911
Investments		264,970		261,303		164,137
Loans due from investments		6,723		17,668		91,101
Total noncurrent assets		6,391		11,745		16,658
		376,257		477,690		389,807
Liabilities & Shareholders’ Equity
Total current liabilities		46,467		24,675		13,919
Total noncurrent liabilities		21,468		132,105		110,346
Total liabilities		67,935		156,780		124,265
Shareholders’ equity		308,322		320,910		265,542
		376,257		477,690		389,807

Condensed Statements of Earnings ASM International N.V.

	Year ended December 31,
	2000			2001		2002
Earnings (losses) subsidiaries		97,460			5,923		(26,381	)
Earnings (losses) ASM International		(3,188	)		175		(3,481	)
Net earnings (loss)		94,272			6,098		(29,862	)

Condensed Cash Flow Statements ASM International N.V.

	Year ended December 31,
	2000		2001		2002
Net cash provided by (used in) operating, financing or investing activities		43,654		47,593		(85,347	)
Cash and cash equivalents at the beginning of the year		2,208		45,862		93,455
Cash and cash equivalents at the end of the year		45,862		93,455		8,108

Notes to Condensed Financial Statements of ASM International N.V.:

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          Restrictions which limit the availability of retained earnings, net income for dividend purposes and other funds transfers from subsidiaries to ASM International N.V.:

ASM Pacific Technology

          Subject to the availability of adequate funds, all the retained earnings of ASM Pacific Technology group can be distributed to its shareholders, including ASM International, on a basis proportional to shareholdings of each shareholder. Such retained earnings at December 31, 2002 according to Hong Kong GAAP amounts to approximately HK$ 913.9 million (€ 111.8 million). Other than the above, ASM Pacific Technology group is prohibited from making loans or advances, other than trade receivables in the normal course of business, to ASM International under the Hong Kong Stock Exchange Listing Rules.

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SCHEDULE II
VALUATION RESERVES

(Thousands of Euro)

			Charged or
	Balance at		released to						Currency
	beginning of		cost and						translation			Balance at the
Class of valuation reserve	period		expenses			Deductions			effect			end of period
Allowance for doubtful accounts
Year ended 12/31/02		6,952		133			(803	)		(818	)		5,464
Year ended 12/31/01		8,734		(2,055	)		(45	)		318			6,952
Year ended 12/31/00		1,432		7,868			(428	)		(138	)		8,734
Provision for inventory
Year ended 12/31/02		21,012		2,321			(2,157	)		(1,997	)		19,179
Year ended 12/31/01		20,275		4,416			(4,337	)		658			21,012
Year ended 12/31/00		13,079		10,295			(3,814	)		715			20,275

Item 9. The Offer and Listing.

A.         Offer and Listing Details

             The following table sets forth, for the periods indicated, the high and low closing prices of our common shares as reported on the Nasdaq National Market and the high and low closing price as reported on Euronext Amsterdam Market:

Price Range of Common Shares

		Nasdaq Closing Prices				Euronext Closing Prices
		High		Low		High		Low
Annual Information
	1998	$	12.88	$	2.50	Nlg	26.90	Nlg	4.90
	1999		23.94		3.63	€	23.00	€	3.55
	2000		35.63		9.31		38.00		10.75
	2001		26.84		10.40		31.45		10.10
	2002		28.34		6.50		31.90		7.00
Quarterly Information
	2001:
	First Quarter	$	19.88	$	9.63	€	20.70	€	10.10
	Second Quarter		26.84		15.31		31.45		17.35
	Third Quarter		23.76		10.40		26.80		10.90
	Fourth Quarter		19.51		14.81		21.75		11.05
	2002:
	First Quarter	$	26.11	$	17.77	€	29.70	€	20.39
	Second Quarter		28.34		14.02		31.90		14.69
	Third Quarter		18.30		8.30		18.60		8.16
	Fourth Quarter		14.99		6.50		15.20		7.00
Monthly Information
	October 2002	$	12.75	$	6.50	€	12.70	€	7.00
	November 2002		14.99		10.25		15.20		10.10
	December 2002		14.79		11.45		15.12		11.28
	January 2003		14.31		11.54		13.80		10.59
	February 2003		12.81		10.34		11.79		9.73
	March 2003		12.24		9.61		11.40		8.78

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B. Plan of Distribution

     Not applicable.

C. Markets

     Our common shares are quoted on The Nasdaq National Market under the symbol “ASMI” and listed on the Euronext Amsterdam stock exchange under the symbol “ASM.”

D. Selling Shareholders

     Not applicable.

E. Dilution

     Not applicable.

F. Expenses of the Issue

     Not applicable.

Item 10. Additional Information.

A. Share Capital

     Not applicable.

B. Memorandum of Articles of Association

     Incorporated by reference to our Registration Statement on Form F-3 filed with the United States Securities and Exchange Commission on July 3, 2002 and filed as Exhibit 3.1 to our Form 6-K on November 6, 2001.

C. Material Contracts

     For a description of the material contracts we entered into in the last two fiscal years, please see “Item 4. Information on the Company.”

D. Exchange Controls

     There are no foreign exchange controls or other governmental laws, decrees or regulations in the Netherlands restricting the import or export of capital or affecting the remittance of dividends, interest or other payments to non-resident shareholders. Neither the laws of the Netherlands nor the Articles of Association of ASM International restrict remittances to non-resident shareholders or the right to hold or vote such securities.

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E. Taxation

Summary of Dutch Tax Provisions Applicable to Nonresident Shareholders with a particular focus on US Shareholders

     The statements below briefly summarize the current Dutch tax laws, based on the laws as in force at January 1, 2003. The description is limited to the tax implications for shareholders who neither are nor are deemed to be a resident of the Netherlands for purposes of the relevant tax codes. The description does not address special rules that may apply to holders of special classes of shares and should not be interpreted as extending by implication to matters not specifically referred to in this document. As to individual tax consequences, shareholders are advised to consult their own tax advisors.

     Withholding Tax

     Dividends distributed by us generally are subject to a withholding tax imposed by the Netherlands at a rate of 25%. The expression “dividends distributed” includes, among other things:

• distributions in cash or in kind, deemed and constructive distributions and repayments of paid-in capital which is not recognized as such for Dutch dividend withholding tax purposes;

• liquidation proceeds, proceeds of redemption of ordinary shares or consideration for the repurchase of ordinary shares by us, or one of our subsidiaries, to the extent that such consideration exceeds the average paid-in capital which is recognized as such for Dutch dividend withholding tax purposes;

• the par value of ordinary shares issued to a holder of ordinary shares or an increase in the par value of ordinary shares, as the case may be, to the extent that it does not appear that a contribution, which is recognized as such for Dutch dividend withholding tax purposes, has been made or will be made; and

• partial repayments of paid-in capital, which is recognized as such for Dutch dividend withholding tax purposes, if and insofar as there are net profits (zuivere winst), unless the general meeting of our shareholders has resolved in advance to make such repayment and provided that the par value of the ordinary shares concerned has been reduced by an equal amount by way of an amendment to the articles of association.

     If a holder of ordinary shares resides in a country other than the Netherlands and if a double taxation convention is in effect between the Netherlands and such other country, such holder of ordinary shares may, depending on the terms of that double taxation convention, be eligible for a full exemption from, reduction or refund of Dutch dividend withholding tax. The Netherlands has concluded such a convention with the United States, among other countries.

     Under the Convention between the United States of America and the Kingdom of the Netherlands for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the “US Tax Treaty”) currently in effect, dividends we pay to a holder of our common shares who is not, or is not deemed to be, a resident of the Netherlands for Dutch tax purposes but who is a resident of the United States as defined in the US Tax Treaty are generally eligible for a reduction of the 25% Dutch withholding tax to 15% or, in the case of certain US corporate shareholders owning at least 10% of ASM International voting power, to 5%, provided that such shareholder does not have an enterprise or an interest in an enterprise that is, in whole or in part, carried on through a permanent establishment or permanent representative in the Netherlands to which the dividends are attributable. The US Tax Treaty provides for complete exemption from tax on dividends received by exempt pension trusts and exempt organizations, as defined therein. Except in the case of exempt organizations, the reduced

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dividend withholding rate can be applied at the source upon payment of the dividends, provided that the proper forms have been filed prior to the payment. Exempt organizations remain subject to the statutory withholding rate of 25% and are required to file an application for a refund of such withholding.

A holder who is not, or is not deemed to be, a resident of the Netherlands may not claim the benefits of the US Tax Treaty unless:

• the holder is a resident of the United States as defined therein; and

• the holder’s entitlement to such benefits is not limited by the provisions of Article 26 (“limitation on benefits”) of the US Tax Treaty.

     Under current Dutch law, we may be permitted under limited circumstances to deduct and retain from the withholding a portion of the amount that otherwise would be required to be remitted to the Dutch Tax Authorities. That portion generally may not exceed 3% of the total dividend distributed by us. If we retain a portion of the amount withheld from the dividends paid, the portion (which is not remitted to the tax authorities) might not be creditable against your domestic income tax or corporate income tax liability. We will endeavor to provide you with information concerning the extent to which we have applied the reduction described above to dividends paid to you and advise you to check the consequences thereof with your local tax advisor.

     A refund, reduction, exemption or credit of Dutch dividend withholding tax on the basis of Dutch tax law or on the basis of a tax treaty between the Netherlands and another state, will be granted only if the dividends are paid to the beneficial owner of the dividends. A receiver of a dividend is not considered to be the beneficial owner of a dividend if, in an event of “dividend stripping’, in which he has paid a consideration related to the receipt of such dividend In general terms, “dividend stripping” can be described as in the situation in which a foreign or domestic person (usually, but not necessarily, the original shareholder) has transferred his shares or his entitlement to the dividend distributions to a party that has a more favorable right to a refund or reduction of Dutch dividend withholding tax than the foreign or domestic person. In these situations, the foreign or domestic person (usually the original shareholder), by transferring his shares or his entitlement to the dividend distributions, avoids Dutch dividend withholding tax while retaining his “beneficial” interest in the shares and the dividend distributions.

     Income Tax and Corporate Income Tax on Dividends

     A nonresident individual or corporate shareholder will not be subject to Dutch income tax with respect to dividends distributed by us on or with respect to capital gains derived from the sale, disposal or deemed disposal of our common shares, provided that:

• such holder is neither resident nor deemed to be resident in the Netherlands nor has made an election for the application of the rules of the Dutch 2001 Income Tax Act as they apply to residents of the Netherlands; and

• such holder does not have, and is not deemed to have, an enterprise or an interest in an enterprise which is, in whole or in part, carried on through a permanent establishment, a deemed permanent establishment, or a permanent representative in the Netherlands and to which enterprise or part of an enterprise the shares are attributable, nor does such holder carry out any other activities in the Netherlands that exceed regular asset management;

• such holder does not have a profit share in, or any other entitlement to the assets or income of an enterprise, other than by way of securities, which enterprise is effectively managed in the Netherlands and to which enterprise the shares are attributable;

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• such holder does not carry out and has not carried out employment activities with which the holding of the shares is connected directly or indirectly; and

• such holder, individuals relating to such holder and some of their relations by blood or marriage in the direct line (including foster children) do not have a substantial interest or deemed substantial interest in an entity resident or deemed resident in the Netherlands, or, if such holder has a substantial interest or a deemed substantial interest, it forms part of the assets of an enterprise.

Generally, a nonresident holder will have a substantial interest if he, his partner, certain other relatives (including foster children) or certain persons sharing his household, alone or together, directly or indirectly:

• hold shares representing 5% or more of our total issued and outstanding capital (or the issued and outstanding capital of any class of our shares);

• hold or have rights to acquire shares (including the right to convert notes or stock options into shares), whether or not already issued, that at any time (and from time to time) represent 5% or more of our total issued and outstanding capital (or the issued and outstanding capital of any class of our shares); or

• hold or own certain profit-participating rights that relate to 5% or more of our annual profit and/or to 5% or more of our liquidation proceeds.

The same criteria apply to a nonresident entity, save for the extension to partners, certain other relatives, and certain persons sharing the holder’s household.

     Gift and Inheritance Tax

     In principle, liability for Dutch gift tax or inheritance tax arises in respect of any gifts of common shares by or inheritance of common shares from any person who resides in the Netherlands at the time of the gift or death.

     A gift or inheritance of common shares from a nonresident shareholder will not be subject to Dutch gift and inheritance tax, provided that:

• the nonresident shareholder does not have an enterprise or an interest in an enterprise that is, in whole or in part, carried on through a permanent establishment or a permanent representative in the Netherlands to which or to whom the common shares are attributable;

• the nonresident shareholder is not entitled to a share in the profits of an enterprise that is effectively managed in the Netherlands other than by way of securities or through an employment contract, the common shares being attributable to that enterprise; and

• the nonresident shareholder makes a gift of shares and dies within 180 days after the date of the gift, while being resident or deemed to be resident in the Netherlands at the time of his death.

     For the purposes of Dutch gift and inheritance tax, a Dutch national is deemed to be a resident of the Netherlands if he resided in that country at any time during a period of ten years preceding the date of the gift or death, as the case may be. In addition, for the purposes of Dutch gift tax, a person not possessing Dutch nationality is also deemed to be a Dutch resident, irrespective of his nationality, if he was a Dutch resident at any time during a period of twelve months preceding the time at which the gift was made. The Netherlands has concluded a treaty with the United States, based on which double taxation

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on inheritances may be avoided if the inheritance is subject to Netherlands and/or US inheritance tax and the deceased was a resident of either the Netherlands or the United States.

Summary of US Federal Tax Provisions Applicable to United States Security Holders

     The following is a general description of the material United States (“U.S.”) federal income tax consequences of the ownership and disposition of the common shares. This summary only applies to “U.S. Holders” (as defined below) that hold their shares as capital assets. This discussion does not purport to deal with all aspects of U.S. federal income taxation that may be relevant to holders of shares in view of their particular circumstances (for example, persons subject to the alternative minimum tax provisions of the Internal Revenue Code), and does not deal with holders subject to special rules, such as, but not limited to dealers in securities or foreign currencies, traders in securities that elect to use a mark-to-market method of accounting, certain financial institutions, tax exempt organizations, insurance companies, persons that actually or constructively own 10% or more of our voting stock, persons holding common shares as part of a straddle, hedging, conversion or constructive sale transaction or holders of common shares whose “functional currency” is not the U.S. dollar.

     This discussion is based on the Internal Revenue Code of 1986, as amended to the date hereof, final, temporary and proposed Treasury Department regulations promulgated thereunder, and administrative and judicial interpretations thereof, changes to any of which subsequent to the date hereof, possibly with retroactive effect may affect the tax consequences described herein. In addition, there can be no assurance that the Internal Revenue Service will not challenge one or more of the tax consequences described herein, and we have not obtained, nor do we intend to obtain, a ruling from the Internal Revenue Service or an opinion of counsel with respect to the U.S. federal income tax consequences of acquiring or holding shares. Prospective holders of shares should consult their own tax advisors as to the application of the U.S. federal income tax laws to their particular situation as well as any tax consequences that may arise under the U.S. federal estate or gift tax and any state, local and foreign tax laws from the ownership and disposition of the shares.

     The following discussion is a summary of the tax rules applicable to U.S. Holders of shares and does not consider any U.S. federal income tax consequences to non-U.S. Holders. As used herein, “U.S. Holder” means a beneficial owner of shares that is (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or a trust in existence on August 20, 1996 that was treated as U.S. persons under the law in effect immediately prior to that date and that made a valid election to be treated as a U.S. person, or (v) any other person or entity that would be subject to U.S. federal income tax on a net income basis in respect of the common shares. A “non-U.S. Holder” is a beneficial owner of common shares that is not a U.S. Holder as so defined herein.

     Taxation of Dispositions

     A U.S. Holder will recognize gain or loss for U.S. federal income tax purposes upon the sale or other disposition of the shares in an amount equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis in the shares. For these purposes, a U.S. Holder’s adjusted tax basis in the shares generally will equal the U.S. dollar cost of such shares to such U.S. Holder. Subject to the passive foreign investment company rules described below, gain or loss realized by a U.S. Holder on such sale or other disposition generally will be treated as capital gain or loss, and will be long-term capital gain

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or loss if the shares were held for more than one year. Any such gain will generally be treated as U.S. source income for U.S. foreign tax credit purposes. Net long-term capital gain recognized by a U.S. Holder who is an individual generally is subject to reduced rates of taxation. The deduction of capital losses is subject to certain limitations. Prospective investors should consult their own tax advisors in this regard.

     If we repurchase shares, the repurchase generally will be treated as a sale or exchange of the shares subject to the rules discussed above. However, under certain circumstances as provided in Section 302 of the Internal Revenue Code, the repurchase may be treated fully or partially as a dividend taxable as described below under “Taxation of Dividends.” U.S. Holders should consult their own tax advisors concerning the U.S. federal income tax consequences of a repurchase of their shares.

     Taxation of Dividends

     Subject to the passive foreign investment company rules described below, the gross amount of any distribution paid (including amounts withheld to pay Netherlands taxes) with respect to the shares, other than certain pro rata distributions of our shares, will be included in the gross income of a U.S. Holder as foreign source dividend income to the extent such distributions are paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. The amount of any distribution of property other than cash will be the fair market value of such property on the date of distribution. If a U.S. Holder receives a dividend in euros, the amount of the dividend for U.S. federal income tax purposes will be the U.S. dollar value of the dividend, determined at the spot rate in effect on the date of such payment, regardless of whether the payment is later converted into U.S. dollars. In the case of such later conversion, the U.S. Holder may recognize U.S. source ordinary income or loss as a result of currency fluctuations between the date on which the dividend is paid and the date the dividend amount is converted to U.S. dollars. Distributions treated as dividends will not be eligible for the dividends received deduction generally allowed to corporations under the Internal Revenue Code. To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, the distribution will first be treated as a tax-free return of capital to the extent of the U.S. Holder’s adjusted tax basis in the shares (thereby increasing the amount of gain and decreasing the amount of loss to be recognized on the subsequent disposition of the shares), and to the extent that such distribution exceeds the U.S. Holder’s adjusted tax basis in the shares such excess will be taxed as capital gain. We do not maintain calculations of our earnings and profits under U.S. federal income tax principles, and therefore it may not be possible to determine that a distribution should not be treated as a dividend.

     Subject to certain conditions and limitations set forth in Sections 901 and 904 of the Internal Revenue Code, including certain holding period requirements, foreign tax withheld or paid with respect to dividends on common shares generally will be eligible for credit against a U.S. Holder’s U.S. federal income tax liability. Alternatively, a U.S. Holder may claim a deduction for such amount of withheld foreign taxes, but only for a year for which such U.S. Holder elects to do so with respect to all foreign income taxes. Under current Dutch law, we may be permitted under limited circumstances to deduct and retain from the withholding a portion of the amount that otherwise would be required to be remitted to the taxing authorities in the Netherlands (see “Summary of Dutch Tax Provisions Applicable to Nonresident Shareholders with a particular focus on US Shareholders —Withholding Tax”). This amount generally may not exceed 3% of the total dividend distributed by us. If we withhold an amount from dividends paid to a U.S. Holder that we then are not required to remit to any taxing authority in the Netherlands, the amount in all likelihood will not qualify as a creditable tax for U.S. federal income tax purposes. We will endeavor to provide U.S. Holders with information concerning the extent to which we have applied the reduction described above to dividends paid to U.S. Holders.

     The overall limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us generally will be “passive

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income,” or, in the case of certain U.S. Holders, “financial services income.” To the extent such dividends on common shares are treated as capital gains, such gain would be U.S. source. Accordingly, a U.S. Holder would not be able to use the foreign tax credit arising from any Netherlands withholding taxes imposed on such distribution unless such credit can be applied (subject to applicable limitations) against U.S. tax due on other foreign source income in the appropriate category for foreign tax credit purposes.

     The rules relating to the determination of the U.S. foreign tax credit are complex. U.S. Holders should consult their own tax advisors with respect to the availability of a foreign tax credit or deduction for foreign, including Netherlands, taxes withheld.

     Anti-Deferral Tax Rules

     The Internal Revenue Code contains various provisions that impose current U.S. federal income tax on certain foreign corporations or their U.S. shareholders if such corporations derive certain types of passive income and fail to make adequate distribution of profits to their U.S. shareholders. These provisions include the passive foreign investment company, foreign investment company, foreign personal holding company, personal holding company and controlled foreign corporation rules. While we do not believe that any of these rules will likely apply to us, we are not certain that we can avoid these tax rules because we cannot predict with any degree of certainty the amount and character of our future income or the amount of our shares any particular U.S. Holder will own. Accordingly, we will only briefly summarize those provisions and then only the rules that we believe would have the greatest likelihood of applying to us in the future.

     Passive Foreign Investment Company

     The passive foreign investment company (“PFIC”) provisions of the Internal Revenue Code can have significant tax effects on U.S. Holders. In general, a foreign corporation will be a PFIC in a particular tax year and for all succeeding tax years if:

• 75% or more of its gross income (including the foreign corporation’s pro rata share of the gross income of any U.S. or foreign company in which the corporation owns or is considered to own 25% or more of the shares by value) in a taxable year is passive income; or

• at least 50% of the average value of the corporation’s gross assets in a taxable year (average determined as of the end of each quarter of the corporation’s taxable year and ordinarily determined based on gross fair market value, including the pro rata share of the assets of any U.S. or foreign company in which the corporation owns or is considered to own 25% or more of the shares by value) produce, or are held for the production of, passive income.

     If we were a PFIC for a taxable year during which a U.S. Holder owned our shares, and the U.S. Holder did not make an election either to treat us as a qualified electing fund (within the meaning of the Internal Revenue Code) for the first taxable year in the U.S. Holder’s holding period that we were a PFIC or to mark our shares to market, then:

• Excess distributions paid to a U.S. Holder will be taxed in a special way. Excess distributions are amounts received by a U.S. Holder with respect to our shares in any taxable year, plus the amount of any income inclusion as a result of an investment in U.S. property by us during the taxable year, that exceed 125% of the average distributions received by the U.S. Holder from us in the three previous years before the current taxable year (or, if shorter, the U.S. Holder’s holding period for the shares). The total excess distributions will equal zero for the taxable year in which the U.S. Holder’s holding

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period in such stock begins. The portion of an actual distribution that is not an excess distribution is not taxed under the excess distribution rules, but rather is taxed as described above under “Taxation of Dividends.” Excess distributions must be allocated ratably to each day that a U.S. Holder has held our shares, up to and including the date of the distribution. A U.S. Holder must report amounts allocated to the current taxable year (and to prior taxable years during which we were not a PFIC) as ordinary income for the current taxable year. Amounts allocated to each prior taxable year for which we were a PFIC are subject to the highest rate of tax for the year to which allocated, and each of the resulting amounts of tax incurs an interest charge as if it were an underpayment of taxes for the year to which allocated. Amounts allocated to prior years during which we were a PFIC are never included in a U.S. Holder’s taxable income. Rather, the tax and interest determined under the rules (the “Deferred Tax Amount”) described herein is added to the U.S. Holder’s tax liability and is an actual tax liability, regardless the U.S. Holder’s other income or losses. Thus, even if the U.S. Holder otherwise is not liable for tax (i.e., because of a net operating loss), the U.S. Holder will still have to pay the Deferred Tax Amount. Special foreign tax credit rules applicable to excess distributions may allow a U.S. Holder to offset the amount of tax due on an excess distribution.

•

The entire amount of gain that is recognized by a U.S. Holder upon a sale or other disposition of shares will also be considered an excess distribution and will be subject to tax as described above regardless of whether such gain would otherwise be subject to nonrecognition provisions. For purposes of these rules, a disposition is any transaction that constitutes an actual or deemed transfer of our stock, except for transfers made between members of a consolidated group.

     If a U.S. Holder makes a qualified electing fund (“QEF”) election for all taxable years during which the U.S. Holder owned our shares and we were a PFIC, the PFIC rules described above will not apply to that U.S. Holder. Instead, the electing U.S. Holder is required for each taxable year to include in income a pro rata share of the ordinary earnings of the PFIC as ordinary income and a pro rata share of the net capital gain of the PFIC as long-term capital gain. The QEF election is made on a shareholder-by-shareholder basis and can be revoked only with the consent of the Internal Revenue Service. The QEF election, however, may only be made if the PFIC agrees to make available the information necessary to determine inclusions under the QEF rules and to assure compliance. If we are or become a PFIC, we may be unable or unwilling to satisfy the record keeping requirements that would enable a U.S. Holder to make a QEF election. A U.S. Holder that has made a QEF election is permitted, by election, to defer actual payment of the tax liability arising from a QEF inclusion. Generally, payment is deferred until the PFIC makes actual distributions of amounts previously included in the U.S. Holder’s income pursuant to the QEF election. A U.S. Holder that elects to defer tax on the QEF inclusion amount must pay interest on the deferred tax liability until the liability is actually paid at the normal rate for underpayments of tax. The deferral election is made on a year-by-year basis with respect to each year’s QEF inclusion.

     In lieu of making a QEF election, a U.S. Holder of publicly traded PFIC shares could elect to mark the shares to market annually, in which case if the fair market value of the U.S. Holder’s PFIC shares exceeds the U.S. Holder’s adjusted tax basis in those shares as of the close of the U.S. Holder’s taxable year, the U.S. Holder will recognize the amount of the excess as ordinary income. Likewise, if the fair market value of the U.S. Holder’s PFIC shares is less than the U.S. Holder’s adjusted tax basis in those shares as of the close of the U.S. Holder’s taxable year, the U.S. Holder may recognize the difference as ordinary loss. Losses may be deducted only to the extent of net gain previously included in taxable income by the U.S. Holder under the election for prior taxable years. Provided that if the U.S. Holder has elected to mark our shares to market for all taxable years during which (i) the U.S. Holder owned our shares and (ii) we were a PFIC, the PFIC rules generally will not apply to such U.S. Holder.

     If U.S. Holders own shares during any year in which we are a PFIC, the U.S Holders must file Internal Revenue Service Form 8621.

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     We believe that we are not a PFIC, and we do not expect to become a PFIC. However, we cannot assure that we will not qualify as a PFIC in the future.

     Foreign Personal Holding Company Rules

     Special U.S. tax rules apply to a shareholder of a foreign personal holding company (“FPHC”). A foreign corporation will be classified as a FPHC for U.S. federal income tax purposes if the following two tests are satisfied:

• five or fewer individuals who are U.S. citizens or residents (a “U.S. Group”) actually or constructively own, under attribution rules, more than 50% of all classes of the corporation’s shares measured by voting power or value at any time during the corporation’s taxable year; and

• the corporation receives at least 60% (50% if the corporation has qualified as a foreign personal holding corporation in a prior taxable year) of its gross income regardless of source (foreign or domestic), as specifically adjusted, from passive sources (e.g., dividends, interest, gains from the sale or exchange of shares or securities, rents and royalties).

     If we are a FPHC, each U.S. Holder that owned our shares on the last day of the our taxable year or if earlier, the last day of our taxable year on which a U.S. Group currently exists with respect to us, must include in gross income as dividends such U.S. Holder’s pro rata share the amount the U.S. Holder would have received if we had distributed a dividend equal to our undistributed foreign personal holding company income, as defined for U.S. federal income tax purposes. The imputed income is taxable as a dividend even if no cash dividend is actually paid.

     We believe that we are not a FPHC, and we do not expect to become a FPHC. However, we can not assure you that we will not qualify as a FPHC in the future.

     Personal Holding Company Rules

     A foreign corporation may be classified as a personal holding company for U.S. federal income tax purposes if the following two tests are satisfied:

• If at any time during the last half of the corporation’s taxable year, five or fewer individuals (without regard to their citizenship or residency) actually or constructively own, under attribution rules, more than 50% of the shares of the corporation by value; and

• 60% or more of the foreign corporation’s gross income derived from U.S. sources or effectively connected with a U.S. trade or business, as specifically adjusted, is from passive sources (e.g., dividends, interest, gains from the sale or exchange of shares or securities, rents and royalties).

     For tax year 2003, a personal holding company generally is taxed currently at a rate of 38.6% on its undistributed personal holding company income, which is calculated based generally on the corporation’s taxable income after deducting dividends paid and making certain other adjustments. The PHC tax on a foreign corporation is limited to the corporation’s U.S. source income. Even if we were to become a PHC, we do not expect to have material undistributed PHC income. However, we cannot assure you that we will not become a PHC because of uncertainties regarding the application of the constructive ownership rules and the possibility of changes in our shareholder base and income or other circumstances that could change the application of the PHC rules to us. In addition, if we become a PHC we cannot assure you that the amount of our PHC income will be immaterial.

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     Controlled Foreign Corporation Rules

     If more than 50% of the voting power or total value of all classes of our shares is owned, directly or indirectly, by U.S. Holders, each of which owns 10% or more of the total combined voting power of all classes of our shares, we could be treated as a controlled foreign corporation (“CFC”) under Subpart F of the Internal Revenue Code. This classification would require such 10% or greater shareholders to include in income their pro rata shares of our “Subpart F Income,” as defined in the Internal Revenue Code. In addition, under Section 1248 of the Internal Revenue Code, gain from the sale or exchange of shares by any U.S. Holder who is or was a 10% or greater shareholder at any time during the five year period ending with the sale or exchange will be dividend income to the extent of our earnings and profits attributable to the shares sold or exchanged and accumulated during the periods that we were a CFC. Under certain circumstances, a U.S. Holder that directly owns 10% or more of our voting shares and is a corporation may be entitled to an indirect foreign tax credit for amounts characterized as dividends under Section 1248 of the Internal Revenue Code. We believe that we are not a CFC and we will not become a CFC, however, we can not assure you that we will not become a CFC in the future.

     United States Backup Withholding Tax and Information Reporting

     Under certain circumstances, a U.S. Holder may be subject to information reporting and backup withholding with respect to certain payments made in respect of the shares and the proceeds received on the disposition of the shares paid within the U.S. (and in certain cases, outside the U.S.). Such amounts may be subject to a 30% U.S. backup withholding tax unless the U.S. Holder otherwise establishes an exemption. For example, backup withholding will not apply to a U.S. Holder who (1) is a corporation or comes within certain other exempt categories and, when required, demonstrates that fact, or (2) furnishes a correct taxpayer identification number and makes certain other required certifications as provided by the backup withholding rules.

     The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle a U.S. Holder to a refund, provided that the required information is furnished to the Internal Revenue Service.

* * *

     The discussion set forth above is included for general information only and may not be applicable depending upon a holder’s particular situation. Holders should consult their tax advisors with respect to the tax consequences to them of the purchase, ownership and disposition of shares including the tax consequences under state, local and other tax laws and the possible effects of changes in U.S. federal and other tax laws.

F. Dividends and Paying Agents

     Not Applicable.

G. Statement by Experts

     Not Applicable.

H. Documents on Display

     Whenever a reference is made in this Form 20-F to any contract, agreement or other document, the reference may not be complete and you should refer to the copy of that contract, agreement or other document filed as an exhibit to one of our previous SEC filings.

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     We file annual and special reports and other information with the SEC. You may read and copy all or any portion of the registration statement and any other document we file with the SEC at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. Commencing with filings made this year, such material may also be obtained at the Internet site the SEC maintains at http://www.sec.gov which contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

I. Subsidiary Information

     Not Applicable.

Item 11. Quantitative and Qualitative Disclosures about Market Risk

Market Risk Disclosure

     We are exposed to market risk from changes in interest rates and foreign currency exchange rates, most notably fluctuations of the United States dollar, the Hong Kong dollar and the Japanese yen against the euro. We report our operating results and financial position in euros, while foreign affiliates report their operating results and financial position in their respective functional currencies. To the extent that foreign currency fluctuations affect the value of our investments in our foreign affiliates, they are not hedged. The cumulative effect of these fluctuations is separately reported in Shareholders’ Equity and for the year ended December 31, 2002, we recorded an unfavorable movement of € 29.4 million.

Foreign exchange risk management

     Our operations are exposed to foreign exchange risk arising from cash flows and financial instruments that are denominated in currencies other then the functional currency of ASM International or the respective subsidiary conducting the business. The purpose of our foreign currency management is to manage the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows and on foreign currency assets and liabilities.

     In the first quarter of 2001, we adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 137 and SFAS No. 138. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities, and requires that all derivatives, including foreign currency exchange contracts, be recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized in earnings. All of our derivative financial instruments are recorded at their fair value in other current assets or accrued expenses.

     The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. We do not use derivative financial instruments for trading or speculative purposes. We use derivative financial instruments, such as forward exchange contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur within the next 12 months. As a policy we only hedge anticipated foreign currency sales and purchase transactions for which we have a firm commitment to a customer or supplier. In accordance with SFAS No. 133, hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges, and are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of other comprehensive income in Shareholders’ Equity, and is reclassified into earnings when the hedged transaction affects earnings. An amount of approximately € 1.3 million included in other comprehensive income at December 31, 2002 will be reclassified to earnings

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within 12 months upon completion of the underlying transaction. If the underlying transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss is immediately recognized in earnings under net interest and other financial income (expenses) on the Statement of Operations.

     Furthermore, we continue to manage the currency exposure of certain receivables and payables using derivative instruments, such as forward exchange contracts and currency swaps, and nonderivative instruments, such as debt borrowings in foreign currencies. The gains or losses on these instruments provide an offset to the gains or losses recorded on the foreign currency receivables and payables. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under net interest and other financial income (expenses) on the Statement of Operations. Foreign currency receivables and payables are recorded at the exchange rate at the balance sheet date and gains and losses as a result of changes in exchange rates are recorded in earnings earnings under net interest and other financial income (expenses) on the Statement of Operations. The operations of our subsidiaries are generally financed with debt issued in the currency of the country in which each subsidiary is located in an effort to limit our foreign currency exposure.

     As of December 31, 2002, we have entered into forward exchange contracts with terms less than twelve months to sell in total US$ 28.2 million and to receive € 29.0 million, to sell US$ 10.5 million and to receive Japanese yen 1,263 million, to buy in total US$ 3.0 million for payment of € 2.9 million and to buy in total US$ 2.4 million for payment of Japanese yen 285 million. At December 31, 2002, the fair market value of these forward exchange contracts were to receive € 37.0 million and to pay € 5.1 million. The fair market value of these contracts are based on external quotes from banks for similar contracts.

     The following analysis sets out the sensitivity of the fair value of our financial instruments to an immediate change in foreign currency rates. Fair values represent the present value of forecasted future cash flows at market exchange rates. The sensitivity analysis assumes an immediate 10% favorable or unfavorable change in all foreign currency exchange rates against the euro from their levels as of December 31, 2002 with all other variables kept constant. A favorable 10% change indicates a strengthening of the currency in which our financial instruments are dominated, primarily the US dollar, against the euro and an unfavorable change indicates a weakening of the currency in which our financial instruments are dominated, primarily the US dollar, against the euro. The selection of 10% favorable or unfavorable change in exchange rates should not be construed as a prediction by us of future market events, but rather, to illustrate the potential impact of such event. The modeling technique used to calculate the exposure does not take into account correlation among foreign currency exchange rates, or correlation among various markets (i.e., the foreign exchange, equity and fixed-income markets). Even though we believe it to be possible that all of the foreign currency exchange rates to which we are exposed would simultaneously change by more than 10%, we find it meaningful to “stress test” our exposure under this 10% fluctuation scenario and other hypothetical adverse market scenarios. Our actual experience may differ from the results in the table below due to the correlation assumptions utilized, or if events occur that were not included in the methodology, such as significant liquidity or market events.

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								As of December 31, 2002
								Sensitivity analysis
		Currency and		Carrying				Favorable		Unfavorable
		notional amount		amount		Fair value		change of 10%		change of 10%
		(in millions)				(in millions of euro)
Notes payable to banks, due within twelve months		yen	2,068.5		16.5		16.5		14.9		18.2
Long-term debt with maturities:
	due from 2003 – 2010	euro	4.9		4.9		5.1		4.9		4.9
	due from 2004 – 2006	yen	722.4		5.8		5.8		5.2		6.4
	due from 2003 – 2005	US$	0.1		0.1		0.1		0.1		0.1
Convertible subordinated debt, due November 15, 2005		US$	115.0		109.7		105.0		98.7		120.6
Foreign exchange contracts,  settlement within twelve months:
	purchase	US$	5.4		5.2		5.1		4.6		5.7
	sale	US$	38.7		39.0		37.0		33.2		40.6

     As our borrowings are primarily in other currencies than the euro a change in foreign currency exchange rates will have an impact on our net earnings. A hypothetical change of 10% in foreign currencies against the euro would result in € 0.7 million change in interest expenses at December 31, 2002 borrowing levels.

Interest risk

     At December 31, 2002, we had convertible subordinated debt borrowings outstanding of € 109.7 million at a fixed interest rate, maturing in November 2005, € 10.8 million in long-term debt at fixed interest rates, due from 2003-2010, and € 26.5 million in other borrowings with variable short-term interest rates. We are exposed to interest rate risk primarily through our borrowing activities. We do not enter into financial instrument transactions for trading or speculative purposes or to manage interest rate exposure. A hypothetical change in the average interest rate by 10% on the portion of our debt bearing interest at variable rates would not result in a material change in interest expense at December 31, 2002 borrowing levels.

Credit risk

     Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted and from movements in interest rates and foreign exchange rates. We do not anticipate nonperformance by counterparties. We generally do not require collateral or other security to support financial instruments with credit risk. Concentrations of credit risk (whether on or off-balance sheet) that arise from financial instruments 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. Financial instruments on the balance sheet that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We maintain a policy providing for the diversification of cash and cash equivalent investments and placement of investments in

- 76 -

high quality financial institutions to limit the amount of credit risk exposure. A significant percentage of our revenue is derived from a limited number of large customers. Our largest customer accounted for approximately 13.9% of our net sales in 2002 and our ten largest customers accounted for approximately 39.6% of our net sales in 2002. Sales to these large customers also may fluctuate significantly from time to time depending on the timing and level of purchases from us. Significant orders from such customers may expose us to a concentration of credit risk and difficulties in collecting amounts due, which might harm our financial results and financial condition. At December 31, 2002, one customer accounted for 18.3% of the outstanding balance in accounts receivable.

Item 12. Description of Securities Other Than Equity Securities.

     Not applicable.

Part II

Item 13. Defaults, Dividend Arrearages and Delinquencies.

     None.

Item 14. Material Modification to the Rights of Security Holders and Use of Proceeds.

     None.

Item 15. Controls and Procedures.

A. Evaluation of disclosure controls and procedures

     We have disclosure controls and procedures in place, which are designed to ensure that material information related to ASM International, including our consolidated subsidiaries, is made known to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). We review our disclosure controls and procedures regularly and when necessary and make changes to ensure they are effective.

     Within the 90 day period prior the date of this report, an evaluation was carried out under the supervision and with the participation of our management, including the CEO and the CFO, of the effectiveness of our disclosure controls and procedures. Based upon that evaluation, the CEO and CFO have concluded that our disclosure controls and procedures are effective in causing material information to be collected and evaluated by the management of ASM International on a timely basis and to ensure that the quality and timeliness of our public disclosures complies with our SEC disclosure obligations.

B. Changes in internal controls

     There were no significant changes in our internal controls or in other factors that could significantly affect those controls after the date of our most recent evaluation.

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Part III

Item 17. Financial Statements

     Not Applicable.

Item 18.  Financial Statements.

     See pages F-1 through F-32, incorporated herein by reference.

Item 19.  Exhibits^(*)

Exhibit			Included
Number	Description	Incorporated by Reference to:	Herein:
1.1	English translation of ASM International N.V.’s Compiled Articles of Association, as amended	Exhibit 3.1 to Registrant’s 6-K filed on November 6, 2001
4.1	1994 Stock Option Plan	Exhibit 99.1 to the Registrant’s S-8 filed October 25, 1999
4.2	Debenture Purchase Agreement Part 1	Exhibit 4.2 to the Registrant’s Form F-3 filed on December 13, 1999
4.3	Debenture Purchase Agreement Part 2	Exhibit 4.2 to the Registrant’s Form F-3 filed on December 13, 1999
4.4	Zero Coupon Debenture	Exhibit 4.3 to the Registrant’s Form F-3 filed on December 13, 1999
4.5	Common Stock Purchase Warrant	Exhibit 4.4 to the Registrant’s Form F-3 filed on December 13, 1999
4.6	Supplemental Common Stock Purchase Warrant	Exhibit 4.5 to the Registrant’s Form F-3 filed on December 13, 1999

- 78 -

Exhibit			Included
Number	Description	Incorporated by Reference to:	Herein:
4.7	Registration Rights Agreement	Exhibit 4.6 to the Registrant’s Form F-3 filed on December 13, 1999
4.8	Purchase Agreement dated November 14, 2001 between ASM International N.V. and CIBC World Markets Corp. for purchase of US$ 100 million of 5% Convertible Subordinated Notes	Exhibit 4.16 to the Registrant’s Form 20-F/A filed on May 10, 2002
4.9	Indenture Agreement dated November 19, 2001 between ASMI International N.V. and Citibank, N.A.	Exhibit 4.17 to the Registrant’s Form 20-F/A filed on May 10, 2002
4.10	2001 Stock Option Plan	Exhibit 99.1 to the Registrant’s Form S-8 filed on April 30, 2002
4.11	Equity Line Financing Agreement between ASM International N.V. and Canadian Imperial Holding, Inc. (“CIHI”) dated July 2, 2002	Exhibit 4.18 to the Registrant’s Form F-3 filed on July 3, 2002
4.12	Registration Rights Agreement between ASM International N.V. and CIHI dated July 2, 2002	Exhibit 4.19 to the Registrant’s Form F-3 filed on July 3, 2002
4.13	English translation of Robert L. de Bakker’s Employment Agreement		X
4.14	Trust Deed and Rules of The ASM Pacific Technology Employee Share Incentive Scheme, dated March 23, 1990		X
4.15	Deed of Adherence Relating to Participation in the Employee Share Incentive Scheme of ASM Pacific Technology Limited, dated April 12, 1999		X
4.16	Supplemental Deed Relating to the Employee Share Incentive Scheme of ASM Pacific Technology Limited		X
8.1	Subsidiaries		X
10.1	Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		X
10.2	Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the		X

- 79 -

Exhibit			Included
Number	Description	Incorporated by Reference to:	Herein:
	Sarbanes-Oxley Act of 2002
10.3	Auditor’s Consent		X

* Pursuant to Item 19.2(b)(1) of Form 20-F, the Registrant has omitted certain agreements with respect to long-term debt not exceeding 10% of consolidated total assets. The Registrant agrees to furnish a copy of any such agreements to the Securities Exchange Commission upon request.

- 80 -

SIGNATURES

     The registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused and authorized the undersigned to sign this annual report on its behalf.

	ASM INTERNATIONAL N.V.
Date:  April 17, 2003	/s/ Arthur H. del Prado Arthur H. del Prado Managing Director and Chief Executive Officer

S-1

I, Arthur H. del Prado, certify that:

1.	I have reviewed this annual report on Form 20-F of ASM International N.V.;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
(c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: April 17, 2003

/s/ Arthur H. del Prado

Arthur H. del Prado
Chief Executive Officer

S-2

I, Robert L. de Bakker, certify that:

1.	I have reviewed this annual report on Form 20-F of ASM International N.V.;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

(a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
(b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
(c)	presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

(a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: April 17, 2003

/s/ Robert L. de Bakker

Robert L. de Bakker
Chief Financial Officer

S-3

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
ASM International N.V
Independent Auditors’ Report of Deloitte & Touche Accountants		F-2
Consolidated Balance Sheets as of December 31, 2001 and 2002		F-3
Consolidated Statements of Operations for the years ended December 31, 2000, 2001 and 2002		F-4
Consolidated Statements of Comprehensive Income		F-5
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2000, 2001 and 2002		F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2000, 2001 and 2002		F-6
Notes to the Consolidated Financial Statements		F-7

F-1

Independent Auditors’ Report

Board of Directors and Shareholders
ASM International N.V.
Bilthoven, the Netherlands

     We have audited the accompanying consolidated balance sheets of ASM International N.V. and subsidiaries (collectively, the ‘Company’) as of December 31, 2001 and 2002, and the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the years ended December 31, 2000, 2001 and 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, such consolidated financial statements referred to above present fairly, in all material respects, the financial position of ASM International N.V. and subsidiaries as of December 31, 2001 and 2002, and the results of their operations and their cash flows for each of the years ended December 31, 2000, 2001 and 2002, in conformity with accounting principles generally accepted in the United States of America.

     As discussed in Note F to the consolidated financial statements, the Company changed its method of accounting for goodwill in 2002.

Deloitte & Touche
Accountants

Amsterdam, the Netherlands,
February 17, 2003

F-2

Consolidated Balance Sheets

				EUR
				December 31,
(thousands except share data)		Note		2001		2002
Assets
Cash and cash equivalents			C		107,577		70,991
Marketable securities			C		5		11
Accounts receivable (less allowance for doubtful accounts of € 6,952 and € 5,464)					136,615		132,818
Inventories			D		206,027		185,752
Income taxes receivable					4,103		1,840
Deferred tax assets			S		—		1,843
Other current assets					21,110		18,786
Total current assets					475,437		412,041
Property, plant and equipment, net			E		191,081		160,501
Goodwill, net			F		64,306		54,529
Deferred tax assets			S		—		2,781
Other assets			G		26,241		23,989
Total Assets					757,065		653,841
Liabilities and Shareholders’ Equity
Notes payable to banks			H		16,231		26,548
Accounts payable					61,737		67,029
Accrued expenses					69,544		55,414
Advance payments from customers					6,309		6,290
Deferred revenue					11,562		8,851
Income taxes payable					4,227		5,560
Current portion of long-term debt			I		2,179		2,669
Total current liabilities					171,789		172,361
Deferred tax liabilities			S		1,977		1,050
Long-term debt			I		11,720		8,175
Convertible subordinated debt			J		130,728		109,665
Total liabilities					316,214		291,251
Minority interest in subsidiary					119,941		97,048
Shareholders’ Equity:
Common shares
	Authorized 110,000,000 shares, par value € 0.04, issued and outstanding 49,070,296 and 49,370,308 shares				1,963		1,975
Financing preferred shares
	Authorized 8,000 shares, par value € 40, none issued				—		—
Preferred shares
	Authorized 118,000 shares, par value € 40, none issued				—		—
Capital in excess of par value					252,892		254,999
Retained earnings					64,916		35,054
Accumulated other comprehensive income (loss)					1,139		(26,486	)
Total Shareholders’ Equity			K		320,910		265,542
Total Liabilities and Shareholders’ Equity					757,065		653,841

See Notes to Consolidated Financial Statements.

F-3

Consolidated Statements of Operations

					EUR
					Year ended December 31,
(thousands, except per share data)			Note		2000			2001			2002
Net sales				T		935,212			561,064			518,802
Cost of sales						(518,027	)		(337,743	)		(328,077	)
Gross profit				T		417,185			223,321			190,725
Operating expenses:
Selling, general and administrative						(147,318	)		(111,851	)		(108,393	)
Research and development, net				Q		(73,800	)		(79,661	)		(88,334	)
Amortization of goodwill				F		(4,295	)		(7,558	)		—
	Total operating expenses					(225,413	)		(199,070	)		(196,727	)
Earnings (loss) from operations				T		191,772			24,251			(6,002	)
Net interest and other financial income (expenses)				R		(1,595	)		(984	)		(10,416	)
Earnings (loss) before income taxes, minority interest and cumulative effect of change in accounting principle						190,177			23,267			(16,418	)
Income taxes				S		(22,830	)		(4,711	)		1,165
Earnings (loss) before minority interest and cumulative effect of change in accounting principle						167,347			18,556			(15,253	)
Minority interest						(71,107	)		(13,373	)		(15,890	)
Gain on dilution of investment in subsidiary				L		1,822			915			1,281
Net earnings (loss) before cumulative effect of change in accounting principle				T		98,062			6,098			(29,862	)
Cumulative effect of change in accounting principle, net of tax				A		(3,790	)		—			—
Net earnings (loss)						94,272			6,098			(29,862	)
Basic net earnings (loss) per share:
Net earnings (loss) before cumulative effect of change in accounting principle						2.09			0.12			(0.61	)
Cumulative effect of change in accounting principle				A		(0.08	)		—			—
Net earnings (loss)						2.01			0.12			(0.61	)
Diluted net earnings (loss) per share:
Net earnings (loss) before cumulative effect of change in accounting principle						2.02			0.12			(0.61	)
Cumulative effect of change in accounting principle				A		(0.08	)		—			—
Net earnings (loss)						1.94			0.12			(0.61	)
Weighted average number of shares used in computing per share amounts (in thousands):
		Basic		V		46,810			48,944			49,170
		Diluted		V		48,703			49,958			49,170

See Notes to Consolidated Financial Statements.

F-4

Consolidated Statements of Comprehensive Income

		EUR
		Year ended December 31,
(thousands)		2000			2001			2002
Net earnings (loss)			94,272			6,098			(29,862	)
Other comprehensive income (loss):
	Exchange rate changes for the year		(882	)		5,091			(29,413	)
	Realized and unrealized gains (losses) on derivative instruments		—			(451	)		1,788
	Total other comprehensive income (loss)		(882	)		4,640			(27,625	)
Comprehensive income (loss)			93,390			10,738			(57,487	)

See Notes to Consolidated Financial Statements.

Consolidated Statements of Shareholders’ Equity

				EUR
														Accumulated			Total
				Number of				Capital in			Retained			other com-			Share-
				common		Common		excess of			earnings			prehensive			holders’
(thousands, except for number of common shares)		Note		shares		shares		par value			(deficit)			income (loss)			Equity
Balance December 31, 1999					40,107,784		182		103,443			(35,454	)		(2,619	)		65,552
Issuance of common shares:
	For stock options		L		901,605		4		3,123			—			—			3,127
	Exercise of warrants		K		3,537,957		16		27,514			—			—			27,530
	Public offering		K		4,250,000		19		119,692			—			—			119,711
Net earnings					—		—		—			94,272			—			94,272
Fair value of put option for structured equity line					—		—		(988	)		—			—			(988	)
Other comprehensive loss					—		—		—			—			(882	)		(882	)
Balance December 31, 2000					48,797,346		221		252,784			58,818			(3,501	)		308,322
Issuance of common shares:
	For stock options		L		272,950		3		1,847			—			—			1,850
Change in par value per share			K		—		1,739		(1,739	)		—			—			—
Net earnings					—		—		—			6,098			—			6,098
Other comprehensive income					—		—		—			—			4,640			4,640
Balance December 31, 2001					49,070,296		1,963		252,892			64,916			1,139			320,910
Issuance of common shares:
	For stock options		L		300,012		12		2,107			—			—			2,119
Net loss					—		—		—			(29,862	)		—			(29,862	)
Other comprehensive loss					—		—		—			—			(27,625	)		(27,625	)
Balance December 31, 2002					49,370,308		1,975		254,999			35,054			(26,486	)		265,542

See Notes to Consolidated Financial Statements.

F-5

Consolidated Statements of Cash Flows

			EUR
			Year ended December 31,
(thousands)			2000			2001			2002
Cash flows from operating activities:
	Net earnings (loss)			94,272			6,098			(29,862	)
	Adjustments to reconcile net earnings to net cash from operating activities:
		Depreciation and amortization		52,223			42,763			40,091
		Amortization debt issuance costs		1,575			173			1,448
		Cumulative effect of change in accounting principle, net of tax		3,790			—			—
		Deferred income taxes		(2,652	)		1,139			(5,369	)
		Minority interest		71,107			13,373			15,890
		Gain on dilution of investment in subsidiary		(1,822	)		(915	)		(1,281	)
		Compensation expense Employee Share Incentive Scheme ASMPT		2,773			3,995			3,417
		Increase (decrease) in allowance for doubtful receivables		7,302			(1,782	)		(670	)
	Changes in other assets and liabilities:
		Accounts receivable		(96,807	)		103,787			(10,594	)
		Inventories		(73,462	)		(18,026	)		(3,473	)
		Other current assets		(7,984	)		2,718			866
		Accounts payable and accrued expenses		62,901			(79,424	)		3,098
		Advance payments from customers		9,028			(7,314	)		1,077
		Deferred revenue		2,664			(3,351	)		(2,443	)
		Income taxes		19,101			(22,864	)		4,195
Net cash provided by operating activities				144,009			40,370			16,390
Cash flows from investing activities:
	Capital expenditures			(71,366	)		(71,563	)		(33,246	)
	Acquisition of shares from minority shareholders			(75,461	)		—			—
	Acquisition of business			(96	)		(20,278	)		—
	Proceeds from sale of property, plant and equipment			4,332			621			1,578
	Sale (purchase) of marketable securities			6,214			—			(6	)
Net cash used in investing activities				(136,377	)		(91,220	)		(31,674	)
Cash flows from financing activities:
	Notes payable to banks, net			(9,531	)		3,095			11,409
	Proceeds from long-term debt and subordinated debt			78,466			127,849			595
	Repayments of long-term debt and subordinated debt			(96,202	)		(55,387	)		(3,139	)
	Proceeds from issuance of common shares			126,813			1,850			2,119
	Fair value of put option for structured equity line			(988	)		—			—
	Dividends to minority shareholders			(14,173	)		(29,838	)		(24,459	)
Net cash provided by (used in) financing activities				84,385			47,569			(13,475	)
Exchange rate effects				635			4,053			(7,827	)
Net increase (decrease) in cash and cash equivalents				92,652			772			(36,586	)
Cash and cash equivalents at beginning of year				14,153			106,805			107,577
Cash and cash equivalents at end of year				106,805			107,577			70,991
Supplemental disclosures of cash flow information
Cash paid during the year for:
	Interest			2,257			1,491			8,295
	Income taxes			6,381			26,436			8
Non cash financing activities:
	Exercise of warrants and repayment of subordinated debt			23,555			—			—

See Notes to Consolidated Financial Statements.

F-6

Notes to Consolidated Financial Statements

     (EUR in thousands, except per share data and unless otherwise stated)

NOTE A     Summary of Significant Accounting Policies

     Basis of Presentation

     ASM International N.V. (‘ASMI’ or ‘the Company’) is a corporation domiciled in the Netherlands with principal operations in Europe, the United States, Southeast Asia and Japan. The Company dedicates its resources to the research, development, manufacturing, marketing and servicing of equipment and materials used to produce semiconductor devices. The Company provides production solutions for the main areas of semiconductor production: wafer processing (Front-end), assembly and packaging (Back-end). The Company follows accounting principles generally accepted in the United States of America. Effective for 2002 the Company adopted Statement of Financial Accounting Standard (“SFAS”) No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets,” as described in more detail below.

     Principles of Consolidation

     The Consolidated Financial Statements include the accounts of ASMI and its subsidiaries (‘the Company’), where ASMI holds a controlling interest. The minority interest of third parties is disclosed separately in the Consolidated Financial Statements. All intercompany profits, transactions and balances have been eliminated in consolidation. Intercompany profits included in inventory are recognized in the Statement of Operations upon the sale of the respective inventory to a third party.

     Foreign Currency Translation

     The financial information for subsidiaries outside the Netherlands is measured using local currencies as the functional currency of that subsidiary. Assets and liabilities of foreign subsidiaries are translated into euros at exchange rates prevailing at the end of the year. Revenues and costs relating to the operation of such subsidiaries are translated at average exchange rates during the year. Resulting translation adjustments are directly recorded in Shareholders’ Equity. Exchange rate differences on translations of other transactions in foreign currencies are reflected in the Statement of Operations.

     Derivative Financial Instruments

     The Company uses derivative instruments to manage certain exposures to foreign currency risks. The Company’s objectives for holding derivatives are to minimize these risks using the most effective methods to eliminate or reduce the impact of such exposure.

     The Company adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 137 and SFAS No. 138, in the first quarter of 2001. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities, and requires that all derivatives, including foreign currency exchange contracts, be recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized in earnings. All of the Company’s derivative financial instruments are recorded at their fair value in other current assets or accrued expenses. The transition adjustment upon adoption of SFAS No. 133 in 2001 was not material.

     ASMI and its subsidiaries conduct business in a number of foreign countries, with certain transactions denominated in other currencies than the functional currency of the respective subsidiary

F-7

conducting the business. The purpose of the Company’s foreign currency management is to manage the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. The Company does not use derivative financial instruments for trading or speculative purposes. The Company uses derivative financial instruments, such as forward exchange contracts, to hedge certain forecasted foreign currency denominated sales and purchase transactions expected to occur within the next twelve months. As a policy the Company only hedges forecasted foreign currency transactions for which we have a firm commitment from a customer or to a supplier. In accordance with SFAS No. 133, these hedges related to forecasted transactions are designated and documented at the inception of the hedge as cash flow hedges, and are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of other comprehensive income in Shareholders’ Equity, and is reclassified into earnings when the hedged transaction affects earnings. All amounts included in other comprehensive income at December 31, 2002 will be reclassified to earnings within twelve months upon completion of the underlying transaction. If the underlying transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss is immediately recognized in earnings under net interest and other financial income (expenses) in the Statement of Operations.

     Furthermore, the Company continues to manage the currency exposure of certain receivables and payables using derivative instruments, such as forward exchange contracts and currency swaps, and nonderivative instruments, such as debt borrowings in foreign currencies. The gains or losses on these instruments provide an offset to the gains or losses recorded on the foreign currency receivables and payables. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under net interest and other financial income (expenses) on the Statement of Operations. Foreign currency receivables and payables are recorded at the exchange rate at the balance sheet date and gains and losses as a result of changes in exchange rates are recorded in earnings under net interest and other financial income (expenses) on the Statement of Operations.

     Gains or losses recognized resulting from the ineffectiveness of cash flow and fair value hedges were not material for the years ended December 31, 2001 and 2002.

     Revenue Recognition

     Effective January 1, 2000 the Company adopted new guidance on revenue recognition as is described in Staff Accounting Bulletin No. 101 “Revenue Recognition in Financial Statements” (“SAB 101”), issued by the staff of the Securities and Exchange Commission (the “SEC”) in December 1999.

     Net revenues include product revenues derived primarily from sales of Front-end and Back-end equipment used by both segments of the semiconductor equipment market. The Company recognizes revenue from equipment sales upon shipment of its products when it is proven prior to shipment that the equipment has met all of the customers’ criteria and specifications. The installation process is not believed to be essential to the functionality of the products. However, since under most of the sales contracts, the timing of payment of a portion of the sales price is coincident with installation, such installation is not considered to be inconsequential or perfunctory under the guidance of SAB 101. Therefore, at the time of shipment, the Company defers that portion of the sales price related to the fair value of installation at the time of shipment. The Company believes it has an enforceable claim for that portion of the sales price not related to the fair value of the installation should it not fulfill its installation obligation. The fair value of the installation process is measured based upon the per-hour amounts charged by third parties for similar installation services. When the Company can only satisfy the customer acceptance criteria or specifications at the customer’s location, revenue is deferred until final acceptance by the customer or until contractual conditions lapse. The Company provides training and technical

F-8

support to customers. Revenue related to such services is recognized when the service is completed. Revenue from the sale of spare parts and materials is recognized when the goods are shipped.

     Cash and Cash Equivalents

     Cash and cash equivalents include cash on hand, current accounts with banks, and short-term deposits with a maturity of three months or less at the date of purchase.

     Marketable Securities

     All investments in marketable securities are classified as available for sale which requires to report these investments at fair market value and record the unrealized gains and losses, after tax, as a component of Shareholders’ Equity. In the accompanying Consolidated Financial Statements the marketable securities are carried at cost which approximates fair market value. Realized gains and losses on securities sold are included in net earnings.

     Inventories

     Inventories are stated at the lower of cost (first-in, first-out method) or market value. Costs include net prices paid for materials purchased, charges for freight and custom duties, direct wages of employees and charges for factory production overhead.

     Property, Plant and Equipment

     Property, plant and equipment are carried at cost, less accumulated depreciation. Capital leased assets are recorded at the present value of future lease obligations. Depreciation is calculated using the straight-line method over the estimated useful lives. Leasehold improvements are depreciated over the lesser of the estimated useful life of the underlying property and the lease term.

     Goodwill and Other Intangible Assets

     In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141, “Business Combinations” and SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 141 requires that all business combinations initiated after June 30, 2001 are accounted for under the purchase method and addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination. SFAS No. 142 addresses the initial recognition and measurement of intangible assets acquired outside of a business combination and the accounting for goodwill and other intangible assets subsequent to their acquisition. SFAS No. 142 provides that intangible assets with finite useful lives be amortized and that goodwill and intangible assets with indefinite lives not be amortized, but will rather tested at least annually for impairment. Goodwill represents the excess of the cost of an acquired entity over the net of the amounts assigned to assets acquired and liabilities assumed. The Company adopted SFAS No. 142 as of January 1, 2002, and as of that date stopped amortizing goodwill that resulted from business combinations completed prior to the adoption of SFAS No. 141. The Company tests its recorded goodwill for impairment each year on December 31 or if an event occurs or circumstances change that would indicate that the carrying amount exceeds the fair value of the goodwill. Based on the tests performed no impairment loss was recorded upon adoption of this standard as of January 1, 2002, and as of December 31, 2002.

F-9

     Strategic Investments

     ASMI has certain strategic minority investments in non publicly traded companies. These investments are included in other assets on the Consolidated Balance Sheet. Investments with a capital investment of 20% or more are valued using the equity method of accounting. Investments with a capital investment of less than 20% are carried at cost. ASMI monitors these investments for impairment and makes appropriate reductions in carrying values when necessary.

     Recoverability of Long-Lived Assets

     In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” long-lived assets and certain recognized intangible assets (except those not being amortized) to be held and used by the Company, and to long-lived assets and certain recognized intangible assets (including those not being amortized) to be disposed of, are required to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, the Company estimates the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the undiscounted future cash flow is less than the carrying amount of the asset, the asset is deemed impaired. The amount of the impairment is measured as the difference between the carrying value and the fair value of the asset. Generally, long-lived assets and certain identifiable intangibles to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

     Income Taxes

     The Company accounts for income taxes under the provisions of SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires recognition of deferred tax assets and liabilities for the estimated future tax consequences of events attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using currently enacted tax rates. The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the Statement of Operations in the period in which the enacted rate changes. Deferred tax assets and liabilities are reduced through the establishment of a valuation allowance at such time as, based on available evidence, it is more likely than not that the deferred tax assets will not be realized.

     Stock-Based Compensation

     ASMI accounts for its stock option and stock-based compensation plans using the intrinsic-value method prescribed in Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees.” Accordingly, ASMI computes compensation costs for each employee stock option granted as the amount by which the estimated fair value of the ASMI common shares on the date of the grant exceeds the amount the employee must pay to acquire the shares. As required by SFAS No. 123, “Accounting for Stock-Based Compensation,” ASMI has included, in Note L, the required SFAS No. 123 pro forma disclosures of net income (loss) and earnings (loss) per share as if the fair value-based method of accounting had been applied.

     Research and Development Expenses

     Research and development costs are expensed as incurred. Costs, which relate to prototype and experimental models, which are sold to customers, are charged to cost of sales. Subsidies and other governmental credits to cover research and development costs relating to approved projects are recorded as research and development credits in the period when such project costs occur. Technical development

F-10

credits (Technische Ontwikkelings Kredieten or “TOK”), received from the government of the Netherlands, to offset the cost of certain research and development projects are contingently repayable to the extent sales of equipment developed in such projects occur. Such repayments are calculated as a percentage of sales and are charged to cost of sales. No such repayments are required if such sales do not occur (see Note Q).

     Sales of Shares by a Subsidiary

     As further described in the Notes to Consolidated Financial Statements herein, from time to time, the consolidated subsidiary ASM Pacific Technology Ltd. (“ASMPT”) will issue common shares pursuant to their Employee Share Incentive Scheme. The effect of these issuances is a dilution of the ownership in ASMPT. The Company recognizes the impact of these issuances, and other qualifying issuances as discussed in the SEC’s Staff Accounting Bulletin “Accounting for Sales of Stock by a Subsidiary” (“SAB 51”), in the Statement of Operations as a gain (loss) on dilution of investment in subsidiary.

     Change in Presentation of Dividend Payable to Minority Shareholders

     In 2002 the Company changed its accounting of the proposed dividend payable of its 54.11% subsidiary ASMPT, following the adoption of such change in the principal financial statements of the subsidiary ASMPT. The proposed dividend to minority shareholders, previously recognized as a liability at the balance sheet date, is now recorded as part of “minority interest in subsidiary” instead of “accrued expenses”, and is recognized as a liability when such dividend is declared by the general meeting of shareholders of ASMPT. The comparative amounts for prior years in the Balance Sheet and the Statement of Cash Flows have been restated retroactively to reflect a consistent representation. The change in presentation did not have an impact on the Company’s Shareholders’ Equity and net earnings.

     Cumulative Effect of Change in Accounting Principle

     As more fully described under Revenue Recognition, the Company adopted the guidance outlined in SAB 101. The new method of revenue recognition was adopted as of January 1, 2000 and has been applied retroactively to revenue earned in prior years. The adjustment of € 3,790 to apply retroactively the new method is included in the Statement of Operations for the year ended December 31, 2000.

     Use of Estimates

     The preparation of the Company’s Consolidated Financial Statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and expense during the reported periods. Actual results could differ from those estimates.

     Reclassifications

     Certain other reclassifications have been made to prior year Consolidated Financial Statements to conform to the current year presentation.

     New Accounting Pronouncements

     In June 2001, the FASB issued SFAS No. 143 “Accounting for Asset Retirement Obligations.” SFAS No. 143 establishes accounting standards for the recognition and measurement of legal obligations associated with the retirement of tangible long-lived assets and requires recognition of a liability for an

F-11

asset retirement obligation in the period in which it is incurred. The provisions of this statement are effective for financial statements issued for fiscal years beginning after June 15, 2002. The adoption of SFAS No. 143 did not have a material impact on the Company’s financial position or results of operations.

     In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This statement defines the accounting and reporting for costs associated with exit or disposal activities and is effective for exit and disposal activities that are initiated after December 31, 2002. The Company does not anticipate that the adoption of SFAS No. 146 will have a material impact on the Company’s financial position or results of operations.

     In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation, Transition and Disclosure.” SFAS No. 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. SFAS No. 148 also requires that disclosures of the pro forma effect of using the fair value method of accounting for stock-based employee compensation be displayed more prominently and in a tabular format. Additionally, SFAS No. 148 requires disclosure of the pro forma effect in interim financial statements. The transition and annual disclosure requirements of SFAS No. 148 are effective for fiscal year 2002. SFAS No. 148 does not have a material effect on its financial position or results of operations.

     In November 2002, the FASB issued FASB Interpretation No. 45 (“FIN 45”), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” The disclosure provisions of FIN 45 are effective for financial statements of interim or annual periods that end after December 15, 2002. The provisions for initial recognition and measurement are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002, irrespective of a guarantor’s year-end. The Company is currently evaluating the effect that the adoption of FIN 45 will have on its financial position or results of operations.

     In November 2002, the EITF reached a consensus on Issue 00-21, “Revenue Arrangements with Multiple Deliverables.” The provisions of EITF 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The Company is currently evaluating the effect that the adoption of EITF 00-21 will have on its financial position or results of operations.

F-12

NOTE B     List of Significant Subsidiaries and Equity Investees

		% Ownership December 31,
Name	Location	2001			2002
ASM Europe B.V. (1)	Bilthoven, The Netherlands		100.00	%		100.00	%
ASM United Kingdom Sales B.V. (1)	Bilthoven, The Netherlands		100.00	%		100.00	%
ASM Germany Sales B.V. (1)	Bilthoven, The Netherlands		100.00	%		100.00	%
Advanced Semiconductor Materials    (Netherlands Antilles) N.V	Willemstad, Curacao, Netherlands Antilles		100.00	%		100.00	%
ASM France S.A.R.L	Montpellier, France		100.00	%		100.00	%
ASM Belgium N.V	Leuven, Belgium		100.00	%		100.00	%
ASM Italia S.r.l	Agrate, Italy		100.00	%		100.00	%
ASM Microchemistry Oy	Espoo, Finland		100.00	%		100.00	%
ASM America, Inc.	Phoenix, Arizona, USA		100.00	%		100.00	%
ASM Japan K.K	Tokyo, Japan		100.00	%		100.00	%
ASM Wafer Process Equipment Ltd.	Quarry Bay, Hong Kong, People’s Republic of China		100.00	%		100.00	%
ASM China Ltd.	Shanghai, People’s Republic of China		100.00	%		100.00	%
ASM Wafer Process Equipment Singapore Pte Ltd.	Singapore		100.00	%		100.00	%
ASM Far East Marketing Ltd.	Hsin-Chu Hsien, Taiwan		100.00	%		100.00	%
ASM Korea Ltd.	SungNam-City, Korea		100.00	%		100.00	%
NanoPhotonics AG	Mainz, Germany		24.00	%		24.00	%
ASM Pacific Technology Ltd.	Kwai Chung, Hong Kong, People’s Republic of China		54.36	%		54.11	%
ASM Assembly Automation Ltd.	Kwai Chung, Hong Kong, People’s Republic of China		54.36	%		54.11	%
ASM Assembly Materials Ltd.	Kwai Chung, Hong Kong, People’s Republic of China		54.36	%		54.11	%
ASM Technology Singapore Pte Ltd.	Singapore		54.36	%		54.11	%
Shenzhen ASM Micro Electronic Technology Co. Ltd.	Shenzhen, People’s Republic of China		54.36	%		54.11	%

(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 of Book 2, Part 9 of the Netherlands Civil Code.

The names of certain relative insignificant subsidiaries have not been mentioned. With the exception of the equity investment in NanoPhotonics AG, the accounts of the above mentioned subsidiaries have been included in the Consolidated Financial Statements.

NOTE C     Cash and Cash Equivalents, Marketable Securities

     At December 31, 2002, cash and cash equivalents and marketable securities of the Company’s subsidiary ASMPT amounting to € 57,115 are restricted to use in the operations of this company only.

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NOTE D     Inventories

Inventories consist of the following:

	December 31,
	2001		2002
Components and raw materials		85,864		73,902
Work in process		83,854		72,056
Finished goods		36,309		39,794
Total inventories		206,027		185,752

NOTE E      Property, Plant and Equipment

		Land,			Machinery,
		buildings			equipment,
		and leasehold			furniture
		improvements			and fixtures			Total
At cost:
Balance January 1, 2002			101,483			294,851			396,334
	Capital expenditures		4,471			28,775			33,246
	Retirements and sales		(2,623	)		(13,667	)		(16,290	)
	Reclassifications		(8,046	)		8,046			—
	Translation effect		(8,912	)		(41,959	)		(50,871	)
Balance December 31, 2002			86,373			276,046			362,419
Accumulated depreciation:
Balance January 1, 2002			48,044			157,209			205,253
	Depreciation for the year		6,078			34,013			40,091
	Retirements and sales		(2,619	)		(12,095	)		(14,714	)
	Reclassifications		131			(131	)		—
	Translation effect		(6,425	)		(22,287	)		(28,712	)
Balance December 31, 2002			45,209			156,709			201,918
Property, plant and equipment, net:
	January 1, 2002		53,439			137,642			191,081
	December 31, 2002		41,164			119,337			160,501

Useful lives in years:	- - Buildings and leasehold improvements	10-25
	- - Machinery and equipment	2-10
	- - Furniture and fixtures	2-10

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NOTE F     Goodwill

     The changes in the amount of goodwill for the year ended December 31, 2002 are as follows:

				Accumulated			Carrying
	Cost			amortization			amount
Balance January 1, 2001		73,069			(4,556	)		68,513
Amortization		—			(7,558	)		(7,558	)
Translation effect		3,671			(320	)		3,351
Balance January 1, 2002		76,740			(12,434	)		64,306
Translation effect		(11,600	)		1,823			(9,777	)
Balance December 31, 2002		65,140			(10,611	)		54,529

The allocation of the carrying amount of goodwill is as follows:

	December 31,
	2001		2002
Front-end segment:
ASM Microchemistry Oy		3,560		3,560
NanoPhotonics AG		328		328
Back-end segment:
ASM Pacific Technology Ltd.		60,418		50,641
Total		64,306		54,529

     ASM Pacific Technology Ltd. (“ASMPT”)

     In 2000 the Company purchased in various transactions 5.0% of the outstanding common shares of ASMPT to maintain a majority interest in the shares of ASMPT of 54.88% after the 5.0% acquisition. The total purchase price of the acquired shares amounted to € 74,757. The acquisition of these shares was accounted for using the purchase method and the excess of the purchase price over the fair value of the underlying net assets acquired in the amount of € 64,985 has been recorded as goodwill. The fair value approximated the book value of such assets and liabilities of ASMPT at the date of purchase. The pro forma impact on the Statement of Operations for the year ended December 31, 2000, based on the assumption that the Company acquired the total additional 5.0% interest in ASMPT as of January 1, 2000, was a decrease on minority interest and an increase in net earnings of € 3,182. The pro forma impact on basic and diluted earnings per share for the year ended December 31, 2000 was € 0.07.

     ASM Microchemistry Oy

     In July 1999, the Company acquired all the outstanding shares of Microchemistry Oy. The acquisition was accounted for using the purchase method. Total consideration paid amounted to FIM (Finnish Marks) 23.2 million or € 3,868 and after adding the assets deficiency the recorded goodwill totaled € 4,747.

     NanoPhotonics AG

     In December 1999, the Company acquired a 24.0% interest in NanoPhotonics AG, a German supplier of precision thin film metrology equipment, for € 407. An officer of the Company also purchased a 44.5% interest in NanoPhotonics. The Company has a five-year option to purchase the 44.5% interest from the officer at the same price he paid for his interest in the initial transaction. In exchange for this option, the Company granted the officer a five-year option to purchase 25,000 common shares in ASMI at the fair market value of the shares at the option grant date.

F-15

     Upon adoption of SFAS No. 142 as of January 1, 2002, the Company stopped amortizing goodwill that resulted from business acquisitions. The Company tests its recorded goodwill for impairment each year on December 31 or if an event occurs or circumstances change that would indicate that the fair value of the goodwill exceeds its carrying amount. Based on the tests performed no impairment loss was recorded upon adoption of this standard as of January 1, 2002, and as of December 31, 2002.

     A reconciliation of previously reported net earnings and earnings per share to the amounts adjusted for the exclusion of goodwill amortization is as follows:

	Year ended December 31,
	2000		2001		2002
Reported net earnings (loss)		94,272		6,098		(29,862	)
Add back: amortization of goodwill		4,295		7,558		—
Adjusted net earnings (loss)		98,567		13,656		(29,862	)
Reported basic net earnings (loss) per share		2.01		0.12		(0.61	)
Amortization of goodwill per share		0.09		0.16		—
Adjusted basic net earnings (loss) per share		2.10		0.28		(0.61	)
Reported diluted net earnings (loss) per share		1.94		0.12		(0.61	)
Amortization of goodwill per share		0.09		0.15		—
Adjusted diluted net earnings (loss) per share		2.03		0.27		(0.61	)

NOTE G     Other Assets

Other assets consist of the following:

	Strategic minority		Debt			Total
	investments		issuance costs			other assets
Balance January 1, 2001		—		—			—
Additions		20,278		6,150			26,428
Amortization		—		(173	)		(173	)
Translation effect		—		(14	)		(14	)
Balance January 1, 2002		20,278		5,963			26,241
Amortization		—		(1,448	)		(1,448	)
Translation effect		—		(804	)		(804	)
Balance December 31, 2002		20,278		3,711			23,989

     In October 2001, the Company entered into a strategic alliance with and made an equity investment in NuTool, Inc., a privately owned semiconductor equipment company. The Company made an equity investment of € 20,278 in this California-based company that is a provider of innovative copper deposition technologies, giving a total equity interest of approximately 15.4%, in NuTool, Inc.

     The debt issuance costs relate to fees incurred for the issuance of US$ 115.0 million convertible subordinated notes in November and December 2001 and are amortized by the interest method as interest cost during the life of the debt.

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NOTE H     Notes Payable to Banks

Information on notes payable to banks is as follows:

Short-term debt outstanding in:

	December 31,
	2001		2002
The Netherlands		—		10,000
Japan		16,231		16,548
		16,231		26,548

Short-term debt outstanding in local currencies:

	December 31,
	2001		2002
Euro		—		10,000
Japanese yen (in thousands)		1,877,516		2,068,502

     ASMI and its individual subsidiaries borrow under separate short-term lines of credit with banks in the countries where they are located. The lines contain general provisions concerning renewal and continuance at the option of the banks. The weighted average interest rate of the outstanding notes payable was 2.86% at December 31, 2002.

     Total short-term lines of credit amounted to € 169,737 at December 31, 2002. The amount outstanding at December 31, 2002 was € 26,548 and the undrawn portion totaled € 143,189, the utilization of which is subject to satisfaction of certain financial and other covenants. The undrawn portion includes € 48,693 relating to ASMPT, in which the Company holds a 54.11% interest, and such amount is limited solely for use in the operations of ASMPT.

     In December 2002 the Company entered into a multicurrency revolving credit facility with a consortium of banks in the amount of € 70,000 to be utilized solely for the Company’s Front-end operations, excluding Japan. The credit facility consists of two facilities of € 35,000 each. The term of the first facility is 12 months and the term of the second facility is 18 months. The Company’s ability to utilize the credit facility depends on the Company’s ability to maintain certain financial covenants with respect to solvency and for its Front-end operations a minimum level of earnings from operations plus depreciation plus dividends received from its subsidiary ASMPT. The subsidiaries ASM America, Inc., ASM Europe B.V., ASM Microchemistry Oy and Advanced Semiconductor Materials (Netherlands Antilles) N.V. have issued guarantees for all obligations in connection with the credit facility. At December 31, 2002 the amount outstanding under the facility was € 10,000 at a one-month interest rate of 4.26%. The credit facility is secured by a varying portion of the Company’s shareholding in ASMPT. The facility was a renewal of an existing facility of € 45,000, which expired on December 27, 2002. At December 31, 2002, ASM Japan had € 33,950 available for borrowing under its bank lines, the proceeds of which are restricted to use in the ASM Japan business, and ASMPT had € 48,693 of additional availability under its bank lines, the proceeds of which are restricted to use in the Back-end Segment.

     At December 31, 2002 ASMI has guaranteed available short-term facilities of certain subsidiaries in the amount of € 50,618. The Company does not provide guarantees for borrowings of ASMPT and there are no guarantees from ASMPT to secure indebtedness of the Company. 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 affiliates.

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NOTE I     Long-term Debt

Long-term debt consists of the following:

		December 31,
		2001			2002
Term loans:
	Japan, 2.2-3.3%, due 2005 – 2006		2,472			1,617
	Finland, 1.0-3.0%, due 2003 – 2010		3,956			4,036
Mortgage loans:
	The Netherlands, 5.4%, due 2006		1,625			908
	Japan, 1.7-2.6%, due 2005 – 2006		3,671			2,971
Lease commitments:
	United States, 7.2-14.0%, due 2003 – 2005		215			120
	Japan, 0.3-0.5%, due 2004 – 2005		1,960			1,192
			13,899			10,844
Current portion			(2,179	)		(2,669	)
			11,720			8,175

Long-term debt outstanding in local currencies:

		December 31,
		2001		2002
Including current portion:
	Euro		5,581		4,944
	United States dollar (in thousands)		189		126
	Japanese yen (in thousands)		937,877		722,375

Aggregate annual principal repayments for years
subsequent to December 31, 2002 are:

2003	2,669
2004	2,626
2005	3,348
2006	1,105
2007	336
Thereafter	760
	10,844

     The long-term facilities offered by the Japanese banks to ASM Japan are collateralized by the real estate and other assets of ASM Japan, with additional parent guarantees provided by ASMI. In Finland, the long-term loans are collateralized by machinery and equipment of ASM Microchemistry and guaranteed by ASMI.

     Lease commitments relate to commitments for equipment and machines.

F-18

NOTE J     Convertible Subordinated Debt

     In November and December 2001, ASMI sold US$ 115.0 million in principal amount of 5.0% convertible subordinated notes due November 15, 2005 in a private offering. Interest is payable on May 15 and November 15 of each year. The notes are subordinated in right of payment to our existing and future senior debt. The notes are convertible into common shares at any time before their maturity at a conversion rate of 53.0504 shares per each US$ 1,000 principal amount of notes, subject to adjustment in certain circumstances. This is equivalent to an initial conversion price of US$ 18.85 per share. The outstanding principal balance of the convertible subordinated notes amounted to € 130,728 (US$ 115.0 million) at December 31, 2001 and € 109,665 (US$ 115.0 million) at December 31, 2002.

     The Company may redeem, under certain conditions, some or all of the notes at any time after November 30, 2003 at a redemption price of US$ 1,000 per US$ 1,000 principal amount of notes, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, if the closing price of the Company’s common shares has exceeded 150% of the conversion price then in effect for at least 20 trading days within a period of 30 consecutive trading days ending on the trading day before the date of mailing of the redemption notice. ASMI is required to make an additional payment in cash or, at ASMI’s option, in common shares, or in a combination of cash and common shares, with respect to the notes called for redemption in an amount equal to US$ 199.44 per US$ 1,000 principal amount of notes, less the amount of any interest actually paid on the notes before the date of redemption. In the event of a change in control, ASMI may be required to repurchase the notes.

     The notes and the common shares issuable upon conversion of the notes have not been registered under the Securities Act of 1933. The notes were sold in the United States of America only to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933.

NOTE K     Shareholders’ Equity

     The authorized capital of the Company amounts to 110,000,000 shares of € 0.04 par value common shares, 118,000 shares of € 40 par value preferred shares and 8,000 shares of € 40 par value financing preferred shares, of which 49,370,308 common shares and no preferred or financing preferred shares were outstanding as at December 31, 2002. There are currently no preferred or financing preferred shares issued. All shares have one vote per € 0.04 par value, except for shares the Company and its subsidiaries own, which have no voting rights.

     Financing preferred shares are designed to allow ASMI to finance equity with an instrument paying a preferred dividend, linked to EURIBOR loans and government loans, without the dilutive effects of issuing additional common shares. Preferred and financing preferred shares are issued in registered form only and are subject to transfer restrictions. Essentially, a preferred or financing preferred shareholder must obtain the approval of our 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 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 transfer within three months, at which time the approval expires.

     Preferred shares carry the right to a cumulative preferred dividend. Financing preferred shares are also entitled to a cumulative dividend based on the par value and share premium paid on such shares. Dividends distributable to common shareholders are limited to retained earnings of ASMI decreased by legal reserves of € 96,096, which must be maintained. At December 31, 2002, ASMI had no distributable retained earnings.

F-19

     Change in Par Value

     In October 2001, the Company changed the par value per common share from Nlg 0.01 to € 0.04 par value per common share. The change resulted in an increase of the outstanding amount of common shares and a decrease of the capital in excess of par value of € 1,739.

     Warrants

     In December 1998, in conjunction with the restructuring of a subordinated convertible note with Applied Materials, Inc., the Company issued to Applied Materials, Inc. warrants to purchase 1,500,000 common shares, at a price of US$ 5.375 per share. In March 2000, Applied Materials, Inc. exercised the warrants and the proceeds were used to reduce the outstanding balance of the subordinated note.

     In conjunction with US$ 20 million five-year zero-bond debentures issued on October 1, 1999, the Company issued 2,037,957 non-detachable exercise warrants and 200,000 supplemental warrants on common shares of the Company at a price of US$ 9.81 per share, a premium to market at the date of issuance of 20.0%. In February 2000 the 2,037,957 warrants were exercised and the debentures were cancelled in partial payment of the exercise price of the warrants. The remaining portion of the exercise price was fulfilled by the investors contributing € 4,903 in cash. At December 31, 2002 the 200,000 supplemental warrants have not been exercised.

     Public Offering of Common Shares

     In April 2000, the Company completed a public offering of 4,250,000 common shares at a price of US$ 29.00 per share. The net proceeds amounted to € 119,711, which were used to repay outstanding loans and fund working capital needs.

     Structured Equity Line

     On July 6, 2000, the Company entered into a structured equity line (the “ 2000 Line”) with Canadian Imperial Holdings, Inc. (“CIHI”). The 2000 Line expired unused on July 6, 2002. Prior to that time, the Company entered into a substantially identical US$ 65.0 million structured equity line with CIHI, which expires July 6, 2003 (the “2002 Line”). Under the 2002 Line, the Company can sell up to an aggregate of US$ 65.0 million of newly issued common shares to CIHI from time to time. The Company may sell up to US$ 10.0 million of common shares as often as every five business days, subject to certain limitations based on weekly trading volume. The investor has committed to purchase these shares at market price, which is defined as the volume weighted average trading price for the five trading days immediately preceding the date of issuance, minus a discount of 4.5%. The investor is not obligated to purchase shares if the purchase would cause the aggregate number of common shares of the Company owned by the investor, including those purchased during the previous 60 days, to exceed 9.9% of all of the issued and outstanding common shares of the Company. The investor is also under no obligation to purchase newly issued shares under the 2002 Line in the event that the Company’s SEC registration statement registering the sale and resale of the shares is not effective and various other conditions precedent are not satisfied. The Company registered with the SEC 4,330,446 shares for sale under the 2002 Line. As of December 31, 2002 the Company had not issued any common shares under the 2002 Line.

F-20

NOTE L     Employee Stock Option Plan and Employee Share Incentive Scheme

     Employee Stock Option Plan

     The Company has adopted various stock option plans and has entered into stock option agreements with various key management personnel. Under these plans, key employees may purchase a specific number of shares of the Company’s common stock. Options are priced at market value in euros or US dollars on the date of grant, are generally vesting in equal parts over a period of five years and generally expire after five or ten years. Under the 2001 Stock Option Plan the Company is authorized to issue 4,000,000 shares. At December 31, 2002, options to purchase 933,000 shares have been issued under the 2001 Stock Option Plan. Under previous plans no more options to purchase shares can be issued. Under the various stock option plans a total of 2,136,269 options to purchase common stock were outstanding at December 31, 2002, expiring at various dates through 2012.

     The Company applies the intrinsic value method allowed by APB 25 in accounting for its stock option plans. Under APB 25, compensation expense resulting from awards under fixed plans is measured as the difference between the market price and the exercise price at the grant date. All fixed plan options were granted at an exercise price equal to market value at the measurement date. Accordingly, no compensation expense has been recognized in the Consolidated Statements of Operations pursuant to APB 25.

Following is a summary of changes in options outstanding:

					Weighted		Weighted					Weighted		Weighted
					average		average fair					average		average fair
		Number of			exercise		value of		Number of			exercise		value of
		options			price in US$		options in US$		options			price in €		options in €
Balance December 31, 1999			2,027,600			4.58				338,800			8.72
	Options granted		200,783			14.11		10.91		120,000			13.37		9.70
	Options cancelled		(107,799	)		3.96				(1,800	)		7.67
	Options exercised		(893,205	)		2.90				(8,400	)		7.46
Balance December 31, 2000			1,227,379			7.42				448,600			9.95
	Options granted		689,983			16.83		12.34		138,500			15.46		10.99
	Options cancelled		(26,999	)		5.47				(10,650	)		17.95
	Options exercised		(149,150	)		5.00				(123,800	)		8.27
Balance December 31, 2001			1,741,213			11.38				452,650			11.96
	Options granted		155,500			14.81		10.58		180,000			14.34		9.63
	Options cancelled		(80,000	)		10.59				(13,082	)		20.72
	Options exercised		(286,093	)		6.86				(13,919	)		9.69
Balance December 31, 2002			1,530,620			12.61				605,649			12.53

F-21

     Had compensation cost been determined consistent with SFAS No. 123, “Accounting for Stock-Based Compensation” pro forma net earnings (loss), basic and diluted earnings (loss) per share would have been as follows:

		Year ended December 31,
		2000			2001			2002
Expected life (years)			3 - 10			3 - 10			3 - 10
Risk free interest rate			5.0	%		5.0	%		5.0	%
Dividend yield			—			—			—
Volatility			81.0	%		88.0	%		80.0	%
Assumed forfeitures			—			—			—
Net earnings (loss):
	As reported		94,272			6,098			(29,862	)
	Total stock-based compensation expense determined under fair value based method, net of related tax effect		(1,351	)		(3,990	)		(4,648	)
	Pro forma		92,921			2,108			(34,510	)
Basic earnings (loss) per share:
	As reported		2.01			0.12			(0.61	)
	Pro forma		1.98			0.04			(0.70	)
Diluted earnings (loss) per share:
	As reported		1.94			0.12			(0.61	)
	Pro forma		1.90			0.04			(0.70	)

     The average remaining contractual life of the outstanding options granted in 2002 is 6.43 years at December 31, 2002. The number of options exercisable at December 31, 2000 and 2001 were 773,471 and 1,011,441 respectively. At December 31, 2002 options outstanding and options exercisable classified by range of exercise price were:

Options outstanding					Options exercisable
	Number		Weighted average				Number
Range of exercise	outstanding at		remaining		Weighted average		exercisable at		Weighted average
prices	December 31, 2002		contractual life		exercise price		December 31, 2002		exercise price
In US$			In years		In US$				In US$
0.25 - 3.00		48,000		0.92		0.50		48,000		0.50
3.00 - 6.00		242,338		4.66		5.19		238,338		5.21
6.00 - 9.00		278,000		3.69		8.05		270,800		8.07
9.00 - 14.00		149,000		8.34		11.13		41,000		10.39
14.00 - 20.00		747,282		3.86		16.77		225,696		16.29
20.00 - 30.00		66,000		8.79		24.18		6,000		25.83
0.25 - 30.00		1,530,620		4.51		12.61		829,834		9.29
In €			In years		In €				In €
6.00 - 10.00		165,900		2.08		7.53		114,900		7.57
10.00 - 15.00		317,000		3.68		12.67		82,800		12.48
15.00 - 20.00		117,749		3.91		18.60		37,933		18.87
20.00 - 30.00		5,000		2.50		26.45		2,000		26.45
6.00 - 30.00		605,649		3.28		12.53		237,633		11.24

F-22

     Employee Share Incentive Scheme ASMPT

     In 1989, the shareholders of ASMPT approved a plan to issue up to 5.0 percent of the total issued shares of ASMPT to directors and employees. This plan has been extended in 1999 for a term up to March 23, 2012. The directors annually may approve an amount of supplemental compensation to the designated directors and officers, which will be used to issue or purchase ASMPT’s common shares for the designees at current market value. In 2002, 1,764,000 common shares of ASMPT were issued, for cash at par value of HK$ 0.10 per share, pursuant to the Employee Share Incentive Scheme of ASMPT. In 2001 and 2000, respectively 1,782,500 and 2,828,000 ASMPT shares were issued to certain directors and employees under the plan. The effect of this transaction on ASMI was a dilution of its ownership interest in ASMPT of 0.25% in 2002, 0.26% in 2001, and 0.41% in 2000. The shares issued under the plan in 2002 have diluted ASMI’s ownership in ASMPT to 54.11% as of December 31, 2002. In December 2002 the management of ASMPT has determined that 1,800,000 common shares will be allocated to employees for their services in the year 2002, which shares will be issued in the year 2003. Total compensation expense related to the Employee Share Incentive Scheme of ASMPT of respectively € 2,773 in 2000, € 3,995 in 2001, and € 3,417 in 2002 were charged to the Statement of Operations. The dilution in ownership has resulted in a gain on the investment in ASMPT of € 1,822 in 2000, € 915 in 2001, and € 1,281 in 2002, which gain has been separately included in the Statement of Operations. Due to the participation exemption in the Netherlands no deferred income taxes have been provided for these gains.

NOTE M     Pension Plans

     The Company has retirement plans covering substantially all employees. The principal plans are defined contribution plans, except that of the Company’s Japanese operations, which is a defined benefit pension plan. The Company has no major continuing obligations other than the payment of annual contributions. Aggregate retirement plan contributions including those for the Japanese operations were € 5,756 in 2000, € 7,215 in 2001 and € 7,924 in 2002.

     Employees of the Japanese operations terminating their employment are generally entitled to a lump-sum severance payment or to pension plan benefits based on years of service and certain other factors. Plan assets are held by a life insurance company. There are no unrecognized prior service costs.

     The Company does not provide any post retirement benefits other than pensions.

F-23

NOTE N     Commitments and Contingencies

Capital leases included in property, plant and equipment are as follows:

	December 31,
	2001			2002
Machinery and equipment		2,255			1,828
Furniture and fixtures		426			230
		2,681			2,058
Less accumulated depreciation		(904	)		(1,149	)
		1,777			909

The Company leases certain office and plant facilities and equipment under various operating lease arrangements. Original non-cancelable lease terms typically are between 1 and 15 years. At December 31, 2002 minimum rental commitments under capital leases and operating leases having initial or remaining non-cancelable terms in excess of one year are as follows:

	Capital leases			Operating leases
2003		641			9,522
2004		567			6,382
2005		182			5,012
2006		3			3,712
2007		—			3,183
Thereafter		—			12,708
Total		1,393			40,519
Less amount representing interest		(81	)
Present value of net minimum lease payments		1,312

     Aggregate rental expense for operating leases in 2000 was € 9,847, in 2001 € 10,576 and in 2002 € 10,165. At December 31, 2002 the Company had entered into purchase commitments with suppliers in the amount of € 70,123 for purchases within the next 12 months. Commitments for capital expenditures at December 31, 2002 were € 3,272.

     Change of Control Transaction

     If the Company desires to effect a change of control transaction with a competitor of Applied Materials, Inc., the Company must, pursuant to a litigation settlement transaction in 1997, first offer the change of control transaction to Applied Materials, Inc., on the same terms as the Company would be willing to accept from that competitor pursuant to a bona fide arm’s-length offer by that competitor.

NOTE O     Litigation and Environmental Matters

     The Company is party to various legal proceedings generally incidental to its business and is subject to a variety of environmental and pollution control laws and regulations. As is the case with other companies in similar industries, the Company faces exposure from actual or potential claims and legal proceedings. Although the ultimate disposition of legal proceedings cannot be predicted with certainty, it is the opinion of the Company’s management that the outcome of any claim which is pending or threatened, either individually or on a combined basis, will not have a materially adverse effect on the financial position of the Company, but could materially affect the Company’s results of operations in a given year.

F-24

     In June 2001, the Company’s subsidiary, ASM America, filed a lawsuit against Genus, Inc. in the U.S. District Court for the Northern District of California alleging infringement of three patents involving sequential chemical vapor deposition (U.S. Patent No. 5,916,365), methods for growing thin films (U.S. Patent No. 6,015,590) and ASM America’s “showerhead” patent (U.S. Patent No. 4,798,165), entitled “Apparatus for Chemical Vapor Deposition Using an Axially Symmetric Gas Flow.” Genus responded by denying the allegations and bringing a counterclaim against ASM America and the Company alleging antitrust violations and infringement of U.S. Patent No. 5,294,568 involving selective etching of native oxide. Genus’ antitrust claims were stayed until after trial on the patents at issue. In August 2002, the court ruled that Genus did not infringe the ‘365 patent. In January 2003, the court ruled that Genus did not infringe the ‘590 patent. ASM America is considering an appeal of some elements of these rulings. The litigation is in the discovery phase and a trial date has been set for January 2004. The patents at issue are important to ASM America for the development and marketing of proprietary atomic layer deposition equipment and processes. If the court should determine that ASM America’s patents are invalid in whole or in part, ASM America’s atomic layer deposition program could be materially adversely affected. Given the stage of the proceedings, it is not possible to predict the outcome of the claims and counterclaims at this time, or the range of potential recovery or loss.

     In response to a letter by Applied Materials, Inc. that the Company’s Eagle reactors infringe various Applied Materials’ patents, the Company and ASM America filed a declaratory judgment action against Applied Materials, Inc. on August 27, 2002 in the U.S. District Court for the District of Arizona. The lawsuit seeks a declaration of non-infringement or invalidity of six Applied Materials, Inc. patents relating to cleaning of reaction chambers and deposition of silicon nitride. Applied Materials, Inc. responded on December 16, 2002 by denying the allegations and counterclaiming for a declaratory judgment of infringement and validity of two of the patents related to cleaning of reaction chambers and for damages, a preliminary or permanent injunction and costs. Applied Materials, Inc. also moved to dismiss the complaint with respect to four of the patents and for a more definitive statement with respect to two of ASMI’s causes of action. No trial date has been set. Given the stage of the proceedings, it is not possible to predict the outcome of the claims and counterclaims at this time, or the range of potential recovery or loss.

NOTE P     Financial Instruments and Risk Management

     Derivatives

     The Company uses forward exchange contracts to hedge certain operational cash flow exposures resulting from changes in foreign currency exchange rates to occur within the next twelve months. The Company enters into these foreign exchange contracts to hedge anticipated sales or purchase transactions in the normal course of business for which we have a firm commitment from a customer or to a supplier. The terms of these contracts are generally consistent with the timing of the transactions being hedged. The Company does not use such instruments for trading or speculative purposes. The Company records changes in the fair value of the forward exchange contracts designated as a cash flow hedge of forecasted transactions in accumulated other comprehensive income, until the forecasted transaction occurs. The gain or loss on the related cash flow hedge will then be reclassified from accumulated other comprehensive income to net sales or cost of sales in the Statement of Operations. If the underlying transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss is immediately recognized in earnings under net interest and other financial income (expenses) in the Statement of Operations.

F-25

     Furthermore, the Company continue to manage the currency exposure of certain receivables and payables using derivative instruments, such as forward exchange contracts and currency swaps, and nonderivative instruments, such as debt borrowings in foreign currencies. The gains or losses on these instruments provide an offset to the gains or losses recorded on the foreign currency receivables and payables. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under net interest and other financial income (expenses) on the Statement of Operations.

     The Company estimates that € 1,337 of unrealized gains included in accumulated other comprehensive income as of December 31, 2002 will be reclassified to net earnings within the next 12 months upon completion of the underlying transaction. Unrealized losses at December 31, 2001 of € 451 were reclassified to earnings in 2002. Hedge ineffectiveness was insignificant for the years ended December 31, 2001 and December 31, 2002.

The outstanding currency forward exchange contracts are as follows:

			Currency									Difference			Included in
			and notional			Forward						between and			accumulated other
			amount			contract						forward value			comprehensive
			(in thousands)			value			Fair value			and fair value			income (loss)
December 31, 2001:
Cash flow hedges:
	Purchase	US$		1,400			1,580			1,600			20			20
	Sale	US$		(24,055	)		(26,925	)		(27,396	)		(471	)		(471	)
Fair value hedges:
	Purchase	US$		10,728			11,769			12,230			461			—
	Sale	US$		(12,171	)		(13,530	)		(13,844	)		(314	)		—
December 31, 2002:
Cash flow hedges:
	Purchase	US$		900			882			858			(24	)		(24	)
	Sale	US$		(26,334	)		(26,388	)		(25,174	)		1,214			1,361
Fair value hedges:
	Purchase	US$		4,500			4,323			4,292			(31	)		—
	Sale	US$		(12,349	)		(12,656	)		(11,800	)		856			—

     Long-term Debt and Subordinated Debt

     At December 31, 2002 the Company had convertible subordinated debt borrowings outstanding of € 109,665 at a fixed interest rate, maturing in November 2005, € 10,844 in long-term debt at fixed interest rates and € 26,548 in other borrowings with variable short-term interest rates. The Company is exposed to interest rate risk primarily through its borrowing activities. The Company does not enter into financial instrument transactions for trading or speculative purposes or to manage interest rate exposure.

F-26

The fair value amounts of our long-term debt and convertible subordinated debt are as follows:

	2001				2002
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
Long-term debt, including current portion		13,899		13,708		10,844		10,955
Convertible subordinated debt		130,728		137,608		109,665		105,003

     Methods and Assumptions Used in Estimating Fair Value Disclosure for Financial Instruments

     For cash and cash equivalents, marketable securities, accounts receivable, notes payable to banks, accounts payable and accrued expenses, the carrying amounts approximate fair value due to their short maturities.

     For long-term debt, the estimated fair values of the Company’s long-term debt are based on current interest rates available to the Company for debt instruments with similar terms and remaining maturities.

     For forward exchange contracts market values based on external quotes from banks have been used to determine the fair value.

     Credit Risk

     Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted and from movements in interest rates and foreign exchange rates. The Company does not anticipate nonperformance by counterparties. The Company generally does not require collateral or other security to support financial instruments with credit risk. Concentrations of credit risk (whether on or off-balance sheet) that arise from financial instruments 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. Financial instruments on the Balance Sheet that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains a policy providing for the diversification of cash and cash equivalent investments and places its investments in high quality financial institutions to limit the amount of credit risk exposure. The Company derives a significant percentage of its revenue from a small number of large customers. Our largest customer accounted for approximately 13.9% of our net sales in 2002 and our ten largest customers accounted for approximately 39.6% of our net sales in 2002. Sales to these large customers also may fluctuate significantly from time to time depending on the timing and level of purchases from the Company. Significant orders from such customers may expose the Company to a concentration of credit risk and difficulties in collecting amounts due, which could harm the Company’s financial results. At December 31, 2002 one customer accounted for 18.3% of the outstanding balance in accounts receivable.

NOTE Q     Research and Development

     The Company’s Netherlands, Finnish and Singapore operations receive research and development grants and credits from various governmental sources. The amount of research and development credits

F-27

offset against research and development expenses amounted to € 2,167, € 5,609 and € 2,992 in 2000, 2001 and 2002, respectively.

     Some of the research and development grants received in the Netherlands are contingently repayable to the extent the Company recognizes sales of products to which the credit is related. The Company does not recognize a liability on its balance sheet in respect of these credits until it recognizes sales of products to which the credit relates, and is then charged to cost of sales when such sale is recorded. These repayments vary and range from 1.0% to 4.0% of the realized sales, depending on the products sold. The actual and contingent repayments accrue at interest rates ranging from 5.0% to 8.0% per annum. The contingent liability related to possible future repayments was € 10,124 at December 31, 2001 and € 10,981 at December 31, 2002. In 2000, 2001 and 2002 the Company made TOK repayments in the amount of € 1,505, € 2,883 and € 23, respectively.

NOTE R     Net Interest and Other Financial Income (Expenses)

Net interest and other financial income (expenses) consists of the following:

	Year ended December 31,
	2000			2001			2002
Interest income		4,699			3,690			1,336
Interest expenses		(8,236	)		(5,031	)		(9,627	)
Foreign currency transaction gains		1,942			357			(2,125	)
Net interest and other financial income (expenses)		(1,595	)		(984	)		(10,416	)

NOTE S     Income Taxes

The components of earnings (loss) before income taxes, minority interest and cumulative effect of change in accounting principle consist of:

	Year ended December 31,
	2000			2001		2002
The Netherlands		(2,582	)		3,958		(24,223	)
Other countries		192,759			19,309		7,805
		190,177			23,267		(16,418	)

The provision for income taxes consists of:

		Year ended December 31,
		2000			2001			2002
Current:
	The Netherlands		—			—			—
	Other countries		(25,809	)		(3,760	)		(4,445	)
			(25,809	)		(3,760	)		(4,445	)
Deferred:
	The Netherlands		—			—			—
	Other countries		2,979			(951	)		5,610
			2,979			(951	)		5,610
Provision for income taxes			(22,830	)		(4,711	)		1,165

     The provisions for income taxes as shown in the Consolidated Statements of Operations differ from the amounts computed by applying the Netherlands statutory income tax rates to earnings before

F-28

taxes. A reconciliation of the provisions for income taxes and the amounts that would be computed using the statutory Netherlands income tax rates is set forth as follows:

	Year ended December 31,
	2000			2001			2002
Earnings before income taxes, minority interest and cumulative effect of change in accounting principle		190,177			23,267			(16,418	)
Netherlands statutory tax rate		35.0	%		35.0	%		34.5	%
Income tax provision at statutory rate		(66,562	)		(8,143	)		5,664
Non-deductible expenses		(1,211	)		(1,391	)		(876	)
Foreign taxes at a rate other than the Netherlands statutory rate		21,313			4,199			6,990
Valuation allowance		98			(2,923	)		(14,662	)
Non-taxable income		24,875			4,214			4,865
Other		(1,343	)		(667	)		(816	)
Provision for income taxes		(22,830	)		(4,711	)		1,165

     Non-taxable income relates primarily to our manufacturing operation in Singapore where income is non-taxable under a tax incentive scheme granted by the Singapore tax authority. The original tax exemption applied to income for a period of 10 years ending on December 31, 2001. In 2001, the Singapore operation has obtained tax incentives covering certain new products for a term of ten years as from January 1, 2002.

Deferred income taxes consist of the following:

		December 31,
		2001			2002
Deferred tax assets:
	Reserves and allowances		1,504			1,458
	Net operating loss carryforwards		95,487			100,215
	Other		703			239
Gross deferred tax assets			97,694			101,912
Less: valuation allowance			(90,596	)		(91,532	)
Net deferred tax assets			7,098			10,380
Deferred tax liabilities:
	Depreciation		(5,097	)		(3,109	)
	Research and development credits		(3,603	)		(3,692	)
	Other		(375	)		(5	)
Deferred tax liabilities			(9,075	)		(6,806	)
Net deferred income taxes			(1,977	)		3,574

Deferred tax assets (liabilities) are classified in the balance sheet as follows:

	December 31,
	2001			2002
Deferred tax assets - current		—			1,843
Deferred tax assets - non-current		—			2,781
Deferred tax liabilities - non-current		(1,977	)		(1,050	)
		(1,977	)		3,574

F-29

     Based on tax filings, ASMI and its individual subsidiaries have net operating losses available at December 31, 2002, of € 296,555 for tax return purposes to reduce future income taxes, mainly in Europe and the United States. The Company believes that realization of its net deferred tax assets is dependent on the ability of the Company to generate taxable income in the future. Given the volatile nature of the semiconductor equipment industry, past experience, and the tax jurisdictions where the Company has net operating loss carryforwards, the Company believes that there is currently insufficient evidence to substantiate recognition of substantially all net deferred tax assets with respect to net operating loss carryforwards. Accordingly, a valuation allowance of € 90,596 in 2001 and € 91,532 in 2002 has been recorded.

The amounts and expiration dates of net operating loss carryforwards for tax purposes are as follows:

Expiration year	December 31, 2002
2003		5,186
2004		7,820
2005		538
2007		10,625
2009		1,465
2017		70,519
2018		7,051
2019		1,333
2020		1,922
2021		19,943
Unlimited		170,153
Net operating loss carryforwards		296,555

     The Company has not provided for deferred foreign withholding taxes, if any, on undistributed earnings of its foreign subsidiaries. At December 31, 2002 undistributed earnings of subsidiaries, subject to withholding taxes, were approximately € 15,314. These earnings could become subject to foreign withholding taxes if they were remitted as dividends or if the Company should sell its interest in the subsidiaries. However, the Company believes that Netherlands tax credits would largely eliminate any foreign withholding tax that might otherwise be due.

NOTE T Disclosures about Segments and Related Information

     The Company organizes its activities in two operating segments, Front-end and Back-end.

     The Front-end segment manufactures and sells equipment used in wafer processing, encompassing the fabrication steps in which silicon wafers are layered with semiconductor devices. The segment is a product driven organizational unit comprised of manufacturing, service, and sales operations in Europe, the United States, Japan and Southeast Asia.

     The Back-end segment manufactures and sells equipment and materials used in assembly and packaging, encompassing the processes in which silicon wafers are separated into individual circuits and subsequently assembled, packaged and tested. The segment is organized in ASMPT, in which the Company holds a majority of 54.11% interest, whilst the remaining shares are listed on the Stock Exchange of Hong Kong. The segment’s main operations are located in Singapore, Hong Kong, the People’s Republic of China and Malaysia.

F-30

	Front-end			Back-end			Total
Year ended December 31, 2000
Net sales to unaffiliated customers		379,283			555,929			935,212
Gross profit		152,829			264,356			417,185
Earnings from operations		34,520			157,252			191,772
Net interest and other financial income (expenses)		(5,560	)		3,965			(1,595	)
Income taxes		(12,176	)		(10,654	)		(22,830	)
Gain on dilution of investment in subsidiary		1,822			—			1,822
Minority interest		—			(71,107	)		(71,107	)
Net earnings before cumulative effect of change in accounting principle		18,606			79,456			98,062
Capital expenditures		23,348			48,018			71,366
Depreciation and amortization		17,850			34,373			52,223
Capitalized goodwill		4,469			64,044			68,513
Other identifiable assets		308,339			401,088			709,427
Total debt		76,276			4			76,280
Year ended December 31, 2001
Net sales to unaffiliated customers		336,625			224,439			561,064
Gross profit		131,788			91,533			223,321
Earnings (loss) from operations		(3,771	)		28,022			24,251
Net interest and other financial income (expenses)		(4,983	)		3,999			(984	)
Income taxes		(2,156	)		(2,555	)		(4,711	)
Gain on dilution of investment in subsidiary		915			—			915
Minority interest		—			(13,373	)		(13,373	)
Net earnings (loss) before cumulative effect of change in accounting principle		(9,995	)		16,093			6,098
Capital expenditures		49,691			21,872			71,563
Depreciation and amortization		20,894			21,869			42,763
Capitalized goodwill		3,888			60,418			64,306
Other identifiable assets		376,859			315,900			692,759
Total debt		156,707			4,151			160,858
Year ended December 31, 2002
Net sales to unaffiliated customers		266,915			251,887			518,802
Gross profit		85,819			104,906			109,725
Earnings (loss) from operations		(42,659	)		36,657			(6,002	)
Net interest and other financial income (expenses)		(10,910	)		494			(10,416	)
Income taxes		3,499			(2,334	)		1,165
Gain on dilution of investment in subsidiary		1,281			—			1,281
Minority interest		—			(15,890	)		(15,890	)
Net earnings (loss)		(48,789	)		18,927			(29,862	)
Capital expenditures		19,706			13,540			33,246
Depreciation and amortization		18,047			22,044			40,091
Capitalized goodwill		3,888			50,641			54,529
Other identifiable assets		339,703			259,609			599,312
Total debt		146,631			426			147,057

F-31

     There are no inter-segment transactions, other than charges for management services, which are based on actual cost. The accounting policies used to measure the net earnings and total assets in each segment are identical to 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.

Segmentation of the business by geographic area, in which the Company has operating units, in sales to unaffiliated customers and long-lived assets is summarized as follows:

			United
	Europe		States		Far East		Japan		Other		Consolidated
Year ended December 31, 2000
Net sales to unaffiliated customers		91,737		126,371		554,509		162,595		—		935,212
Long-lived assets		9,988		9,821		106,715		23,657		1,987		152,168
Year ended December 31, 2001
Net sales to unaffiliated customers		123,365		120,263		221,494		95,942		—		561,064
Long-lived assets		21,512		49,782		110,763		27,408		1,894		211,359
Year ended December 31, 2002
Net sales to unaffiliated customers		65,611		148,732		249,615		54,844		—		518,802
Long-lived assets		19,475		46,790		86,934		25,863		1,717		180,779

     Long-lived assets includes the Company’s assets in property, plant and equipment and the Company’s strategic minority interest in NuTool, Inc.

     In 2002 one customer accounted for 13.9% of the total net sales. In 2001 one customer accounted for 7.2% of total net sales. In 2000 one customer accounted for 14.2% of total net sales.

F-32

NOTE U Selected Operating Expenses and Additional Information

Personnel expenses for employees were as follows:

	Year ended December 31,
	2000		2001		2002
Wages, salaries and social charges		178,427		151,902		150,477
Pensions		5,756		7,215		7,924
		184,183		159,117		158,401

The average number of employees, exclusive of temporary workers, by geographic area during the year was as follows:

	Year ended December 31,
	2000		2001		2002
The Netherlands		284		355		324
Other European countries		103		146		123
United States of America		279		343		378
Far East		5,622		5,558		5,042
Japan		203		223		238
		6,491		6,625		6,105

NOTE V Earnings (Loss) per Share

The following represents a reconciliation of net earnings (loss) and weighted average number of shares outstanding (in thousands) for purposes of calculating basic and diluted net earnings (loss) per share:

		Year ended December 31,
		2000		2001		2002
Net earnings (loss) used for purpose of computing basic earnings per share			94,272		6,098		(29,862	)
After-tax equivalent of interest expense on convertible notes and exercisable warrants			430		—		—
Net earnings (loss) used for purposes of computing diluted net earnings (loss) per share			94,702		6,098		(29,862	)
Basic weighted average number of shares outstanding at the end of period used for purpose of computing basic earnings per share			46,810		48,944		49,170
Dilutive effect of stock options			1,112		922		—
Dilutive effect of convertible notes and exercisable warrants			781		92		—
Dilutive weighted average number of shares outstanding			48,703		49,958		49,170
Net earnings (loss) per share:
	Basic		2.01		0.12		(0.61	)
	Diluted		1.94		0.12		(0.61	)

     No adjustments have been reflected in the diluted weighted average number of shares and net loss for the year ended December 31, 2002 due to the loss reported for the year. For the year ended December 31, 2002, the effect of 957 stock options, 6,101 conversion rights, and 112 exercisable warrants to acquire common stock were anti-dilutive.

F-33

NOTE W Related Party Transactions

     In December 1999, the Company acquired 24.0% of the outstanding equity of NanoPhotonics AG, a German supplier of precision metrology equipment, for € 407, and our Chief Executive Officer also purchased a 44.5% interest in NanoPhotonics AG. The Company has a five-year option to purchase the 44.5% interest from our Chief Executive Officer at the same price he paid for his interest in the initial transaction. At December 31, 2001 and December 31, 2002, the Company has provided NanoPhotonics AG with additional financing of € 1,176 and € 2,943, respectively. In 2001 and 2002 the Company purchased equipment from NanoPhotonics AG in the amount of € 700 and € 209, respectively.

     In December 1997, the Company loaned its Chief Operating Officer Front-end operations € 191 (US$ 0.2 million) at an average interest rate for 2002 of 2.6%. This interest-bearing loan is outstanding at December 31, 2002 and is repayable upon the exercise of stock options granted to this officer or termination of his employment.

     In March 2000, the Company made an interest-bearing loan to its Chief Executive Officer in connection with the exercise of stock options at an average interest rate for 2002 of 4.9%. The loan amounting to € 2,173 is outstanding at December 31, 2002 and is secured by the shares received in the stock option exercise. The Company has custody of the shares until the loan is repaid.

     In October 2001, the Company entered into a strategic alliance with and made a 15.4% equity investment of € 20,278 in NuTool, Inc., a privately held semiconductor technology company located in Milpitas, California. The purchase price of the investment was determined by reference to prices paid by other recent strategic investors. NuTool, Inc. provides innovative copper deposition technologies to the semiconductor industry. Its patented electrochemical mechanical deposition technology offers new process solutions for copper deposition and planarization, providing significant savings in integrated circuit manufacturing and enabling new integrated circuit designs and new process technologies. The strategic alliance with NuTool, Inc. provides us with more competitive solutions to address the industry’s transition to copper metallization. The Company has a seat on the Board of NuTool, Inc. In 2002 the Company sold equipment in the amount of € 729.

     The Chairman of the Supervisory Board, Mr. van den Hoek is a partner in the European law firm of Stibbe. Another partner at Stibbe serves as the Company’s general legal counsel. Mr. van den Hoek has been with Stibbe since 1965. Mr. van den Hoek also serves on the boards of directors of various European companies.

F-34

Exhibit Index (*)

Exhibit			Included
Number	Description	Incorporated by Reference to:	Herein:
1.1	English translation of ASM International N.V.’s Compiled Articles of Association, as amended	Exhibit 3.1 to Registrant’s 6-K filed on November 6, 2001
4.1	1994 Stock Option Plan	Exhibit 99.1 to the Registrant’s S-8 filed October 25, 1999
4.2	Debenture Purchase Agreement Part 1	Exhibit 4.2 to the Registrant’s Form F-3 filed on December 13, 1999
4.3	Debenture Purchase Agreement Part 2	Exhibit 4.2 to the Registrant’s Form F-3 filed on December 13, 1999
4.4	Zero Coupon Debenture	Exhibit 4.3 to the Registrant’s Form F-3 filed on December 13, 1999
4.5	Common Stock Purchase Warrant	Exhibit 4.4 to the Registrant’s Form F-3 filed on December 13, 1999
4.6	Supplemental Common Stock Purchase Warrant	Exhibit 4.5 to the Registrant’s Form F-3 filed on December 13, 1999

Exhibit			Included
Number	Description	Incorporated by Reference to:	Herein:
4.7	Registration Rights Agreement	Exhibit 4.6 to the Registrant’s Form F-3 filed on December 13, 1999
4.8	Purchase Agreement dated November 14, 2001 between ASM International N.V. and CIBC World Markets Corp. for purchase of US$ 100 million of 5% Convertible Subordinated Notes	Exhibit 4.16 to the Registrant’s Form 20-F/A filed on May 10, 2002
4.9	Indenture Agreement dated November 19, 2001 between ASMI International N.V. and Citibank, N.A.	Exhibit 4.17 to the Registrant’s Form 20-F/A filed on May 10, 2002
4.10	2001 Stock Option Plan	Exhibit 99.1 to the Registrant’s Form S-8 filed on April 30, 2002
4.11	Equity Line Financing Agreement between ASM International N.V. and Canadian Imperial Holding, Inc. (“CIHI”) dated July 2, 2002	Exhibit 4.18 to the Registrant’s Form F-3 filed on July 3, 2002
4.12	Registration Rights Agreement between ASM International N.V. and CIHI dated July 2, 2002	Exhibit 4.19 to the Registrant’s Form F-3 filed on July 3, 2002
4.13	English translation of Robert L. de Bakker’s Employment Agreement		X
4.14	Trust Deed and Rules of The ASM Pacific Technology Employee Share Incentive Scheme, dated March 23, 1990		X
4.15	Deed of Adherence Relating to Participation in the Employee Share Incentive Scheme of ASM Pacific Technology Limited, dated April 12, 1999		X
4.16	Supplemental Deed Relating to the Employee Share Incentive Scheme of ASM Pacific Technology Limited		X
8.1	Subsidiaries		X
10.1	Certificate of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002		X
10.2	Certificate of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the		X

- 79 -

Exhibit			Included
Number	Description	Incorporated by Reference to:	Herein:
	Sarbanes-Oxley Act of 2002
10.3	Auditor’s Consent		X

* Pursuant to Item 19.2(b)(1) of Form 20-F, the Registrant has omitted certain agreements with respect to long-term debt not exceeding 10% of consolidated total assets. The Registrant agrees to furnish a copy of any such agreements to the Securities Exchange Commission upon request.

- 80 -

EX-4.13 3 p67631exv4w13.htm EX-4.13

Exhibit 4.13

Unofficial Translation

R.L. de Bakker
Oranjelaan 7
2243 HG Wassenaar

Bilthoven, December 19, 2000 B0033adp/tv

Dear Mr. de Bakker

In continuation of our recent conversations I do herewith confirm the agreement we reached concerning the start of your employment with ASM International N.V. as per January 1, 2001 in the capacity of Chief Financial Officer.

The scope and responsibilities of this position have been discussed with you and are as such known to you. During the Annual General Meeting of Shareholders of May 23 of this year it will be proposed to appoint you as Member of the Board of Management of ASMI.

The following conditions will apply:

Salary
Your fixed salary will be NLG 450.000 (Translators Note : Equals — Euro 204.300)

Bonus plan
An annually determined bonus of maximum 30% of the fixed salary will be applicable.

Stock Option Plan
At the start of your employment you are eligible for 35.000 options under the rules of the Plan and according to the enclosed option letter. These options can be exercised over a 5 year period. The exercise price will be the price of our shares on the day that you sign the letter. After receipt of your signed contract we will confirm the contract.

General requlations
As discussed the general ASM regulations regarding insurances and pensions will be applicable to you.
Enclosed you will find an overview of our general employment conditions.

Unless otherwise agreed a mutual notice period of 6 months will be applicable.

Enclosed you will also find a draft press release concerning the start of your employment. Your possible comments will be appreciated.

The above is a short confirmation of our conversations.
We are convinced that you can provide an important contribution to the further financial strengthening of our company in the coming years and wish you much success.

With kind regards

ASM INTERNATIONAL N.V.	Signed for Agreement
/s/ Arthur H. del Prado	/s/ R.L. de Bakker

EX-4.14 4 p67631exv4w14.txt EX-4.14 EXHIBIT 4.14 SH3347 Dated: 23rd March 1990 (1) ASM PACIFIC TECHNOLOGY LIMITED (2) ADVANCED SEMICONDUCTOR MATERIALS ASIA LIMITED (3) ASM ASSEMBLY AUTOMATION LIMITED (4) ADVANCED SEMICONDUCTOR MATERIALS (OVERSEAS) LIMITED (5) ASM ASSEMBLY MATERIALS LIMITED (6) A.H. DEL PRADO (7) LAM SEE PONG, PATRICK ---------------------------------------- TRUST DEED AND RULES of THE ASM PACIFIC TECHNOLOGY LIMITED EMPLOYEE SHARE INCENTIVE SCHEME ---------------------------------------- HERBERT SMITH 17/F Edinburgh Tower 15 Queen's Road Central Hong Kong CONTENTS

PAGE ---- 1. Definitions 1 2. Compliance with the Scheme 1 3. Group Scheme 3 4. Acquisition of Shares 4 5. Trustees' Powers of Delegation 4 6. Administration 5 7. Trustees' Protections 5 8. Appointment, Removal and Retirement of Trustees 7 9. Alterations to the Scheme 8 10. Governing Law 8 SCHEDULES 1. The Rules: 1. Definitions 9 2. Funding of the Scheme and Provisional Allocation of Funds 13 3. Acquisition of Shares 15 4. Limitations 20 5. Obligations of the Company 20 6. Notices 21 7. Disputes 22 8. Termination of Scheme 22 9. Rights in respect of the Scheme 23

10. Alterations 23 2. Supplemental Trust Deed 24 THIS DEED is made the 23rd day of March, 1990. BETWEEN: (1) ASM PACIFIC TECHNOLOGY LIMITED whose registered office is at Caledonian House, Grand Cayman, Cayman Islands, British West Indies ("the Company"); (2) ADVANCED SEMICONDUCTOR MATERIALS ASIA LIMITED, whose registered office is at 6th floor, Watson Centre, 16-22 Kung Yip Street, Kwai Chung, Hong Kong; (3) ASM ASSEMBLY AUTOMATION LIMITED, whose registered office is at 20th floor, Watson Centre aforesaid; (4) ADVANCED SEMICONDUCTOR MATERIALS ASIA LIMITED whose registered office is at 6th floor, Watson Centre aforesaid; (5) ASM ASSEMBLY MATERIALS LIMITED whose registered office is at 585-609 Castle Peak Road, 15th and 16th floors, Wo Kee Hong Building, Kwai Chung, New Territories, Hong Kong; (parties (2) to (5) above inclusive being the "Four Subsidiaries"); (6) A.H. DEL PRADO of Jan Steenlan 9,3723 BS Bilthoven, the Netherlands; and (7) LAM SEE PONG, PATRICK of Princess Terrace, 11th floor, Block A, 21 Man Fuk Road, Kowloon, Hong Kong; (parties (6) and (7) above inclusive being the "First Trustees"). WHEREAS: (A) The Company was incorporated in the Cayman Islands on 21st November 1988 as an exempted company. It has an authorized share capital of HB$50,000,000 (divided into 500,000,000 shares of HB$0.10 each) of which 360,000,000 have been issued and are fully paid up. (B) The Company and the Four Subsidiaries carry on the business of manufacturing semiconductors and machinery used to manufacture semiconductors. (C) The Company and the Four Subsidiaries wish to establish a share incentive scheme for the provision by the Company and other Participating Companies (including the Four Subsidiaries) of funds for the subscription or purchase by the Trustees of Shares. (D) The First Trustees have agreed to be Trustees of the Scheme. NOW THIS DEED WITNESSETH as follows: 1. Definitions 1.1 Words and expressions defined in the rules set out in Schedule 1 to this Deed (the "Rules") shall, unless the context otherwise requires, have the same meanings in this Deed, including the recitals hereto. 1.2 References to any statutory provisions are to those provisions as amended or re-enacted from time to time and, unless the context otherwise requires, words in the singular include the plural (and vice versa) and words importing any gender include all genders. 2. Compliance with the Scheme 2.1 Each Participating Company hereby covenants with the Trustees to pay to the Trustees, in accordance with and subject to the provisions of the Scheme, the amounts due from it in accordance with the Rules for the purpose of the subscription and purchase by the Trustees in the names of Designated Employees, of Shares, together with any other amounts required to cover any costs, charges and expenses incurred in any such purchase or subscription and any other expenses and charges incurred by the Trustees in the establishment, administration and determination of the Scheme. 2.2 Subject as hereinafter provided, the Trustees hereby covenant with each Participating Company to apply the monies received in accordance with the Rules in the subscription for and/or purchase of Shares in the names of Designated Employees and in discharge of such costs charges and expenses as are referred to in sub-clause 2.1. -2- 3. Group Scheme 3.1 The Scheme may, with the consent of the Board and if necessary after notification to the Stock Exchange, be extended to any Subsidiary not a party to this Deed by the adherence of such Subsidiary to the provisions of the Scheme by deed in the form set out in Schedule 2 to this Deed, with such amendments as the Trustees may prescribe, and thereupon the provisions of the Scheme and of this Deed shall apply to that Subsidiary as though it were a party to this Deed. 3.2 The Scheme shall cease to extend to any Participating Company, other than the Company, at any time when: 3.2.1 that Participating Company ceases to be a Subsidiary; or 3.2.2 a notice (which has not subsequently been cancelled) is served by the Company upon the Trustees that the Scheme shall cease to apply to that Participating Company. 3.3 Each Participating Company hereby covenants with the Trustees that it will provide the Trustees with such information as the Trustees may require from it for the purposes of administration and determination of the Scheme. 3.4 If and so long as the Scheme is extended to any Subsidiary, the powers and discretions exercisable by that Subsidiary in relation to the Scheme shall be exercisable by resolution of the board of directors or a duly appointed committee of such board, and a minute of any resolution thereof signed by the secretary or a director of that Subsidiary shall be sufficient authority for the Trustees to act. 4. Acquisition of Shares Shares may be acquired under the Scheme by way of subscription and/or purchase provided that any sums paid by Participating Companies to the Trustees for the acquisition of Shares shall, if not so applied, be used to cover the Trustees' incidental costs and expenses or be repaid to the relevant Participating Companies in accordance with the Rules. -3- 5. Trustees' Powers of Delegation 5.1 The Trustees in the exercise of their discretions and the performance of their duties hereunder, may employ and pay a registrar, solicitor, broker, actuary, accountant, banker or other adviser, and may appoint any such person as their agent to transact all or any business, and may act on the advice or opinion of any solicitor, broker, actuary, accountant or other professional person, and shall not be responsible for anything done or omitted or suffered in good faith in reliance on such advice or opinion. 5.2 The Trustees may execute or sign, and (if and so long as there is more than one Trustee) may authorize the execution or signature by any one of their number as their agent (and any corporate trustee may similarly authorize any of its directors, officers or employees on its behalf to effect the execution or signature) of, any deeds, documents, cheques or other instruments by the impression of any signature on behalf of, or as witness of any sealing by, the Trustees. 5.3 The Trustees may at any time cause any part of the funds held by them pursuant to the Scheme to be deposited for safekeeping with any Trustee or any other person on behalf of the Trustees and may pay any expenses in connection therewith. 6. Administration 6.1 Subject to and in accordance with the provisions of this Deed and the Rules and subject to the approval of the Company, the Trustees may make such regulations as they consider appropriate relating to the administration of the Scheme. 6.2 If and so long as there is more than one Trustee, the Trustees shall meet together as may be necessary for the administration of the Scheme, and all decisions taken by a majority for as a result of the casting vote of any chairman appointed by the Trustees present at the meeting) of the Trustees present at any meeting of the Trustees of which notice has been given to those of them who are in Hong Kong (provided at least two Trustees shall be present at every meeting) shall be as effective for all purposes as if those decisions had been unanimous decisions of all the trustees. A written resolution signed by all the -4- Trustees arrived at without any meeting shall be effective for all purposes. Nothing herein shall preclude a corporate Trustee acting on its own. 7. Trustees' Protections 7.1 The Participating Companies shall pay to or reimburse the Trustees upon demand all costs, charges and expenses reasonably incurred by them in the course of the administration and determination of the Scheme and shall keep the Trustees, their successors in title and their estates and effects fully and effectively indemnified and saved harmless from and against all actions, claims, losses, demands, proceedings, charges, expenses, costs, damages, taxes, duties and any other liabilities arising out of anything done or caused to be done by them or suffered or incurred by them in the exercise or purported exercise of the powers and discretions vested in them by this Deed or the Rules or otherwise howsoever arising out of, or in connection with, the preparation, administration, operation or termination of the Scheme (but so that no Trustee shall be indemnified or exonerated in respect of any negligence, fraud or willful default on his part) and in addition the Trustees shall have the benefit of all indemnities conferred upon trustees generally by law and by the Trustee Ordinance. 7.2 A person shall not be disqualified from acting as a Trustee or exercising any power vested in the Trustees by reason of his having any interest, whether direct or indirect, in any Participating Company or by reason of his being eligible to benefit, personally benefiting or having benefited under the Scheme and such person shall not be liable to account to any party for any profit derived from the acquisition by him of Shares under the Scheme. 7.3 Any person acting as a Trustee in the course of any profession or business carried on by him may charge and be paid such reasonable remuneration, charges or disbursements whether in connection with the Scheme or otherwise as shall from time to time be agreed between him and the Company. 7.4 Any Trustee being a banker may act as a banker to the Trustees and any Trustee being a subsidiary or an associated company of a banker may employ such banker as banker to -5- the Trustees and in neither case shall such banker or the Trustees be liable to account for any profits or advantages so obtained. 7.5 No Trustee (nor any director or officer of a body corporate or a trust corporation acting as a Trustee) shall be precluded from acquiring, holding or dealing with (on his own account) any debentures, debenture stock, shares or securities whatsoever of the Company or any Subsidiary or any other company in the shares of which the Company or any Subsidiary may be interested, nor from entering into any contract or other transaction with the Company or any Subsidiary or any such other company, nor from being interested in any such contract or transaction, nor shall he or it be in any way liable to account to the Company or any Subsidiary for any profits made, fees, commissions, shares of brokerage, discounts allowed or advantages obtained by him or it from, or in connection with, such acquisition, holding, dealing, contract or transaction whether or not in connection with his or its duties hereunder. 7.6 The Trustees shall be entitled in the absence of manifest error to rely without further enquiry on information supplied to them by the Participating Companies for the purposes of the Scheme and shall also be entitled to rely, in the absence of manifest error, on any direction, notice or document purported by any Participating Company to be given or executed by or with the authority of the Company, as having been so given or executed. 7.7 The Trustees may, but shall not be obliged, to invest any funds held by them pursuant to the Scheme pending application of such funds pursuant to the Rules. All funds so invested shall be invested in accordance with the provisions of the Trustee Ordinance and the Trustees shall incur no liability to any party in respect of any losses incurred as a result of investments authorized by this clause. 8. Appointment, Removal and Retirement of Trustees 8.1 The Company may at any time by writing under hand of a person duly authorized by a resolution of the Board: 8.1.1 appoint a new Trustee, including a corporate Trustee; and -6- 8.1.2 remove a Trustee from office (but not so as to leave in office less than two Trustees, unless a corporate Trustee), without assigning any reason therefore and such removal shall (in the absence of any other date specified in the notice) take place forthwith. Such powers of appointment and removal shall be vested in the Trustees in the event that the Company ceases to exist. 8.2 A Trustee may retire by giving to the Company written notice of his or its desire to retire and such notice shall take effect at the expiry of three months (or such other period as may be agreed with the Company) from the date of such notice. The Trustee so retiring shall not be obliged to give any reason for, and shall not be responsible for any costs occasioned by, such retirement but shall execute all such documents and do all such things as may be necessary to give proper effect to such retirement. 9. Alterations to the Scheme The Directors may at any time, with the concurrence of the Trustees and (for so long as the Shares remain listed on the Stock Exchange) the Stock Exchange, by deed supplemental hereto alter any of the provisions of this Deed in such manner as may be thought fit, and the provisions of any such supplemental deed shall be binding on all Participating Companies and Designated Employees provided that no such purported alteration shall be effective until (if it involves directly or indirectly some alteration to the Rules for which a resolution of the Company in general meeting is required under the Rules) it shall have been so approved by a resolution passed by the members of the Company in general meeting. 10. Governing Law This Deed shall be governed by and construed in accordance with the laws of Hong Kong. IN WITNESS whereof these presents have been entered into the day and year first above written. -7- SCHEDULE 1 THE RULES OF THE ASM PACIFIC TECHNOLOGY LIMITED EMPLOYEE PROFIT SHARING SCHEME 1. Definitions 1.1 In these Rules, the following words and expressions shall, where the context so admits, bear the meanings set forth below: "Allocation Date" a date upon which funds are allocated to Designated Employees pursuant to Rule 2.1.3; "Auditors" the auditors of the Company for the time being; "the Board" the board of directors for the time being of the Company, or any duly authorized committee thereof; "business day" a day, other than Saturday, on which banks are customarily open for business in Hong Kong; "the Company" ASM Pacific Technology Limited; "Continuous Employment" the meaning given to that expression by the first schedule to the Employment Ordinance, provided that any period of absence due to pregnancy or confinement shall be taken to be part of an employee's period of Continuous Employment with any one or more Participating Companies; "the Deed" the Trust Deed as amended from time to time constituting (together with these Rules) the Scheme; "Designated Employee" means an Eligible Employee designated by the Board pursuant to Rule 2.1.3 as a person for whose benefit funds paid to the Trustees pursuant to the Scheme shall be held; -8- "Eligible Employee" any individual who on any particular Allocation Date; (a) is an executive or non-executive director or an employee of a Participating Company; and (b) in the case of a director who is not an employee, has held that office with that or any one or more of the Participating Companies for not less than one year (or such lesser period as the Board may specify in accordance with the Scheme), or, in the case of an employee, has had not less than one year's Continuous Employment (or such lesser period as the Board may specify in accordance with the Scheme) with that or any one or more of the Participating Companies; "Group" the group of companies comprising the Company and the Relevant Subsidiaries; "Participating Company" subject to clause 3.2 of the Deed, each of the Company and the Relevant Subsidiaries; "Payment Date" in respect of each Qualification Period, the business day specified by the Trustees by notice pursuant to Rule 2.2 as the day by which a Participating Company is required to have made payment to the Trustees for the benefit of those persons who were Eligible Employees of that Participating Company on the Allocation Date with which such Qualification Period began and who on that date became Designated Employees pursuant to Rule 2.1.3; "Public" all holders of Shares other than: (a) the directors of the Company; -9- (b) substantial shareholders of the Company; (c) the wife or husband of a director or substantial shareholder of the Company; (d) any son, daughter, step son or step daughter under the age of 21 years of a director or substantial shareholder of the Company, or of the wife or husband of a director or substantial shareholder of the Company; (e) the trustees of any trust, acting in their capacity as such trustees, of which any person mentioned in paragraphs (a) to (d) of this definition, is a beneficiary or, in the case of a discretionary trust, is a discretionary object; and (f) any company of which a director or substantial shareholder of the Company is a substantial shareholder and the holding company or subsidiary of the company of which a director or substantial shareholder of the Company is a substantial shareholder; "Qualification Period" in respect of all persons who are Eligible Employees on any Allocation Date and who on that date have become Designated Employees pursuant to Rule 2.1.3, a period of not less than one year or such period as may from time to time be substituted therefor by the Board in accordance with the Scheme or such period as may be substituted therefor by the operation of Rule 3.2; "Relevant Subsidiaries" Advanced Semiconductor Materials Asia Limited, ASM Assembly Automation Limited, ASM Assembly Materials Limited, Advanced Semiconductor Materials -10- (Overseas) Limited and any other Subsidiary which may hereafter execute a deed of adherence in the form set out in Schedule 2 to the Deed (with such modifications, if any, as may be agreed between the Company and the Trustees); "the Scheme" the ASM Pacific Technology Limited Employee Share Incentive Scheme (as constituted by the Deed and these Rules) in its present form or as from time to time amended in accordance with the provisions hereof; "Share" a fully paid share of HK$0.10 in the capital of the Company or such other description and denomination of share in the capital of the Company as represents such share following any reorganization of the capital of the Company; "Stock Exchange" The Stock Exchange of Hong Kong Limited; "Subsidiary" a subsidiary (as defined in section 2 of the Companies Ordinance) of the Company; "substantial shareholder" in relation to a company means a person entitled to exercise, or control the exercise, of 10 per cent or more of the voting power at any general meeting of the said company; "Trustees" the trustee or trustees of the Scheme from time to time and for the time being; "year" a period of one year ending on the 31st December or such other period ending on such other date as the Board may from time to time determine, being in either case the date of which the audited (consolidated) accounts of the Company and the Group are made up. -11- 1.2 Reference to any statutory provisions are to those provisions as amended or re-enacted from time to time and, unless the context otherwise requires, words in the singular include the plural (and vice versa) and words importing any gender include all genders. 2. Funding of the Scheme and Provisional Allocation of Funds 2.1 Within 40 days of the Company announcing, during a year in respect of which the Board shall have resolved that the Scheme shall operate, its final results in respect of the previous year, the Board shall determine: 2.1.1 what percentage of the consolidated profits (before tax and extraordinary items) of the Group in respect of the said previous year shall be paid to the Trustees to be held by them upon the terms of the Scheme; 2.1.2 the aggregate amount of the funds to be paid to the Trustees pursuant to Rule 2.1.1 to be allocated to Designated Employees of each Participating Company and the consequent payment which each Participating Company must make to the Trustees; and 2.1.3 the Eligible Employees for whose benefit such funds shall be held, and the amount to be allocated to each such Designated Employee. 2.2 Immediately following determination of the matters set out in Rule 2.1, the Company shall notify: 2.2.1 each Participating Company in writing of the Allocation Date, the length of the Qualification Period beginning on that date and the aggregate amount of funds allocated to Designated Employees of each Participating Company and shall request each Participating Company to pay the amount allocated to its Designated Employees to the Trustees no later than the fifth business day following the date of such notification; 2.2.2 each Designated Employee to whom funds have been allocated pursuant to Rule 2.1.3, either by sending to him, or by making available to him at his place of work, a letter of notification, setting out the fact that funds have been so allocated, -12- the amount of those funds, the terms upon which they are to be held by the Trustees, the Allocation Date, the length of the Qualification Period applicable to him and any other matters which the Company deems necessary or desirable; and 2.2.3 the Trustees of the determinations of the Board pursuant to Rules 2.1.2 and 2.1.3. 2.3 Each Participating Company shall on the due date pay to the Trustees in cash the amount required to be paid by it pursuant to Rule 2.2.1. 2.4 All funds at any time paid to the Trustees by Participating Companies pursuant to Rule 2.3 shall be held upon trust and applied by the Trustees in accordance with the provisions of the Deed and these Rules for the benefit of Designated Employees in accordance with their respective interests therein. 2.5 The Trustees shall at all times maintain accounts and records which clearly identify: (a) every payment of funds to the Trustees by a Participating Company pursuant to Rule 2.2.1; (b) the Allocation Date and Qualification Period referable to each such payment of funds; (c) the Designated Employees for whose benefit each such payment has been made and the amount of such payment allocated to each of them; and (d) the date(s) upon which each such payment is applied in the subscription and/or purchase of Shares pursuant to the Scheme. so that each such payment shall be treated as a discrete sub-fund of the monies for the time being held on trust by the Trustees pursuant to the Scheme and the amount thereof, and the identities and interests of the Designated Employees entitled thereto, are at all times capable of being readily ascertained. -13- 3. Acquisition of Shares 3.1 Subject to the provisions of Rules 3.2 and 3.9 and 4, as soon as practicable following the expiry of each Qualification Period, the Trustees shall apply the funds paid to them by Participating Companies on the Payment Date for that Qualification Period: 3.1.1 in subscribing for Shares for cash at par on behalf of those Eligible Employees who became Designated Employees with respect to such funds on the Allocation Date with which that Qualification Period began; and/or 3.1.2 in purchasing Shares at market price on the Stock Exchange on behalf of those Eligible Employees who became Designated Employees with respect to such funds on that Allocation Date; and 3.1.3 in paying all costs, charges and expenses, including brokers fees and stamp duty ancillary to such subscription and/or purchase; provided that if any such Designated Employee: 3.1.4 ceases to be an executive or non-executive director or an employee of the Participating Company or Companies of which he is an executive or non-executive director or by which he is employed at any time during that Qualification Period other than: (i) in circumstances where the Designated Employee is or is to be re-employed by, or appointed an executive or non-executive director of, another Participating Company; or (ii) by death; or (iii) by retirement at normal retirement age; or (iv) by retirement for reasons of ill-health or physical incapacity; or 3.1.5 is, at the expiry of that Qualification Period, under notice to terminate his tenure of office and/or employment with such Company or Companies, whether such notice is given by the relevant Participating Company or Companies or the Designated Employee; -14- any such funds allocated to him on that Allocation Date shall not be so applied but shall be applied by the Trustees in discharging the liabilities under Rule 3.6 of the Participating Company or Companies of which that Designated Employee was an executive or non-executive director or by which he was employed on that Allocation Date. 3.2 In the event of the Company or any Subsidiary selling or otherwise disposing of the whole or any part of its shareholding in any Participating Company so that the said Participating Company ceases to be a Participating Company pursuant to clause 3.2.1 of the Deed, all Qualification Periods which are unexpired as at the date of completion of such sale or disposal shall, for the purposes of Rule 3.1, be deemed to expire on the said completion date in respect of the funds paid by the said Participating Company to the Trustees for the benefit of its Designated Employees, so that the said Designated Employees shall not lose the benefit of funds paid on their behalf to the Trustees, but shall be entitled to benefit therefrom forthwith pursuant to the terms of the Scheme. 3.3 Subject to the limitations in Rule 4, the Trustees may decide in their absolute discretion whether to apply the funds paid to them pursuant to Rule 2.3 (after deduction of such amounts required for the payment of costs pursuant to Rule 3.7.2) in subscribing for, or in purchasing, Shares, and if Shares are to be both purchased and subscribed for, the Trustees shall determine the relative amounts to be so applied. 3.4 In the event that the Trustees choose to apply any part of the available funds in subscribing for Shares: 3.4.1 the Trustees shall notify the Board in writing as soon as possible of the number of Shares to be subscribed for and the names of the Designated Employees to whom such Shares are to be allotted; 3.4.2 within 5 business days of receipt of such notification the Board shall meet to allot the relevant number of Shares to such Designated Employees subject only to payment of the subscription price therefor by the Trustees; and -15- 3.4.3 share certificates in respect of such Shares shall be issued in the names of the relevant Designated Employees and dispatched to the Trustees for distribution to those Designated Employees. 3.5 In the event that the Trustees choose to apply any part of the available funds in purchasing Shares on the Stock Exchange, the Trustees shall ensure that such Shares are purchased and registered in the names of the relevant Designated Employees. 3.6 If on a subscription or purchase of Shares by the Trustees, the funds held by the Trustees on behalf of any one Designated Employee are found to be insufficient (after deduction of such sum as the Trustees deem appropriate for the payment of costs and expenses relating to the purchase of or subscription for Shares on behalf of that Eligible Employee) to subscribe or purchase a whole number of Shares, the number of Shares to be subscribed for or purchased on behalf of that Designated Employee shall be rounded down to the nearest whole Share which may be subscribed or purchased by the available funds, and the balance of such funds shall be reimbursed forthwith to the Participating Company by which that Designated Employee was employed on the Allocation Date on which he became a Designated Employee (and, if more than one, to those Participating Companies, pro rata to the payments made by each such Company on behalf of the relevant Designated Employee on the relevant Payment Date). 3.7 Without prejudice to the provisions of the Deed, all costs from time to time incurred by the Trustees in subscribing and purchasing Shares pursuant to the Scheme and in administering the Scheme (including without limitation all brokerage, commissions and stamp duty) shall be discharged by the Trustees from: 3.7.1 those unapplied funds, if any, available pursuant to Rule 3.1 (any surplus of such funds being reimbursed forthwith to the Participating Company in question) and then if necessary; 3.7.2 by apportioning the remaining costs amongst Designated Employees in proportion to their respective interests in any funds of which the Trustees shall stand possessed at the relevant time pending their application pursuant to the Scheme -16- and deducting such apportioned amount from the sum allocated to each Designated Employee so interested; and if any costs still remain to be discharged after applying sub-clause 3.7.1 and 3.7.2, the amount of such costs shall be borne by the Participating Companies who last made payments to the Trustees pursuant to Rule 2.2.1 in the proportions which their respective payments bore to the aggregate of such payments. 3.8 All Shares subscribed for pursuant to Rule 3.1.1 shall carry the same rights as respects voting, dividends, transfer and all other rights, including those arising on a liquidation, as all other Shares in issue at the time of such subscription. 3.9 No Shares shall be subscribed for or purchased pursuant to the Scheme at any time: 3.9.1 when less than 25% of the issued share capital of the Company is in the hands of the Public and such subscription or purchase would result in the percentage of the issued share capital of the Company in the hands of the public being further reduced; or 3.9.2 when 25% or more of the issued share capital of the Company is in the hands of the Public and such subscription or purchase would result in the percentage of the issued share capital of the Company in the hands of the Public being reduced to below 25%; and in the event of the subscription or purchase of Shares being prevented by operation of this Rule, the Company shall procure that all steps as are reasonably practicable are promptly taken so as to enable the Scheme to operate free of the restrictions imposed by this Rule. 4. Limitations 4.1 The maximum aggregate number of Shares which may be acquired by the Trustees pursuant to the Scheme shall not exceed 5 percent of the issued share capital of the Company from time to time, excluding any Shares acquired pursuant to the Scheme, provided that not more than 2 per cent of the number of Shares in issue at the -17- commencement of any year (excluding any Shares acquired then under the Scheme) may be acquired pursuant to the Scheme in that year. 4.2 In no circumstances may any Designated Employee acquire pursuant to the Scheme more than 15 per cent of the aggregate number of Shares acquired thereunder for the benefit of all Designated Employees. 4.3 The limits in this Rule 4 on the number of Shares which may be acquired under the Scheme shall be adjusted in such manner as the Auditors shall determine in writing to be, in their opinion, fair and reasonable following any capitalization issue, sub-division, consolidation or reduction of the share capital of the Company and in respect of any discount element in any rights issue undertaken by the Company to the intent that the said limits on the number of Shares which may be so acquired shall take account of any such event. 5. Obligations of the Company 5.1 The Company shall: 5.1.1 ensure that it has sufficient authorized but unissued share capital to be able to allot the maximum number of Shares for which the Trustees may subscribe in any year; 5.1.2 pay all capital duty payable on increases of the Company's authorized capital made to ensure compliance with Rule 5.1.1; 5.1.3 ensure that the Board is at all times authorized to allot the maximum number of Shares for which the Trustees may subscribe in any year; 5.1.4 allot and issue all Shares acquired to be allotted and issued pursuant to the Scheme at any time on terms that they rank pari passu in all respects with all other Shares in issue at that time save for the right to participate in any dividends or other distributions declared made or paid on a date, or by reference to a record date, prior to such allotment and issue; -18- 5.1.5 promptly apply for all Shares allotted pursuant to the Scheme to be listed and dealt in on the Stock Exchange. 6. Notices 6.1 Any notice which any party hereto is required or may desire to give to any other party hereto or to any Designated Employee pursuant to this Scheme shall be sufficiently given if delivered to that party or Designated Employee personally or sent through the post pre-paid and addressed, in the case of a party hereto, to that party at his address set out in the Deed or at such other address notified by that party to all other parties hereto for that purpose, and, in the case of a Designated Employee, addressed to that Designated Employee at his address last known to the party giving the notice (including any address supplied by the relevant Participating Company as being his address), or sent through the Company's internal postal service, and if so sent by post shall be deemed to have been duly given on the day following the date of posting and if sent through the Company's internal postal service shall be deemed to have been duly given 72 hours after the date of posting. Any document so sent by post to any party who is an individual or to a Designated Employee shall be deemed to have been duly delivered notwithstanding that he is then deceased (and whether or not the party giving the notice has notice of his death), except where his personal representatives have established their title to the satisfaction of the party giving the notice and have supplied an address to which documents are to be sent. 7. Disputes The decision of the Board in any dispute relating to any Eligible or Designated Employee or any other matter under this Scheme shall be final and conclusive subject to the certification of the Auditors having been obtained when so required. 8. Termination of the Scheme 8.1 The Company in general meeting or the Board may at any time resolve to terminate this Scheme, in which event no further funds shall be paid to the Trustees by Participating -19- Companies, but the provisions of this Scheme in relation to funds already held by the Trustees shall continue in full force and effect and the Scheme may accordingly be operated to enable such funds to be applied in accordance with its terms. 8.2 The Scheme shall in any event terminate on the 10th anniversary of the date of the Deed whereupon the Trustees shall wind-up the Scheme in accordance with Rule 8.3 and, save for rights accrued prior to that date, the Deed shall thereupon cease to have any effect. 8.3 Upon the termination of the Scheme the Trustees shall (except to the extent the Trustees require monies to meet the expenses of determining the Scheme) thereupon account and pay to Participating Companies (so far as practicable) any monies held by them in the same proportion as they were provided. 9. Rights in respect of the Scheme In no circumstances shall any Eligible or Designated Employee or any person who has ceased to be an Eligible or Designated Employee for any reason whatever or in respect of whom notice to terminate his tenure of office and/or employment has been given (whether by him or a Participating Company) be entitled to claim ___ against any Participating Company or the Trustees any compensation for or in respect of any loss he may suffer by reason of the operation of the terms of this Scheme. 10. Alterations 10.1 These Rules may at any time be altered by a resolution of the Board (with the concurrence of the Trustees and, where appropriate, the Stock Exchange) and such alterations shall be binding on all Participating Companies provided that no such purported alteration shall be effective except with the prior sanction of the Company in general meeting if the alteration would have the effect of extending the classes of Eligible or Designated Employees (subject to the provisions of Rule 10.2), or of altering to the advantage of Eligible or Designated Employees (present or future) any of the provisions of Rules 3.8, 8.2 or 8.3 or any of the provisions of this Scheme which relate to the limitations on the number of Shares to be acquired hereunder, including the provisions -20- relating to adjustments to those figures, or to increasing the maximum annual entitlement of any individual Employee to any funds paid to the Trustees pursuant to the Scheme. 10.2 For the avoidance of doubt, the Board shall be entitled, by resolution of the Board alone, to specify for the purpose of paragraph (b) of the definition of "Eligible Employee" shorter periods than those contained in such paragraph for the purposes of the first and last occasions on which the Scheme is operated. -21- SCHEDULE 2 This Deed is made this day of 198[ ] BETWEEN: (1) ASM PACIFIC TECHNOLOGY LIMITED (the "Company"); (2) ADVANCED SEMICONDUCTOR MATERIALS ASIA LIMITED; (3) ASM ASSEMBLY AUTOMATION LIMITED; (4) ADVANCED SEMICONDUCTOR MATERIALS (OVERSEAS) LIMITED; (5) ASM ASSEMBLY MATERIALS LIMITED (parties (2) to (5) above inclusive being the "Subsidiaries"); (6) A.H. DEL PRADO; (7) LAM SEE PON, PATRICK; (parties (6) and (7) above inclusive being the "Trustees"); and (8) [ ] (the "New Subsidiary"); and is supplemental to a Trust Deed executed by the Company, the Subsidiaries and the Trustees on the [ ] day of [ ] 1989 (the "Scheme"). WHEREAS: A. The Company was incorporated on the 21st day of November 1988 and on the 5th day of December 1988 each of the Subsidiaries became a subsidiary of the Company; B. The New Subsidiary has been invited and wishes to become a Participating Company in order that its Eligible Employees may participate in the Scheme as Designated Employees. NOW THIS DEED WITNESSETH as follows: 1. Terms defined in the Scheme bear the same meaning herein. -22- 2. The New Subsidiary agrees to become a Participating Company and to be bound by the terms of the Scheme. In witness whereof the parties hereto have set their hands and seals the day first above written. THE COMMON SEAL OF ASM PACIFIC ) TECHNOLOGY LIMITED was hereunto ) affixed in the presence of: ) Director: /s/ Arthur H. del Prado Secretary: /s/ Patrick Lam See Pong THE COMMON SEAL OF ADVANCED ) SEMICONDUCTOR MATERIALS ASIA ) LIMITED was hereunto affixed ) in the presence of: ) Director: /s/ Arthur H. del Prado Secretary: /s/ Patrick Lam See Pong THE COMMON SEAL OF ASM ) ASSEMBLY AUTOMATION ) LIMITED was hereunto affixed ) in the presence of: ) Director: /s/ Arthur H. del Prado Secretary: /s/ Patrick Lam See Pong THE COMMON SEAL OF ADVANCED ) SEMICONDUCTOR MATERIALS ) (OVERSEAS) LIMITED was hereunto ) affixed in the presence of: ) Director: /s/ Arthur H. del Prado Secretary: /s/ Patrick Lam See Pong -23- THE COMMON SEAL OF ASM ) ASSEMBLY MATERIALS LIMITED ) was hereunto affixed in the presence of: ) Director: /s/ Arthur H. del Prado Secretary: /s/ Patrick Lam See Pong SIGNED SEALED AND DELIVERED ) by the said A.H. DEL PRADO ) in the presence of: ) /s/ Chan Lo Kwan ) /s/ Arthur H. del Prado SIGNED SEALED AND DELIVERED ) by the said LAM SEE PONG, PATRICK ) in the presence of: ) /s/ Chan Lo Kwan ) /s/ Patrick Lam See Pong THE COMMON SEAL of [the ) New Subsidiary] ) was hereunto affixed in the presence of: ) Director: Secretary: THE COMMON SEAL of ASM PACIFIC ) TECHNOLOGY LIMITED was hereunto ) affixed in the presence of: ) Director: /s/ Arthur H. del Prado Secretary: /s/ Patrick Lam See Pong -24- THE COMMON SEAL of ADVANCED ) SEMICONDUCTOR MATERIALS ASIA ) was hereunto affixed in the presence of: ) Director: /s/ Arthur H. del Prado Secretary: /s/ Patrick Lam See Pong THE COMMON SEAL of ASM ) ASSEMBLY AUTOMATION LIMITED ) was hereunto affixed in the presence of: ) Director: /s/ Arthur H. del Prado Secretary: /s/ Patrick Lam See Pong THE COMMON SEAL of ADVANCED ) SEMICONDUCTOR MATERIALS ) (OVERSEAS) LIMITED was hereunto ) affixed in the presence of: ) Director: /s/ Arthur H. del Prado Secretary: /s/ Patrick Lam See Pong THE COMMON SEAL of ASM ) ASSEMBLY MATERIALS LIMITED ) was hereunto affixed in the presence of: ) Director: /s/ Arthur H. del Prado Secretary: /s/ Patrick Lam See Pong -25- SIGNED SEALED AND DELIVERED ) by the said A.H. DEL PRADO ) in the presence of: ) /s/ Chan Lo Kwan ) /s/ Arthur H. del Prado SIGNED SEALED AND DELIVERED ) by the said LAM SEE PONG, PATRICK ) in the presence of: ) /s/ Chan Lo Kwan ) /s/ Patrick Lam See Pong -26- EX-4.15 5 p67631exv4w15.txt EX-4.15 Exhibit 4.15 DATED THE 12TH DAY OF APRIL, 1999 ASM PACIFIC TECHNOLOGY LIMITED ASM ASIA LIMITED ASM ASSEMBLY AUTOMATION LIMITED ASM ASSEMBLY MATERIALS LIMITED THE COMPANIES WHOSE NAMES ARE SET OUT IN THE SCHEDULE and A.H. DEL PRADO and LAM SEE PONG, PATRICK ------------------------------------------------ DEED OF ADHERENCE RELATING TO PARTICIPATION IN THE EMPLOYEE SHARE INCENTIVE SCHEME OF ASM PACIFIC TECHNOLOGY LIMITED -------------------------------------------------- JENNIFER CHEUNG & CO. Solicitors Hong Kong (JC/0020/99) THIS DEED is made the 12th day of April, 1999 BETWEEN: (1) ASM PACIFIC TECHNOLOGY LIMITED (the "Company"); (2) ASM ASIA LIMITED; (3) ASM ASSEMBLY AUTOMATION LIMITED; (4) ASM ASSEMBLY MATERIALS LIMITED (parties (2) to (4) above inclusive being the "Subsidiaries"); (5) THE COMPANIES WHOSE NAMES ARE SET OUT IN SCHEDULE 1 (the "Participating New Subsidiaries"); and (6) A.H. DEL PRADO AND LAM SEE PONG, PATRICK. And is supplemental to a Trust Deed executed by the Company, the Subsidiaries, Advanced Semiconductor Materials (Overseas) Limited and the Trustees on the 23rd day of March 1990 (the "Scheme"). WHEREAS: A. The Company was incorporated on the 21st day of November 1988 and on the 5th day of December 1988 each of the Subsidiaries became a subsidiary of the Company. B. Advanced Semiconductor Materials (Overseas) Limited was dissolved on 21st December, 1993. C. Each of the Participating New Subsidiaries has become a Participating Company on the date set opposite its name in the Schedule (the "Participating Date") so that its eligible employees may participate in the Scheme as Designated Employees. NOW THIS DEED WITNESSETH as follows: 1. Terms defined in the Scheme bear the same meaning herein. 2. The parties hereto confirm and ratify the participation of each Participating New Subsidiaries as a Participating Company with effect from the Participating Date, and each Participating New Subsidiaries confirms that it has complied with the terms of the Scheme with effect from the Participating Date and agrees to be bound by the terms of the Scheme. -1- In witness whereof the parties hereto have set their hands and seals the day first above written. THE COMMON SEAL of ASM PACIFIC ) TECHNOLOGY LIMITED was ) Hereunto affixed in the ) Presence of: ) /s/ Arthur H. del Prado /s/ Patrick Lam See Pong - ------------------------------------ ------------------------------------ A.H. Del Prado Lam See Pong, Patrick Director Director THE COMMON SEAL of ASM ASIA ) LIMITED was hereunto affixed ) in the presence of: ) /s/ Arthur H. del Prado /s/ Patrick Lam See Pong - ------------------------------------ ------------------------------------ A.H. Del Prado Lam See Pong, Patrick Director Director THE COMMON SEAL of ASM ) ASSEMBLY AUTOMATION LIMITED ) was hereunto affixed in the ) presence of: ) /s/ Arthur H. del Prado /s/ Patrick Lam See Pong - ------------------------------------ ------------------------------------ A.H. Del Prado Lam See Pong, Patrick Director Director -2- THE COMMON SEAL of ASM ) ASSEMBLY MATERIALS LIMITED ) was hereunto affixed in the ) presence of: ) /s/ Arthur H. del Prado /s/ Patrick Lam See Pong - ------------------------------------ ------------------------------------ A.H. Del Prado Lam See Pong, Patrick Director Director THE COMMON SEAL of ASM ) TECHNOLOGY SINGAPORE PTE ) LIMITED was hereunto affixed ) in the presence of: ) /s/ Arthur H. del Prado /s/ Patrick Lam See Pong - ------------------------------------ ------------------------------------ A.H. Del Prado Lam See Pong, Patrick Director Director THE COMMON SEAL of CAPITAL ) EQUIPMENT DISTRIBUTION LIMITED ) was hereunto affixed in the ) presence of: ) /s/ Patrick Lam See Pong /s/ Alan Fung Shu Kan - ------------------------------------ ------------------------------------ Lam See Pong, Patrick Fung Shu Kan, Alan Director Director -3- SIGNED SEALED AND DELIVERED by ) A.H. DEL PRADO in the presence ) of: ) /s/ Arthur H. del Prado /s/ Trudy Veldhuisen ------------------------------------ Trudy Veldhuisen SIGNED SEALED AND DELIVERED by ) LAM SEE PONG, PATRICK in the ) presence of: ) /s/ Patrick Lam See Pong /s/ Amy Wong Yee Man ------------------------------------ Wong Yee Man, Amy -4- SCHEDULE PARTICIPATING NEW SUBSIDIARIES

Name Participating Date - ---- ------------------ ASM TECHNOLOGY 9th December, 1989 SINGAPORE PTE LIMITED CAPITAL EQUIPMENT 23rd February, 1996 DISTRIBUTION LIMITED

-5- EX-4.16 6 p67631exv4w16.txt EX-4.16 Exhibit 4.16 DATED THE 30TH DAY OF JUNE, 1999 ASM PACIFIC TECHNOLOGY LIMITED THE COMPANIES WHOSE NAMES ARE SET OUT IN THE SCHEDULE and A.H. DEL PRADO and LAM SEE PONG, PATRICK ------------------------------------------------ SUPPLEMENTAL DEED RELATING TO THE EMPLOYEE SHARE INCENTIVE SCHEME OF ASM PACIFIC TECHNOLOGY LIMITED -------------------------------------------------- JENNIFER CHEUNG & CO. Solicitors Hong Kong (JC/0020/99) THIS SUPPLEMENTAL DEED is made the 30th day of June, 1999 BETWEEN : (1) ASM PACIFIC TECHNOLOGY LIMITED whose registered office is at Caledonian House, Grand Cayman, Cayman Islands, British West Indies (the "Company"); (2) THE COMPANIES whose names are set out in the Schedule; and (3) A.H. DEL PRADO of Jan Steenlan 9,3723 BS Bilthoven, the Netherlands and Lam See Pong, Patrick of Princess Terrace, 11th Floor, Block A, 21 Man Fuk Road, Kowloon, Hong Kong (the "First Trustees"). WHEREAS: (A) The Company, ASM Asia Limited, ASM Assembly Automation Limited, Advanced Semiconductor Materials (Overseas) Limited (which was dissolved on 21st December, 1993), ASM Assembly Materials Limited and the First Trustees executed a deed dated 23rd March, 1990 relating to the establishment of a share incentive scheme for the provision by the Company and other Participating Companies of funds for the subscription or purchase by the Trustees of Shares (the "Deed"). The other companies named in the Schedule hereto are Participating Companies joining the Scheme subsequent to the date of the Deed. (B) By a resolution of the shareholders of the Company passed on 25th June, 1999, amendments to the Rules were approved. NOW THIS SUPPLEMENTAL DEED WITNESSETH as follows: 1. Definitions Words and expressions defined in the Deed and the rules set out in Schedule 1 to the Deed shall, unless the context otherwise requires, have the same meanings in this Supplemental Deed, including the recitals hereto. 2. Alterations to the Scheme 2.1 The parties hereto agree that the Rules shall be amended as follows: (a) The existing provisions of Rule 2.1.1 be deleted and be replaced by the following: "2.1.1. what percentage of the consolidated profits (before tax and extraordinary items) of the Group in respect of the said previous year shall be paid to the trustees to be held by them upon the terms of the Scheme, provided that such shall not exceed 2 percent." (b) The existing provisions of Rule 4.1 be deleted and be replaced by the following with effect from 23rd March, 2000: -1- "4.1 The maximum aggregate number of Shares which may be subscribed for or purchased by the Trustees pursuant to the Scheme after 23rd March, 2000 shall not exceed 5 percent, of the issued share capital of the Company from time to time, excluding any Shares acquired pursuant to the Scheme since 23rd March, 1990, provided that not more than 2 percentage, of the number of Shares in issue at the commencement of any year (excluding any Shares subscribed for or purchased then under the Scheme since 23rd March, 1990) may be subscribed for or purchased pursuant to the Scheme in that year." (c) Rule 8.2 of the Scheme be amended to the effect that the Scheme shall only terminate on 23rd March, 2010 and that the figure "10th" appearing in such Rule be deleted and be replaced by the figure "20th". 2.2 Save as amended aforementioned, all the terms and conditions contained in the Scheme and the Deed shall remain in full force and effect. 3. Governing Law This Supplemental Deed shall be governed by and construed in accordance with the laws of Hong Kong. IN WITNESS whereof these presents have been entered into the day and year first above written. THE COMMON SEAL of ASM PACIFIC ) TECHNOLOGY LIMITED was ) hereunto affixed in the ) presence of: ) /s/ Arthur H. del Prado /s/ Patrick Lam See Pong - ------------------------------------ ------------------------------------ A.H. Del Prado Lam See Pong, Patrick Director Director -2- THE COMMON SEAL of ASM ASIA ) LIMITED was hereunto affixed ) in the presence of: ) /s/ Arthur H. del Prado /s/ Patrick Lam See Pong - ------------------------------------ ------------------------------------ A.H. Del Prado Lam See Pong, Patrick Director Director THE COMMON SEAL of ASM ) ASSEMBLY AUTOMATION LIMITED ) was hereunto affixed in the ) presence of: ) /s/ Arthur H. del Prado /s/ Patrick Lam See Pong - ------------------------------------ ------------------------------------ A.H. Del Prado Lam See Pong, Patrick Director Director THE COMMON SEAL of ASM ) ASSEMBLY MATERIALS LIMITED ) was hereunto affixed in the ) presence of: ) /s/ Arthur H. del Prado /s/ Patrick Lam See Pong - ------------------------------------ ------------------------------------ A.H. Del Prado Lam See Pong, Patrick Director Director -3- THE COMMON SEAL of ASM ) TECHNOLOGY SINGAPORE PTE ) LIMITED was hereunto affixed ) in the presence of: ) /s/ Arthur H. del Prado /s/ Patrick Lam See Pong - ------------------------------------ ------------------------------------ A.H. Del Prado Lam See Pong, Patrick Director Director THE COMMON SEAL of CAPITAL ) EQUIPMENT DISTRIBUTION LIMITED ) was hereunto affixed in the ) presence of: ) /s/ Patrick Lam See Pong /s/ Alan Fung Shu Kan - ------------------------------------ ------------------------------------ Lam See Pong, Patrick Fung Shu Kan, Alan Director Director SIGNED SEALED AND DELIVERED by ) A.H. DEL PRADO in the presence ) of: ) /s/ Trudy Veldhuisen /s/ Arthur H. del Prado - ------------------------------------ Trudy Veldhuisen -4- SIGNED SEALED AND DELIVERED by ) LAM SEE PONG, PATRICK in the ) presence of: ) /s/ Amy Wong Yee Man /s/ Patrick Lam See Pong - ------------------------------------ Wong Yee Man, Amy -5- SCHEDULE PARTICIPATING NEW SUBSIDIARIES ASM ASIA LIMITED ASM ASSEMBLY AUTOMATION LIMITED ASM ASSEMBLY MATERIALS LIMITED ASM TECHNOLOGY SINGAPORE PTE LIMITED CAPITAL EQUIPMENT DISTRIBUTION LIMITED -6- EX-8.1 7 p67631exv8w1.htm EX-8.1

Exhibit 8.1

SUBSIDIARIES

Advanced Semiconductor Materials (Netherlands Antilles N.V.)

ASM Pacific Technology Limited (subsidiary of ASM Netherlands Antilles N.V.)

ASM Assembly Automation Limited (subsidiary of ASM Pacific Technology Limited)

ASM Assembly Materials Limited (subsidiary of ASM Pacific Technology Limited)

ASM Assembly Products B.V. (subsidiary of ASM Pacific Technology Limited)

ASM Assembly Technology Co. Limited (subsidiary of ASM Pacific Technology Limited)

ASM Pacific International Marketing Limited (subsidiary of ASM Pacific Technology Limited)

ASM Pacific Investments Limited (subsidiary of ASM Pacific Technology Limited)

ASM Pacific KOR Limited (subsidiary of ASM Pacific Technology Limited)

ASM Assembly Equipment Bangkok Limited (subsidiary of ASM Pacific Technology Limited)

ASM Technology Singapore Pte. Limited (subsidiary of ASM Pacific Technology Limited)

ASM Technology (M) Sdn. Bhd. (subsidiary of ASM Pacific Technology Limited)

Capital Equipment Distribution Limited (subsidiary of ASM Pacific Technology Limited)

Shenzhen ASM Micro Electronic Technology Co. Limited (subsidiary of ASM Pacific Technology Limited)

Shenzhen ASM Precision Machinery Manufactory Limited (subsidiary of ASM Pacific Technology Limited)

ASM Assembly Equipment (M) Sdn. Bhd. (subsidiary of ASM Pacific Technology Limited)

ASM Assembly Equipment Trading (Shanghai Co. Limited) (subsidiary of ASM Pacific Technology Limited)

ASM Pacific (Bermuda) Limited (subsidiary of ASM Pacific Technology Limited)

ASM Asia Limited (subsidiary of ASM Pacific Technology Limited)

ASM America Inc.

ASM Pacific Assembly Products Inc. (subsidiary of ASM America Inc.)

ASM Japan K.K.

ASM Microchemistry Oy

NanoPhotonics AG

ASM Europe B.V.

ASM France SARL (subsidiary of ASM Europe B.V.)

ASM Belgium N.V. (subsidiary of ASM Europe B.V.)

ASM United Kingdom Sales B.V. (subsidiary of ASM Europe B.V.)

ASM Germany Sales B.V. (subsidiary of ASM Europe B.V.)

ASM Italia SRL (subsidiary of ASM Europe B.V.)

ASM China Limited

ASM Wafer Process Equipment Limited

ASM Far East Marketing Limited (subsidiary of ASM Wafer Process Equipment Limited)

ASM Korea Limited

EX-10.1 8 p67631exv10w1.htm EX-10.1

Exhibit 10.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of ASM International N.V. (the “Company”) on Form 20-F for the period ended December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Arthur H. del Prado, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

     (1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Arthur H. del Prado

Arthur H. del Prado
Chief Executive Officer
April 17, 2003

EX-10.2 9 p67631exv10w2.htm EX-10.2

Exhibit 10.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report of ASM International N.V. (the “Company”) on Form 20-F for the period ended December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert L. de Bakker, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

     (1)  The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert L. de Bakker

Robert L. de Bakker
Chief Financial Officer
April 17, 2003

EX-10.3 10 p67631exv10w3.htm EX-10.3

Exhibit 10.3

[DELOITTE & TOUCHE LETTERHEAD]

Date	Reference
April 17, 2003	A. Sandler

INDEPENDENT AUDITORS’ CONSENT

We consent to the incorporation in ASM International N.V.’s Registration Statements no.’s 33-6184, 33-6185, 33-6186, 33-78628 and 33-93026 on Form S-8 and no. 333-92006, 333-8080 and 333-11502 on Form F-3 of our report dated February 17, 2003, on the consolidated financial statements of ASM International N.V., which are included in this annual report on Form 20-F of ASM International N.V., for the year ended December 31, 2002.

/s/ Deloitte & Touche Accountants

-----END PRIVACY-ENHANCED MESSAGE-----

EX-4.13

exv4w13

EX-4.14

                                                                    EXHIBIT 4.14

SH3347

                             Dated: 23rd March 1990

(1)   ASM PACIFIC TECHNOLOGY LIMITED

(2)   ADVANCED SEMICONDUCTOR MATERIALS ASIA LIMITED

(3)   ASM ASSEMBLY AUTOMATION LIMITED

(4)   ADVANCED SEMICONDUCTOR MATERIALS (OVERSEAS) LIMITED

(5)   ASM ASSEMBLY MATERIALS LIMITED

(6)   A.H. DEL PRADO

(7)   LAM SEE PONG, PATRICK





                    ----------------------------------------

                             TRUST DEED AND RULES
                                      of
                      THE ASM PACIFIC TECHNOLOGY LIMITED
                       EMPLOYEE SHARE INCENTIVE SCHEME

                    ----------------------------------------




                                  HERBERT SMITH
                              17/F Edinburgh Tower
                             15 Queen's Road Central
                                    Hong Kong

                                   CONTENTS




                                                                      PAGE
                                                                      ----
                                                                   
1.    Definitions                                                       1

2.    Compliance with the Scheme                                        1

3.    Group Scheme                                                      3

4.    Acquisition of Shares                                             4

5.    Trustees' Powers of Delegation                                    4

6.    Administration                                                    5

7.    Trustees' Protections                                             5

8.    Appointment, Removal and Retirement of Trustees                   7

9.    Alterations to the Scheme                                         8

10.   Governing Law                                                     8


                                  SCHEDULES

1.    The Rules:

      1.    Definitions                                                 9

      2.    Funding of the Scheme and Provisional Allocation of Funds   13

      3.    Acquisition of Shares                                       15

      4.    Limitations                                                 20

      5.    Obligations of the Company                                  20

      6.    Notices                                                     21

      7.    Disputes                                                    22

      8.    Termination of Scheme                                       22

      9.    Rights in respect of the Scheme                             23


                                                                   

      10.   Alterations                                                 23

2.    Supplemental Trust Deed                                           24



THIS DEED is made the 23rd day of March, 1990.

BETWEEN:

(1)   ASM PACIFIC TECHNOLOGY LIMITED whose registered office is at Caledonian
      House, Grand Cayman, Cayman Islands, British West Indies ("the Company");

(2)   ADVANCED SEMICONDUCTOR MATERIALS ASIA LIMITED, whose registered office is
      at 6th floor, Watson Centre, 16-22 Kung Yip Street, Kwai Chung, Hong Kong;

(3)   ASM ASSEMBLY AUTOMATION LIMITED, whose registered office is at 20th floor,
      Watson Centre aforesaid;

(4)   ADVANCED SEMICONDUCTOR MATERIALS ASIA LIMITED whose registered office is
      at 6th floor, Watson Centre aforesaid;

(5)   ASM ASSEMBLY MATERIALS LIMITED whose registered office is at 585-609
      Castle Peak Road, 15th and 16th floors, Wo Kee Hong Building, Kwai Chung,
      New Territories, Hong Kong; (parties (2) to (5) above inclusive being the
      "Four Subsidiaries");

(6)   A.H. DEL PRADO of Jan Steenlan 9,3723 BS Bilthoven, the Netherlands; and

(7)   LAM SEE PONG, PATRICK of Princess Terrace, 11th floor, Block A, 21 Man Fuk
      Road, Kowloon, Hong Kong;

      (parties (6) and (7) above inclusive being the "First Trustees").

WHEREAS:

(A)   The Company was incorporated in the Cayman Islands on 21st November 1988
      as an exempted company. It has an authorized share capital of
      HB$50,000,000 (divided into 500,000,000 shares of HB$0.10 each) of which
      360,000,000 have been issued and are fully paid up.

(B)   The Company and the Four Subsidiaries carry on the business of
      manufacturing semiconductors and machinery used to manufacture
      semiconductors.

(C)   The Company and the Four Subsidiaries wish to establish a share incentive
      scheme for the provision by the Company and other Participating Companies
      (including the Four Subsidiaries) of funds for the subscription or
      purchase by the Trustees of Shares.

(D)   The First Trustees have agreed to be Trustees of the Scheme.

NOW THIS DEED WITNESSETH as follows:

1.    Definitions

1.1   Words and expressions defined in the rules set out in Schedule 1 to this
      Deed (the "Rules") shall, unless the context otherwise requires, have the
      same meanings in this Deed, including the recitals hereto.

1.2   References to any statutory provisions are to those provisions as amended
      or re-enacted from time to time and, unless the context otherwise
      requires, words in the singular include the plural (and vice versa) and
      words importing any gender include all genders.

2.    Compliance with the Scheme

2.1   Each Participating Company hereby covenants with the Trustees to pay to
      the Trustees, in accordance with and subject to the provisions of the
      Scheme, the amounts due from it in accordance with the Rules for the
      purpose of the subscription and purchase by the Trustees in the names of
      Designated Employees, of Shares, together with any other amounts required
      to cover any costs, charges and expenses incurred in any such purchase or
      subscription and any other expenses and charges incurred by the Trustees
      in the establishment, administration and determination of the Scheme.

2.2   Subject as hereinafter provided, the Trustees hereby covenant with each
      Participating Company to apply the monies received in accordance with the
      Rules in the subscription for and/or purchase of Shares in the names of
      Designated Employees and in discharge of such costs charges and expenses
      as are referred to in sub-clause 2.1.


                                      -2-

3.    Group Scheme

3.1   The Scheme may, with the consent of the Board and if necessary after
      notification to the Stock Exchange, be extended to any Subsidiary not a
      party to this Deed by the adherence of such Subsidiary to the provisions
      of the Scheme by deed in the form set out in Schedule 2 to this Deed, with
      such amendments as the Trustees may prescribe, and thereupon the
      provisions of the Scheme and of this Deed shall apply to that Subsidiary
      as though it were a party to this Deed.

3.2   The Scheme shall cease to extend to any Participating Company, other than
      the Company, at any time when:

      3.2.1 that Participating Company ceases to be a Subsidiary; or

      3.2.2 a notice (which has not subsequently been cancelled) is served by
            the Company upon the Trustees that the Scheme shall cease to apply
            to that Participating Company.

3.3   Each Participating Company hereby covenants with the Trustees that it will
      provide the Trustees with such information as the Trustees may require
      from it for the purposes of administration and determination of the
      Scheme.

3.4   If and so long as the Scheme is extended to any Subsidiary, the powers and
      discretions exercisable by that Subsidiary in relation to the Scheme shall
      be exercisable by resolution of the board of directors or a duly appointed
      committee of such board, and a minute of any resolution thereof signed by
      the secretary or a director of that Subsidiary shall be sufficient
      authority for the Trustees to act.

4.    Acquisition of Shares

      Shares may be acquired under the Scheme by way of subscription and/or
      purchase provided that any sums paid by Participating Companies to the
      Trustees for the acquisition of Shares shall, if not so applied, be used
      to cover the Trustees' incidental costs and expenses or be repaid to the
      relevant Participating Companies in accordance with the Rules.


                                      -3-

5.    Trustees' Powers of Delegation

5.1   The Trustees in the exercise of their discretions and the performance of
      their duties hereunder, may employ and pay a registrar, solicitor, broker,
      actuary, accountant, banker or other adviser, and may appoint any such
      person as their agent to transact all or any business, and may act on the
      advice or opinion of any solicitor, broker, actuary, accountant or other
      professional person, and shall not be responsible for anything done or
      omitted or suffered in good faith in reliance on such advice or opinion.

5.2   The Trustees may execute or sign, and (if and so long as there is more
      than one Trustee) may authorize the execution or signature by any one of
      their number as their agent (and any corporate trustee may similarly
      authorize any of its directors, officers or employees on its behalf to
      effect the execution or signature) of, any deeds, documents, cheques or
      other instruments by the impression of any signature on behalf of, or as
      witness of any sealing by, the Trustees.

5.3   The Trustees may at any time cause any part of the funds held by them
      pursuant to the Scheme to be deposited for safekeeping with any Trustee or
      any other person on behalf of the Trustees and may pay any expenses in
      connection therewith.

6.    Administration

6.1   Subject to and in accordance with the provisions of this Deed and the
      Rules and subject to the approval of the Company, the Trustees may make
      such regulations as they consider appropriate relating to the
      administration of the Scheme.

6.2   If and so long as there is more than one Trustee, the Trustees shall meet
      together as may be necessary for the administration of the Scheme, and all
      decisions taken by a majority for as a result of the casting vote of any
      chairman appointed by the Trustees present at the meeting) of the Trustees
      present at any meeting of the Trustees of which notice has been given to
      those of them who are in Hong Kong (provided at least two Trustees shall
      be present at every meeting) shall be as effective for all purposes as if
      those decisions had been unanimous decisions of all the trustees. A
      written resolution signed by all the


                                      -4-

      Trustees arrived at without any meeting shall be effective for all
      purposes. Nothing herein shall preclude a corporate Trustee acting on its
      own.

7.    Trustees' Protections

7.1   The Participating Companies shall pay to or reimburse the Trustees upon
      demand all costs, charges and expenses reasonably incurred by them in the
      course of the administration and determination of the Scheme and shall
      keep the Trustees, their successors in title and their estates and effects
      fully and effectively indemnified and saved harmless from and against all
      actions, claims, losses, demands, proceedings, charges, expenses, costs,
      damages, taxes, duties and any other liabilities arising out of anything
      done or caused to be done by them or suffered or incurred by them in the
      exercise or purported exercise of the powers and discretions vested in
      them by this Deed or the Rules or otherwise howsoever arising out of, or
      in connection with, the preparation, administration, operation or
      termination of the Scheme (but so that no Trustee shall be indemnified or
      exonerated in respect of any negligence, fraud or willful default on his
      part) and in addition the Trustees shall have the benefit of all
      indemnities conferred upon trustees generally by law and by the Trustee
      Ordinance.

7.2   A person shall not be disqualified from acting as a Trustee or exercising
      any power vested in the Trustees by reason of his having any interest,
      whether direct or indirect, in any Participating Company or by reason of
      his being eligible to benefit, personally benefiting or having benefited
      under the Scheme and such person shall not be liable to account to any
      party for any profit derived from the acquisition by him of Shares under
      the Scheme.

7.3   Any person acting as a Trustee in the course of any profession or business
      carried on by him may charge and be paid such reasonable remuneration,
      charges or disbursements whether in connection with the Scheme or
      otherwise as shall from time to time be agreed between him and the
      Company.

7.4   Any Trustee being a banker may act as a banker to the Trustees and any
      Trustee being a subsidiary or an associated company of a banker may employ
      such banker as banker to


                                      -5-

      the Trustees and in neither case shall such banker or the Trustees be
      liable to account for any profits or advantages so obtained.

7.5   No Trustee (nor any director or officer of a body corporate or a trust
      corporation acting as a Trustee) shall be precluded from acquiring,
      holding or dealing with (on his own account) any debentures, debenture
      stock, shares or securities whatsoever of the Company or any Subsidiary or
      any other company in the shares of which the Company or any Subsidiary may
      be interested, nor from entering into any contract or other transaction
      with the Company or any Subsidiary or any such other company, nor from
      being interested in any such contract or transaction, nor shall he or it
      be in any way liable to account to the Company or any Subsidiary for any
      profits made, fees, commissions, shares of brokerage, discounts allowed or
      advantages obtained by him or it from, or in connection with, such
      acquisition, holding, dealing, contract or transaction whether or not in
      connection with his or its duties hereunder.

7.6   The Trustees shall be entitled in the absence of manifest error to rely
      without further enquiry on information supplied to them by the
      Participating Companies for the purposes of the Scheme and shall also be
      entitled to rely, in the absence of manifest error, on any direction,
      notice or document purported by any Participating Company to be given or
      executed by or with the authority of the Company, as having been so given
      or executed.

7.7   The Trustees may, but shall not be obliged, to invest any funds held by
      them pursuant to the Scheme pending application of such funds pursuant to
      the Rules. All funds so invested shall be invested in accordance with the
      provisions of the Trustee Ordinance and the Trustees shall incur no
      liability to any party in respect of any losses incurred as a result of
      investments authorized by this clause.

8.    Appointment, Removal and Retirement of Trustees

8.1   The Company may at any time by writing under hand of a person duly
      authorized by a resolution of the Board:

      8.1.1 appoint a new Trustee, including a corporate Trustee; and


                                      -6-

      8.1.2 remove a Trustee from office (but not so as to leave in office less
            than two Trustees, unless a corporate Trustee), without assigning
            any reason therefore and such removal shall (in the absence of any
            other date specified in the notice) take place forthwith.

      Such powers of appointment and removal shall be vested in the Trustees in
      the event that the Company ceases to exist.

8.2   A Trustee may retire by giving to the Company written notice of his or its
      desire to retire and such notice shall take effect at the expiry of three
      months (or such other period as may be agreed with the Company) from the
      date of such notice. The Trustee so retiring shall not be obliged to give
      any reason for, and shall not be responsible for any costs occasioned by,
      such retirement but shall execute all such documents and do all such
      things as may be necessary to give proper effect to such retirement.

9.    Alterations to the Scheme

      The Directors may at any time, with the concurrence of the Trustees and
      (for so long as the Shares remain listed on the Stock Exchange) the Stock
      Exchange, by deed supplemental hereto alter any of the provisions of this
      Deed in such manner as may be thought fit, and the provisions of any such
      supplemental deed shall be binding on all Participating Companies and
      Designated Employees provided that no such purported alteration shall be
      effective until (if it involves directly or indirectly some alteration to
      the Rules for which a resolution of the Company in general meeting is
      required under the Rules) it shall have been so approved by a resolution
      passed by the members of the Company in general meeting.

10.   Governing Law

      This Deed shall be governed by and construed in accordance with the laws
      of Hong Kong.

IN WITNESS whereof these presents have been entered into the day and year first
above written.


                                      -7-

                                   SCHEDULE 1

               THE RULES OF THE ASM PACIFIC TECHNOLOGY LIMITED
                         EMPLOYEE PROFIT SHARING SCHEME

1.    Definitions

1.1   In these Rules, the following words and expressions shall, where the
      context so admits, bear the meanings set forth below:


      "Allocation Date"          a date upon which funds are allocated to
                                 Designated Employees pursuant to Rule 2.1.3;

      "Auditors"                 the auditors of the Company for the time
                                 being;

      "the Board"                the board of directors for the time being of
                                 the Company, or any duly authorized committee
                                 thereof;

      "business day"             a day, other than Saturday, on which banks
                                 are customarily open for business in Hong
                                 Kong;

      "the Company"              ASM Pacific Technology Limited;

      "Continuous Employment"    the meaning given to that expression by the
                                 first schedule to the Employment Ordinance,
                                 provided that any period of absence due to
                                 pregnancy or confinement shall be taken to be
                                 part of an employee's period of Continuous
                                 Employment with any one or more Participating
                                 Companies;

      "the Deed"                 the Trust Deed as amended from time to time
                                 constituting (together with these Rules) the
                                 Scheme;

      "Designated Employee"      means an Eligible Employee designated by the
                                 Board pursuant to Rule 2.1.3 as a person for
                                 whose benefit funds paid to the Trustees
                                 pursuant to the Scheme shall be held;


                                      -8-

      "Eligible Employee"        any individual who on any particular
                                 Allocation Date;

                                 (a)   is an executive or non-executive
                                       director or an employee of a
                                       Participating Company; and

                                 (b)   in the case of a director who is not an
                                       employee, has held that office with that
                                       or any one or more of the Participating
                                       Companies for not less than one year (or
                                       such lesser period as the Board may
                                       specify in accordance with the Scheme),
                                       or, in the case of an employee, has had
                                       not less than one year's Continuous
                                       Employment (or such lesser period as the
                                       Board may specify in accordance with the
                                       Scheme) with that or any one or more of
                                       the Participating Companies;

      "Group"                    the group of companies comprising the Company
                                 and the Relevant Subsidiaries;

      "Participating Company"    subject to clause 3.2 of the Deed, each of
                                 the Company and the Relevant Subsidiaries;

      "Payment Date"             in respect of each Qualification Period, the
                                 business day specified by the Trustees by
                                 notice pursuant to Rule 2.2 as the day by
                                 which a Participating Company is required to
                                 have made payment to the Trustees for the
                                 benefit of those persons who were Eligible
                                 Employees of that Participating Company on
                                 the Allocation Date with which such
                                 Qualification Period began and who on that
                                 date became Designated Employees pursuant to
                                 Rule 2.1.3;

      "Public"                   all holders of Shares other than:

                                 (a)   the directors of the Company;


                                      -9-

                                 (b)   substantial shareholders of the Company;

                                 (c)   the wife or husband of a director or
                                       substantial shareholder of the Company;

                                 (d)   any son, daughter, step son or step
                                       daughter under the age of 21 years of a
                                       director or substantial shareholder of
                                       the Company, or of the wife or husband of
                                       a director or substantial shareholder of
                                       the Company;

                                 (e)   the trustees of any trust, acting in
                                       their capacity as such trustees, of which
                                       any person mentioned in paragraphs (a) to
                                       (d) of this definition, is a beneficiary
                                       or, in the case of a discretionary trust,
                                       is a discretionary object; and

                                 (f)   any company of which a director or
                                       substantial shareholder of the Company is
                                       a substantial shareholder and the holding
                                       company or subsidiary of the company of
                                       which a director or substantial
                                       shareholder of the Company is a
                                       substantial shareholder;

      "Qualification Period"     in respect of all persons who are Eligible
                                 Employees on any Allocation Date and who on
                                 that date have become Designated Employees
                                 pursuant to Rule 2.1.3, a period of not less
                                 than one year or such period as may from
                                 time to time be substituted therefor by the
                                 Board in accordance with the Scheme or such
                                 period as may be substituted therefor by the
                                 operation of Rule 3.2;

      "Relevant Subsidiaries"    Advanced Semiconductor Materials Asia
                                 Limited, ASM Assembly Automation Limited,
                                 ASM Assembly Materials Limited, Advanced
                                 Semiconductor Materials


                                      -10-

                                 (Overseas) Limited and any other Subsidiary
                                 which may hereafter execute a deed of
                                 adherence in the form set
                                 out in Schedule 2 to the Deed (with such
                                 modifications, if any, as may be agreed
                                 between the Company and the Trustees);

      "the Scheme"               the ASM Pacific Technology Limited
                                 Employee Share Incentive Scheme (as
                                 constituted by the Deed and these Rules) in
                                 its present form or as from time to time
                                 amended in accordance with the provisions
                                 hereof;

      "Share"                    a fully paid share of HK$0.10 in the capital
                                 of the Company or such other description and
                                 denomination of share in the capital of the
                                 Company as represents such share following any
                                 reorganization of the capital of the Company;

      "Stock Exchange"           The Stock Exchange of Hong Kong Limited;

      "Subsidiary"               a subsidiary (as defined in section 2 of the
                                 Companies Ordinance) of the Company;

      "substantial shareholder"  in relation to a company means a person
                                 entitled to exercise, or control the exercise,
                                 of 10 per cent or more of the voting power at
                                 any general meeting of the said company;

      "Trustees"                 the trustee or trustees of the Scheme from
                                 time to time and for the time being;

      "year"                     a period of one year ending on the 31st
                                 December or such other period ending on such
                                 other date as the Board may from time to
                                 time determine, being in either case the
                                 date of which the audited (consolidated)
                                 accounts of the Company and the Group are
                                 made up.


                                      -11-

1.2   Reference to any statutory provisions are to those provisions as amended
      or re-enacted from time to time and, unless the context otherwise
      requires, words in the singular include the plural (and vice versa) and
      words importing any gender include all genders.

2.    Funding of the Scheme and Provisional Allocation of Funds

2.1   Within 40 days of the Company announcing, during a year in respect of
      which the Board shall have resolved that the Scheme shall operate, its
      final results in respect of the previous year, the Board shall determine:

      2.1.1 what percentage of the consolidated profits (before tax and
            extraordinary items) of the Group in respect of the said previous
            year shall be paid to the Trustees to be held by them upon the terms
            of the Scheme;

      2.1.2 the aggregate amount of the funds to be paid to the Trustees
            pursuant to Rule 2.1.1 to be allocated to Designated Employees of
            each Participating Company and the consequent payment which each
            Participating Company must make to the Trustees; and

      2.1.3 the Eligible Employees for whose benefit such funds shall be held,
            and the amount to be allocated to each such Designated Employee.

2.2   Immediately following determination of the matters set out in Rule 2.1,
      the Company shall notify:

      2.2.1 each Participating Company in writing of the Allocation Date, the
            length of the Qualification Period beginning on that date and the
            aggregate amount of funds allocated to Designated Employees of each
            Participating Company and shall request each Participating Company
            to pay the amount allocated to its Designated Employees to the
            Trustees no later than the fifth business day following the date of
            such notification;

      2.2.2 each Designated Employee to whom funds have been allocated pursuant
            to Rule 2.1.3, either by sending to him, or by making available to
            him at his place of work, a letter of notification, setting out the
            fact that funds have been so allocated,


                                      -12-

            the amount of those funds, the terms upon which they are to be held
            by the Trustees, the Allocation Date, the length of the
            Qualification Period applicable to him and any other matters which
            the Company deems necessary or desirable; and

      2.2.3 the Trustees of the determinations of the Board pursuant to Rules
            2.1.2 and 2.1.3.

2.3   Each Participating Company shall on the due date pay to the Trustees in
      cash the amount required to be paid by it pursuant to Rule 2.2.1.

2.4   All funds at any time paid to the Trustees by Participating Companies
      pursuant to Rule 2.3 shall be held upon trust and applied by the Trustees
      in accordance with the provisions of the Deed and these Rules for the
      benefit of Designated Employees in accordance with their respective
      interests therein.

2.5   The Trustees shall at all times maintain accounts and records which
      clearly identify:

      (a)   every payment of funds to the Trustees by a Participating Company
            pursuant to Rule 2.2.1;

      (b)   the Allocation Date and Qualification Period referable to each
            such payment of funds;

      (c)   the Designated Employees for whose benefit each such payment has
            been made and the amount of such payment allocated to each of them;
            and

      (d)   the date(s) upon which each such payment is applied in the
            subscription and/or purchase of Shares pursuant to the Scheme.

      so that each such payment shall be treated as a discrete sub-fund of the
      monies for the time being held on trust by the Trustees pursuant to the
      Scheme and the amount thereof, and the identities and interests of the
      Designated Employees entitled thereto, are at all times capable of being
      readily ascertained.


                                      -13-

3.    Acquisition of Shares

3.1   Subject to the provisions of Rules 3.2 and 3.9 and 4, as soon as
      practicable following the expiry of each Qualification Period, the
      Trustees shall apply the funds paid to them by Participating Companies on
      the Payment Date for that Qualification Period:

      3.1.1 in subscribing for Shares for cash at par on behalf of those
            Eligible Employees who became Designated Employees with respect to
            such funds on the Allocation Date with which that Qualification
            Period began; and/or

      3.1.2 in purchasing Shares at market price on the Stock Exchange on behalf
            of those Eligible Employees who became Designated Employees with
            respect to such funds on that Allocation Date; and

      3.1.3 in paying all costs, charges and expenses, including brokers fees
            and stamp duty ancillary to such subscription and/or purchase;

      provided that if any such Designated Employee:

      3.1.4 ceases to be an executive or non-executive director or an employee
            of the Participating Company or Companies of which he is an
            executive or non-executive director or by which he is employed at
            any time during that Qualification Period other than:

            (i)   in circumstances where the Designated Employee is or is to
                  be re-employed by, or appointed an executive or
                  non-executive director of, another Participating Company; or

            (ii)  by death; or

            (iii) by retirement at normal retirement age; or

            (iv)  by retirement for reasons of ill-health or physical
                  incapacity; or

3.1.5       is, at the expiry of that Qualification Period, under notice to
            terminate his tenure of office and/or employment with such Company
            or Companies, whether such notice is given by the relevant
            Participating Company or Companies or the Designated Employee;


                                      -14-

            any such funds allocated to him on that Allocation Date shall not be
            so applied but shall be applied by the Trustees in discharging the
            liabilities under Rule 3.6 of the Participating Company or Companies
            of which that Designated Employee was an executive or non-executive
            director or by which he was employed on that Allocation Date.

3.2   In the event of the Company or any Subsidiary selling or otherwise
      disposing of the whole or any part of its shareholding in any
      Participating Company so that the said Participating Company ceases to be
      a Participating Company pursuant to clause 3.2.1 of the Deed, all
      Qualification Periods which are unexpired as at the date of completion of
      such sale or disposal shall, for the purposes of Rule 3.1, be deemed to
      expire on the said completion date in respect of the funds paid by the
      said Participating Company to the Trustees for the benefit of its
      Designated Employees, so that the said Designated Employees shall not lose
      the benefit of funds paid on their behalf to the Trustees, but shall be
      entitled to benefit therefrom forthwith pursuant to the terms of the
      Scheme.

3.3   Subject to the limitations in Rule 4, the Trustees may decide in their
      absolute discretion whether to apply the funds paid to them pursuant to
      Rule 2.3 (after deduction of such amounts required for the payment of
      costs pursuant to Rule 3.7.2) in subscribing for, or in purchasing,
      Shares, and if Shares are to be both purchased and subscribed for, the
      Trustees shall determine the relative amounts to be so applied.

3.4   In the event that the Trustees choose to apply any part of the available
      funds in subscribing for Shares:

      3.4.1 the Trustees shall notify the Board in writing as soon as possible
            of the number of Shares to be subscribed for and the names of the
            Designated Employees to whom such Shares are to be allotted;

      3.4.2 within 5 business days of receipt of such notification the Board
            shall meet to allot the relevant number of Shares to such Designated
            Employees subject only to payment of the subscription price therefor
            by the Trustees; and


                                      -15-

      3.4.3 share certificates in respect of such Shares shall be issued in the
            names of the relevant Designated Employees and dispatched to the
            Trustees for distribution to those Designated Employees.

3.5   In the event that the Trustees choose to apply any part of the available
      funds in purchasing Shares on the Stock Exchange, the Trustees shall
      ensure that such Shares are purchased and registered in the names of the
      relevant Designated Employees.

3.6   If on a subscription or purchase of Shares by the Trustees, the funds held
      by the Trustees on behalf of any one Designated Employee are found to be
      insufficient (after deduction of such sum as the Trustees deem appropriate
      for the payment of costs and expenses relating to the purchase of or
      subscription for Shares on behalf of that Eligible Employee) to subscribe
      or purchase a whole number of Shares, the number of Shares to be
      subscribed for or purchased on behalf of that Designated Employee shall be
      rounded down to the nearest whole Share which may be subscribed or
      purchased by the available funds, and the balance of such funds shall be
      reimbursed forthwith to the Participating Company by which that Designated
      Employee was employed on the Allocation Date on which he became a
      Designated Employee (and, if more than one, to those Participating
      Companies, pro rata to the payments made by each such Company on behalf of
      the relevant Designated Employee on the relevant Payment Date).

3.7   Without prejudice to the provisions of the Deed, all costs from time to
      time incurred by the Trustees in subscribing and purchasing Shares
      pursuant to the Scheme and in administering the Scheme (including without
      limitation all brokerage, commissions and stamp duty) shall be discharged
      by the Trustees from:

      3.7.1 those unapplied funds, if any, available pursuant to Rule 3.1 (any
            surplus of such funds being reimbursed forthwith to the
            Participating Company in question) and then if necessary;

      3.7.2 by apportioning the remaining costs amongst Designated Employees in
            proportion to their respective interests in any funds of which the
            Trustees shall stand possessed at the relevant time pending their
            application pursuant to the Scheme


                                      -16-

            and deducting such apportioned amount from the sum allocated to each
            Designated Employee so interested;

      and if any costs still remain to be discharged after applying sub-clause
      3.7.1 and 3.7.2, the amount of such costs shall be borne by the
      Participating Companies who last made payments to the Trustees pursuant to
      Rule 2.2.1 in the proportions which their respective payments bore to the
      aggregate of such payments.

3.8   All Shares subscribed for pursuant to Rule 3.1.1 shall carry the same
      rights as respects voting, dividends, transfer and all other rights,
      including those arising on a liquidation, as all other Shares in issue at
      the time of such subscription.

3.9   No Shares shall be subscribed for or purchased pursuant to the Scheme
      at any time:

      3.9.1 when less than 25% of the issued share capital of the Company is in
            the hands of the Public and such subscription or purchase would
            result in the percentage of the issued share capital of the Company
            in the hands of the public being further reduced; or

      3.9.2 when 25% or more of the issued share capital of the Company is in
            the hands of the Public and such subscription or purchase would
            result in the percentage of the issued share capital of the Company
            in the hands of the Public being reduced to below 25%;

            and in the event of the subscription or purchase of Shares being
            prevented by operation of this Rule, the Company shall procure that
            all steps as are reasonably practicable are promptly taken so as to
            enable the Scheme to operate free of the restrictions imposed by
            this Rule.

4.    Limitations

4.1   The maximum aggregate number of Shares which may be acquired by the
      Trustees pursuant to the Scheme shall not exceed 5 percent of the issued
      share capital of the Company from time to time, excluding any Shares
      acquired pursuant to the Scheme, provided that not more than 2 per cent of
      the number of Shares in issue at the


                                      -17-

      commencement of any year (excluding any Shares acquired then under the
      Scheme) may be acquired pursuant to the Scheme in that year.

4.2   In no circumstances may any Designated Employee acquire pursuant to the
      Scheme more than 15 per cent of the aggregate number of Shares acquired
      thereunder for the benefit of all Designated Employees.

4.3   The limits in this Rule 4 on the number of Shares which may be acquired
      under the Scheme shall be adjusted in such manner as the Auditors shall
      determine in writing to be, in their opinion, fair and reasonable
      following any capitalization issue, sub-division, consolidation or
      reduction of the share capital of the Company and in respect of any
      discount element in any rights issue undertaken by the Company to the
      intent that the said limits on the number of Shares which may be so
      acquired shall take account of any such event.

5.    Obligations of the Company

5.1   The Company shall:

      5.1.1 ensure that it has sufficient authorized but unissued share capital
            to be able to allot the maximum number of Shares for which the
            Trustees may subscribe in any year;

      5.1.2 pay all capital duty payable on increases of the Company's
            authorized capital made to ensure compliance with Rule 5.1.1;

      5.1.3 ensure that the Board is at all times authorized to allot the
            maximum number of Shares for which the Trustees may subscribe in any
            year;

      5.1.4 allot and issue all Shares acquired to be allotted and issued
            pursuant to the Scheme at any time on terms that they rank pari
            passu in all respects with all other Shares in issue at that time
            save for the right to participate in any dividends or other
            distributions declared made or paid on a date, or by reference to a
            record date, prior to such allotment and issue;


                                      -18-

      5.1.5 promptly apply for all Shares allotted pursuant to the Scheme to be
            listed and dealt in on the Stock Exchange.

6.    Notices

6.1   Any notice which any party hereto is required or may desire to give to any
      other party hereto or to any Designated Employee pursuant to this Scheme
      shall be sufficiently given if delivered to that party or Designated
      Employee personally or sent through the post pre-paid and addressed, in
      the case of a party hereto, to that party at his address set out in the
      Deed or at such other address notified by that party to all other parties
      hereto for that purpose, and, in the case of a Designated Employee,
      addressed to that Designated Employee at his address last known to the
      party giving the notice (including any address supplied by the relevant
      Participating Company as being his address), or sent through the Company's
      internal postal service, and if so sent by post shall be deemed to have
      been duly given on the day following the date of posting and if sent
      through the Company's internal postal service shall be deemed to have been
      duly given 72 hours after the date of posting. Any document so sent by
      post to any party who is an individual or to a Designated Employee shall
      be deemed to have been duly delivered notwithstanding that he is then
      deceased (and whether or not the party giving the notice has notice of his
      death), except where his personal representatives have established their
      title to the satisfaction of the party giving the notice and have supplied
      an address to which documents are to be sent.

7.    Disputes

      The decision of the Board in any dispute relating to any Eligible or
      Designated Employee or any other matter under this Scheme shall be final
      and conclusive subject to the certification of the Auditors having been
      obtained when so required.

8.    Termination of the Scheme

8.1   The Company in general meeting or the Board may at any time resolve to
      terminate this Scheme, in which event no further funds shall be paid to
      the Trustees by Participating


                                      -19-

      Companies, but the provisions of this Scheme in relation to funds already
      held by the Trustees shall continue in full force and effect and the
      Scheme may accordingly be operated to enable such funds to be applied in
      accordance with its terms.

8.2   The Scheme shall in any event terminate on the 10th anniversary of the
      date of the Deed whereupon the Trustees shall wind-up the Scheme in
      accordance with Rule 8.3 and, save for rights accrued prior to that date,
      the Deed shall thereupon cease to have any effect.

8.3   Upon the termination of the Scheme the Trustees shall (except to the
      extent the Trustees require monies to meet the expenses of determining the
      Scheme) thereupon account and pay to Participating Companies (so far as
      practicable) any monies held by them in the same proportion as they were
      provided.

9.    Rights in respect of the Scheme

      In no circumstances shall any Eligible or Designated Employee or any
      person who has ceased to be an Eligible or Designated Employee for any
      reason whatever or in respect of whom notice to terminate his tenure of
      office and/or employment has been given (whether by him or a Participating
      Company) be entitled to claim ___ against any Participating Company or the
      Trustees any compensation for or in respect of any loss he may suffer by
      reason of the operation of the terms of this Scheme.

10.   Alterations

10.1  These Rules may at any time be altered by a resolution of the Board (with
      the concurrence of the Trustees and, where appropriate, the Stock
      Exchange) and such alterations shall be binding on all Participating
      Companies provided that no such purported alteration shall be effective
      except with the prior sanction of the Company in general meeting if the
      alteration would have the effect of extending the classes of Eligible or
      Designated Employees (subject to the provisions of Rule 10.2), or of
      altering to the advantage of Eligible or Designated Employees (present or
      future) any of the provisions of Rules 3.8, 8.2 or 8.3 or any of the
      provisions of this Scheme which relate to the limitations on the number of
      Shares to be acquired hereunder, including the provisions


                                      -20-

      relating to adjustments to those figures, or to increasing the maximum
      annual entitlement of any individual Employee to any funds paid to the
      Trustees pursuant to the Scheme.

10.2  For the avoidance of doubt, the Board shall be entitled, by resolution of
      the Board alone, to specify for the purpose of paragraph (b) of the
      definition of "Eligible Employee" shorter periods than those contained in
      such paragraph for the purposes of the first and last occasions on which
      the Scheme is operated.


                                      -21-

                                   SCHEDULE 2

This Deed is made this     day of     198[  ]


BETWEEN:

(1)   ASM PACIFIC TECHNOLOGY LIMITED (the "Company");

(2)   ADVANCED SEMICONDUCTOR MATERIALS ASIA LIMITED;

(3)   ASM ASSEMBLY AUTOMATION LIMITED;

(4)   ADVANCED SEMICONDUCTOR MATERIALS (OVERSEAS) LIMITED;

(5)   ASM ASSEMBLY MATERIALS LIMITED
      (parties (2) to (5) above inclusive being the "Subsidiaries");

(6)   A.H. DEL PRADO;

(7)   LAM SEE PON, PATRICK;

      (parties (6) and (7) above inclusive being the "Trustees"); and

(8)   [          ] (the "New Subsidiary");


and is supplemental to a Trust Deed executed by the Company, the Subsidiaries
and the Trustees on the [   ] day of [             ] 1989 (the "Scheme").

WHEREAS:

A.    The Company was incorporated on the 21st day of November 1988 and on
      the 5th day of December 1988 each of the Subsidiaries became a
      subsidiary of the Company;

B.    The New Subsidiary has been invited and wishes to become a Participating
      Company in order that its Eligible Employees may participate in the Scheme
      as Designated Employees.

NOW THIS DEED WITNESSETH as follows:

1.    Terms defined in the Scheme bear the same meaning herein.


                                      -22-

2.    The New Subsidiary agrees to become a Participating Company and to be
      bound by the terms of the Scheme.

In witness whereof the parties hereto have set their hands and seals the day
first above written.

THE COMMON SEAL OF ASM PACIFIC             )
TECHNOLOGY LIMITED was hereunto            )
affixed in the presence of:                )

                  Director:                      /s/  Arthur H. del Prado

                  Secretary:                     /s/  Patrick Lam See Pong

THE COMMON SEAL OF ADVANCED                )
SEMICONDUCTOR MATERIALS ASIA               )
LIMITED was hereunto affixed               )
in the presence of:                        )

                  Director:                      /s/  Arthur H. del Prado

                  Secretary:                     /s/  Patrick Lam See Pong

THE COMMON SEAL OF ASM                     )
ASSEMBLY AUTOMATION                        )
LIMITED was hereunto affixed               )
in the presence of:                        )

                  Director:                      /s/  Arthur H. del Prado

                  Secretary:                     /s/  Patrick Lam See Pong

THE COMMON SEAL OF ADVANCED                )
SEMICONDUCTOR MATERIALS                    )
(OVERSEAS) LIMITED was hereunto            )
affixed in the presence of:                )

                  Director:                      /s/  Arthur H. del Prado

                  Secretary:                     /s/  Patrick Lam See Pong


                                      -23-

THE COMMON SEAL OF ASM                     )
ASSEMBLY MATERIALS LIMITED                 )
was hereunto affixed in the presence of:   )

                  Director:                      /s/  Arthur H. del Prado

                  Secretary:                     /s/  Patrick Lam See Pong

SIGNED SEALED AND DELIVERED                )
by the said A.H. DEL PRADO                 )
in the presence of:                        )
/s/ Chan Lo Kwan                           )     /s/  Arthur H. del Prado



SIGNED SEALED AND DELIVERED                )
by the said LAM SEE PONG, PATRICK          )
in the presence of:                        )
/s/ Chan Lo Kwan                           )     /s/  Patrick Lam See Pong



THE COMMON SEAL of [the                    )
New Subsidiary]                            )
was hereunto affixed in the presence of:   )

                  Director:

                  Secretary:



THE COMMON SEAL of ASM PACIFIC             )
TECHNOLOGY LIMITED was hereunto            )
affixed in the presence of:                )

                  Director:                      /s/  Arthur H. del Prado

                  Secretary:                     /s/  Patrick Lam See Pong


                                      -24-

THE COMMON SEAL of ADVANCED                )
SEMICONDUCTOR MATERIALS ASIA               )
was hereunto affixed in the presence of:   )

                  Director:                      /s/  Arthur H. del Prado

                  Secretary:                     /s/  Patrick Lam See Pong

THE COMMON SEAL of ASM                     )
ASSEMBLY AUTOMATION LIMITED                )
was hereunto affixed in the presence of:   )

                  Director:                      /s/  Arthur H. del Prado

                  Secretary:                     /s/  Patrick Lam See Pong

THE COMMON SEAL of ADVANCED                )
SEMICONDUCTOR MATERIALS                    )
(OVERSEAS) LIMITED was hereunto            )
affixed in the presence of:                )

                  Director:                      /s/  Arthur H. del Prado

                  Secretary:                     /s/  Patrick Lam See Pong

THE COMMON SEAL of ASM                     )
ASSEMBLY MATERIALS LIMITED                 )
was hereunto affixed in the presence of:   )

                  Director:                      /s/  Arthur H. del Prado

                  Secretary:                     /s/  Patrick Lam See Pong


                                      -25-

SIGNED SEALED AND DELIVERED                )
by the said A.H. DEL PRADO                 )
in the presence of:                        )
/s/ Chan Lo Kwan                           )     /s/  Arthur H. del Prado




SIGNED SEALED AND DELIVERED                )
by the said LAM SEE PONG, PATRICK          )
in the presence of:                        )
/s/ Chan Lo Kwan                           )     /s/  Patrick Lam See Pong



                                      -26-

EX-4.15

                                                                    Exhibit 4.15

                        DATED THE 12TH DAY OF APRIL, 1999

                         ASM PACIFIC TECHNOLOGY LIMITED

                                ASM ASIA LIMITED

                         ASM ASSEMBLY AUTOMATION LIMITED

                         ASM ASSEMBLY MATERIALS LIMITED

              THE COMPANIES WHOSE NAMES ARE SET OUT IN THE SCHEDULE

                                       and

                    A.H. DEL PRADO and LAM SEE PONG, PATRICK
                ------------------------------------------------
                                DEED OF ADHERENCE
                          RELATING TO PARTICIPATION IN
                       THE EMPLOYEE SHARE INCENTIVE SCHEME
                                       OF
                         ASM PACIFIC TECHNOLOGY LIMITED

               --------------------------------------------------







                              JENNIFER CHEUNG & CO.
                                   Solicitors
                                    Hong Kong
                                  (JC/0020/99)

THIS DEED is made the 12th day of April, 1999

BETWEEN:

(1)      ASM PACIFIC TECHNOLOGY LIMITED (the "Company");

(2)      ASM ASIA LIMITED;

(3)      ASM ASSEMBLY AUTOMATION LIMITED;

(4)      ASM ASSEMBLY MATERIALS LIMITED
         (parties (2) to (4) above inclusive being the "Subsidiaries");

(5)      THE COMPANIES WHOSE NAMES ARE SET OUT IN SCHEDULE 1 (the "Participating
         New Subsidiaries"); and

(6)      A.H. DEL PRADO AND LAM SEE PONG, PATRICK.

And is supplemental to a Trust Deed executed by the Company, the Subsidiaries,
Advanced Semiconductor Materials (Overseas) Limited and the Trustees on the 23rd
day of March 1990 (the "Scheme").

WHEREAS:

A.       The Company was incorporated on the 21st day of November 1988 and on
         the 5th day of December 1988 each of the Subsidiaries became a
         subsidiary of the Company.

B.       Advanced Semiconductor Materials (Overseas) Limited was dissolved on
         21st December, 1993.

C.       Each of the Participating New Subsidiaries has become a Participating
         Company on the date set opposite its name in the Schedule (the
         "Participating Date") so that its eligible employees may participate in
         the Scheme as Designated Employees.

NOW THIS DEED WITNESSETH as follows:

1.       Terms defined in the Scheme bear the same meaning herein.

2.       The parties hereto confirm and ratify the participation of each
         Participating New Subsidiaries as a Participating Company with effect
         from the Participating Date, and each Participating New Subsidiaries
         confirms that it has complied with the terms of the Scheme with effect
         from the Participating Date and agrees to be bound by the terms of the
         Scheme.



                                      -1-

In witness whereof the parties hereto have set their hands and seals the day
first above written.

THE COMMON SEAL of ASM PACIFIC      )
TECHNOLOGY LIMITED was              )
Hereunto affixed in the             )
Presence of:                        )




/s/  Arthur H. del Prado                    /s/  Patrick Lam See Pong
- ------------------------------------        ------------------------------------
A.H. Del Prado                              Lam See Pong, Patrick
Director                                    Director





THE COMMON SEAL of ASM ASIA         )
LIMITED was hereunto affixed        )
in the presence of:                 )




/s/  Arthur H. del Prado                    /s/  Patrick Lam See Pong
- ------------------------------------        ------------------------------------
A.H. Del Prado                              Lam See Pong, Patrick
Director                                    Director




THE COMMON SEAL of ASM              )
ASSEMBLY AUTOMATION LIMITED         )
was hereunto affixed in the         )
presence of:                        )




/s/  Arthur H. del Prado                    /s/  Patrick Lam See Pong
- ------------------------------------        ------------------------------------
A.H. Del Prado                              Lam See Pong, Patrick
Director                                    Director


                                      -2-

THE COMMON SEAL of ASM              )
ASSEMBLY MATERIALS LIMITED          )
was hereunto affixed in the         )
presence of:                        )




/s/  Arthur H. del Prado                    /s/  Patrick Lam See Pong
- ------------------------------------        ------------------------------------
A.H. Del Prado                              Lam See Pong, Patrick
Director                                    Director




THE COMMON SEAL of ASM              )
TECHNOLOGY SINGAPORE PTE            )
LIMITED was hereunto affixed        )
in the presence of:                 )




/s/  Arthur H. del Prado                    /s/  Patrick Lam See Pong
- ------------------------------------        ------------------------------------
A.H. Del Prado                              Lam See Pong, Patrick
Director                                    Director




THE COMMON SEAL of CAPITAL          )
EQUIPMENT DISTRIBUTION LIMITED      )
was hereunto affixed in the         )
presence of:                        )




/s/  Patrick Lam See Pong                   /s/  Alan Fung Shu Kan
- ------------------------------------        ------------------------------------
Lam See Pong, Patrick                       Fung Shu Kan, Alan
Director                                    Director


                                      -3-

SIGNED SEALED AND DELIVERED by      )
A.H. DEL PRADO in the presence      )
of:                                 )

/s/  Arthur H. del Prado                    /s/  Trudy Veldhuisen
                                            ------------------------------------
                                            Trudy Veldhuisen

SIGNED SEALED AND DELIVERED by      )
LAM SEE PONG, PATRICK in the        )
presence of:                        )

/s/  Patrick Lam See Pong                   /s/  Amy Wong Yee Man
                                            ------------------------------------
                                            Wong Yee Man, Amy



                                      -4-

                                    SCHEDULE

                         PARTICIPATING NEW SUBSIDIARIES


Name                                                         Participating Date
- ----                                                         ------------------
                                                          
ASM TECHNOLOGY                                               9th December, 1989
SINGAPORE PTE
LIMITED

CAPITAL EQUIPMENT                                            23rd February, 1996
DISTRIBUTION LIMITED





                                      -5-

EX-4.16

                                                                    Exhibit 4.16

                        DATED THE 30TH DAY OF JUNE, 1999

                         ASM PACIFIC TECHNOLOGY LIMITED

              THE COMPANIES WHOSE NAMES ARE SET OUT IN THE SCHEDULE

                                       and

                    A.H. DEL PRADO and LAM SEE PONG, PATRICK



                ------------------------------------------------
                                SUPPLEMENTAL DEED
                                   RELATING TO
                       THE EMPLOYEE SHARE INCENTIVE SCHEME
                                       OF
                         ASM PACIFIC TECHNOLOGY LIMITED

               --------------------------------------------------








                              JENNIFER CHEUNG & CO.
                                   Solicitors
                                    Hong Kong
                                  (JC/0020/99)

THIS SUPPLEMENTAL DEED is made the 30th day of June, 1999

BETWEEN   :

(1)      ASM PACIFIC TECHNOLOGY LIMITED whose registered office is at Caledonian
         House, Grand Cayman, Cayman Islands, British West Indies (the
         "Company");

(2)      THE COMPANIES whose names are set out in the Schedule; and

(3)      A.H. DEL PRADO of Jan Steenlan 9,3723 BS Bilthoven, the Netherlands and
         Lam See Pong, Patrick of Princess Terrace, 11th Floor, Block A, 21 Man
         Fuk Road, Kowloon, Hong Kong (the "First Trustees").

WHEREAS:

(A)      The Company, ASM Asia Limited, ASM Assembly Automation Limited,
         Advanced Semiconductor Materials (Overseas) Limited (which was
         dissolved on 21st December, 1993), ASM Assembly Materials Limited and
         the First Trustees executed a deed dated 23rd March, 1990 relating to
         the establishment of a share incentive scheme for the provision by the
         Company and other Participating Companies of funds for the subscription
         or purchase by the Trustees of Shares (the "Deed"). The other companies
         named in the Schedule hereto are Participating Companies joining the
         Scheme subsequent to the date of the Deed.

(B)      By a resolution of the shareholders of the Company passed on 25th June,
         1999, amendments to the Rules were approved.

NOW THIS SUPPLEMENTAL DEED WITNESSETH as follows:

1.       Definitions

         Words and expressions defined in the Deed and the rules set out in
         Schedule 1 to the Deed shall, unless the context otherwise requires,
         have the same meanings in this Supplemental Deed, including the
         recitals hereto.

2.       Alterations to the Scheme

2.1      The parties hereto agree that the Rules shall be amended as follows:

         (a)      The existing provisions of Rule 2.1.1 be deleted and be
                  replaced by the following:

                  "2.1.1.  what percentage of the consolidated profits (before
                           tax and extraordinary items) of the Group in respect
                           of the said previous year shall be paid to the
                           trustees to be held by them upon the terms of the
                           Scheme, provided that such shall not exceed 2
                           percent."

         (b)      The existing provisions of Rule 4.1 be deleted and be replaced
                  by the following with effect from 23rd March, 2000:

                                      -1-

                  "4.1     The maximum aggregate number of Shares which may be
                           subscribed for or purchased by the Trustees pursuant
                           to the Scheme after 23rd March, 2000 shall not exceed
                           5 percent, of the issued share capital of the Company
                           from time to time, excluding any Shares acquired
                           pursuant to the Scheme since 23rd March, 1990,
                           provided that not more than 2 percentage, of the
                           number of Shares in issue at the commencement of any
                           year (excluding any Shares subscribed for or
                           purchased then under the Scheme since 23rd March,
                           1990) may be subscribed for or purchased pursuant to
                           the Scheme in that year."

         (c)      Rule 8.2 of the Scheme be amended to the effect that the
                  Scheme shall only terminate on 23rd March, 2010 and that the
                  figure "10th" appearing in such Rule be deleted and be
                  replaced by the figure "20th".

2.2      Save as amended aforementioned, all the terms and conditions contained
         in the Scheme and the Deed shall remain in full force and effect.

3.       Governing Law

         This Supplemental Deed shall be governed by and construed in accordance
         with the laws of Hong Kong.

IN WITNESS whereof these presents have been entered into the day and year first
above written.

THE COMMON SEAL of ASM PACIFIC      )
TECHNOLOGY LIMITED was              )
hereunto affixed in the             )
presence of:                        )




/s/  Arthur H. del Prado                    /s/  Patrick Lam See Pong
- ------------------------------------        ------------------------------------
A.H. Del Prado                              Lam See Pong, Patrick
Director                                    Director



                                      -2-

THE COMMON SEAL of ASM ASIA         )
LIMITED was hereunto affixed        )
in the presence of:                 )




/s/  Arthur H. del Prado                    /s/  Patrick Lam See Pong
- ------------------------------------        ------------------------------------
A.H. Del Prado                              Lam See Pong, Patrick
Director                                    Director




THE COMMON SEAL of ASM              )
ASSEMBLY AUTOMATION LIMITED         )
was hereunto affixed in the         )
presence of:                        )




/s/  Arthur H. del Prado                    /s/  Patrick Lam See Pong
- ------------------------------------        ------------------------------------
A.H. Del Prado                              Lam See Pong, Patrick
Director                                    Director




THE COMMON SEAL of ASM              )
ASSEMBLY MATERIALS LIMITED          )
was hereunto affixed in the         )
presence of:                        )




/s/  Arthur H. del Prado                    /s/  Patrick Lam See Pong
- ------------------------------------        ------------------------------------
A.H. Del Prado                              Lam See Pong, Patrick
Director                                    Director




                                      -3-

THE COMMON SEAL of ASM              )
TECHNOLOGY SINGAPORE PTE            )
LIMITED was hereunto affixed        )
in the presence of:                 )




/s/  Arthur H. del Prado                    /s/  Patrick Lam See Pong
- ------------------------------------        ------------------------------------
A.H. Del Prado                              Lam See Pong, Patrick
Director                                    Director




THE COMMON SEAL of CAPITAL          )
EQUIPMENT DISTRIBUTION LIMITED      )
was hereunto affixed in the         )
presence of:                        )




/s/  Patrick Lam See Pong                   /s/  Alan Fung Shu Kan
- ------------------------------------        ------------------------------------
Lam See Pong, Patrick                       Fung Shu Kan, Alan
Director                                    Director

SIGNED SEALED AND DELIVERED by      )
A.H. DEL PRADO in the presence      )
of:                                 )


/s/  Trudy Veldhuisen                       /s/  Arthur H. del Prado
- ------------------------------------
Trudy Veldhuisen


                                      -4-

SIGNED SEALED AND DELIVERED by      )
LAM SEE PONG, PATRICK in the        )
presence of:                        )


/s/  Amy Wong Yee Man                       /s/  Patrick Lam See Pong
- ------------------------------------
Wong Yee Man, Amy


                                      -5-

                                    SCHEDULE

                         PARTICIPATING NEW SUBSIDIARIES

ASM ASIA LIMITED

ASM ASSEMBLY AUTOMATION LIMITED

ASM ASSEMBLY MATERIALS LIMITED

ASM TECHNOLOGY SINGAPORE PTE LIMITED

CAPITAL EQUIPMENT DISTRIBUTION LIMITED



                                      -6-

EX-8.1

exv8w1

EX-10.1

exv10w1

EX-10.2

exv10w2

EX-10.3

exv10w3