##### Table of Contents





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, 2011



| ̈ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|- | -----------------------------------------------------------------------------------------



| ̈ | Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
|- | --------------------------------------------------------------------------------------------



Date of event requiring this shell company report



For the transition period from
            to



Commission File Number: 0-13355



ASM INTERNATIONAL N.V.

(Exact name of Registrant as specified in its charter)



The Netherlands

(jurisdiction of incorporation or organization)

Versterkerstraat 8, 1322 AP, Almere, the Netherlands

(Address of principal executive
offices)

Richard Bowers

Telephone: (602) 432-1713

Fax: (602) 470-2419

Email: dick.bowers@asm.com

Address: 3440 E. University Dr., Phoenix, AZ 85034, USA

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:



|                                |  |                                          
|------------------------------- |  | -----------------------------------------
|Title of each class             |  | Name of each exchange on which registered
|Common Shares, par value  0.04 |  | The NASDAQ Stock Market LLC              

Securities registered or to be registered pursuant to

Section 12(g) of the Act: None

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:55,377,020 common shares; 0 preferred shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes  x    No   ̈

If this annual report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.    Yes   ̈    No  x

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 whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such
files).    Yes  þ    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

|                           |  |                      |  |                         
|-------------------------- |  | -------------------- |  | ------------------------
|Large accelerated
filer  x |  | Accelerated
filer   ̈ |  | Non-accelerated
filer   ̈

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements
included in this filing:

U.S. GAAP  x    International Financial Reporting Standards as issued by the International

Accounting Standards
Board   ̈    Other   ̈

If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17   ̈    Item 18   ̈

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act):    Yes   ̈    No  x











---

##### Table of Contents

TABLE OF CONTENTS



|        |  |                                                            |  |  |    | 
|------- |  | ---------------------------------------------------------- |  |  | -- | 
|Part I  |  |                                                            |  |  |    | 
|        |  |                                                           
|Item 1  |  | Identity of Directors, Senior Management and Advisors      |  |  | 4  | 
|        |  |                                                           
|Item 2  |  | Offer Statistics and Expected Timetable                    |  |  | 4  | 
|        |  |                                                           
|Item 3  |  | Key Information                                            |  |  | 5  | 
|        |  | A. Selected Consolidated Financial Data                    |  |  | 5  | 
|        |  | B. Capitalization and Indebtedness                         |  |  | 7  | 
|        |  | C. Reasons for the Offer and Use of Proceeds               |  |  | 7  | 
|        |  | D. Risk Factors                                            |  |  | 7  | 
|        |  |                                                           
|Item 4  |  | Information on the Company                                 |  |  | 19 | 
|        |  | A. History and Development of the Company                  |  |  | 19 | 
|        |  | B. Business Overview                                       |  |  | 19 | 
|        |  | C. Organizational Structure                                |  |  | 35 | 
|        |  | D. Property, Plant and Equipment                           |  |  | 36 | 
|        |  |                                                           
|Item 4A |  | Unresolved Staff Comments                                  |  |  | 36 | 
|        |  |                                                           
|Item 5  |  | Operating and Financial Review and Prospects               |  |  | 36 | 
|        |  | A. Operating Results                                       |  |  | 37 | 
|        |  | B. Liquidity and Capital Resources                         |  |  | 50 | 
|        |  | C. Research and Development, Patents and Licenses, etc.    |  |  | 52 | 
|        |  | D. Trend Information                                       |  |  | 52 | 
|        |  | E. Off-Balance Sheet Arrangements                          |  |  | 53 | 
|        |  | F. Tabular Disclosure of Contractual Obligations           |  |  | 53 | 
|        |  |                                                           
|Item 6  |  | Directors, Senior Management and Employees                 |  |  | 54 | 
|        |  | A. Directors and Senior Management                         |  |  | 54 | 
|        |  | B. Compensation                                            |  |  | 56 | 
|        |  | C. Board Practices                                         |  |  | 56 | 
|        |  | D. Employees                                               |  |  | 57 | 
|        |  | E. Share Ownership                                         |  |  | 57 | 
|        |  |                                                           
|Item 7  |  | Major Shareholders and Related Party Transactions          |  |  | 57 | 
|        |  | A. Major Shareholders                                      |  |  | 57 | 
|        |  | B. Related Party Transactions                              |  |  | 58 | 
|        |  | C. Interests of Experts & Counsel                          |  |  | 58 | 
|        |  |                                                           
|Item 8  |  | Financial Information                                      |  |  | 58 | 
|        |  | A. Consolidated Statements and Other Financial Information |  |  | 58 | 
|        |  | B. Significant Changes                                     |  |  | 59 | 
|        |  |                                                           
|Item 9  |  | The Offer and Listing                                      |  |  | 59 | 
|        |  | A. Offer and Listing Details                               |  |  | 59 | 
|        |  | B. Plan of Distribution                                    |  |  | 60 | 
|        |  | C. Markets                                                 |  |  | 60 | 
|        |  | D. Selling Shareholders                                    |  |  | 60 | 
|        |  | E. Dilution                                                |  |  | 60 | 
|        |  | F. Expenses of the Issue                                   |  |  | 60 | 
|        |  |                                                           
|Item 10 |  | Additional Information                                     |  |  | 60 | 
|        |  | A. Share Capital                                           |  |  | 60 | 
|        |  | B. Memorandum and Articles of Association                  |  |  | 60 | 
|        |  | C. Material Contracts                                      |  |  | 60 | 
|        |  | D. Exchange Controls                                       |  |  | 60 | 
|        |  | E. Taxation                                                |  |  | 60 | 
|        |  | F. Dividends and Paying Agents                             |  |  | 67 | 
|        |  | G. Statement by Experts                                    |  |  | 67 | 
|        |  | H. Documents on Display                                    |  |  | 67 | 
|        |  | I. Subsidiary Information                                  |  |  | 67 | 
|        |  |                                                           
|Item 11 |  | Quantitative and Qualitative Disclosures About Market Risk |  |  | 67 | 
|        |  |                                                           
|Item 12 |  | Description of Securities Other Than Equity Securities     |  |  | 70 | 



2



---

##### Table of Contents

|                                           |  |                                                                              |     |  |    | 
|------------------------------------------ |  | ---------------------------------------------------------------------------- | --- |  | -- | 
|                                           |  |                                                                             
|Part II                                    |  |                                                                              |     |  |    | 
|                                           |  |                                                                             
|Item 13                                    |  | Defaults, Dividend Arrearages and Delinquencies                              |     |  | 71 | 
|                                           |  |                                                                             
|Item 14                                    |  | Material Modifications to the Rights of Security Holders and Use of Proceeds |     |  | 71 | 
|                                           |  |                                                                             
|Item 15                                    |  | Controls and Procedures                                                      |     |  | 71 | 
|                                           |  |                                                                             
|Item 16                                    |  |                                                                              |     |  | 71 | 
|                                           |  | A. Audit Committee Financial Expert                                          |     |  | 71 | 
|                                           |  | B. Code of Ethics                                                            |     |  | 72 | 
|                                           |  | C. Principal Accountant Fees and Services                                    |     |  | 72 | 
|                                           |  | D. Exemptions from the Listing Standards for Audit Committees                |     |  | 72 | 
|                                           |  | E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers    |     |  | 72 | 
|                                           |  | F. Change in Registrants Certifying Accountant                              |     |  | 73 | 
|                                           |  | G. Corporate Governance                                                      |     |  | 73 | 
|                                           |  |                                                                             
|Part III                                   |  |                                                                              |     |  |    | 
|                                           |  |                                                                             
|Item 17                                    |  | Financial Statements                                                         |     |  | 75 | 
|                                           |  |                                                                             
|Item 18                                    |  | Financial Statements                                                         |     |  | 75 | 
|                                           |  |                                                                             
|Item 19                                    |  | Exhibits                                                                     |     |  | 75 | 
|                                           | 
|Signatures                                 |  |                                                                              | S-1 | 
|                                           | 
|Index to Consolidated Financial Statements |  |                                                                              | F-1 | 



3



---

##### Table of Contents

PART I



As used in this report, the terms we, us,
our, ASMI, 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 (). The terms United States and U.S. refer to the United States of America.



Forward Looking Safe Harbor Statement



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 revenue,
sales, income, expenditures, sufficiency of cash generated from operations, maintenance of majority interest in ASM Pacific Technology Ltd. , business strategy, product development, product acceptance, market penetration, market demand, return on
investment in new products, product shipment dates, corporate transactions, restructurings, liquidity and financing matters, currency fluctuations, litigation involving intellectual property, shareholder matters, and outlooks. These statements may
be found under Item 4, Information on the Company, Item 5, Operating and Financial Review and Prospects and elsewhere in this report. Forward-looking statements are statements other than statements of historical
fact and typically are identified by use of terms such as may, could, should, project, believe, anticipate, expect, plan, estimate,
forecast, potential, intend, continue 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 risks discussed in
Item 3.D, Risk factors. The risks described are not the only ones facing ASMI. Some risks are not yet known and some that we do not currently believe to be material could later become material. Each of these risks could materially
affect our business, revenues, income, assets, liquidity and capital resources. All statements are made as of the date of this report, and we assume no obligation to update or revise any forward-looking statements to reflect future developments or
circumstances.



Item 1. Identity of
Directors, Senior Management and Advisors



Not
applicable.



Item 2. Offer Statistics and
Expected Timetable



Not applicable.



4



---

##### Table of Contents

Item 3. Key Information



A. Selected consolidated financial data.



The following selected financial data has been derived from ASMIs historical audited consolidated financial
statements. The selected financial data should be read in conjunction with Item 5, Operating and Financial Review and Prospects and Item 18, Financial Statements, and the accompanying notes for the corresponding
fiscal years:



|                                                                                                   |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|-------------------------------------------------------------------------------------------------- |  | ------------------------------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | - |  | ---- | --------- | - |  | - | ---------- | -
|                                                                                                   |  | Year ended December 31                |         
|                                                                                                   |  | 2007                                  |          |   | 2008 |   |          | 2009 |  |   | 2010     |   |  | 2011 |          
|                                                                                                   |  | EUR                                   |          |   | EUR  |   |          | EUR  |  |   | EUR      |   |  | EUR  |          
|                                                                                                   |  | (in thousands, except per share data) |         
|Consolidated Statements of Operations data:                                                        |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Net sales                                                                                          |  |                                       | 955,239  |   |      |   | 747,362  |      |  |   | 590,739  |   |  |      | 1,222,900 |   |  |   | 1,634,334  |  
|Cost of sales                                                                                      |  |                                       | (594,163 | ) |      |   | (477,100 | )    |  |   | (409,224 | ) |  |      | (673,322  | ) |  |   | (1,063,708 | )
|                                                                                                   |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Gross profit                                                                                       |  |                                       | 361,076  |   |      |   | 270,262  |      |  |   | 181,515  |   |  |      | 549,578   |   |  |   | 570,626    |  
|Operating expenses:                                                                                |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Selling, general and administrative                                                                |  |                                       | (129,676 | ) |      |   | (126,591 | )    |  |   | (107,777 | ) |  |      | (130,596  | ) |  |   | (174,107   | )
|Research and development, net                                                                      |  |                                       | (83,468  | ) |      |   | (75,011  | )    |  |   | (62,806  | ) |  |      | (78,785   | ) |  |   | (129,400   | )
|Amortization of other intangible assets                                                            |  |                                       | (553     | ) |      |   | (475     | )    |  |   | (401     | ) |  |      | (357      | ) |  |   | (911       | )
|Impairment of goodwill                                                                             |  |                                       |         |   |      |   | (1,395   | )    |  |   |         |   |  |      |          |   |  |   |           |  
|Impairment of property, plant and equipment                                                        |  |                                       |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   | (8,038     | )
|Restructuring expenses                                                                             |  |                                       |         |   |      |   | (7,068   | )    |  |   | (35,687  | ) |  |      | (11,201   | ) |  |   |           |  
|                                                                                                   |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Total operating expenses                                                                           |  |                                       | (213,697 | ) |      |   | (210,540 | )    |  |   | (206,671 | ) |  |      | (220,939  | ) |  |   | (312,455   | )
|                                                                                                   |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Operating income:                                                                                  |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Gain on bargain purchase                                                                           |  |                                       |         |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   | 109,279    |  
|                                                                                                   |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Earnings (loss) from operations                                                                    |  |                                       | 147,379  |   |      |   | 59,722   |      |  |   | (25,156  | ) |  |      | 328,640   |   |  |   | 367,450    |  
|Interest income                                                                                    |  |                                       | 6,113    |   |      |   | 4,047    |      |  |   | 1,018    |   |  |      | 1,221     |   |  |   | 2,902      |  
|Interest expense                                                                                   |  |                                       | (9,866   | ) |      |   | (7,745   | )    |  |   | (8,556   | ) |  |      | (15,677   | ) |  |   | (13,497    | )
|Gain (loss) resulting from early extinguishment of debt                                            |  |                                       | (10,049  | ) |      |   | 7,956    |      |  |   | (1,759   | ) |  |      | (3,609    | ) |  |   | (824       | )
|Accretion interest expense convertible notes                                                       |  |                                       |         |   |      |   |         |      |  |   | (4,286   | ) |  |      | (6,010    | ) |  |   | (4,401     | )
|Revaluation conversion option                                                                      |  |                                       |         |   |      |   |         |      |  |   | (24,364  | ) |  |      | (19,037   | ) |  |   | (4,378     | )
|Foreign currency exchange results                                                                  |  |                                       | (1,020   | ) |      |   | 785      |      |  |   | (1,384   | ) |  |      | (65       | ) |  |   | 5,604      |  
|                                                                                                   |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Earnings (loss) from continuing operations before income taxes                                     |  |                                       | 132,557  |   |      |   | 64,765   |      |  |   | (64,487  | ) |  |      | 285,462   |   |  |   | 352,855    |  
|Income tax expense                                                                                 |  |                                       | (19,245  | ) |      |   | (12,144  | )    |  |   | (3,786   | ) |  |      | (42,939   | ) |  |   | (36,692    | )
|                                                                                                   |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Earnings (loss) from continuing operations before dilution on investment in subsidiary             |  |                                       | 113,312  |   |      |   | 52,621   |      |  |   | (68,273  | ) |  |      | 242,523   |   |  |   | 316,164    |  
|Gain on dilution of investment in subsidiary(1)                                                    |  |                                       | 3,010    |   |      |   | 4,088    |      |  |   |         |   |  |      |          |   |  |   |           |  
|                                                                                                   |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Net earnings (loss)                                                                                |  |                                       | 116,322  |   |      |   | 56,709   |      |  |   | (68,273  | ) |  |      | 242,523   |   |  |   | 316,164    |  
|                                                                                                   |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Net earnings (loss) for allocation between shareholders of the parent and non-controlling interest |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Allocation of net earnings (loss)                                                                  |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Shareholders of the parent                                                                         |  |                                       | 60,977   |   |      |   | 18,411   |      |  |   | (107,517 | ) |  |      | 110,639   |   |  |   | 186,770    |  
|Non-controlling interest                                                                           |  |                                       | 55,345   |   |      |   | 38,298   |      |  |   | 39,244   |   |  |      | 131,884   |   |  |   | 129,394    |  
|                                                                                                   |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Earnings per Share data:                                                                           |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Basic net earnings (loss) per share                                                                |  |                                      | 1.13     |   |      |  | 0.35     |      |  |  | (2.08    | ) |  |     | 2.11      |   |  |  | 3.38       |  
|Diluted net earnings (loss) per share:                                                             |  |                                      | 1.07     |   |      |  | 0.35     |      |  |  | (2.08    | ) |  |     | 2.09      |   |  |  | 3.16       |  
|Basic weighted average number of shares (thousands)                                                |  |                                       | 53,968   |   |      |   | 52,259   |      |  |   | 51,627   |   |  |      | 52,435    |   |  |   | 55,210     |  
|Diluted weighted average number of shares (thousands)                                              |  |                                       | 65,076   |   |      |   | 52,389   |      |  |   | 51,627   |   |  |      | 61,494    |   |  |   | 64,682     |  
|Other data:                                                                                        |  |                                       |          |   |      |   |          |      |  |   |          |   |  |      |           |   |  |   |            |  
|Number of common shares outstanding at year end (in thousands)                                     |  |                                       | 54,005   |   |      |   | 54,275   |      |  |   | 51,745   |   |  |      | 52,932    |   |  |   | 55,377     |  
|Dividends declared on common shares                                                                |  |                                      | 0.10     |   |      |   |         |      |  |   |         |   |  |      |          |   |  |  | 0.40       |  
|Number of preferred shares outstanding at year end (thousands)                                     |  |                                       |         |   |      |   | 21,985   |      |  |   |         |   |  |      |          |   |  |   |           |  



5



---

##### Table of Contents

|                                 |  |                   |         |  |      |  |         |      |  |  |         |  |  |      |           |  |  |  |           | 
|-------------------------------- |  | ----------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- |  |  | ---- | --------- |  |  |  | --------- | 
|                                 |  | As of December 31 |        
|                                 |  | 2007              |         |  | 2008 |  |         | 2009 |  |  | 2010    |  |  | 2011 |          
|                                 |  | EUR               |         |  | EUR  |  |         | EUR  |  |  | EUR     |  |  | EUR  |          
|                                 |  | (in thousands)    |        
|Consolidated Balance Sheet data: |  |                   |         |  |      |  |         |      |  |  |         |  |  |      |           |  |  |  |           | 
|Cash and cash equivalents        |  |                   | 167,923 |  |      |  | 157,277 |      |  |  | 293,902 |  |  |      | 340,294   |  |  |  | 390,250   | 
|Total assets                     |  |                   | 840,333 |  |      |  | 767,798 |      |  |  | 851,700 |  |  |      | 1,214,117 |  |  |  | 1,582,221 | 
|Net current assets(2)            |  |                   | 392,213 |  |      |  | 372,029 |      |  |  | 419,535 |  |  |      | 509,867   |  |  |  | 739,252   | 
|Total debt                       |  |                   | 186,936 |  |      |  | 153,682 |      |  |  | 265,430 |  |  |      | 215,681   |  |  |  | 195,409   | 
|Capital stock                    |  |                   | 2,160   |  |      |  | 2,171   |      |  |  | 2,070   |  |  |      | 2,117     |  |  |  | 2,215     | 
|Total shareholders equity       |  |                   | 318,878 |  |      |  | 317,902 |      |  |  | 241,229 |  |  |      | 411,460   |  |  |  | 659,796   | 



|(1) | Following the adoption of ASC 810(-10 45-23) in 2009 results on dilution of investments in subsidiaries are accounted for directly in equity. The 2009 results and changes in
equity have been adjusted accordingly.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Net current assets is calculated as the difference between total current assets, including cash and cash equivalents, and total current liabilities.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------



6



---

##### Table of Contents

Exchange Rate Information



We publish our consolidated financial statements in euros. In this
Annual Report, references to , euro or EUR are to euros, and references to $, U.S.
dollar, USD or US$ are to United States dollars.



The following table sets forth, for each period indicated, specified information regarding the U.S. dollar per euro exchange rates based on the rates of the European Central Bank, referred to as the reference
rate. On February 29, 2012, the reference rate was 1.3443 U.S dollars per euro. Prior to January 1, 2009, the exchange rate was based on the noon buying rate in 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.



U.S. Dollar per Euro Exchange Rate



|     |  |               |        |  |             |  |        |              |  |  |              |  |  |             |        |  |                |  |        |  |  |  |        | 
|---- |  | ------------- | ------ |  | ----------- |  | ------ | ------------ |  |  | ------------ |  |  | ----------- | ------ |  | -------------- |  | ------ |  |  |  | ------ | 
|     |  | September2011 |        |  | October2011 |  |        | November2011 |  |  | December2011 |  |  | January2012 |        |  | February2012 1 | 
|High |  |               | 1.4285 |  |             |  | 1.4160 |              |  |  | 1.3809       |  |  |             | 1.3511 |  |                |  | 1.3176 |  |  |  | 1.3454 | 
|Low  |  |               | 1.3430 |  |             |  | 1.3181 |              |  |  | 1.3229       |  |  |             | 1.2889 |  |                |  | 1.2669 |  |  |  | 1.2982 | 



|                       |  |                          |        |  |      |  |        |      |  |  |        |  |  |      |        |  |  |  |        | 
|---------------------- |  | ------------------------ | ------ |  | ---- |  | ------ | ---- |  |  | ------ |  |  | ---- | ------ |  |  |  | ------ | 
|                       |  | Years Ended December 31, |       
|                       |  | 2007                     |        |  | 2008 |  |        | 2009 |  |  | 2010   |  |  | 2011 |       
|Average exchange rate2 |  |                          | 1.3797 |  |      |  | 1.4695 |      |  |  | 1.3963 |  |  |      | 1.3207 |  |  |  | 1.4000 | 



|(1) | Through February 29, 2012.
|--- | --------------------------

|(2) | Average of the exchange rates on the last day of each month during the period presented.
|--- | ----------------------------------------------------------------------------------------



B. Capitalization and indebtedness.



Not applicable.



C. Reasons for the offer and use of proceeds.



Not applicable.



D. Risk factors.



You should carefully consider each of the risks and uncertainties
described below and all other information contained in this Annual Report on Form 20-F. In order to help assess the major risks in our business, we have identified many, but not all, of these risks, which may not be in order of likelihood or
materiality. Due to the scope of our operations, a wide range of factors both known and unknown could materially affect future developments and performance.



If any of the following risks are realized, our business, financial condition, cash flow or results of operations could be materially and adversely
affected, and as a result, the trading price of our common stock could be materially and adversely impacted. These risk factors should be read in conjunction with other information set forth in this Report, including without limitation Item 4
Information on the Company, Item 5 Operating and Financial Review and Prospects, and our Consolidated Financial Statements and related notes.



RISKS RELATED TO OUR INDUSTRY



The industry in which we operate is highly cyclical.



We sell our products to the semiconductor manufacturing industry, which is subject to sudden, extreme, cyclical variations in product supply and
demand. Starting late in 2008 and continuing in 2009, this industry experienced a dramatic and unprecedented decline in demand for semiconductor devices due to the worldwide economic downturn, which led to significant layoffs, plant closings,
reduced capital expenditures and other cost reduction measures by semiconductor manufacturers. These conditions caused a substantial diminution in the demand for our products, which represent capital expenditures for our customers although a pick-up
in demand was evident in the second half of 2009 and continued through 2010. During 2011 order intake was mixed in the uncertain global climate and industry conditions. The timing, length and severity of these cycles cannot be predicted and future
downturns may result in changes in the semiconductor manufacturing industry and the manner in which we must conduct our business in ways that cannot now be predicted.



7



---

##### Table of Contents

Semiconductor manufacturers may contribute to the severity of downturn and upturn cycles by
misinterpreting the conditions in the industry and over-investing or under-investing in semiconductor manufacturing capacity and equipment. In any event, the lag between changes in demand for semiconductor devices and changes in demand for our
products by semiconductor manufacturers accentuates the intensity of these cycles in both expansion and contraction phases. We may not be able to respond timely and effectively to these industry cycles in the expansion and contraction phases.



Industry downturns historically have been characterized by
reduced demand for semiconductor devices and equipment, production over-capacity and a decline in average selling prices. During periods of declining demand, we must quickly and effectively reduce expenses. However, our ability to reduce expenses is
limited by our need for continued investment in engineering and research and development and extensive ongoing customer service and support requirements. In addition, in a downturn, our ability to reduce inventories quickly is limited by the long
lead time for production and delivery of some of our products, reduced sales, order cancellations and delays, and delays associated with reducing deliveries from our supplier pipeline. During an extended downturn, a portion of our inventory may have
to be written down as excess or obsolete if it is not sold in a timely manner.



Industry upturns have been characterized by fairly 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 hire and assimilate a sufficient number of additional qualified personnel, and fund such increase of manufacturing capacity. Our inability to quickly respond in
times of increased demand, because of the effect, for example, of our ongoing programs to reduce expenses and regulate the rate of purchases from our suppliers, could harm our reputation and cause some of our existing or potential customers to place
orders with our competitors rather than us.



Our industry
along with global financial markets and regions have been in flux since 2008. In particular, financial turmoil in the Eurozone has recently been unsettling, including the debt burden of certain nations and their ability to meet future
obligations, euro currency stability, and the continued suitability of the euro as a single currency. These concerns could possibly result in the reintroduction of individual currencies or even the dissolution of the euro itself. If the
euro ended, the contractual and legal consequences for holders of euro denominated obligations cannot be predicted; however, these possible developments and fluid market perceptions could negatively affect the value of euro denominated obligations
and assets. These financial concerns in Europe as well as the health of the overall global financial markets and a weaker or deteriorating global economy could also adversely impact our business, financial condition and operating results, such
as lower sales due to decreased capital purchases by our customers, financial instability or insolvency of suppliers and customers, and other such similar or related adverse effects.



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 future
success depends upon commercial acceptance of products incorporating new technologies we are developing, such as new plasma enhanced and atomic layer deposition processes, new epitaxy processes and new materials and chemistries. The semiconductor
industry and the semiconductor equipment industry are subject to rapid technological change and frequent introductions of enhancements to existing products which can result in significant write-downs and impairment charges and costs. 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, without limitation:



| |  |  | successful innovation of processes and equipment;
| | - |  | -------------------------------------------------



| |  |  | accurate technology and product selection;
| | - |  | ------------------------------------------



| |  |  | timely and efficient completion of product design, development and qualification;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | 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. We may also experience delays and technical and manufacturing difficulties in
future



8



---

##### Table of Contents

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 materially and negatively impact our operating results and 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, 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. If we have insufficient cash flow from our businesses to support the necessary level of research and
development, we will have to fund such expenditures by diminishing our cash balances, or utilizing our credit facilities or reducing our level of research and development expenses.



Because of intense competition in our industry and constant
technological evolution, the consequences of failing to invest in strategic developments are significant. 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 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 from companies which
have greater resources than we do, and potential competition from new companies entering the market in which we compete. 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 Systems (now LAM Research Corporation), Tokyo Electron, Kokusai, and
Jusung. Our primary competitors in the Back-end business include Kulicke & Soffa, ESEC, Shinkawa, Apic Yamada, BE Semiconductor Industries, Towa, Shinko and Mitsui. A number of our competitors have substantially greater financial,
technological, engineering, manufacturing, marketing and distribution resources, which may enable them to:



| |  |  | better withstand periodic downturns in the semiconductor industry;
| | - |  | ------------------------------------------------------------------



| |  |  | compete more effectively on the basis of price, technology, service and support;
| | - |  | --------------------------------------------------------------------------------



| |  |  | 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, without limitation:



| |  |  | 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 ownership of 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 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.



9



---

##### Table of Contents

Industry alliances may not select our equipment.



Our customers are entering into alliances or other forms of cooperation with one another to expedite the development of
processes and other manufacturing technologies. One of the results of this cooperation may be the definition of a system or particular tool set for a certain function or a series of process steps that uses a specific set of manufacturing equipment.
These decisions could work to our disadvantage if a competitors equipment becomes the standard equipment for such function or process. Even if our equipment was previously used by a customer, that equipment may be displaced in current and
future applications by the equipment standardized through such cooperation. These forms of cooperation may have a material adverse effect on our business, financial condition and results of operations.



RISKS RELATED TO OUR BUSINESS



Commencing in 2009, we implemented a major restructuring plan in our Front-end
operations, the execution of which involved risks to our business and financial results.



Our PERFORM! program, designed to streamline our Front-end global operations and reduce our cost base including a focused effort on lowering our working capital requirements, was started in 2009 and involved the
material restructuring of our significant Front-end operating, manufacturing and administrative units. These efforts and other initiatives continued through 2010. While the majority of the initiatives were finalized in 2010, we have continued in
2011 to further implement and build upon these initiatives as we have transitioned to a more global sales organization, a more centralized and cost efficient R&D function and the sharing of platforms among products. Changes of this magnitude
across a broad spectrum of our Front-end operations involve significant risks to our operations, including among others the following:



| |  |  | adverse impact on our ability to provide customers with timely delivery and satisfactory service;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | loss of intellectual capital through redirecting of R&D and other functions; and
| | - |  | --------------------------------------------------------------------------------



| |  |  | underestimation of cost or overestimation of benefit.
| | - |  | -----------------------------------------------------



We cannot assure you that we will be able to successfully manage these changes in the future or that the changes will achieve all desired effects of
streamlining our operations and reducing our cost base. If such ongoing or new efforts are not successful for any reason, including because the attendant costs are higher or benefits are lower than estimated, it could have a material adverse impact
on our competiveness, financial condition, results of operations and cash flows.



Our customers face challenges in economic downturns and if they cannot perform their obligations to us our financial results will suffer.



We face increased payment and performance risk in economic downturns
from our customers. If any of our customers become insolvent or commence bankruptcy or similar proceedings, our receivables from such customers may become uncollectible. In order to promote sales, we may be required to provide extended payment
terms, financing arrangements or other modified sale terms for some customers, which will increase our sales expenses and further increase our exposure to customer credit risk, all in an environment of downward pressure on average selling prices.
Even though we may be a secured creditor in these arrangements with rights in the underlying equipment, the equipment may have only limited value upon a customer default, especially if activity in our markets remains at low levels, which may result
in substantial write-downs upon any such default.



If we do
not accurately evaluate our customers creditworthiness in connection with sales financing arrangements involving increased exposure to customer payment risk, our bad debt expense will increase. If we are too cautious in our sales practices
because of this, we may lose sales. In either case, our results of operations and financial condition would be negatively affected.



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 if they
reschedule, reduce or cancel orders, or fail to make payments, 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 6.4% of our consolidated net sales in
2011. Our largest customer accounted for 22.8% and 3.5% of our Front-end and Back-end 2011 net sales, respectively. Our ten largest customers accounted for 27.9% of our consolidated net sales in 2011. Our ten largest customers accounted for 70.4%
and 20.2% of our Front-end and Back-end 2011 net sales, respectively. 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,



10



---

##### Table of Contents

which would reduce our revenues and negatively affect our financial results, perhaps materially. 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 ongoing research and development activities. 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 capital constraints that adversely affected our operations and ability to compete, particularly in our Front-end
business. We may require additional capital to finance our future growth and fund our ongoing research and development activities particularly with regard to our Front-end business. We have only limited ability to reallocate funds from our Back-end
business to our Front-end business and some limitations on our ability to reallocate funds among our Front-end businesses.



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 with debt, 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, particularly in times of global or
European financial crisis or uncertainty that may dramatically affect the availability of bank and other sources of debt financing.



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.



Our products (primarily in the Front-end) generally have long sales cycles and
implementation periods, which increase our costs of 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. Accordingly, the sales cycles of our products often last for many months or even years, thereby requiring us to invest significant resources in attempting to complete sales.



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 earnings from
operations.



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 and confidential information. These agreements and measures may not be
sufficient to protect our technology from third party infringement 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.



Intellectual property laws may not adequately support our proprietary
rights or may change in an unfavorable manner. Patent rights may not be granted or construed as we expect, and key patents may expire resulting in technology becoming available that may hurt our competitive position.



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 such countries. If competitors are
able to use our technology as their own, our ability to compete effectively could be harmed.



11



---

##### Table of Contents

In past years, there has been substantial litigation regarding patent and other intellectual property
rights in our semiconductor and related technology industries. In the future, 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.



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 potentially 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 with adverse financial consequences:



| |  |  | forfeit 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, produce, use, have sold, have produced or have used the relevant
technology, which license may not be available on reasonable terms or at all or may involve significant royalty payments;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | pay damages, including potential treble damages and attorneys fees in some circumstances; or
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | redesign those products that use the challenged intellectual property.
| | - |  | ----------------------------------------------------------------------



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, 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 a settlement fee and to grant it a worldwide,
non-exclusive and royalty-free license to use a number of our patents including but not limited to those patents which we were enforcing in the litigation. All licenses granted by Applied Materials to us expire at the end of the life of the
underlying patents which expire at various times through approximately 2016. Our obligation to pay certain royalties to Applied Materials generally continues until the expiration of the corresponding underlying patent to the extent we practice such
patent. In addition, the settlement agreement included covenants for limited periods during which the parties would 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. These covenants, which lasted for different periods of time for different products, have expired. 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 included in the agreement.



We recently determined that various Applied Materials patents licensed
under the settlement agreement and applicable to certain epitaxial equipment had expired. Accordingly, as of the third quarter of 2011, we ceased paying royalties on the sale of such equipment and believe we have overpaid prior royalties. Applied
Materials disputes our determination and has stated that we are obligated to pay royalties on the sale of these products through 2013. This dispute is being addressed in accordance with the procedures provided in the 1998 settlement agreement. The
amount of unpaid royalties which are being sought by Applied Materials is not material.



Additional litigation with Applied Materials regarding the operation of the settlement agreement or other matters could occur. Litigation with Applied Materials, which has greater financial resources than we do,
could negatively impact our earnings and financial position.



Our net
earnings 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 assets, liabilities and operating expenses are exposed to fluctuations of various foreign currency exchange rates.



In addition, foreign currency fluctuations may affect the prices of our products. Prices for our products for sales to our customers throughout the
world are currently denominated in various foreign currencies



12



---

##### Table of Contents

including, but not limited to, U.S. dollar, euro, Japanese yen and Chinese Yuan. 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 could increase relative to prices of our competitors, 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 earnings from operations could be subject to additional foreign exchange rate fluctuations.



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



Substantially all of our equipment orders are subject to operating, performance, safety, economic specifications and other contractual obligations. We occasionally experience unforeseen difficulties in
compliance with these criteria, which can result in increased design, installation and other costs and expenses.



Substantially all of our equipment sales are conditioned on our demonstration, and our customers acceptance, that the equipment meets
specified operating and performance criteria, either before shipment or after installation in a customers facility. We occasionally experience difficulties demonstrating compliance with such terms, which can lead to unanticipated expenses for
the performance of the contract or the redesign, modification and testing of the equipment and related software. To the extent this occurs in the future, our cost of goods sold and earnings from operations will be adversely affected. If we are not
able to demonstrate compliance with the particular contract or the performance and operating specifications in respect of specific equipment, we may have to pay penalties to the customer, issue credit notes to the customer and/or take other remedial
action, including payment of damages or adjusted pricing, any one of which could negatively affect our earnings from operations.



We are subject to various legal proceedings and claims, the outcomes of which are uncertain. If we fail to accurately evaluate the probability of loss or the
amount of possible losses, an adverse outcome may materially and adversely affect our financial condition and results of operations.



We are party to various legal proceedings and claims generally incidental to our business including without limitation intellectual property and
product liability claims, as disclosed in Note 22 of Notes to Consolidated Financial Statements included elsewhere in this report. For each of these proceedings and claims, our management evaluates, based on the relevant facts and legal principles,
the likelihood of an unfavorable outcome and whether the amount of the loss can be reasonably estimated, in connection with our determination of whether or not to record a charge to earnings. Significant subjective judgments are required in these
evaluations, including judgments regarding the validity of asserted claims and the likely outcome of legal, arbitration and administrative proceedings. The outcome of these proceedings is subject to a number of factors beyond our control. In
addition, estimates of the potential costs associated with legal, arbitration and administrative proceedings frequently cannot be subjected to any sensitivity analysis, as damage estimates or settlement offers by claimants may bear little or no
relation to the eventual outcome. Finally, in any particular proceeding, even where we believe that we would ultimately prevail, we may agree to settle or to terminate a claim or proceeding where we believe that doing so, when taken together with
other relevant commercial considerations, is more cost-effective than engaging in an expensive and protracted contest. If we do not accurately assess the probability of an unfavorable outcome or the range of possible loss, an unfavorable outcome
could have a material adverse impact on our financial condition and results of operations.



The Dutch Enterprise Court reviewed and dismissed the inquiry in relation to ASMI and Stichting Continuïteit ASM International.



During 2008, two ASMI shareholders requested the Dutch Enterprise
Court to investigate certain corporate governance matters in relation to the Company and Stichting Continuïteit ASM International. In August 2009, the Enterprise Court ordered an inquiry in respect of the affairs of the Company. In July 2010,
the Dutch Supreme Court annulled the order of the Enterprise Court and remanded the decision to the Enterprise Court to consider certain observations of the Supreme Court. The Enterprise Court dismissed the inquiry in June 2011 and ordered the
matter concluded. The plaintiffs appealed the dismissal ruling to the Dutch Supreme Court. The Dutch Supreme Court has not yet rendered a new decision.



If our products are found to be defective, we may be required to recall and/or replace them, which could be costly and result in a material adverse effect on our
business, financial position and net earnings.



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 and product



13



---

##### Table of Contents

liability claims that could impose substantial costs and have a material and adverse effect on our business, financial position and net earnings.



Although we currently are a majority 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. This event would have a significant
negative effect on our consolidated earnings from operations.



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 in our results. 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, 2011, we owned 52.17% of ASM Pacific Technology through our wholly-owned subsidiary, ASM Pacific Holding B.V. and
the remaining 47.83% was owned by the public. 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 in 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. This event would have a significant negative
effect on our consolidated earnings from operations, although our net earnings would be reduced only to the extent of the reduction of our ownership interest in ASM Pacific Technology.



The ASM Pacific Technology shares we own are partly pledged as security for our revolving credit facility. If such shares
were sold upon the exercise of remedies following an uncured default under this credit facility, we may no longer be able to consolidate the result of operations of ASM Pacific Technology.



ASM Pacific Technology has an employee share incentive program pursuant to which it can issue up to an aggregate of 7.5%
of its total issued shares subject to certain limitations. When ASM Pacific Technology issues shares pursuant to this program, our ownership interest is diluted. Our interest could further be diluted if ASM Pacific Technology issues equity for other
purposes. Any such decision by ASM Pacific Technology to issue additional shares requires the approval of shareholders in general meeting in accordance with the listing rules of the Hong Kong Stock Exchange, which in effect makes such decision
subject to our approval. We may need to purchase shares of ASM Pacific Technology or take other measures to maintain our majority interest in the future. There is no assurance that we will have sufficient financial resources to do so at that time.



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.



Certain directors of ASM Pacific Technology are directors of ASM International. However, 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 interest.



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 cannot compel the payment or amount of dividends. With respect to the payment of dividends, the directors must consider the financial position of ASM Pacific Technology after the dividend. Cash dividends received from ASM
Pacific Technology totaled  21.4 million,  65.6 million, and  86.9 in 2009, 2010, and 2011, respectively. In the past, we have used
these dividends in our Front-end business. In November 2006, we announced our commitment that for at least the years 2007, 2008 and 2009 we would not use these cash dividends to support our Front-end business, but instead would use such dividends to
retire outstanding convertible debt, repurchase our common shares, pay dividends on our common shares, or purchase shares of ASM Pacific Technology. At our 2010 Annual General Meeting, we announced that we would continue this commitment for at least
another two years through 2011. See Item 5, Operating and Financial Review and ProspectsManagements Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources.



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



14



---

##### Table of Contents

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 affiliates of ASM International who 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 Takeovers Code. In particular, under the Hong Kong Takeovers Code we would be excluded
from voting on a takeover transaction requiring shareholder approval if we have an interest in such transaction.



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 particularly during sustained economic upturns in the industry. 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 have agreements with some, but not all, key employees restricting their ability to compete with us after their
employment terminates. We do not maintain insurance to protect against the loss of key executives or employees. 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.
| | - |  | --------------------------------------------------------------------------------------------------------



We have in the past experienced intense competition for skilled
personnel during market expansions and believe competition will be intense if the semiconductor market experiences a sustained expansion. Consequently, we generally attempt to minimize reductions in skilled personnel in reaction to industry
downturns, which reduces our ability to lower costs by payroll reduction.



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 customers having a competing installed base, 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 using another suppliers equipment. Our inability to sell our products to potential customers who use another suppliers equipment could adversely affect our
ability to increase revenue and market share.



Our reliance on a limited
number of suppliers and a single manufacturing facility in our Front-end could result in disruption of our operations.



We outsource a portion of the manufacturing of our Front-end business to a limited number of suppliers. If our suppliers were unable or unwilling to
deliver products in a timely manner to us in the quantities we require for any reason, including without limitation, capital constraints, 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 customer relationships and financial performance. Many of our suppliers face economic challenges in a depressed or difficult global economy, which
increases our risk of disruption from a suppliers failure to perform its obligations to us in a timely manner.



We have shifted an increasing portion of our Front-end manufacturing to our Front-end Manufacturing Singapore (FEMS) facility, and expect to
increase the concentration of Front-end manufacturing there in the



15



---

##### Table of Contents

future. If this facility experiences a manufacturing disruption for any reason, including without limitation, natural disaster, labor unrest, capacity constraints, supply chain management
problems or contractual disputes, our ability to timely meet our customers needs may be impaired, which would negatively affect our customer relationships and financial performance.



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. A substantial portion of our manufacturing employees and operations are in the Peoples Republic of China and the success of our business
depends substantially on those operations. In addition, we have operating facilities in the Netherlands, the United States, Japan, Hong Kong, Singapore, Malaysia and South Korea. Our operations are subject to risks inherent in doing business
internationally, including, without limitation:



| |  |  | unexpected changes in regulatory or legal requirements or changes in one country in which we do business which are inconsistent with regulations in another
country in which we do business;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | potentially adverse tax consequences;
| | - |  | -------------------------------------



| |  |  | fluctuations in foreign currency exchange rates and foreign currency controls;
| | - |  | ------------------------------------------------------------------------------



| |  |  | political conditions and instability;
| | - |  | -------------------------------------



| |  |  | economic conditions and instability;
| | - |  | ------------------------------------



| |  |  | terrorist activities;
| | - |  | ---------------------



| |  |  | human health emergencies, such as the outbreak of infectious diseases or viruses;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | tariffs and other trade barriers, including current and future import and export restrictions and compliance requirements, and freight rates;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulty in staffing, coordinating and managing international operations;
| | - |  | ---------------------------------------------------------------------------



| |  |  | burden of complying with a wide variety of foreign laws and licensing requirements;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | differences in intellectual property right protection;
| | - |  | ------------------------------------------------------



| |  |  | differences in rights to enforce agreements;
| | - |  | --------------------------------------------



| |  |  | differences in commercial payment terms and practices; and
| | - |  | ----------------------------------------------------------



| |  |  | business interruption and damage from natural disasters, such as earthquakes, tsunamis and floods.
| | - |  | --------------------------------------------------------------------------------------------------



These factors could increase our costs of doing business in a
particular region or result in delays or cancellations of purchase orders or disrupt our supply chain, any of which could materially and adversely impact our business and operating results.



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. To the extent such
regulations or directives apply to our business throughout the world, 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 or scarce
materials. As with other companies engaged in similar activities, we face inherent risks of environmental liability in our current and historical manufacturing R&D activities. Accordingly, costs associated with such future environmental
compliance or remediation obligations could adversely affect our business.



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



We may consider from time to time additional investments in
complementary businesses, products or technologies, such as the recent acquisition by ASM Pacific Technology of the SEAS Business in early 2011. We may not be able to successfully integrate these businesses, products, technologies or personnel that
we might acquire in the future, and accordingly we may not realize the anticipated benefits from such acquisitions. In particular, our operation of acquired businesses involves numerous risks, including without limitation:



| |  |  | problems integrating the purchased operations, technologies or products;
| | - |  | ------------------------------------------------------------------------



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



16



---

##### Table of Contents

| |  |  | 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;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | risks associated with installation, service and maintenance of equipment of which we have limited or no prior experience;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | limited technical documentation of the equipment developed in the acquired company; and
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | potential loss of key employees, particularly those of the acquired organizations.
| | - |  | ----------------------------------------------------------------------------------



In addition, in the event of any future acquisitions of such businesses, products or technologies, 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 substantial accounting write-offs.
| | - |  | ----------------------------------------



RISKS RELATED TO AN INVESTMENT IN OUR SHARES



Lehman Bros. liquidation administrators have notified us that our common shares purchased by Lehman and held by Lehman in custody accounts on our behalf may have
a shortfall.



During 2008, we engaged Lehman to
repurchase ordinary ASMI shares on the Euronext and Nasdaq markets. As of September 15, 2008, Lehman had purchased and held 2,552,071 shares for our account. Lehman went into bankruptcy administration on September 15, 2008, and
we subsequently filed a submission giving notice of our proprietary interest in the shares believed to be held in custody by Lehman. At our May 2009 AGM, our shareholders resolved to cancel all of these treasury shares and we so notified Lehman
of the cancellation. However we were notified in September 2010 by the Lehman administrators that there is a possible shortfall in the number of shares held by Lehman as reflected in the statements of our accounts with Lehman. To the extent the
number of treasury shares held by Lehman as of the date of their cancellation is lower than 2,552,071 only such lower number of shares have been cancelled and the shortfall of shares may still be considered outstanding. The Lehman administrators
report that some time prior to its bankruptcy, Lehman put into a segregated client omnibus account a cash sum on our behalf of $6,758,796, which the administrators apparently regard as money to which we have a proprietary right in lieu of some or
all of the missing shares. We are uncertain at this time as to the accuracy of the shortfall of shares, the sufficiency of this cash sum to cover the value of any such discrepancy, and our entitlement to all or a portion of such sum when
distributions are determined and made since there is likely to also be a shortfall in Lehman assets subject to proprietary rights. Given the magnitude of the overall Lehman administration, the timeline for clarity and resolution of this item is
expected to be considerable, perhaps up to several years.



Our founder
who is also Chairman of the Board of ASM Pacific Technology controls approximately 20.48% of the voting power which gives him significant influence over matters voted on by our shareholders, including the election of members of our Supervisory Board
and Management Board and makes it substantially more difficult for a shareholder group to remove or elect such members without his support.



Our founder, Arthur H. del Prado, controlled approximately 20.48% of the voting power of our outstanding common shares as of December 31, 2011.
Accordingly, he has significant influence on the outcome of matters submitted to a shareholder vote, such as the election of the members of our Supervisory Board and Management Board. Persons nominated by the Supervisory Board for appointment by the
shareholders to the Supervisory Board or Management Board at a general meeting of shareholders will be elected if they receive a majority of the votes cast at the meeting. Nominees to the Supervisory Board or Management Board who are not
proposed by the Supervisory Board are appointed if they receive the affirmative vote of a majority of the votes cast at the meeting, provided such affirmative votes represent at least one third of our issued capital. Members of the Supervisory
and Management Boards may be removed only by the affirmative vote of a majority of the votes cast at a meeting, and, unless such removal is recommended by the Supervisory Board, the affirmative votes must represent at least one third of our issued
capital. This makes it difficult for a group of shareholders to remove or elect members of our Supervisory Board or Management Board without the support of our founder.



17



---

##### Table of Contents

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



The Company has granted to Stichting Continuïteit ASM
International (Stichting), a non-membership organization with a board composed of three members independent of ASMI, the right to acquire and vote our preferred shares. The objective of Stichting is to serve the interests of the Company.
To that objective Stichting may, among other things, acquire, own and vote our preferred shares in order to maintain our independence and/or continuity and/or identity. This may prevent a change of control from occurring that shareholders may
otherwise support. On May 14, 2008, Stichting exercised this right in response to a perceived threat to our continuity and acquired shares of our preferred stock representing 29.9% of the total voting power of our outstanding capital shares at
that time. These shares were retired in 2009 and a new right was issued to Stichting to acquire and vote preferred shares in certain situations in the future. For additional information regarding Stichting, see Item 7, Major Shareholders
and Related Party Transactions.



The voting power of
Stichting makes it more difficult for a shareholder or a group of shareholders to cause us to enter into a change of control transaction not supported by Stichting, even if such transaction offers our shareholders an opportunity to sell their shares
at a premium over the market price.



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



Pursuant to our 1997 settlement agreement with Applied Materials, 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, 2011 and December 31, 2011, the sale price of our common shares, as reported on the NASDAQ Global Select
Market, ranged from a low of US$ 22.23 to a high of US$ 44.60. 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 and the following, without limitation:



| |  |  | future announcements concerning our business or that of our competitors or customers;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | the introduction of new products or changes in product pricing policies by us or our competitors;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | litigation regarding proprietary rights or other matters;
| | - |  | ---------------------------------------------------------



| |  |  | changes in analysts earnings estimates and recommendations;
| | - |  | ------------------------------------------------------------



| |  |  | developments in the financial markets;
| | - |  | --------------------------------------



| |  |  | quarterly fluctuations in operating results;
| | - |  | --------------------------------------------



| |  |  | hedge fund and shareholder activist activities;
| | - |  | -----------------------------------------------



| |  |  | general economic, political and market conditions, such as recessions or foreign currency fluctuations; and
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | general conditions in the semiconductor and semiconductor equipment industries.
| | - |  | -------------------------------------------------------------------------------



In addition, public stock markets frequently experience substantial price and trading volume volatility, particularly in
the high technology sectors of the market. This volatility has significantly affected the market prices of securities of many technology companies for reasons frequently unrelated to or disproportionately impacted by the operating performance of
these companies. These broad market fluctuations may adversely affect the market price of our common shares.



Our quarterly revenues and earnings from operations have varied significantly in the past and may vary in the future due to a number of factors, including, without limitation:



| |  |  | 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;
| | - |  | ---------------------



18



---

##### Table of Contents

| |  |  | 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;
| | - |  | -------------------------------------------------



| |  |  | foreign currency exchange rate fluctuations; e.g. appreciation of the euro versus the Japanese yen and U.S. dollar, which would negatively affect the
competitiveness of those manufacturing activities that are domiciled in countries whose currency is the euro; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | economic conditions generally or in various geographic areas where we or our customers do business.
| | - |  | ---------------------------------------------------------------------------------------------------



In addition, in our Front-end segment we derive a substantial portion
of our net sales from products that have a high average selling price and significant lead times between the initial order and delivery of the product. The timing and recognition of net sales from customer orders can cause significant fluctuations
in our earnings from operations 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 earnings from operations 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 earnings from operations. 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
financial position and net earnings.



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



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.



A. History and development of the Company.



ASM International N.V. was incorporated on March 4, 1968 as a Netherlands naamloze vennootschap, or public limited liability company,
and was previously known as Advanced Semiconductor Materials International N.V. Our principal executive offices are located at Versterkerstraat 8, 1322 AP, Almere, the Netherlands. Our telephone number at that location is +31 8810 08810. 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.



B. Business overview.



Introduction



Our Business



We are an equipment supplier mainly to the semiconductor, LED and electronics manufacturing industry. We design, manufacture and sell equipment and
services to our customers for the production of semiconductor devices, or integrated circuits, for the production of LEDs, and for electronics manufacturing in general. The semiconductor capital equipment market is composed of three major market
segments: wafer processing equipment, assembly and packaging equipment, and test equipment. ASMI is mainly active in the wafer processing and assembly and packaging market segments. The wafer processing segment is referred to as
Front-end. Assembly and packaging is referred to as Back-end. We also sell lead frames for semiconductor assembly. In addition, ASM AS, the newly acquired surface-mount technology (SMT) business unit is offering
SMT placement tools for the global electronics manufacturing industries.



19



---

##### Table of Contents

Front-end production systems perform processes on round slices of silicon, called wafers, which are
typically 200mm or 300mm in diameter. During these processes, thin films, or layers, of various materials are grown or deposited onto the wafer. These films are electrically conductive, electrically insulating, or semiconducting. By depositing
multiple layers of films, multi-level, integrated electrical circuits are created. Such circuits are referred to as dies or chips. There are many dies on each wafer. After testing the individual circuits for correct
performance, the dies on the wafer are separated. Back-end production systems then assemble and connect one or more known good dies in a single package to form a complex semiconductor device that will perform calculations, store data and interface
with its environment.



Our Front-end operations are
conducted through wholly-owned subsidiaries, the most significant being ASM Front-End Manufacturing Singapore Pte Ltd. (FEMS), located in Singapore, ASM Europe B.V. (ASM Europe), located in the Netherlands, ASM America, Inc.
(ASM America), located in the United States, ASM Japan K.K. (ASM Japan), located in Japan, and ASM Genitech Korea Ltd. (ASM Genitech) located in Korea.



Our Back-end and SMT equipment operations are conducted through our majority-owned subsidiary, ASM Pacific Technology
Ltd. (ASM Pacific Technology), with principal operations in Hong Kong, the Peoples Republic of China, Singapore, Germany and Malaysia. At December 31, 2011, we owned 52.17% of the outstanding equity of ASM Pacific Technology.



The location of our Front-end facilities allows us to
interact closely with customers in the worlds major Front-end geographic market segments: Europe, North America, and Asia. The principal market we address in the Front-end is a portion of the deposition market segment. Our Front-end segment
accounted for 24.0% of our net sales in 2010 and 28% of our net sales in 2011.



Our Back-end and SMT equipment facilities are in close proximity to where most customer assembly and packaging operations are located. The principal markets we address in Back-end are portions of the Bonding
Equipment, Packaging Equipment and Integrated Assembly Systems segments, which segments include assembly and packaging equipment for LEDs. For the SMT equipment business, we mainly address the placement equipment market. We also manufacture and sell
lead frames which are substrates connecting the various circuits on a chip to the devices in which the chips are installed. Our Back-end segment accounted for 76.0% of our net sales in 2010 and 72% of our net sales in 2011.



Industry Background and Major Business Trends



Semiconductor devices are the key enablers of the electronic age. Each
semiconductor device can hold many individual components, most of which are transistors. For over 30 years now, the average number of components per integrated semiconductor device, at the optimum cost-per-component, has been increased by a factor
of two every 18 to 24 months. This trend is generally referred to as Moores law. Increases in complexity, along with simultaneous reductions in the cost-per-component, have mainly been achieved by reducing the size of individual transistors,
so that a larger number of transistors fit within a given size die. Today, transistors less than 32nm (1 nm is equal to one billionth of a meter) long are manufactured in high volume, and several billion transistors can be manufactured on a single
die with an area of a few square centimeters.



A second
development that has decreased the cost per device is the increased size of the wafer, so that more devices can be produced within one production cycle. Today, almost all of the newly installed semiconductor device fabrication capacity employs 300mm
wafers, with each wafer typically holding between a few dozen to several thousand individual circuits. In several industry consortia a transition to 450mm wafers is being discussed. The yield, or the fraction of dies that operates according to
specifications, is one of the key variables that influences the cost at which integrated circuits can be manufactured. Large initial investments are needed to build an automated production line in an ultra-clean environment to achieve such high
yield. The capital equipment in the production line is an important determinant for the yield of the factory, and the speed with which the yield can be optimized for new device generations.



Another emerging trend is that towards vertical or 3D transistors. This trend also helps to keep the industry on track
with Moores law (more Moore) because more functions can be stacked vertically on a wafer or chip than in two dimensions. Recent announcements have introduced FinFETs and several 3D memory transistor architectures.
Also on die level the trend is towards 3D by stacking several chips in one package. These chips can come from different supply chains, each optimized for its own performance and cost, enabling the manufacture of heterogeneous devices with even more
integrated capability. This latter trend is sometimes referred to as more than Moore.



The trends outlined above are the main drivers of the broad semiconductor roadmap which semiconductor equipment companies track in developing new production systems and process technologies. These new systems and
technologies must be developed well ahead of volume demand for



20



---

##### Table of Contents

the semiconductor devices they make. As a result, there is a large lead time between the investment in a new technology, and its commercial success. With the combination of a long lead time and
the short product life-cycles comes the inherent difficulty of matching supply and demand, which results in the high volatility associated with the semiconductor equipment industry. In this highly cyclical industry, the Front-end and Back-end market
segments have historically reacted differently to market forces.



The semiconductor industry had a relatively low growth year in 2011, driven by a US$ 1.7 trillion global electronics industry (VLSI Research Chip Insider February 13, 2012), that required approximately $252
billion (ibid.) in semiconductors. The semiconductor industry in turn, supported the approximately $51 billion (ibid.) semiconductor capital equipment industry, which supplies the needed production systems and services.



Our Strategy



Our strategic objective is to realize profitable, sustainable growth by capitalizing on our technological innovations,
manufacturing infrastructure and sales and support offices located close to our global customers. The key elements of our strategy include:



| |  |  | Streamlining our Front-end and Back-end manufacturing by systematically reducing manufacturing costs through global sourcing and product platform consolidation.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Maintaining our global reach through our global operating, sales and customer service organization and its facilities in key parts of the world in order to
establish and maintain long-term customer relationships.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Leveraging our combined strong Front-end and Back-end technology leadership and manufacturing capabilities through advancements in our products and processes
early in the technology lifecycle.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expanding the scope and depth of our research and development capabilities through strategic alliances with independent research institutes, universities,
customers and suppliers, and expanding our patent portfolio where this is deemed necessary and beneficial.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Background of Semiconductor Manufacturing Processes



Overview



The process of manufacturing an integrated semiconductor, from raw material to finished device, includes amongst others the segments in which we
participate: Front-end and Back-end.



Front-end
Manufacturing Process



The Front-end manufacturing
process, or wafer processing, can be divided in three distinct parts: wafer manufacturing, transistor formation (known as Front-end of the line (FEOL) processing), and interconnect formation (known as Back-end of the line
(BEOL) processing). We develop and sell technology, develop, manufacture and sell equipment, and provide services used by semiconductor device manufacturers in each of these sections of Front-end manufacturing.



In the wafer manufacturing process, 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, by either epitaxy or diffusion/oxidation (described below). Epitaxial wafers are even flatter and contain fewer defects at the surface than polished wafers.



During FEOL and BEOL wafer processing, multiple thin films of either
electrically insulating material, also called dielectrics, or conductive material are modified, grown, or deposited on a silicon wafer. First, several material processing cycles are used in the FEOL to build the basic transistor and other components
such as capacitors and resistors. Second, several processing cycles are used in the BEOL to electrically connect the large amount of transistors and components, and to build additional passive components such as capacitors, inductors and resistors.
Patterning of deposited layers with lithography and etching (described below) creates the transistors, passive components and connecting wires, which together make up the integrated circuit. Each integrated circuit is on a single 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 deposition, and patterning processes are performed on the same wafer.



The number and precise order of the process steps vary depending upon the complexity and design of the integrated circuit. The performance of the circuit is determined in part by the various electrical
characteristics of the materials used in the layers of the circuit and the wafer. Simple circuits may have as few as ten layers, while complex circuits may have more than one hundred layers. The Front-end manufacturing process is capital intensive,
requiring multiple units of several different production systems.



21



---

##### Table of Contents

Many different but complementary methods are used to modify, grow, or deposit materials on the wafers. We are predominantly active in developing and manufacturing the equipment used by
semiconductor device manufacturers in the deposition processes, i.e., those steps that involve the creation of insulating, conducting and semi-conducting layers on the wafer surface.



The Front-end manufacturing process is complete when all of the layers have been deposited and patterned on the wafer. As
a last step, the correct electrical functioning of the integrated circuits on each die is confirmed by probing. Non-functioning circuits are marked so they can be eliminated before the Back-end processing. The introduction of even trace levels of
foreign particles or material can make a circuit, or even an entire wafer, unusable. To reduce the level of foreign particles or material, Front-end processing is performed in clean rooms with ultra-low particle and contamination levels. Once the
Front-end processing is complete, the entire wafer with multiple, functioning, integrated circuits is shipped to the Back-end facility where it is separated into dies, which are then bonded to a suitable substrate or lead frame, packaged, and tested
before final shipment of the semiconductor device to the end customer. Back-end processes do not require the same level of contaminant control. These processes are performed in facilities that differ from facilities in which Front-end processes are
performed.



Back-end Manufacturing Process



When the wafer with confirmed working integrated
circuits is received in the Back-end facility, wafers are first cut (diced) into individual dies or chips. The individual dies are then attached to a lead frame or other substrate by a bonding process. The lead frame or substrate
provides the interface between the electrical circuit on the die and the system in which the die is incorporated. Lead frames are produced by stamping or etching out a pattern on a strip of copper or iron-nickel alloy. High precision lead frames are
produced by an etching process, also to achieve a shorter time to market. Stamped frames are typically used for very high volumes on mature designs. The electrical connection of the electrical circuit to the lead frame is made by wire bonding. As
few as one or as many as a thousand or more separate wires are connected between the die and the lead frame.



After this assembly and wire bonding interconnection process, the dies are encapsulated to protect them from environmental influences. Singulated
dies will then move through inspection, electrical test, marking and packing to prepare the tested and finished devices for shipment to the customer.



Another method used for chips with high pin count and speed is flip chip. The flip chip process eliminates the need for die and wire bonding.
Instead, it involves populating the electrical interconnect points on a chip with small solder balls made of low melting point materials, a process called bumping. The substrate is designed such that it has an identical pattern to that of the
device. Wafer level packaging (WLP) is another emerging technique that places all the protective layers, interconnections and interconnection points directly on the surface of the wafer, such that completely packaged devices are made at
wafer level. After probing and dicing, the die can be separated and may be directly attached to printed circuit boards.



LED Manufacturing Process



Light Emitting Diodes (LEDs) are manufactured on sapphire or silicon carbide substrates of typically 2 to 4 in diameter. The LED is
formed by depositing thin films on the substrate surface. Following this process electrical contacts are provided by a mask aligner. Individual dies are singulated by a laser scriber and a dicing machine. The individual LED dies are then tested and
binned in different performance categories. Subsequently LED dies are attached to the package substrates. The electrodes of the LED die are connected to the leads of the package substrate with fine gold wire by a wire bonder.



The SMT Placement Process (Electronics Assembly)



Modern electronic modules are produced by placing
various components and connectors on printed circuit boards. To ensure the precision and efficiency required to handle ever smaller components at ever lower cost, the placement process takes place on highly automated surface-mount technology (SMT)
lines.



These SMT lines and the placement process in
general can be divided into three main segments:



| |  |  | The solder paste printer, which applies solder paste to the printed circuit board (PCB) in order to keep the components in place during the entire placement
process
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The placement machine, which places various components on the printed circuit board in predefined positions. A placement head, which can move along three axes
and rotate around the Z-axis, uses suction to pick up a component from the tape or tray, checks the components position with the help of a camera system, computes its angle and offset from the nominal position, and places it onto the printed
circuit board. When all components have been placed, a conveyor system moves the board to the next station and replaces it with a fresh, empty board. To increase the
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



22



---

##### Table of Contents

| | throughput rate, modern placement machines have several revolver-type placement heads, each of which is able to pick up and place multiple components per cycle in order to minimize
the travel time between pick-up and placement positions. And thanks to their modular design, the machines can be configured with different feeder modules, placement heads, camera systems, etc. in order to best meet the specific production
requirements. For products with many components and high line throughput requirements, multiple SMT placement machines are usually positioned in a line.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The reflow oven, in which the solder paste is heated and hardened or adhesives are cured in order to create a permanent bond between the components and the
printed circuit boards conducting paths. Once all components have been placed, the PCB is transported into the reflow oven, where the board is heated to the appropriate processing temperature. The solder balls in the solder paste melt and
create a mechanical as well as an electrical connection between the components and the printed circuit board. If the SMD components were glued on, the reflow oven is used to cure the adhesive at a temperature that is lower than the heat required to
melt the solder paste. Once the adhesive has hardened, the boards are flow-soldered  usually after additional special components have been installed.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Modern SMT lines contain additional systems and components such as
quality control systems (e.g., automated optical inspection or AOI systems) or special process control systems (e.g., barcode readers).



Important Technology Trends for our Business



Technology Trends in Front-end and Back-end



The continuous demand for smaller, faster and cheaper semiconductor components drives the technology advances in the semiconductor manufacturing
process. As the transistors in an integrated circuit become smaller, the cost-per-component decreases. Fortuitously, at the same time the operating speed of the transistor increases. Thus the minimum size of a single transistor in an integrated
circuit is an extremely important parameter. This minimum size can be characterized by the so-called half-pitch, which is about equal to the smallest line width in the device. Today, our customers manufacture semiconductor devices having a
half-pitch as small as 45 to 22 nanometers (one nanometer is one billionth of a meter). Our customers are qualifying and testing new critical processes to generate devices with line widths at or below 28 to 15nm, and vertical 3D transistors.
Simultaneously, in our customers laboratories and several collaborative research environments advanced 11nm and 8nm design rule devices are being developed.



Today, most of the newly installed semiconductor device fabrication
capacity employs 300mm wafers. A transition towards 450mm wafers is now being planned. Early research in consortia is already taking place, while the first 450mm factories are not expected before 2015.



In developing faster and smaller devices, our Front-end customers
major technology requirements are:



| |  |  | new thin film materials and device designs that can reduce the amount of power consumed in the device, increase the speed and reliability of the circuit, and
increase the amount of charge that can be stored;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reliable manufacturing of taller three-dimensional structures in devices;
| | - |  | -------------------------------------------------------------------------



| |  |  | lithography of ever smaller feature sizes, now much smaller than the wavelength of visible light; and
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | new manufacturing processes that reduce device variability and increase yield.
| | - |  | ------------------------------------------------------------------------------



Technological developments in the Front-end process have resulted in new requirements for the Back-end manufacturing
process. The ability to place millions of transistors onto a thumbnail-size device with vastly increased functionality has created the first major trend: the need for more input/output terminals in the same or smaller space. The challenge for
Back-end equipment suppliers is to connect this increasing number of terminals in a package that sometimes is barely larger than the chip. Wire bonding has been at the forefront of this transition, but for integrated circuits with very high terminal
count, the industry has developed ball grid array (BGA) and flip chip packaging that use the entire surface of a die, and not just the perimeter.



A second major trend in the Back-end market segment is driven by the strong growth in demand for hand held devices. There is an ongoing need to
build ever smaller and more complex packages at lower cost for this market. Individual dies must be packaged in areas that are just slightly larger than the individual dies they contain. These chip scale packages minimize the amount of space
occupied by the end product on the circuit board.



A third
major trend relates to the industry demand for a much higher level of integration, but still at lower cost and optimized yield. This has resulted in a requirement to place multiple dies into the same package. The assembly of a combination of
known good dies in a package can lead to higher yield than the



23



---

##### Table of Contents

combination of the same functionality blocks on a single chip. Such a System-in-Package (SiP) is more than a simple collection of multiple dies: SiP products are fully functional
systems or sub-systems. Moreover, devices from different supply chains, with sometimes entirely different feature sizes or technologies can be integrated this way. Dies can be placed next to and/or on top of each other, using stacked die bonding
techniques and sometimes mixing flip chip and wire bonding techniques in the same package. It appears that in the near future an increasing fraction of the value of the device will be in the package, at the cost of the fraction that is for the die.



Technology Trends in Electronics Assembly



| |  |  | As a result of the above, new technological requirements for placement equipment arise from the component side as well as from downstream production processes
and from the markets for end products.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The trend toward integrating ever more complex functions in the smallest amount of space continues unabated and will keep playing a significant role in the
development of placement equipment and SMT production techniques. Examples of this trend include:
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | More use of dies, which can be placed closer together because of their lack of packaging, and package-on-package (PoP) designs, which are placed one on top of
the other
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | More optical circuitry for faster transmission rates
| | - |  | ----------------------------------------------------



| |  |  | More component diversity
| | - |  | ------------------------



| |  |  | The market for LED placement equipment is a good example of some of these technological requirements: The setup processes and programs must be able to handle the
different LED brightness categories and accommodate them with the addition of series resistors or by permitting only the placement of LEDs in the same brightness category. Since LED components are very fragile, they must be positioned with great
care using special nozzle shapes. In addition, the placement machines and conveyor systems must be able to process extra-long boards, because the multiple clusters of backlight units are often very large.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | These and other developments in the component and PCB field pose ever tougher demands on the precision and flexibility of the placement equipment  from
drives and gantries to feeders and vision systems to placement heads and pick-up systems. And since producers are also subject to increasing pressure in terms of costs and efficiency, this level of precision must be delivered even for high placement
speeds and over long periods of time. Another challenge is the feeding of components directly from the wafer, which is a way of eliminating time-consuming and expensive process steps such as the packaging of dies and flip-chips. Other challenges are
posed by the growth in selected application fields such as LED placement.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | New requirements arise also at the customer end. Shorter product life cycles and the rising number of product variants along with optimized logistics chains
reduce the average lot sizes and make for shorter lead times. At the same time, todays lines run at much higher speeds. As a result, each shift must be able to handle more and more product changeovers, which means that the associated setup
procedures reduce the productivity of traditional SMT lines.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In the process control area, customers want more features ranging from monitoring to full-fledged component traceability for sophisticated applications in
medical technology, aerospace engineering and the automobile industry. But no matter which industry they serve, electronics manufacturers have to deal with huge competitive and cost pressures as well as a highly cyclical market environment.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As far as recent trends in LED packaging are concerned, the sapphire or silicon carbide substrate for LED chip fabrication is migrating from 50mm to 100mm, some
are moving to 150mm substrates in production. Larger substrates can produce more LED chips in a wafer. With reference to chip sizes, High Power LED increases the chip size to 1mm or above to increase the total output power for a single chip.
Furthermore, as the LED efficiency increases, more chips move to 0.15mm to reduce the cost for small power application such as indicators. For package substrates, more High Power LED packages employ ceramic and silicon substrates for better heat
dissipation.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our Response to
Technology Trends



We develop and manufacture wafer
processing systems and new thin film materials that enable our customers to produce devices that consume less power, are faster, show less variability, are more reliable and are able to store more electrical charge.



Today, our leading-edge high volume production systems support the
manufacturing of semiconductor devices having a half-pitch as small as 45 to 22 nanometers (one nanometer is one billionth of a meter). At ASMI, and in close cooperation with our customers, we are qualifying and testing new critical process
equipment for line widths at or below 28 to 15nm. Simultaneously, we are developing new 15 to 11nm technologies in our laboratories. Today, most of the newly installed semiconductor device fabrication capacity employs 300mm wafers. Accordingly, our
system and process development and sales effort is concentrated in 300mm equipment. Initial developments of 450mm equipment have started in parallel.



24



---

##### Table of Contents

In order to meet our customers needs, we have developed, and are still developing many new
materials. For example, in the FEOL, high-k dielectrics and novel metal electrodes can improve the performance and reduce the power consumption of a device, thereby enhancing battery life. This same class of materials can also lead to larger charge
storage in a smaller capacitor, critical for memories and RF circuits. Whereas in the recent past much focus has been on the development of the high-k dielectric, today as much focus is on new technologies and materials for the metal electrode and
the gate sidewall passivation. Another example of new materials in the FEOL is our silicon-germanium (SiGe) and silicon-carbon (SiC) and silicon-carbon-phosphorous (SiCP) epitaxial materials that can increase the
switching speed of the transistors and the circuit in which they are embedded by so-called strain engineering. This can be done without negatively affecting the power these transistors consume.



We expect that the creation of 3D vertical transistors will increase
the demand for processes with better coverage of 3D structures. In response to this trend, we have developed and are still developing a variety of Atomic Layer Deposition (ALD) and epitaxy processes. ALD is an advanced technology that deposits
atomic layers one at a time on wafers. This process is used to create ultra-thin films of exceptional quality and flatness. Plasma is sometimes used to enhance the process further (Plasma Enhanced ALD, or PEALD).



In the BEOL or interconnect process, a continued demand to improve the
speed at which signals travel through thin copper wires has led to the development of a full suite of low-k materials. These low-k materials can decrease the amount of delay in signal propagation, resulting in, for example, faster microprocessors.
We have been one of the leaders in successfully introducing these low-k materials in the market. We are continuing to develop improvements to this low-k technology to enable faster interconnect circuits.



We have also developed and sold new processes and wafer processing
equipment to enable the creation of narrow lines having dimensions beyond the resolution of common lithography, and with low line width variability. For that purpose we have developed low temperature plasma enhanced ALD processes that are compatible
with the photoresist processes that are common to lithography tools.



In addition to addressing the technology needs of our customers, the relentless drive of the industry to reduce cost corresponds to significant spending on development programs that further increase throughput,
equipment reliability, and yield in our customers line, and further lower the cost of the wafer processing systems. In order to enable further efficiencies in our manufacturing process, we have improved, and will continue to improve the level
of standardization in our equipment portfolio by migrating to common platforms, sub-assemblies and components. This requires a significant engineering effort.



For our Back-end customers, lead frame and wire bond technology continues to offer the most flexible method of connecting the die to the printed
circuit board. Increasing pressure on the number of I/O terminals per unit area of silicon continues to drive down the distance between two adjacent interconnect points or pads, reducing the bond pad pitch and allowable wire diameter. The increasing
I/O requirement has also resulted in the use of several rows of these pads on a single die. Production is now ongoing with a bond pad pitch of 30 microns. Wire bonding must not only address decreasing wire diameters and pitch, but also address the
throughput to reduce the overall cost of the device. Future wire bonding platforms will be able to operate in an environment that requires the bond pad pitch to be at 25 microns. The increasing row count will require better control of the wire
shapes and looping profiles to maintain signal integrity at high communication speeds. All of this must be achieved with the highest possible speed and reliability. In addition, semiconductor manufacturers are looking to automation and integration
of Back-end equipment as ways to reduce costs and increase productivity.



Increasing pressure on the level of integration and reduction in size of handheld or mobile devices has given rise to several alternative assembly and bonding techniques and materials, such as flip chips and
several chip-scale packaging methods. Stacked die packages, in which more than one die is stacked on top of another, to form a single device, play a major role in the handheld appliance market. We are responding to the need of stacked die packages
by developing better wire bonding techniques, for example, by controlling the shape of the wire loop. We are currently developing methods of working with insulated wires, which will allow for more crossed connections in a device.



The newly developed ASM Die Bonder AD8312 offers a wide range of
benefits with the sole target of producing highest speed and quality at lowest cost per die placement. Special handling and operating aspects of stacked and thin die are incorporated in the machine concept. The extremely fast vision system and the
ultra-light pick and place head with innovative linear motor technology offer a significant increase in performance, product quality and yield.



In Electronics Assembly, in close coordination with customers and other partners, our SMT placement machines, under the brand name SIPLACE, are
developed and manufactured to process a broad spectrum of components with high speed, precision and reliability. Our modular machine designs allow customers to flexibly adapt their SMT lines to shorter lead times, fluctuating workloads, frequent
product changes and smaller lot sizes.



25



---

##### Table of Contents

With their digital vision systems, intelligent SIPLACE X-feeders, head models, conveyor systems and
linear drives, all current SIPLACE platforms use a shared pool of basic hardware modules to simplify the production and maintenance of the entire portfolio.



To put the performance and flexibility of its machines to the best possible use, ASM Assembly Systems has developed the extensive SIPLACE software
suite, which ranges from production scheduling to line and process control to monitoring, setup verification and traceability. In addition, the SIPLACE FACTS materials management system and the SIPLACE LES line execution system for setup-optimized
production synchronization provide customers with powerful software solutions.



Products



Market Coverage



The table below indicates the major market segments of the semiconductor equipment industry. The principal market segments in which we participate
are underlined.



|                 |  |                           |  |                                      |  |                                 
|---------------- |  | ------------------------- |  | ------------------------------------ |  | --------------------------------
|                 |  |                           | 
|                 |  |                           |  | Major Market Segment 1               |  |                                 
|Market Segment 1 |  | Test and relatedSystems   |  | IC Fabrication Equipment orFront-end |  | IC AssemblyEquipment or Back-end
|                 |  | Automated Test Systems    |  | MicroLithography and Mask Equipment  |  | Assembly Inspection Equipment   
|                 |  | Material Handling Systems |  | CMP Equipment                        |  | Dicing Equipment                
|                 |  |                           |  | Ion Implanters                       |  | Bonding Equipment               
|                 |  |                           |  | Deposition and Related Tools 2       |  | Packaging Equipment             
|                 |  |                           |  | Etching and Cleaning Tools           |  | Integrated Assembly Systems     
|                 |  |                           |  | Process Diagnostic Equipment         |  | Leadframes3                     



|(1) | Based on VLSI Research Industry Segmentation (www.vlsiresearch.com).
|--- | --------------------------------------------------------------------

|(2) | This segment also includes diffusion and oxidation furnaces.
|--- | ------------------------------------------------------------

|(3) | While the materials segment is not included by VLSI Research in the Back-end segment, lead frames are a significant component of our revenues.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------



Front-end Segment Products



ASMIs Front-end segment products come from a number of product
platforms, with each platform designed to host and enable specified process technologies. The products in each product platform are linked through common technology elements of the platform, for example a common in-system software framework, common
critical components, similar logistics (batch or single wafer processing), or a similar wafer processing environment (wet or dry). The following table lists our principal product platforms for the Front-end market, the main process technology that
they enable, and the semiconductor device manufacturing solution for which the products from that platform are used.



|                    |  |                                      |  |                                                                                     
|------------------- |  | ------------------------------------ |  | ------------------------------------------------------------------------------------
|ProductPlatform     |  | ASMI ProcessTechnology               |  | Products                                                                            
|Advance® 400
Series |  | ALD, CVD, diffusion/oxidation, LPCVD |  | A400, A412, A4ALD, Vertical Furnace Systems                                         
|Eagle®              |  | PECVD                                |  | Eagle 10, Eagle 12(1), Dragon(1), Single Wafer Plasma Processing Systems            
|XP(2)               |  | ALD, PECVD, PEALD                    |  | Pulsar® and EmerALD ALD Products, PECVD Products, PEALD Products                    
|Epsilon             |  | Epitaxy, LPCVD                       |  | Epsilon 2000 and Epsilon 3200(3)Single Wafer Epitaxy Systems                        
|Polygon®            |  | ALD                                  |  | Polygon 8200, Polygon 8300(4), Pulsar(4)Single Wafer Atomic Layer Deposition Systems



|(1) | The functionality of the Eagle 12 and the Dragon has merged with the XP platform in 2010
|--- | ----------------------------------------------------------------------------------------

|(2) | The XP is our standard single wafer processing platform designed to accommodate multiple process application modules with common platform standards
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The functionality of the Epsilon is being merged with the XP platform
|--- | ---------------------------------------------------------------------

|(4) | The functionality of the Polygon, Pulsar and EmerALD has merged with the XP platform starting in 2009
|--- | -----------------------------------------------------------------------------------------------------



26





---

##### Table of Contents

Description of our Front-end Segments Product Platforms



Advance 400



The Advance 400 is our Vertical Furnace, batch processing platform.
Products built on this product platform are used for diffusion, oxidation, (LP)CVD and ALD. The product platform is used in many manufacturing steps, from the production of silicon wafers to the final anneal in interconnect. The A400 is a system for
150 and 200mm wafers, while the A412 is for 300mm wafers. The A412 systems feature two reactors above a rotating carousel, a dual-boat concept for high productivity, and a wide range of process applications with variable load sizes from 25 wafers
for shortest cycle time requirements, up to 150 wafers for lowest cost requirements in a single run. In this series, we also offer the A4ALD, for atomic layer deposition of dielectrics and metals.



Eagle



The Eagle is our single-wafer processing product platform for PECVD applications. While the Eagle 10 is a system for 150
and 200mm wafers, the Eagle 12 and Dragon systems are for 300mm wafers. The Eagle 10 and Dragon have two PECVD reactors, while the Eagle 12 has three PECVD reactors. Different wafers are processed in parallel in the reactors to enhance the
throughput. The processes available on the Eagle product platform include insulators (such as silicon oxide, silicon nitride, silicon oxi-nitride), Aurora low-k dielectrics for interconnect applications, as well as hardmask and antireflection layers
that aid in the lithography of very fine features.



XP
Platform



The Eagle XP is our high productivity
extension to the Eagle product platform, for 300mm. The Eagle XP has four PECVD reactors. Substantially all processes on the Eagle 12 and Dragon are available on the Eagle XP.



The XP is being transitioned from a dedicated platform for PECVD to a
common high volume platform for all 300mm single wafer processing in our addressed markets. The XP platform will also enable integration of sequential process steps on one platform. The XP is now available with PECVD, PEALD, Pulsar and EmerALD ALD
modules. In addition, the functionality of the Epsilon is also currently being merged with the XP platform.



The XP common platform will benefit our customers through reduced operating costs since multiple ASM products now will use many of the same parts
and consumables and a common control architecture improves ease of use. The XP common platform enables us to improve the coherency in our product portfolio.



Epsilon



The Epsilon is our platform for single wafer epitaxy. The Epsilon product platform offers a wide range of epitaxy products and materials for many
applications, ranging from high temperature silicon used in silicon starting material manufacturing, to low temperature, selective or non-selective silicon, silicon germanium (SiGe), silicon-carbon (SiC) used in CMOS devices
and silicon germanium carbon (SiGeC) used in bipolar devices. The Epsilon 2000 is a single wafer, single reactor system for 150mm and 200mm wafers. The Epsilon 3200 is a single wafer, single reactor system for 300mm wafers.



Polygon



The Polygon is a single wafer atomic layer deposition platform. It
features a six-sided central vacuum handler, capable of hosting up to four reactors. The Polygon 8200 is used for 150 and 200mm wafers, and for magnetic head substrates. The Polygon 8300 is used for 300mm wafers. One or more Pulsar modules with ALD
technology can be integrated onto the platform. Products built on this product platform are currently being used in, among others, ALD high-k gate dielectrics for high performance logic, metal-insulator-metal capacitors for system on a chip
applications, and magnetic head gap fill.



Description
of our Front-end Segments Process Technology Platforms



Depending on application, a process technology can be used in more than one product platform. Process technologies that are intended for use across multiple product platforms are called a process technology
platform. The technologies in a process technology platform share a common knowledge base and patent portfolio. ALCVD, for example, is enabled on both our single wafer and batch product platforms. This gives us the principal ability to provide a
single wafer tool for a certain application early in the lifecycle,



27



---

##### Table of Contents

when short development cycle times are needed, and later in the lifecycle switch to a batch tool for efficiencies in high volume production, using the same chemistry and maintaining basic
materials properties.



ALCVD: Atomic Layer Deposition and
Plasma Enhanced Atomic Layer Deposition



ALCVD is one
of the newest technologies to deposit ultra-thin films of exceptional flatness and uniformity. This technology was brought into ASMI in 1999 with the acquisition of ASM Microchemistry, who first developed the thermal ALD technology. PEALD is an
extension of this original ALD technology that uses plasma, which was brought into ASMI in 2001 through a partnership with Genitech and a subsequent acquisition in 2004. The use of plasma enables us to deposit high quality films at very low
temperatures. Collectively ASMI refers to these two technologies as its ALCVD process technology platform. ALCVD is a very versatile technology platform that can be used to deposit high-k insulating materials, conductors, silicon oxide and silicon
nitride. Selected ALCVD processes are released on our Polygon, Eagle, XP, and Advance 400 product platforms. We expect that the trends of continued scaling, and evolution towards three dimensional device structures plays into the strength of our
ALCVD position.



LPCVD: novel chemistries



On our LPCVD process technology platform we have developed processes
with new chemistries (under the trademark Silcore) that enable the deposition of silicon and silicon containing materials at low temperatures. We offer processes on our Epsilon product platform for selective and non-selective epitaxy, single wafer
LPCVD, and on our Advance 400 product platform for thin, smooth polycrystalline Si. Our strategy for the LPCVD process technology platform as a whole is to continue to qualify new chemistries developed by, and with, our chemical suppliers for all of
our product platforms, well in advance of the development of our customers needs.



Back-end Segment Products



The following table lists ASM Pacific Technologies (ASMPT) principal products for Back-end market and the main technologies that they enable.



|                               |  |                                                                          |  |                                                                                                                                                                                                                                                        
|------------------------------ |  | ------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ProductPlatform                |  | ASMI ProcessTechnology                                                   |  | Products                                                                                                                                                                                                                                               
|Die Attach
Equipment           |  | Die Bonding                                                              |  | AD898/8912 epoxy/ eutectic, AD830,MCM12 multi chip, SD890A andSD832D soft solder, IS898 glassattach
Systems,AD211/AD220 Eutectic Die Bonder                                                                                                            
|Scanning and
Sorting Equipment |  | Die Sorting                                                              |  | WP808A WLP sorting Systems, ,AS899, MS100 Plus die sortingSystems; ES100 Automated
OpticalInspection System                                                                                                                                            
|Flip Chip
Equipment            |  | Flip Chip Bonding                                                        |  | AD900A, AD9012A, AD900TS,AD9012TS, AD9212 dual head flipchip bonding Systems, AD9012TC,Hummingbird stud
bumping Systems                                                                                                                                
|Wire Bonding
Equipment         |  | Thermosonic Gold Wire Bonding                                            |  | TwinEagleXtreme, HarrierXtreme,EagleXtreme, iHawkXtremeEagleXtreme X2L                                                                                                                                                                                 
|Wire Bonding
Equipment         |  | Ultrasonic Aluminum Wedge Bonding                                        |  | Heavy Aluminum Wire BonderAL501, AB530, AB559A rotatingbond head                                                                                                                                                                                       
|Singulation
Equipment          |  | Singulation                                                              |  | Laser Scriber LS100                                                                                                                                                                                                                                    
|Encapsulation
Equipment        |  | Molding, Dispensing and Jetting                                          |  | IDEALmold and Osprey transfermolding Systems, IDEALcompress/IDEALab Silicone Liquid Molding,DS500
dam-and-fill Systems, DS520Jetting System                                                                                                            
|Post
Encapsulation Equipment   |  | Ball Placement, Testing and Marking, Trim and Form, Singulation, Binning |  | BP2000 ball placement, CS8000-APjig saw and sorting, MP209, MP-TABtrim form system, FT2030S,
FT1000,FT2030WF Test and Finishinghandler, FV2030 Vision Inspection,SLS230 LED Testing & Sorting,SLT400 LED Taping, IP360 PackageSorting and Taping System



28



---

##### Table of Contents

Die and Flip Chip Bonding, and Die Sorting Products



ASMPT manufactures several die bonding models as well as die sorting
equipment to address various markets including semiconductors and light emitting diodes (LED). The latest epoxy die bonder platform for 300mm wafers continues the path undertaken by ASMPT to provide customers with high quality cost-efficient
systems. With its capability of handling up to 300mm wafers, fully automatic operation, epoxy writer, pre and post bond inspection and wafer mapping, this platform is able to provide customers with favorable operational results. Variations on this
platform have been developed to address the requirements of the growing stacked die market. The ability to handle silicon devices down to 25 microns in thickness is a key feature for the future.



Packaged device performance is continually pushed to higher levels. In
critical applications, devices are increasingly utilizing flip chip interconnect methods to provide higher levels of electrical performance. Our flip chip platform provides high speed flip chip die bonding for IC applications. Variations of this
platform have evolved to provide for the use of ultrasonics, heat force or the combination of these to affect the process. There continues to be a very large market in which the die and wafer sizes are relatively small, under 30 mils square. A mil
is 1/1000 of an inch. Many of these devices are attached directly to printed circuit boards (Chip on Board, COB) or very large arrays. Therefore, many different handling methods are required. We have several systems addressing the
various form factors represented in the market.



The LED
business requires both high speed and high precision manipulation of very small devices. Many of these devices are assembled in arrays with a die attach process. In these arrays brightness and color must match. We have developed several platforms
for sorting these devices and segregating them according to the customers requirements. The high power LED market for general purpose illumination continues to grow. These devices have unique thermal and electrical requirements that must be
met by the die attach process. We have a new platform that addresses the use of soft solder in a special atmosphere that facilitates this special process. Machines may be configured to operate stand-alone or connected to epoxy curing ovens and wire
bonders.



Wire Bonding Products



The Eagle Xtreme gold/Cu wire bonder is the successor to our
award-winning Eagle60AP generation bonder. The Eagle Xtreme and iHawk Xtreme gold wire bonders continue to extend the productivity of the process as well as exceed the industry roadmaps for required bond pad pitch. Additional features on the Eagle
Xtreme allow it to deal with the complex wire geometries and extreme height variations that are prevalent in the stacked die packages being built today at higher productivity rates. The productivity envelope was enlarged with the introduction of our
latest dual head platform, the TwinEagle Xtreme and Harrier Xtreme. This tool provides all the capabilities of our standard Xtreme but with higher output per floor space required. We also extended our product portfolio in the wedge bonder area with
newer, faster, more flexible systems to address the consumer products market that focuses on cost effective solutions. The expansion of the flip chip process has also provided us with opportunities to take advantage of our wire bonder technology to
provide platforms capable of applying gold or copper stud bumps on wafers up to 300mm in diameter.



Encapsulation Products



Our auto molding product line continues to build on the success of our earlier automated multi-plunger molding systems. The IDEALmold serves the industry segment that requires very high throughput with production
flexibility. The recent shift in lot sizes and package variability also required a new platform. We have met this requirement with our Osprey single strip molding system. With this platform, the emphasis is on quick material and package conversions
for low volume, high mix situations. As with all ASMPT products, it can be configured for stand-alone or integrated in the IDEALine (see below) with many of our other Back-end products.



Post Encapsulation Products



Ball placement systems have seen strong growth as the ball grid array
(BGA) package types continue to expand. These are the mainstream packages for microprocessors and other high performance chips found in computer systems today. Our early work in this area has allowed us to be the exclusive supplier of
ball placement systems to the major provider of such components. As the number of package variants continues to increase along with the lead frame unit density, our post encapsulation products (PEP) have also evolved. The variation
requires systems that are more flexible and faster to convert. The increased density has reduced the need for press speed but increased the emphasis on precision. The decrease in package thickness has dictated a change in the tooling methodology to
provide more support throughout the trim, form, and singulation processes. Significant changes have been made in design to migrate to turret handling and offloading for small packages. These changes allow the incorporation of faster handling across
more processes in a smaller footprint than the conventional linear approach. Significant inroads have been made in the incorporation of test heads into these lines so that units emerge ready to ship.



29



---

##### Table of Contents

Automated Systems



The IDEALine integrates Back-end assembly, packaging, and test
handling equipment. Such lines can be fully controlled by computers minimizing operator intervention and providing better quality through more stringent process recipe control. 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, package singulation, test handling, inspection, laser marking, packing, and finishing.



SMT Products



The following table lists the ASM Pacific Technologies (ASMPT) principal product platforms for the SMT market
and the main applications/industries they are targeted at.



Electronics Assembly Products (Hardware)



|                                        |  |                                                                                        |  |                    
|--------------------------------------- |  | -------------------------------------------------------------------------------------- |  | -------------------
|Type of Production                      |  | Applications/Industries                                                                |  | Platforms          
|High-end/high-speed
environments        |  | Large EMS providers, telecommunication & IT products, LED placement                    |  | SIPLACE XSIPLACE
CA
|High-quality/high-mix
environments      |  | Small and medium-sized EMS providers, machine controls, automobile industry, aerospace |  | SIPLACE SX         
|Cost-sensitive high-volume environments |  | Medium-sized and large EMS providers                                                   |  | SIPLACE DXSIPLACE
D



Within the platforms, machines with
different gantry and head configurations are available (e.g., SIPLACE DX1, SIPLACE DX2, SIPLACE DX4, or SIPLACE SX1, SIPLACE SX2, SIPLACE SX 4 etc.)



Electronics Assembly Products (Software)



|                                                   |  |                                                    
|-------------------------------------------------- |  | ---------------------------------------------------
|Applications                                       |  | Products                                           
|Production
planning, optimization and line control |  | SIPLACE Pro
SICluster / SICluster Pro SIPLACE EDM  
|Production
monitoring, process control             |  | SIPLACE OIS
SIPLACE Feeder Manager SIPLACE Explorer
|Setup
verification, traceability                   |  | SIPLACE Setup Center
SIPLACE Traceability          
|Order &
materials management                       |  | SIPLACE FACTS                                      
|Line
execution & process synchronization           |  | SIPLACE LES                                        



The SIPLACE is our powerful high-end
SMT platform able to handle 01005 components, which is the smallest component size being processed today, with no slowdown in high-volume environments. The SIPLACE X-Series is an attractive solution for large EMS companies, mobile phone production
and the growing LED placement market.



The SIPLACE CA is the
first placement platform that can supply components directly from the wafer as well as with classic SMT feeder technologies. For the electronics manufacturer, this capability means increased flexibility and investment protection.



In 2010 the SIPLACE SX placement platform was launched, whose special
interchangeable gantries, intelligent feeders and innovative setup concepts make it an ideal solution for high-mix environments. The key feature of this highly innovative solution is the Capacity-on-Demand function. The newly developed
SIPLACE MultiStar placement head switches automatically between Collect & Place mode, Pick & Place mode and a special mixed mode, which is why it can be used for the fast placement of standard components as well as for the
end-of-line placement of large components. Thanks to these properties, even high-mix lines can operate well balanced at all times for improved total line productivity.



30



---

##### Table of Contents

With the digital SIPLACE D-Series, which combines high-tech innovations with proven technologies, a
favorable price-performance ratio and cost of ownership, SIPLACE offers a platform for highly cost-sensitive users in the standard and high-performance segment who require lots of flexibility.



In 2011, ASM Assembly Systems has introduced the SIPLACE DX, whose features and price-performance ratio were optimized
especially for high-volume production environments in Asia and other parts of the world.



Intellectual Property and Trademarks



Intellectual Property



Because of the rapid technological advances in the microelectronics field, our products must continually change and improve. Accordingly, we believe that our success will depend upon the technical competence and
creative ability of our personnel as well as the ownership of and the ability to enforce our intellectual property rights.



We own and license patents that cover some of the key technologies, features and operations of our products and are registered in the principal
countries where semiconductor devices or equipment are manufactured or sold. For instance, we have hundreds of issued patents that relate to the ALCVD process technology platform. As another example, we have about 10 issued patents related to
Silcore and other specialized LPCVD process chemistries.



The following table shows the number of patents for which we made an initial filing during the indicated year and the number of patents in force at
the end of the indicated year. As part of a program to reduce cost, the patent portfolio was critically reviewed against the current business strategy in 2009. Cost control measures and stricter patent filing prioritization in 2010 resulted in a
lower initial patent filing rate in 2010 compared to 2009. Increased R&D activity in 2011 resulted in a higher filing rate.



|          |  |                              |  |      |     |  |      |  |     |      |  |  |      |  |  |      |     |  |  |  |       | 
|--------- |  | ---------------------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | ---- |  |  | ---- | --- |  |  |  | ----- | 
|Segment   |  | For year:                    |  | 2007 |     |  | 2008 |  |     | 2009 |  |  | 2010 |  |  | 2011 |    
|Front-end |  | Initial patent filings       |  |      | 93  |  |      |  | 79  |      |  |  | 47   |  |  |      | 33  |  |  |  | 51    | 
|          |  | Patents in force at year end |  |      | 793 |  |      |  | 872 |      |  |  | 830  |  |  |      | 931 |  |  |  | 1,043 | 
|Back-end  |  | Initial patent filings       |  |      | 26  |  |      |  | 18  |      |  |  | 19   |  |  |      | 18  |  |  |  | 21    | 
|          |  | Patents in force at year end |  |      | 256 |  |      |  | 332 |      |  |  | 399  |  |  |      | 436 |  |  |  | 731   | 



We have entered into worldwide,
non-exclusive, non-transferable and non-assignable licenses with Applied Materials for patents related to epitaxy and certain chemicals used to deposit insulating layers for PECVD. We pay Applied Materials a royalty on sales of equipment that use
the patented technologies. A number of the licensed patents have already expired. The remaining royalty bearing patents that we use expire at various times through 2013. Upon expiration of the patents, the technology may be used royalty-free by the
public, including us. For further information, see Item 3.D, Risk factors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.



We have licensed our intellectual
property in our ALCVD process technology platform through non-exclusive, restricted field of use license agreements to a limited number of companies. In addition to generating revenue, we seek to accelerate market acceptance of our ALCVD technology
through our licensing.



We have licensed our RTP portfolio
of 58 issued patents and 20 pending patents to Levitech BV.



In the Back-end market, companies generally compete based on their cumulative expertise in applying well known technologies to improve productivity
and cost-efficiency. As a result, we have historically filed fewer patents related to our Back-end operations. Due to increasing pressure on new technology development in the Back-end market, and the increasing fractional value of the package in the
device, we expect the importance of patents in the Back-end market segment to increase over the following years. Wherever deemed necessary, ASM Pacific Technology will file for protection of its innovations.



Trademarks



ASM, the ASM International logo, Advance, Aurora, Dragon, Eagle, EmerALD, Epsilon,
Polygon, Pulsar and Silcore are our registered trademarks. A400, A412, ALCVD, Atomic Layer CVD, Intrepid, NCP, PEALD, are our trademarks. The Process of Innovation, The Switch Is On and Drive Innovation. Deliver
Excellence. are our service marks.



AB500B, DreamPAK,
DRYLUB, EQUIPMANAGER, EQUIPMGR, FAB Farming IDEALine, IDEALsystem, IDEALab, IDEALNet, PGS, SMARTWALK, SOFTEC, SmartSurf, and Ultravac are registered trademarks of ASM Pacific Technology Ltd. Cheetah, Eagle60, Harrier, Hummingbird, IDEALCompress,



31



---

##### Table of Contents

IDEALmold, OSPREYLine, TwinEagle, SolarCSI, SolarWIS, SolarMTS and SolarLAS are trademarks of ASM Pacific Technology.



SIPLACE is a trademark licensed from Siemens AG by ASM Pacific
Technology in respect of its newly-acquired electronics assembly systems business.



Litigation



There has been substantial litigation regarding patent and other intellectual property rights in semiconductor-related industries. Although we have
been involved in significant litigation in the past, we are at present not involved in any litigation which we believe is likely to have a material adverse effect on our financial position. 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 ASMI 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 earnings from operations. 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 earnings from operations.



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 global product development policies and local activities are for the most part directed toward expanding and
improving present product lines to incorporate technology advances and reduce product cost, while simultaneously developing new products that can penetrate new markets. These activities require the application of physics, chemistry, materials
science, chemical engineering, electrical engineering, precision mechanical engineering, software engineering, and system engineering.



Our net research and development expenses were  62.8 million,  78.8 million and  129.4 million in 2009, 2010 and 2011, respectively. We expect to continue investing significant resources in research and development in
order to enhance our product offerings. Our research and development activities are chiefly 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 and/or technologies. This approach, combined with the interactions between the individual centers, permits efficient allocation of technical resources and customer interaction during
development. In 2010, we formed a globally Platform Engineering group that addresses the needs for common platforms for the various products in our Front-end Segment. Selected resources in Belgium, Almere and Helsinki have been grouped under
corporate R&D, addressing the common needs for advanced materials research and process integration work for the 15nm, 11nm and smaller nodes.



|          |                                 |                                           |  |                                                                             |       | 
|--------- | ------------------------------- | ----------------------------------------- |  | --------------------------------------------------------------------------- | ----- | 
|Segment   |                                 | Location                                  |  | Number of R&Demployees as ofDecember 31, 
2011,exclusive oftemporaryworkers |      
|Front-end |                                 | Almere, the Netherlands                   |  |                                                                             | 45    | 
|          | Leuven, Belgium                 |                                           |  | 22                                                                          |      
|          | Helsinki, Finland               |                                           |  | 8                                                                           |      
|          | Phoenix, Arizona, United States |                                           |  | 95                                                                          |      
|          | Cheonan, South Korea            |                                           |  | 36                                                                          |      
|          | Singapore                       |                                           |  | 3                                                                           |      
|          | Tama, Japan                     |                                           |  | 85                                                                          |      
|Back-end  |                                 | Hong Kong, the Peoples Republic of China |  |                                                                             | 451   | 
|          |                                 | Singapore                                 |  |                                                                             | 332   | 
|          |                                 | Chengdu, the Peoples Republic of China   |  |                                                                             | 131   | 
|          |                                 | Munich, Germany                           |  |                                                                             | 177   | 
|Total     |                                 |                                           |  |                                                                             | 1,385 | 



As part of our research and development
activities, we are engaged in various formal and informal arrangements with customers and institutes. At December 31, 2011, our Front-end segment was engaged in several formal joint development programs with customers for 300mm applications of
our products. As part of



32



---

##### Table of Contents

these efforts, we may sell new products to customers at a significantly reduced margin, and invest significant resources in the joint development and subsequent product qualification. We
sometimes also cooperate with other semiconductor capital equipment suppliers in complementary fields, in order to gain knowledge on the performance of our own deposition processes, in cooperation with other processes, either in bilateral or in
publicly funded projects. In addition to cooperating with customers and other capital equipment suppliers, we also enter into research projects with technical universities and institutes (including TNO; CNT; IMEC).



We participate also in publicly funded programs, mainly in Europe, to
develop the production technology for semiconductor devices with line widths of 22, 15 and 11nm and below and in More-than-Moore technologies. Among our current cooperative efforts are projects awarded under the Information Society Technologies
(IST) seventh framework program. We are also a partner in several cluster development programs in the Eureka initiative by MEDEA+ (Micro Electronics Development for European Applications) and its successor CATRENE (Cluster for Application and
Technology Research in Europe on Nano-Electronics.



In 2011
we renewed our strategic R&D partnership with the Interuniversity MicroElectronics Center (IMEC) in Leuven, Belgium. Our Epsilon, A412, Pulsar, EmerALD, Dragon and Eagle based products are involved in this partnership. This gives us the
opportunity to investigate, both jointly and independently, the integration of individual process steps in process modules and electrically active devices. We have been partnering with IMEC since 1990.



In December 2003, we commenced a five-year partnership with University
of Helsinki that aims at further development of atomic layer deposition processes and chemistries. This partnership was extended for a second quinquennial in December 2008.



Manufacturing and Suppliers



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



In 2004, in order to reduce manufacturing costs in our Front-end operations we established FEMS, a manufacturing facility in Singapore, to manufacture certain generic subsystems and subassemblies for our Vertical
Furnaces that we previously outsourced. In 2009 we started the transition of manufacturing of ASM products to be final assembled in Singapore, i.e. including final assembly, test and shipment of the system to the customer from the FEMS
facility. We closed down our manufacturing operations in Almere, the Netherlands, at the end of 2009, and we closed our manufacturing facilities in Phoenix (US) and in Nagaoka (Japan) in 2010.



With this transition we have also implemented a global organization for our procurement activities. Further, we plan to
move to a global operational excellence system, instead of the historical regionally oriented quality systems.



Our Back-end operations are vertically integrated. 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 market and sell our products with the objective of developing and maintaining an ongoing, highly interactive service and support relationship
with our customers. 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 of new applications with our customers.



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 2 to 4 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.



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.



33



---

##### Table of Contents

To execute the sales and service functions in the Front-end, we have established a global sales force,
in which all regional units report directly into the global sales organization. We have sales offices located in Europe (in the Netherlands, France, Ireland, Germany and Italy), Israel, Taiwan, Korea, the Peoples Republic of China, Singapore,
the United States of America and Japan. At the end of 2011, 158 employees were employed in sales and marketing of Front-end products, representing 10 % of total Front-end segment staff.



Sales of Back-end equipment and materials are provided by our principal offices in Hong Kong and Singapore, through
direct sales offices in the Peoples Republic of China, Taiwan, the Philippines, Malaysia, Thailand, Japan, Europe and North America, and through sales representatives in South Korea and some parts of the United States. At the end of 2011, 516
employees were employed in sales and marketing of Back-end products, representing 4% of total Back-end segment staff.



Customers



We sell our products predominantly to manufacturers of semiconductor devices, manufacturers of silicon wafers and assembly companies. Our customers
include most of the leading semiconductor and wafer manufacturers. Our customers vary from independent semiconductor manufacturers that design, manufacture, and sell their products on the open market, to large electronic systems companies that
design and manufacture semiconductor devices for their own use, to semiconductor manufacturers, known as foundries that manufacture devices on assignment of other companies, including fabless companies that design chips but do not have
wafer processing factories.



Our largest customer accounted
for approximately 9.1%, 5.2% and 6.4% of our net sales in 2009, 2010 and 2011, respectively. For our Front-end segment this was 30.6%, 21.6% and 22.8% of our net sales in 2009, 2010 and 2011, respectively. For our Back-end segment this was 6.0%,
4.3% and 3.5% of our net sales in 2009, 2010 and 2011, respectively. Our ten largest customers accounted for approximately 32.9%, 27.9% and 27.9% of our net sales 2009, 2010 and 2011, respectively. For our Front-end segment this was 61.4%, 61.2% and
70.4% of our net sales in 2009, 2010 and 2011, respectively. For our Back-end segment this was 32.7%, 27.3% and 20.2% of our net sales 2009, 2010 and 2011, 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, timing of new fabrication facilities and
new product introductions.



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



|     |          |           |       |                        |  |        |               |                        |     |                         |     |   |          |      |      |  
|---- | -------- | --------- | ----- | ---------------------- |  | ------ | ------------- | ---------------------- | --- | ----------------------- | --- | - | -------- | ---- | ---- | -
|     |          |           |       |                        | 
|     |          | SEGMENT   |       | PERCENTAGEOF NET SALES |  |        |               | GEOGRAPHIC DESTINATION |     | PERCENTAGE OF NET SALES |    
|     |          |           |       |                        |  |        |               |                        |     | Front-end               |     |   | Back-end |     
|2011 |          | Front-end |       | 27.9%                  |  |        |               | S.E. Asia              |     |                         | 9.2 | % |          |      | 52.8 | %
|     |          |           |       |                        |  |        | Europe        |                        |     | 6.6                     | %   |   |          | 14.1 | %   
|     | Back-end |           | 72.1% |                        |  |        | United States |                        |     | 9.1                     | %   |   |          | 2.3  | %   
|     |          |           |       |                        |  | Japan  |               |                        | 3.0 | %                       |     |   | 2.9      | %   
|     |          |           |       |                        |  |        |               |                        |     |                         |     |   |          |      |      |  
|     |          |           |       |                        | 
|     |          | SEGMENT   |       | PERCENTAGEOF NET SALES |  |        |               | GEOGRAPHIC DESTINATION |     | PERCENTAGE OF NET SALES |    
|     |          |           |       |                        |  |        |               |                        |     | Front-end               |     |   | Back-end |     
|2010 |          | Front-end |       | 24.0%                  |  |        |               | S.E. Asia              |     |                         | 8.2 | % |          |      | 68.9 | %
|     |          |           |       |                        |  | Europe |               |                        | 5.6 | %                       |     |   | 0.7      | %   
|     | Back-end |           | 76.0% |                        |  |        | United States |                        |     | 7.5                     | %   |   |          | 1.7  | %   
|     |          |           |       |                        |  | Japan  |               |                        | 2.7 | %                       |     |   | 4.7      | %   
|     |          |           |       |                        |  |        |               |                        |     |                         |     |   |          |      |      |  
|     |          |           |       |                        | 
|     |          | SEGMENT   |       | PERCENTAGEOF NET SALES |  |        |               | GEOGRAPHIC DESTINATION |     | PERCENTAGE OF NET SALES |    
|     |          |           |       |                        |  |        |               |                        |     | Front-end               |     |   | Back-end |     
|2009 |          | Front-end |       | 27.1%                  |  |        |               | S.E. Asia              |     |                         | 6.5 | % |          |      | 68.8 | %
|     |          |           |       |                        |  | Europe |               |                        | 6.2 | %                       |     |   | 0.6      | %   
|     | Back-end |           | 72.9% |                        |  |        | United States |                        |     | 8.8                     | %   |   |          | 2.5  | %   
|     |          |           |       |                        |  | Japan  |               |                        | 5.6 | %                       |     |   | 1.0      | %   



34



---

##### Table of Contents

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 in order to optimize the use of the equipment for the
customers specific processes. For our Front-end operations, where the availability of field support is particularly important for a sale, 512 employees were employed in customer service at the end of 2011 representing 31% of total Front-end
segment staff. For our Back-end operations 1,082 employees were employed in customer service at the end of 2011, representing 7% of total Back-end segment.



Competition



The semiconductor equipment industry is intensely competitive, and is fragmented among companies of varying size, each with a limited number of
products serving particular segments of the 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 evaluate manufacturing equipment based on 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 market are from the United
States, Japan and Korea. Our primary competitors in the Back-end market 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 market include Applied Materials, Novellus Systems (now LAM Research Corporation), Tokyo Electron, Kokusai, and Jusung. Our primary competitors in the Back-end
market include Kulicke & Soffa, ESEC, Shinkawa, Apic Yamada, BE Semiconductor Industries, Towa, Shinko and Mitsui. The primary competitors of SIPLACE in the placement market are Fuji, Panasonic, Juki, and Yamaha (Japan); Assembleon
(Europe); and Universal (U.S.).



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 29, 2012:



|                                                                      |  |                         |  |                                           
|--------------------------------------------------------------------- |  | ----------------------- |  | ------------------------------------------
|Subsidiary Name and Location                                          |  | Country ofIncorporation |  | Percentage Owned by
ASM International N.V.
|                                                                      |  |                        
|ASM Europe
B.V. Almere, the Netherlands                               |  | The Netherlands         |  | 100%                                      
|                                                                      |  |                        
|ASM America,
Inc. Phoenix, Arizona, United States                     |  | United States           |  | 100%                                      
|                                                                      |  |                        
|ASM Japan
K.K. Tama, Japan                                            |  | Japan                   |  | 100%                                      
|                                                                      |  |                        
|ASM Front-End Manufacturing Singapore Pte. Ltd.,
Singapore            |  | Singapore               |  | 100%                                      
|                                                                      |  |                        
|ASM Pacific
Technology Ltd. Hong Kong, the Peoples Republic of China |  | Cayman Islands          |  | 52.17%                                    



35



---

##### Table of Contents

D. Property, plant 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 facilities are located in the Netherlands, the United States, Japan and Singapore 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:



|          |  |                                       |  |                                                                                                               |  |                                      |           | 
|--------- |  | ------------------------------------- |  | ------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | --------- | 
|SEGMENT   |  | LOCATION                              |  | PRIMARY USES                                                                                                  |  | APPROXIMATE
AGGREGATE
SQUARE FOOTAGE |          
|          |  | Almere, the Netherlands               |  | Executive offices of ASMI
Marketing, research and offices                                                     |  |                                      | 103,000   | 
|          |  | Tama and Nagaoka, Japan               |  | Wafer processing equipment marketing, research and offices                                                    |  |                                      | 80,000    | 
|Front-end |  | Phoenix, Arizona, United States       |  | Wafer processing equipment marketing, research and offices                                                    |  |                                      | 130,000   | 
|          |  | Singapore                             |  | Wafer processing equipment manufacturing and offices                                                          |  |                                      | 169,000   | 
|          |  | Cheonan, South Korea                  |  | Wafer processing equipment manufacturing, marketing, research and offices                                     |  |                                      | 33,000    | 
|          |  | Helsinki, Finland                     |  | Wafer processing equipment research and offices                                                               |  |                                      | 6,000     | 
|          |  | Hong Kong, Peoples Republic of China |  | Semiconductor assembly and encapsulation equipment manufacturing, marketing, research and offices             |  |                                      | 278,000   | 
|          |  | Shenzhen, Peoples Republic of China  |  | Semiconductor assembly equipment parts and modules manufacturing, lead frame manufacturing and offices        |  |                                      | 2,100,000 | 
|Back-end  |  | Chengdu, Peoples Republic of China   |  | Semiconductor assembly equipment research and offices                                                         |  |                                      | 179,000   | 
|          |  | Singapore                             |  | Semiconductor assembly equipment and etched lead frame manufacturing, marketing, research and offices         |  |                                      | 403,000   | 
|          |  | Johor Bahru, Malaysia                 |  | Semiconductor assembly equipment parts and modules manufacturing, etched lead frame manufacturing and
offices |  |                                      | 315,000   | 
|          |  | Munich, Germany                       |  | SMT equipment manufacturing, marketing, research and offices                                                  |  |                                      | 325,000   | 



Our principal facilities in the
Netherlands, the United States, Korea, Finland, Hong Kong, the Peoples Republic of China, Singapore and Malaysia are subject to leases expiring at various times from 2011 to 2024. Some 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.



Back-ends new manufacturing plant in Huizhou, China is now fully-operational, and is progressing into its second phase of expansion. A
new casting center and a fabrication center will be ready by the first half of 2012. It will allow Back-end to further enhance its production capacity to cater for the growth of both the assembly and packaging equipment and SMT equipment
businesses, and to facilitate new investments in casting technology. We intend to further supplement our etched lead frame capacity by setting up new etching facilities in Fuyong, China to serve the growing China market.



Item 4A. Unresolved Staff Comments



None.



Item 5. Operating and Financial Review and Prospects



Managements Discussion and Analysis of Financial Condition and Results of
Operations



Overview



We are an equipment supplier mainly to the semiconductor, LED and
electronics manufacturing industry . We design, manufacture and services to our customers for the production of semiconductor devices, or integrated circuits, for the production of LEDs and for electronics manufacturing in general. The
semiconductor capital equipment market is composed of three major market segments: wafer processing equipment, assembly and packaging equipment, and test equipment. ASMI is mainly active in wafer



36



---

##### Table of Contents

processing (Front-end) and assembly and packaging (Back-end). 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 28% of our net sales in 2011, through our principal facilities in the Netherlands, the United States, Japan and Singapore. We conduct
our Back-end business, which accounted for 72% of our net sales in 2011, through our principal facilities in Hong Kong, the Peoples Republic of China, Singapore, Malaysia and Germany. Our Back-end operations are conducted through our 52.17%
majority-owned subsidiary, ASM Pacific Technology.



We sell
our products to the semiconductor manufacturing industry and the assembly (pick and placement) industry, which is subject to sudden, extreme, cyclical variations in product supply and demand.



After a very strong year 2010 for the industry as a whole, the year 2011 Shows a mixed picture. 2011 started strong with
a further increase of our order book in Q1 2011, however as from Q2 a reduction in the order intake took place, compensated in the following quarters, especially in the Back-end by deliveries out of our order book. Towards the end of 2011 we saw
also a reduction in the order intake in our newly acquired AS activities. As a consequence of this decline in the economic climate sales for the year ended at a level of  1,634 million (excl. AS  1,191 million). Sales in the Front-end show for the full year an
increase from  293 million to
 456 million. This 55% increase of net sales was driven by increased equipment and higher spares and service sales amongst others due to
strong inroads made with enabling new technologies in (PE)ALD and as a result of increased activity at our customers In our Back-end segment sales increased from  930 million to  1,178 million. In the Back-end segment we saw a strong sales increase due
to the acquisition of the AS activities of Siemens, which contributed  444 million to the sales in 2011. For the existing activities
of the Back-end segment sales decreased from  929 million to 734 million. This decrease was mainly caused by the lower LED equipment sales and the worsening of the business climate in the second half of 2011.



The gross margin for ASMI consolidated decreased from 44.9% in 2010 to 34.9% in 2011. Gross margin in our Front-end
segment decreased from 39.1% in 2010 to 37.8% in 2011, while our Back-end segment showed a decrease from 46.8% to 33.8% for the same period. The decrease of the gross margin in our Front-end segment compared to last year is mainly attributable to
the product mix differences which impacted especially the Q4 margin. The gross profit margin in the comparable Back-end segment decreased due to mix differences between equipment and lead frame sales, the increase in raw material prices for its lead
frame business and, especially in the second half of 2011 due to the lower loading of the factories. The acquisition of the AS business impacted the gross margin as a result of its lower gross margin and the revaluation of acquired inventories at
fair value.



The result from operations as a percentage of
sales decreased from 26.9% in 2010 to 22.4% in 2011. The purchase price allocation of the newly acquired SEAS business resulted in a gain of bargain purchase of  109 million. The operating margin of our Front-end segment increased from 5.4% in 2010 to 13.7% in 2011. For the same period the operating margin of our comparable Back-end segment decreased from 33.6% to
22.2%.



Net earnings for 2011 were strongly affected by the
gain on the bargain purchase of SEAS.



The company generated
a positive operational cash flow in 2011 of 217 million, compared to
260 million in 2010. As well the Front-end as the Back-end operations were generating a positive operational cash flow in 2011.



In January 2011, we exercised our right to call the
outstanding 4.25% convertible subordinated notes (due 2011), resulting in conversion of all remaining notes at February 15. As a result a revaluation of the conversion option ( 4.4 million) was included in our results for the first quarter of the year 2011.



A. Operating Results



Sales



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 and Europe.



37



---

##### Table of Contents

The following table shows the geographic distribution of our Front-end and Back-end sales for the
years 2009, 2010 and 2011:



|                           |  |                         |       |  |      |  |      |      |  |   |       |  |  |  |      |   |  |   |         |  |  |  |      |  
|-------------------------- |  | ----------------------- | ----- |  | ---- |  | ---- | ---- |  | - | ----- |  |  |  | ---- | - |  | - | ------- |  |  |  | ---- | -
|                           |  | Year ended December 31, |      
|(amounts in millions)      |  | 2009                    |       |  | 2010 |  |      | 2011 | 
|Front-end:                 |  |                         |       |  |      |  |      |      |  |   |       |  |  |  |      |   |  |   |         |  |  |  |      |  
|United States              |  |                        | 51.9  |  |      |  | 32.4 | %    |  |  | 91.7  |  |  |  | 31.3 | % |  |  | 148.4   |  |  |  | 32.5 | %
|Europe                     |  |                         | 36.8  |  |      |  | 22.9 |      |  |   | 67.9  |  |  |  | 23.2 |   |  |   | 107.8   |  |  |  | 23.6 |  
|Taiwan                     |  |                         | 17.3  |  |      |  | 10.8 |      |  |   | 35.1  |  |  |  | 12.0 |   |  |   | 37.8    |  |  |  | 8.3  |  
|Japan                      |  |                         | 33.1  |  |      |  | 20.7 |      |  |   | 33.0  |  |  |  | 11.2 |   |  |   | 49.7    |  |  |  | 10.9 |  
|South Korea                |  |                         | 9.2   |  |      |  | 5.7  |      |  |   | 37.3  |  |  |  | 12.7 |   |  |   | 70.2    |  |  |  | 15.4 |  
|China                      |  |                         | 7.8   |  |      |  | 4.9  |      |  |   | 21.5  |  |  |  | 7.3  |   |  |   | 23.6    |  |  |  | 5.2  |  
|Other                      |  |                         | 4.3   |  |      |  | 2.6  |      |  |   | 6.9   |  |  |  | 2.3  |   |  |   | 18.6    |  |  |  | 4.1  |  
|                           |  |                         |       |  |      |  |      |      |  |   |       |  |  |  |      |   |  |   |         |  |  |  |      |  
|                           |  |                        | 160.4 |  |      |  | 100  | %    |  |  | 293.4 |  |  |  | 100  | % |  |  | 456.1   |  |  |  | 100  | %
|Back-end:                  |  |                         |       |  |      |  |      |      |  |   |       |  |  |  |      |   |  |   |         |  |  |  |      |  
|Peoples Republic of China |  |                        | 144.6 |  |      |  | 33.6 | %    |  |  | 350.0 |  |  |  | 37.6 | % |  |  | 527.6   |  |  |  | 44.8 | %
|Europe                     |  |                         | 3.4   |  |      |  | 0.8  |      |  |   | 8.3   |  |  |  | 0.9  |   |  |   | 230.2   |  |  |  | 19.5 |  
|Taiwan                     |  |                         | 86.2  |  |      |  | 20.0 |      |  |   | 148.8 |  |  |  | 16.0 |   |  |   | 71.9    |  |  |  | 6.1  |  
|Malaysia                   |  |                         | 42.4  |  |      |  | 9.8  |      |  |   | 112.1 |  |  |  | 12.1 |   |  |   | 84.0    |  |  |  | 7.1  |  
|South Korea                |  |                         | 63.9  |  |      |  | 14.9 |      |  |   | 97.8  |  |  |  | 10.5 |   |  |   | 41.4    |  |  |  | 3.5  |  
|Hong Kong                  |  |                         | 16.1  |  |      |  | 3.7  |      |  |   | 39.9  |  |  |  | 4.3  |   |  |   | 26.7    |  |  |  | 2.2  |  
|Thailand                   |  |                         | 24.4  |  |      |  | 5.7  |      |  |   | 42.1  |  |  |  | 4.5  |   |  |   | 32.5    |  |  |  | 2.8  |  
|Japan                      |  |                         | 5.7   |  |      |  | 1.3  |      |  |   | 57.4  |  |  |  | 6.2  |   |  |   | 47.0    |  |  |  | 4.0  |  
|Singapore                  |  |                         | 5.1   |  |      |  | 1.2  |      |  |   | 13.8  |  |  |  | 1.5  |   |  |   | 16.7    |  |  |  | 1.4  |  
|Philippines                |  |                         | 21.6  |  |      |  | 5.0  |      |  |   | 34.4  |  |  |  | 3.7  |   |  |   | 34.8    |  |  |  | 3.0  |  
|United States              |  |                         | 15.0  |  |      |  | 3.5  |      |  |   | 21.1  |  |  |  | 2.3  |   |  |   | 37.5    |  |  |  | 3.2  |  
|Other                      |  |                         | 2     |  |      |  | 0.5  |      |  |   | 3.8   |  |  |  | 0.4  |   |  |   | 28.0    |  |  |  | 2.4  |  
|                           |  |                         |       |  |      |  |      |      |  |   |       |  |  |  |      |   |  |   |         |  |  |  |      |  
|                           |  |                        | 430.4 |  |      |  | 100  | %    |  |  | 929.5 |  |  |  | 100  | % |  |  | 1,178.3 |  |  |  | 100  | %
|                           |  |                         |       |  |      |  |      |      |  |   |       |  |  |  |      |   |  |   |         |  |  |  |      |  



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 several months. 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 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.



A substantial portion of our Front-end sales is for equipping new or upgraded fabrication plants where device
manufacturers are installing complete 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 61.4%, 61.2% and 70.4% of Front-end net
sales in 2009, 2010 and 2011, respectively. The composition of our ten largest Front-end customers changes from year to year. The largest Front-end customer accounted for 30.6%, 21.6% and 22.8% of Front-end net sales in 2009, 2010 and 2011,
respectively.



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 32.7%, 27.3% and 20.2% of Back-end net sales 2009, 2010 and
2011, respectively. Because our Back-end customers 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 6.0%, 4.3% and
3.5% of Back-end net sales 2009, 2010 and 2011, respectively.



Research
and Development



We continue to invest in research and
development at a high level. 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



38



---

##### Table of Contents

technology and expertise. Research and development costs are expensed as incurred. The costs relating to prototypes and experimental models, which we may subsequently sell to customers are
charged to the cost of sales.



For a further discussion of
research and development expenses see Item 4.B, Business OverviewResearch and Development and Results of Operations, below.



Our research and development operations in the Netherlands and the United States receive research and development grants and credits from various
sources.



Critical Accounting Policies and Estimates



The preparation of consolidated financial statements and related
disclosures in conformity with accounting principles generally accepted in the United States of America (US GAAP) requires management to make judgments, assumptions and estimates that affect the amounts reported. Note 1 of Notes to
Consolidated Financial Statements describes the significant accounting policies used in the preparation of the consolidated financial statements. Certain of these significant accounting policies are considered to be critical accounting policies.



A critical accounting policy is defined as one that is both
material to the presentation of ASMIs consolidated financial statements and that requires management to make difficult, subjective or complex judgments that could have a material effect on ASMIs financial condition or results of
operations. Specifically, these policies have the following attributes: (1) ASMI is required to make assumptions about matters that are highly uncertain at the time of the estimate; and (2) different estimates ASMI could reasonably have
used, or changes in the estimate that are reasonably likely to occur, would have a material effect on ASMIs financial condition or results of operations.



Estimates and assumptions about future events and their effects cannot be determined with certainty. ASMI bases its estimates on historical
experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as ASMIs operating environment changes.
These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. In addition, management is periodically faced with uncertainties, the outcomes of which are not within its
control and will not be known for prolonged periods of time. These uncertainties include those discussed in, Item 3D, Risk Factors. Based on a critical assessment of its accounting policies and the underlying judgments and
uncertainties affecting the application of those policies, management believes that ASMIs consolidated financial statements are fairly stated in accordance with USGAAP, and provide a meaningful presentation of ASMIs financial condition
and results of operations.



Analysis of specific sensitivity
to changes of estimates and assumptions are included in the notes to the financial statement.



Management believes that the following are critical accounting policies:



Revenue Recognition



ASMI recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has
occurred or services have been rendered; sellers price to buyer is fixed or determinable; and collectability is probable. Each sale arrangement may contain commercial terms that differ from other arrangements. In addition, we frequently enter
into contracts that contain multiple deliverables. Judgment is required to properly identify the accounting units of the multiple deliverable transactions and to determine the manner in which revenue should be allocated among the accounting units.
Moreover, judgment is used in interpreting the commercial terms and determining when all criteria of revenue recognition have been met in order for revenue recognition to occur in the appropriate accounting period. While changes in the allocation of
the estimated sales price between the units of accounting will not affect the amount of total revenue recognized for a particular sales arrangement, any material changes in these allocations could impact the timing of revenue recognition.



In 2009, the Financial Accounting Standards Board issued
amended revenue recognition guidance for arrangements with multiple deliverables and certain software sold with tangible products. This new guidance eliminates the residual method of revenue recognition and allows the use of managements best
estimate of selling price for individual elements of an arrangement when vendor specific evidence or third party evidence is unavailable. ASMI implemented this guidance beginning in the first quarter of 2011 for transactions that were initiated or
materially modified during 2011. The implementation of the new guidance had an insignificant impact on reported net sales as compared to net sales under previous guidance, as the



39



---

##### Table of Contents

new guidance did not change the units of accounting within sales arrangements and the elimination of the residual method for the allocation of arrangement consideration had an inconsequential
impact on the amount and timing of reported net sales.



A
major portion of our revenue is derived from contractual arrangements with customers that have multiple deliverables, such as equipment and installation. For each of the specified deliverables ASMI determines the selling price by using either vendor
specific objective evidence (VSOE), third party evidence (TPE) or by best estimate of the selling price (BESP). For transactions entered into, or materially modified, as of January 1, 2011, when the Company
is unable to establish relative selling price using VSOE or TPE, the Company uses BESP in its allocation of arrangement consideration. The total arrangement consideration is allocated at inception of the arrangement to all deliverables on the basis
of their relative selling price. The revenue relating to the undelivered elements of the arrangements is deferred at their relative selling prices until delivery of these elements. At December 31, 2010 and December 31, 2011 we have
deferred revenues from installations in the amount of 4.4 million and
6.3 million respectively.



Our Front-end sales frequently involve sales of complex equipment, which may include customer-specific criteria, sales to new customers or sales of
equipment with new technology. For each sale, the decision whether to recognize revenue is, in addition to shipment and factory acceptance, based on: the contractual agreement with a customer; the experience with a particular customer; the
technology and the number of similarly configured equipment previously delivered. Based on these criteria we may decide to defer revenue until completion of installation at the customers site and obtaining final acceptance from the customer.
At December 31, 2010 and December 31, 2011 we had no deferred revenue from sales of equipment.



Warranty



We provide maintenance on our systems during the warranty period, usually one to two years. Costs of warranty include the cost of labor, material
and related overhead necessary to repair a product during the warranty period. For the front-end business and the SMT business we accrue for the estimated cost of the warranty on products shipped in a provision for warranty, upon recognition of the
sale of the product. The costs are estimated based on actual historical expenses incurred and on estimated future expenses related to current sales, and are updated periodically. Actual warranty costs are charged against the provision for warranty.
The actual warranty costs may differ from estimated warranty costs, as a result of which we adjust our provision for warranty accordingly. Future warranty costs may exceed our estimates, which could result in an increase of our cost of sales.



Business combinations



ASC Topic 805 (Business Combinations) requires that
companies record acquisitions under the purchase method of accounting. Accordingly, the purchase price is allocated to the tangible assets and liabilities and intangible assets acquired, based on their estimated fair values. The excess purchase
price over the fair value is recorded as goodwill. Purchased intangibles with definite lives are amortized over their respective useful lives. When a bargain purchase incurs, which is the case when the fair value of the acquired business exceeds the
purchase price, this surplus in fair value is recognized as a gain from bargain purchase.



Long-lived assets



Long-lived assets include goodwill, other intangible assets and property, plant and equipment.



Goodwill is tested for impairment annually on December 31 and
whenever events or changes in circumstances indicate that the carrying amount of the goodwill may not be recoverable. Our Front-end impairment test and the determination of the fair value is based on a discounted future cash flow approach that uses
our estimates of future revenues, driven by assumed market growth and estimated costs as well as appropriate discount rates. These estimates are consistent with the plans and estimated costs we use to manage the underlying business. Our Back-end
impairment test is based on the market value of the listed shares of ASMPT. The material assumptions used by management for the annual impairment test performed per December 31, 2011 were:



| |  |  | For Front-end external market segment data, historical data and strategic plans to estimate cash flow growth per product line have been used.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cash flow projections for the first four years; after these four years perpetuity growth rates are set based on market maturity of the products. For maturing
product the perpetuity growth rates used are 1% or less and for enabling technology products the rate used is 3% or less.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



40



---

##### Table of Contents

| |  |  | A discount rate of 20.5% ( unchanged from 2010) representing the pre-tax weighted average cost of capital. This relatively high rate is a consequence of the
current situation whereby certain production lines are in the early phase of the product lifecycle, hence reflecting a higher risk.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For Back-end the market value of the listed shares of ASMPT on the Hong Kong Stock exchange has been used in our analysis.
| | - |  | --------------------------------------------------------------------------------------------------------------------------



Management believes that the fair value calculated reflects the amount
a market participant would be willing to pay. Based on this analysis management believes that the fair value of the reporting units substantially exceeded its carrying value and that, therefore, goodwill was not impaired as of December 31,
2011.



The calculation of fair value involves certain
management judgments and was based on our best estimates and projections at the time of our review. The value 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 results of operations at that time. At December 31, 2011, a decrease in estimated cash flows of 10% and an increase of 10% of the discount rate used in calculating the fair value would not
result in an impairment of the carrying value of goodwill.



Other intangible assets and property, plant and equipment are reviewed by us 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 estimate the future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. Our cash flow
estimates used include certain management judgments and were based on our best estimates and projections at the time of our review, and may be different if other assumptions are used. In future periods, however, we may be required to record
impairment losses, which may significantly affect our results of operations at that time. At December 31, 2011, a decrease in estimated cash flows of 10% would not result in an impairment of the carrying value of long-lived assets.



Allowance for doubtful accounts



ASMI maintains an allowance for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. This allowance is based on historical experience, credit evaluations, specific customer collection history and any customer-specific issues ASMI has identified. Changes in
circumstances, such as an unexpected material adverse change in a major customers ability to meet its financial obligation to ASMI or its payment trends, may require us to further adjust our estimates of the recoverability of amounts due to
ASMI, which could have a material adverse effect on ASMIs financial condition and results of operations. At December 31, 2011 the allowance for doubtful accounts amounted to 7.6 million, which is 2.3% of our total accounts receivable.



Inventories



Inventories are stated at the lower of cost (first-in, first out method) or market value. Inventory in the newly acquired SEAS business is generally
determined on the basis of an average method. Costs include net prices paid for materials purchased, charges for freight and custom duties, production labor cost and factory overhead. Allowances are made for slow moving, obsolete or unsellable
inventory and are reviewed on a quarterly basis.



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 write downs for inventory based on the above factors and take into account worldwide quantities and demand into our analysis.



At December 31, 2011 our allowance for inventory obsolescence amounted to 59.0 million, which is 13.5% of our total inventory. If circumstances related to our inventories change, our estimate of the values of inventories could materially change. At December 31, 2011, an
increase of our overall estimate for obsolescence and lower market value by 10% of our total inventory balance would result in an additional charge to cost of sales of 43 million.



Convertible bonds and conversion option



As per 1 January 2009, ASMI applies ASC 815 Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entitys Own
Stock. Our convertible bonds due 2010, 2011 and 2014, include a



41



---

##### Table of Contents

component that creates a financial liability to the Company and a component that grants an option to the holder of the convertible note to convert it into common shares of the Company
(conversion option). ASC 815 requires separate recognition of these components.



For the conversion options of the convertible bonds due 2010 and 2011 the accounting is different from that for the conversion option of the convertible bonds due 2014. As the convertible bonds due 2010 and 2011
are denominated in USD and the ASM International common shares in which they can be converted to are denominated in Euro, these conversion options are recognized as a liability measured at fair value. The conversion option is measured at fair value
through the income statement, and for 2011 this revaluation at fair value resulted in a loss of 4.4 million (2010: loss 19.0 million). For the conversion options of the convertible bonds due 2014 the fixedfor-fixed principle is met as both the debt
instrument (the bond) and the entitys equity shares into which they can be converted are denominated in the functional currency (Euro). Based on the before mentioned criteria the conversion option qualifies as permanent equity.



The fair value of the liability component is estimated using the
prevailing market interest rate at the date of issue, for similar non-convertible debt. Subsequently, the liability is measured at amortized cost. The interest expense on the liability component is calculated by applying the market interest rate for
similar non-convertible debt at the date of issue to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible subordinated notes, thus creating a non-cash
interest expense. For 2011 this accretion interest was 4.4 million (2010:
6.0 million).



Share-based compensation expenses



The cost relating to employee stock options is measured at fair value on the grant date. The grant-date fair value of stock options is determined
using a Black-Scholes option valuation model. This Black-Scholes model requires the use of assumptions, including expected share price volatility, the estimated life of each award and the estimated dividend yield. The risk-free interest rate used in
the model is determined, based on a euro government bond with a life equal to the expected life of the options.



|                        |  |              |        |   |      |  |       |  
|----------------------- |  | ------------ | ------ | - | ---- |  | ----- | -
|                        |  | December 31, |       
|                        |  | 2010         |        |   | 2011 | 
|Expected life (years)   |  |              | 5  10 |   |      |  | 7     |  
|Risk free interest rate |  |              | 2.8    | % |      |  | 3.51  | %
|Dividend yield          |  |              |       |   |      |  | 0.32  | %
|Expected volatility     |  |              | 45.6   | % |      |  | 40.90 | %



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. We have established 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 not 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, 2011, we believe that there is insufficient evidence to substantiate recognition of substantially all net deferred tax assets with respect to net operating loss carry forwards, and we have established a valuation
allowance in the amount of 76.5 million. 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 significantly influence our results of operations at that time. If our evaluation of the realization of deferred tax assets would indicate that an additional 10% of the net deferred tax assets
as of December 31, 2011 is not realizable, this would result in an additional valuation allowance and an income tax expense of 0.7
million.



Consistent with the provisions of ASC 740, as of
December 31,2011, ASMI has a liability of unrecognized tax benefits of 21.7 million (2010: 20.1 million). A reconciliation of the beginning balance at January 1, 2011 and the ending balance at December 31, 2011 of the
liability for unrecognized tax benefits is as follows:



|                                              |  |  |      | 
|--------------------------------------------- |  |  | ---- | 
|(euro millions)                               |  |  |     
|Balance January 1, 2011                       |  |  | 20.1 | 
|Gross increasestax positions in current year |  |  | 1.0  | 
|Foreign currency translation effect           |  |  | 0.7  | 
|                                              |  |  |      | 
|Balance December 31, 2011                     |  |  | 21.7 | 
|                                              |  |  |      | 



42



---

##### Table of Contents

Unrecognized tax benefits mainly relate to transfer pricing positions, operational activities in
countries where we are not tax registered and tax deductible costs. We estimate that no interest and penalties are related to these unrecognized tax benefits. Unrecognized tax benefits of
21.749 would, if recognized, impact the Companys effective tax rate. The Company provided for the full amount of 21.749 to mitigate possible impact in case of an unfavorable outcome.



The calculation of our tax positions involves dealing with
uncertainties in the application of complex tax laws. Our estimate for the potential outcome of any uncertain tax position is highly judgmental. Settlement of uncertain tax positions in a manner inconsistent with our estimates could have a material
impact on our earnings, financial position and cash flows.



Results of
Operations



The following table shows certain
Consolidated Statement of Operations data as a percentage of net sales for our Front-end and Back-end segments for the years 2009, 2010 and 2011:



|                                                           |  |                         |       |    |          |  |       |       |  |  |       |   |  |      |       |   |      |  |       |      |  |  |       |   |  |      |       |    |  |  |       |   |  |  |       |  
|---------------------------------------------------------- |  | ----------------------- | ----- | -- | -------- |  | ----- | ----- |  |  | ----- | - |  | ---- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | - |  | ---- | ----- | -- |  |  | ----- | - |  |  | ----- | -
|                                                           |  | Year ended December 31, |      
|                                                           |  | Front-end               |       |    | Back-end |  |       | Total | 
|                                                           |  | 2009                    |       |    | 2010     |  |       | 2011  |  |  | 2009  |   |  | 2010 |       |   | 2011 |  |       | 2009 |  |  | 2010  |   |  | 2011 |      
|Net sales                                                  |  |                         | 100.0 | %  |          |  | 100.0 | %     |  |  | 100.0 | % |  |      | 100.0 | % |      |  | 100.0 | %    |  |  | 100.0 | % |  |      | 100.0 | %  |  |  | 100.0 | % |  |  | 100.0 | %
|Cost of sales                                              |  |                         | (94.6 | )  |          |  | (60.9 | )     |  |  | (62.2 | ) |  |      | (59.8 | ) |      |  | (53.2 | )    |  |  | (66.2 | ) |  |      | (69.3 | )  |  |  | (55.1 | ) |  |  | (65.0 | )
|Gross profit                                               |  |                         | 5.4   |    |          |  | 39.1  |       |  |  | 37.8  |   |  |      | 40.2  |   |      |  | 46.8  |      |  |  | 33.8  |   |  |      | 30.7  |    |  |  | 44.9  |   |  |  | 35.0  |  
|Selling, general and administrative expenses               |  |                         | (36.5 | )  |          |  | (17.2 | )     |  |  | (13.4 | ) |  |      | (11.5 | ) |      |  | (8.6  | )    |  |  | (9.7  | ) |  |      | (18.2 | )  |  |  | (10.7 | ) |  |  | (10.7 | )
|Research and development expenses                          |  |                         | (21.5 | )  |          |  | (12.5 | )     |  |  | (10.7 | ) |  |      | (6.6  | ) |      |  | (4.6  | )    |  |  | (6.9  | ) |  |      | (10.6 | )  |  |  | (6.4  | ) |  |  | (7.9  | )
|Amortization of other intangible assets                    |  |                         | (0.2  | )  |          |  | (0.1  | )     |  |  |      |   |  |      |      |   |      |  |      |      |  |  | (0.1  | ) |  |      | (0.1  | )  |  |  |      |   |  |  | (0.1  | )
|Impairment of PP&E                                         |  |                         |      |    |          |  |      |       |  |  |      |   |  |      |      |   |      |  |      |      |  |  | (0.7  | ) |  |      |      |    |  |  |      |   |  |  | (0.5  | )
|Gain bargain purchase                                      |  |                         |      |    |          |  |      |       |  |  |      |   |  |      |      |   |      |  |      |      |  |  | 9.3   |   |  |      |      |    |  |  |      |   |  |  | 6.6   |  
|Restructuring expenses                                     |  |                         | (22.3 | )  |          |  | (3.8  | )     |  |  |      |   |  |      |      |   |      |  |      |      |  |  |      |   |  |      | (6.0  | )  |  |  | (0.9  | ) |  |  |      |  
|                                                           |  |                         |       |    |          |  |       |       |  |  |       |   |  |      |       |   |      |  |       |      |  |  |       |   |  |      |       |    |  |  |       |   |  |  |       |  
|Earnings (loss) from operations                            |  |                         | (75.0 | )  |          |  | 5.4   |       |  |  | 13.7  |   |  |      | 22.1  |   |      |  | 33.6  |      |  |  | 25.9  |   |  |      | (4.3  | )  |  |  | 26.9  |   |  |  | 22.5  |  
|Net interest income (expense)                              |  |                         | (5.0  | )  |          |  | (5.1  | )     |  |  | (2.7  | ) |  |      | 0.1   |   |      |  | 0.1   |      |  |  | 0.1   |   |  |      | (1.3  | )  |  |  | (1.2  | ) |  |  | (0.6  | )
|Accretion of interest convertible                          |  |                         | (2.7  | )  |          |  | (2.1  | )     |  |  | (1.0  | ) |  |      |      |   |      |  |      |      |  |  |      |   |  |      | (0.7  | )  |  |  | (0.5  | ) |  |  | (0.3  | )
|Revaluation conversion option                              |  |                         | (15.2 | )  |          |  | (6.5  | )     |  |  | (1.0  | ) |  |      |      |   |      |  |      |      |  |  |      |   |  |      | (4.1  | )  |  |  | (1.6  | ) |  |  | (0.3  | )
|Gain (expense) resulting from early extinguishment of debt |  |                         | (1.1  | )  |          |  | (1.2  | )     |  |  | (0.2  | ) |  |      |      |   |      |  |      |      |  |  |      |   |  |      | (0.3  | )  |  |  | (0.3  | ) |  |  | (0.0  | )
|Foreign currency exchange gains (losses)                   |  |                         | (0.4  | )  |          |  | (0.6  | )     |  |  | 1.8   |   |  |      | (0.1  | ) |      |  | 0.2   |      |  |  | (0.2  | ) |  |      | (0.2  | )  |  |  |      |   |  |  | 0.3   |  
|                                                           |  |                         |       |    |          |  |       |       |  |  |       |   |  |      |       |   |      |  |       |      |  |  |       |   |  |      |       |    |  |  |       |   |  |  |       |  
|Earnings (loss) before income taxes and dilution           |  |                         | (99.4 | )  |          |  | (10.1 | )     |  |  | 10.8  |   |  |      | 22.1  |   |      |  | 33.9  |      |  |  | 25.7  |   |  |      | (10.9 | )  |  |  | 23.3  |   |  |  | 21.6  |  
|Income tax income / (expense)                              |  |                         | 4.9   |    |          |  | (2.1  | )     |  |  | (1.0  | ) |  |      | (2.7  | ) |      |  | (4.0  | )    |  |  | (2.7  | ) |  |      | (0.6  | )  |  |  | (3.5  | ) |  |  | (2.2  | )
|                                                           |  |                         |       |    |          |  |       |       |  |  |       |   |  |      |       |   |      |  |       |      |  |  |       |   |  |      |       |    |  |  |       |   |  |  |       |  
|Net earnings (loss)                                        |  |                         | (94.5 | )% |          |  | (12.2 | )%    |  |  | 9.8   | % |  |      | 19.4  | % |      |  | 29.9  | %    |  |  | 23.0  | % |  |      | (11.6 | )% |  |  | 19.8  | % |  |  | 19.4  | %
|                                                           |  |                         |       |    |          |  |       |       |  |  |       |   |  |      |       |   |      |  |       |      |  |  |       |   |  |      |       |    |  |  |       |   |  |  |       |  
|Allocation of net earnings (loss)                          |  |                         |       |    |          |  |       |       |  |  |       |   |  |      |       |   |      |  |       |      |  |  |       |   |  |      |       |    |  |  |       |   |  |  |       |  
|Shareholders of the parent                                 |  |                         |       |    |          |  |       |       |  |  |       |   |  |      |       |   |      |  |       |      |  |  |       |   |  |      | (18.3 | )% |  |  | 9.0   | % |  |  | 11.4  | %
|Minority interest                                          |  |                         |       |    |          |  |       |       |  |  |       |   |  |      |       |   |      |  |       |      |  |  |       |   |  |      | 6.7   | %  |  |  | 10.8  | % |  |  | 7.9   | %



Year Ended December 31, 2011 Compared to Year
Ended December 31, 2010



Net Sales. The
following table shows net sales of our Front-end and Back-end segments for the full year 2011 compared to the same period in 2010:



|                               |  |           |         |  |      |  |         |          |  |  |     |   
|------------------------------ |  | --------- | ------- |  | ---- |  | ------- | -------- |  |  | --- | --
|(EUR millions)                 |  | Full year |        
|                               |  | 2010      |         |  | 2011 |  |         | % Change | 
|Front-end                      |  |           | 293.4   |  |      |  | 456.1   |          |  |  | 55  | % 
|Back-end                       |  |           |         |  |      |  |         |          |  |  |     |   
|-Excluding ASM AS (comparable) |  |           | 929.5   |  |      |  | 734.4   |          |  |  | (21 | )%
|-ASM AS                        |  |           |        |  |      |  | 443.8   |          |  |  | n/a |   
|                               |  |           |         |  |      |  |         |          |  |  |     |   
|Back-end total                 |  |           | 929.5   |  |      |  | 1,178.3 |          |  |  | 27  | % 
|ASMI consolidated              |  |           | 1,222.9 |  |      |  | 1,634.3 |          |  |  | 34  | % 
|                               |  |           |         |  |      |  |         |          |  |  |     |   



The increase of net sales in the full
year 2011 in our Front-end segment compared to last year was driven by increased equipment and higher spares and service sales amongst others due to strong inroads



43



---

##### Table of Contents

made with enabling new technologies in (PE)ALD and as a result of increased activity at our customers. In our Back-end segment record sales were realized due to the acquisition of SEAS (ASMAS).



The impact of currency changes year-over-year was a
decrease of 5%.



Gross Profit Margin.The following
table shows gross profit and gross profit margin for the Front-end and Back-end segments for the full year 2011 compared to the same period in 2010:



|                               |  |              |       |  |                    |  |       |                                       |  |  |      |   |  |  |      |   |  |  |          | 
|------------------------------ |  | ------------ | ----- |  | ------------------ |  | ----- | ------------------------------------- |  |  | ---- | - |  |  | ---- | - |  |  | -------- | 
|(EUR millions)                 |  | Full year    |      
|                               |  | Gross profit |       |  | Gross profitmargin |  |       | Increase or(decrease)percentagepoints | 
|                               |  | 2010         |       |  | 2011               |  |       | 2010                                  |  |  | 2011 |   | 
|Front-end                      |  |              | 114.6 |  |                    |  | 172.3 |                                       |  |  | 39.1 | % |  |  | 37.8 | % |  |  | (1.3)pt  | 
|Back-end                       |  |              |       |  |                    |  |       |                                       |  |  |      |   |  |  |      |   |  |  |          | 
|-Excluding ASM AS (comparable) |  |              | 435.0 |  |                    |  | 284.5 |                                       |  |  | 46.8 | % |  |  | 38.7 | % |  |  | (8.1)pt  | 
|-ASM AS                        |  |              |      |  |                    |  | 113.8 |                                       |  |  | n/a  |   |  |  | 25.6 | % |  |  | n/a      | 
|                               |  |              |       |  |                    |  |       |                                       |  |  |      |   |  |  |      |   |  |  |          | 
|Back-end total                 |  |              | 435.0 |  |                    |  | 398.3 |                                       |  |  | 46.8 | % |  |  | 33.8 | % |  |  | (13.0)pt | 
|                               |  |              |       |  |                    |  |       |                                       |  |  |      |   |  |  |      |   |  |  |          | 
|ASMI consolidated              |  |              | 549.6 |  |                    |  | 570.6 |                                       |  |  | 44.9 | % |  |  | 34.9 | % |  |  | (10.0)pt | 
|                               |  |              |       |  |                    |  |       |                                       |  |  |      |   |  |  |      |   |  |  |          | 



The decrease of the gross margin in our
Front-end segment compared to the same period last year is mainly attributable to the product mix differences. The gross profit margin in the Back-end segment decreased due to mix differences between equipment and lead frame sales, the increase in
raw material prices for its lead frame business, the acquisition of the AS business with its lower gross margin, and the lower trading in the course of 2011.



Business combination accounting rules require us to account for inventories assumed from our acquisitions at their fair values. The revaluation of
the acquired inventories increased both cost of sales and the gain on bargain purchase with 11.5 million.



The impact of currency changes year to year was a decrease of 5%.



Selling, General and Administrative Expenses.The
following table shows selling, general and administrative expenses for our Front-end and Back-end segments for the full year 2011 compared to the same period in 2010:



|                                       |  |           |       |  |      |  |       |          |  |  |     |   
|-------------------------------------- |  | --------- | ----- |  | ---- |  | ----- | -------- |  |  | --- | --
|(EUR millions)                         |  | Full year |      
|                                       |  | 2010      |       |  | 2011 |  |       | % Change | 
|Front-end                              |  |           | 51.0  |  |      |  | 61.2  |          |  |  | 20  | % 
|Back-end                               |  |           |       |  |      |  |       |          |  |  |     |   
|-Excluding ASM AS (comparable)         |  |           | 79.9  |  |      |  | 76.5  |          |  |  | (4  | )%
|-ASM AS                                |  |           |      |  |      |  | 35.0  |          |  |  | n/a |   
|-Acquisition related transaction costs |  |           |      |  |      |  | 2.4   |          |  |  | n/a |   
|                                       |  |           |       |  |      |  |       |          |  |  |     |   
|Back-end total                         |  |           | 79.9  |  |      |  | 113.8 |          |  |  | 42  | % 
|ASMI consolidated                      |  |           | 131.0 |  |      |  | 175.0 |          |  |  | 34  | % 
|                                       |  |           |       |  |      |  |       |          |  |  |     |   



As a percentage of net sales, selling,
general and administrative expenses were 11% in the full year of 2011, flat compared to the same period of 2010.



For the full year of 2011 selling, general and administrative expenses as a percentage of net sales of our Front-end segment, were reduced to 13%
compared with 17% for the full year of 2010. On a comparable base- excluding the AS business- for the period under review the selling, general and administrative expenses in the Back-end segment as a percentage of net sales increased from 9% in 2010
to 10% in 2011.



The impact of currency changes year to year
was a decrease of 4%.



Research and Development
Expenses. The following table shows research and development expenses for our Front-end and Back-end segments for the full year 2011 compared to the same period in 2010:



|                               |  |           |      |  |      |  |       |          |  |  |     |  
|------------------------------ |  | --------- | ---- |  | ---- |  | ----- | -------- |  |  | --- | -
|(EUR millions)                 |  | Full year |     
|                               |  | 2010      |      |  | 2011 |  |       | % Change | 
|Front-end                      |  |           | 36.5 |  |      |  | 48.5  |          |  |  | 33  | %
|Back-end                       |  |           |      |  |      |  |       |          |  |  |     |  
|-Excluding ASM AS (comparable) |  |           | 42.3 |  |      |  | 43.3  |          |  |  | 3   | %
|-ASM AS                        |  |           |     |  |      |  | 37.5  |          |  |  | n/a |  
|                               |  |           |      |  |      |  |       |          |  |  |     |  
|Back-end total                 |  |           | 42.3 |  |      |  | 80.9  |          |  |  | 91  | %
|ASMI consolidated              |  |           | 78.8 |  |      |  | 129.4 |          |  |  | 64  | %
|                               |  |           |      |  |      |  |       |          |  |  |     |  



44



---

##### Table of Contents

As a percentage of net sales, research and development expenses were 8% in the full year of 2011, an
increase of 1%-point compared to the same period of 2010.



The impact of currency changes year to year was a decrease of 4%.



Impairment charge property, plant and equipment. In 2011 the
Company recorded an impairment charge of 8,038 related to machinery and equipment. The Company impaired certain items of property, plant
and equipment related to the Back-end lead frame business. The impairment loss was recognized based on the difference between the carrying value and the fair value of the relevant assets.



Gain on bargain purchase. On 7 January 2011, ASMPT acquired the entire equity interest of 13 direct and
indirect subsidiaries of Siemens Aktiengesellschaft (SEAS Entities). We recognized a gain of 109.3 million on the
bargain purchase representing the excess of the net fair value of the identifiable assets acquired and the liabilities assumed over the aggregate of the consideration transferred.



The gain on bargain purchase of 109 million was recognized upon completion of the acquisition of the SEAS entities. The gain on bargain purchase was mainly attributable
to depressed market value of the acquired business because of years of losses due to challenging economic environment and the bad global economic environment during the period of negotiation of the acquisition.



Earnings from Operations.The following table shows earnings
from operations for our Front-end and Back-end segments for the full year 2011 compared to the same period in 2010:



|                                        |  |           |       |   |      |  |       |        |  |  |        |  
|--------------------------------------- |  | --------- | ----- | - | ---- |  | ----- | ------ |  |  | ------ | -
|(EUR millions)                          |  | Full year |      
|                                        |  | 2010      |       |   | 2011 |  |       | Change | 
|Front-end                               |  |           |       |   |      |  |       |        |  |  |        |  
|Excluding impairments and restructuring |  |           | 27.1  |   |      |  | 62.6  |        |  |  | 35.5   |  
|- Restructuring                         |  |           | (11.2 | ) |      |  |      |        |  |  | 11.2   |  
|                                        |  |           |       |   |      |  |       |        |  |  |        |  
|Including impairments and restructuring |  |           | 15.9  |   |      |  | 62.6  |        |  |  | 46.7   |  
|Back-end                                |  |           |       |   |      |  |       |        |  |  |        |  
|Comparable                              |  |           | 312.8 |   |      |  | 164.8 |        |  |  | (148.0 | )
|-ASM AS                                 |  |           |      |   |      |  | 41.3  |        |  |  | 41.3   |  
|-Impairments                            |  |           |      |   |      |  | (8.0  | )      |  |  | (8.0   | )
|-Gain bargain purchase SEAS             |  |           |      |   |      |  | 109.3 |        |  |  | 109.3  |  
|-Acquisition related transaction cost   |  |           |      |   |      |  | (2.4  | )      |  |  | (2.4   | )
|                                        |  |           |       |   |      |  |       |        |  |  |        |  
|Back-end total                          |  |           | 312.8 |   |      |  | 304.9 |        |  |  | (7.9   | )
|                                        |  |           |       |   |      |  |       |        |  |  |        |  
|ASMI consolidated                       |  |           | 328.6 |   |      |  | 367.5 |        |  |  | 38.9   |  
|                                        |  |           |       |   |      |  |       |        |  |  |        |  



The impact of currency changes year to
year was a decrease of 6%.



Net Interest Expense. Net
interest expense amounted to 10.6 million in 2011 compared to the net interest expense of 14.5 million in 2010. This decrease in net interest expenses mainly resulted from a lower average debt in 2011.



Accretion interest expense convertible notes. Both our
convertible bonds due 2011 and 2014, include a component that creates a financial liability to the Company and a component that grants an option to the holder of the convertible note to convert it into common shares of the Company (conversion
option). ASC 815 requires separate recognition of these components.



The fair value of the liability component is estimated using the prevailing market interest rate at the date of issue, for similar non-convertible debt. Subsequently, the liability is measured at amortized cost.
The interest expense on the liability component is calculated by applying the market interest rate for similar non-convertible debt at the date of issue to the liability component of the instrument. The difference between this amount and the
interest paid is added to the carrying amount of the convertible subordinated notes, thus creating a non-cash interest expense. For 2011 this accretion interest was 4.4 million (2010; 6.0 million).



Revaluation conversion option.All convertible bonds include a component that creates a financial liability to the
Company and a component that grants an option to the holder of the convertible note to convert it into common shares of the Company (conversion option). ASC 815 requires separate recognition of these components.



For the conversion options of the convertible bonds due 2011 the
accounting is different from that for the conversion option of the convertible bonds due 2014. As the convertible bonds due 2011 was denominated in USD and the ASM International common shares in which they can be converted to are



45



---

##### Table of Contents

denominated in Euro, these conversion options are recognized as a liability measured at fair value. The conversion option is measured at fair value through the income statement, for 2011, until
early redemption in February 2011, this revaluation at fair value resulted in a loss of 4.4 million (2010: 19.0 million).



For the conversion options of the convertible bonds due 2014 the fixedfor-fixed principle is met as both the debt instrument (the bond) and
the entitys equity shares in which they can be converted to are denominated in the functional currency (Euro). Based on the before mentioned criteria the conversion option qualifies as permanent equity.



Loss resulting from early extinguishment of debt.On
January 3, 2011 we announced the redemption for all outstanding principal balance of our 4.25% Convertible Subordinated Notes due 2011, which resulted in the conversion of almost all remaining notes prior to the redemption date. The loss from
the early extinguishment of the notes of 824, which includes the write-off of unamortized issuance costs, has been recorded as a loss
from early extinguishment of debt in the Consolidated Statement of Operations for the year 2011.



In 2010 US$ 56.5 million convertible subordinated notes have been repurchased for a market value of US$ 74.6 million. The loss from the early extinguishment of the notes of 3,609, which includes the write-off of unamortized issuance costs and the amortization of unamortized interest expenses, has been recorded as a
loss from early extinguishment of debt in the Consolidated Statement of Operations for the year 2010.



Income Tax Expense. Income tax expense decreased from 43 million in 2010 to 37 million in 2011, resulting from the balance of an increase
of result before tax in 2011 and a release of certain valuation allowances.



Net Earnings allocated to the shareholders of the parent.The following table shows net earnings for our Front-end and Back-end segments for the full year, 2011 compared to the same period in 2010:



|                                        |  |           |       |   |      |  |       |        |  |  |       |  
|--------------------------------------- |  | --------- | ----- | - | ---- |  | ----- | ------ |  |  | ----- | -
|(EUR millions)                          |  | Full year |      
|                                        |  | 2010      |       |   | 2011 |  |       | Change | 
|Front-end                               |  |           |       |   |      |  |       |        |  |  |       |  
|-Excluding special items                |  |           | (1.8  | ) |      |  | 49.7  |        |  |  | 51.6  |  
|-Restructuring charges                  |  |           | (11.2 | ) |      |  |      |        |  |  | 11.2  |  
|-Loss from early extinguishment of debt |  |           | (3.6  | ) |      |  | (0.8  | )      |  |  | 2.8   |  
|-Fair value change conversion options   |  |           | (19.0 | ) |      |  | (4.4  | )      |  |  | 14.7  |  
|                                        |  |           |       |   |      |  |       |        |  |  |       |  
|-Special items                          |  |           | (33.8 | ) |      |  | (5.2  | )      |  |  | 28.6  |  
|-Including special items                |  |           | (35.7 | ) |      |  | 44.5  |        |  |  | 80.2  |  
|Back-end                                |  |           |       |   |      |  |       |        |  |  |       |  
|-Excluding special items                |  |           | 146.3 |   |      |  | 89.4  |        |  |  | (56.9 | )
|-Impairments                            |  |           |      |   |      |  | (4.2  | )      |  |  | (4.2  | )
|-Gain bargain purchase SEAS             |  |           |      |   |      |  | 57.0  |        |  |  | 57.0  |  
|                                        |  |           |       |   |      |  |       |        |  |  |       |  
|-Special items                          |  |           |      |   |      |  | 52.8  |        |  |  | 52.8  |  
|-Including special items                |  |           | 146.3 |   |      |  | 142.2 |        |  |  | (4.1  | )
|                                        |  |           |       |   |      |  |       |        |  |  |       |  
|ASMI consolidated, total earnings1)     |  |           | 110.6 |   |      |  | 186.8 |        |  |  | 76.1  |  
|                                        |  |           |       |   |      |  |       |        |  |  |       |  



|1) | Allocated to the shareholders of the
parent
|-- | -------------------------------------------



Net earnings for the Back-end
segment reflect our 52.17% ownership of ASM Pacific Technology.



Subsequent events.On February 27 2012 one of our customers, Elpida Memory Inc (Elpida), filed for bankruptcy protection in Japan. As per 31 December, 2011, we had a total outstanding
amount on Elpida of 362 million Yen (equivalent to 3.6 million) while about 65 million Yen (0,6 million) was collected in January 2012 and also have a secured claim for the unpaid amount of the delivered equipment under Japanese Law.
On March 23, 2012 the Tokyo District Court made the order to commence corporate reorganization proceedings and appointed Trustees to Elpida. Given such uncertainty, any loss on the outstanding receivable is not yet determinable and ASMI
will evaluate the impact (if any) of such proceedings as soon as they become available.



Information regarding the hedging of foreign currency net investments is provided in Item 11, and is incorporated herein by reference.



Year Ended December 31, 2010 Compared to Year Ended
December 31, 2009



46



---

##### Table of Contents

Net Sales. The following table shows net sales of our Front-end and Back-end segments for the
full year 2010 compared to 2009:



|                |  |      |       |  |      |  |         |          |  |  |     |  
|--------------- |  | ---- | ----- |  | ---- |  | ------- | -------- |  |  | --- | -
|(EUR millions)  |  | 2009 |       |  | 2010 |  |         | % Change | 
|Front-end       |  |      | 160.4 |  |      |  | 293.4   |          |  |  | 83  | %
|Back-end        |  |      | 430.4 |  |      |  | 929.5   |          |  |  | 116 | %
|                |  |      |       |  |      |  |         |          |  |  |     |  
|Total net sales |  |      | 590.7 |  |      |  | 1,222.9 |          |  |  | 107 | %
|                |  |      |       |  |      |  |         |          |  |  |     |  



The increase of net sales for the full
year of 2010 in our Front-end segment, compared to the same period last year, was driven by higher customer demand in all our equipment segments and in spares and service. In our Back-end segment record quarterly sales were realized in the first
quarter, the second quarter and in the third quarter of 2010 due to the high continued strong demand for our traditional products and increasing demand for our LED related products.



The strengthening of the Yen, U.S. dollar and U.S. dollar related currencies against the Euro in 2010 as compared to the
same period of 2009 impacted total net sales by 5%.



Gross Profit Margin.The following table shows gross profit and gross profit margin for the Front-end and Back-end segments for the full year
2010 compared to the same period in 2009. In order to improve comparability impairment charges have been disclosed separately in the table below.:



|                                                   |  |              |       |   |                    |  |       |                                       |  |  |       |    |  |  |      |   |  |  |        | 
|-------------------------------------------------- |  | ------------ | ----- | - | ------------------ |  | ----- | ------------------------------------- |  |  | ----- | -- |  |  | ---- | - |  |  | ------ | 
|(EUR millions)                                     |  | Gross profit |       |   | Gross profitmargin |  |       | Increase or(decrease)percentagepoints | 
|                                                   |  | 2009         |       |   | 2010               |  |       | 2009                                  |  |  | 2010  |    | 
|Gross profit before impairment of inventory charge |  |              | 32.9  |   |                    |  | 114.6 |                                       |  |  | 20.5  | %  |  |  | 39.1 | % |  |  | 18.6pt | 
|Impairment of inventory charge                     |  |              | (24.2 | ) |                    |  |      |                                       |  |  | (15.1 | )% |  |  |     |   |  |  | 15.1pt | 
|                                                   |  |              |       |   |                    |  |       |                                       |  |  |       |    |  |  |      |   |  |  |        | 
|Gross profit Front-end                             |  |              | 8.7   |   |                    |  | 114.6 |                                       |  |  | 5.4   | %  |  |  | 39.1 | % |  |  | 33.7pt | 
|Gross profit Back-end                              |  |              | 172.8 |   |                    |  | 435.0 |                                       |  |  | 40.1  | %  |  |  | 46.8 | % |  |  | 6.6pt  | 
|                                                   |  |              |       |   |                    |  |       |                                       |  |  |       |    |  |  |      |   |  |  |        | 
|Total gross profit                                 |  |              | 181.5 |   |                    |  | 549.6 |                                       |  |  | 34.8  | %  |  |  | 44.9 | % |  |  | 10.1pt | 
|                                                   |  |              |       |   |                    |  |       |                                       |  |  |       |    |  |  |      |   |  |  |        | 



The gross profit margin of both our
Front-end segment and our Back-end segment strongly improved in 2010 compared to 2009, driven by significantly higher activity levels. The Front-end margin further improved due to the execution of our PERFORM! program which, among other things,
resulted in a lower manufacturing overhead.



In 2009, as a
result of the current prolonged contraction in the market and strategic focus of certain of our product configurations a write down of inventories was recorded of 24.2 million.



The
strengthening of the Yen, U.S. dollar and U.S. dollar related currencies against the Euro in 2010 as compared to the same period of 2009 negatively impacted gross profit by 6%.



Selling, General and Administrative Expenses.The following
table shows selling, general and administrative expenses (including amortization of other intangible assets) for our Front-end and Back-end segments 2010 compared to 2009:



|                                                                                |  |      |       |   |      |  |       |          |  |  |     |   
|------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- |  | ----- | -------- |  |  | --- | --
|(EUR millions)                                                                  |  | 2009 |       |   | 2010 |  |       | % Change | 
|Front-end                                                                       |  |      | 58.9  |   |      |  | 51.0  |          |  |  | (13 | )%
|Back-end                                                                        |  |      | 49.3  |   |      |  | 79.9  |          |  |  | 62  | % 
|                                                                                |  |      |       |   |      |  |       |          |  |  |     |   
|Total selling, general and administrative expenses                              |  |      | 108.2 |   |      |  | 131.0 |          |  |  | 21  | % 
|                                                                                |  |      |       |   |      |  |       |          |  |  |     |   
|Total selling, general and administrative expenses as a percentage of net sales |  |      | 18    | % |      |  | 11    | %        |  |  |     |   
|                                                                                |  |      |       |   |      |  |       |          |  |  |     |   



For 2010, selling, general and
administrative expenses as a percentage of net sales of our Front-end segment, were reduced to 17% compared with 37% for 2009, reflecting our focus to reduce our fixed cost base as part of our restructuring program PERFORM!.



The selling, general and administrative expenses in the Back-end
segment as a percentage of net sales decreased from 12% in 2009 to 9% in 2010.



47



---

##### Table of Contents

The strengthening of the Yen, U.S. dollar and U.S. dollar related currencies against the Euro in 2010
as compared to the same period of 2009 increased selling, general and administrative expenses by 5%.



Research and Development Expenses. The following table shows research and development expenses for our Front-end and Back-end segments for
the full year 2010 compared to 2009:



|                                                                     |  |      |      |   |      |  |      |          |  |  |    |  
|-------------------------------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | -------- |  |  | -- | -
|(EUR millions)                                                       |  | 2009 |      |   | 2010 |  |      | % Change | 
|Front-end                                                            |  |      | 34.4 |   |      |  | 36.5 |          |  |  | 6  | %
|Back-end                                                             |  |      | 28.4 |   |      |  | 42.3 |          |  |  | 49 | %
|                                                                     |  |      |      |   |      |  |      |          |  |  |    |  
|Total research and development expenses                              |  |      | 62.8 |   |      |  | 78.8 |          |  |  | 25 | %
|                                                                     |  |      |      |   |      |  |      |          |  |  |    |  
|Total research and development expenses as a percentage of net sales |  |      | 11   | % |      |  | 6    | %        |  |  |    |  
|                                                                     |  |      |      |   |      |  |      |          |  |  |    |  



The decrease in research and
development expense as a percentage of sales, in both our Front-end and Back-end segment, is the result of a further prioritization of research and development projects in combination with a substantial sales increase. In the course of 2010 we saw
an increase in the absolute amount of development costs driven by those higher activity levels and related customer specific development activities.



The strengthening of the Yen, U.S. dollar and U.S. dollar related currencies against the Euro in 2010 as compared to the same period of 2009
increased research and development expenses by 6%.



Restructuring Expenses.In 2009 ASMI started the implementation of a major restructuring in the Front-end segment (PERFORM!) as announced on
January 9, 2009 and on July 20, 2009. The main components of the Companys accelerated execution plans are:



| |  |  | The consolidation of our global Front-end manufacturing operations from Europe, the United States and Japan, into our Front-end manufacturing operations in
Singapore by the end of 2010. This will be achieved by completing the previously announced transfer from Almere, the Netherlands, which was finalized during 2009; the phasing out the manufacturing operation in Phoenix, Arizona, in the first half of
2010; and by transferring manufacturing from Nagaoka, Japan, no later than the fourth quarter of 2010.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The reduction of selling, general and administration expenses by making fundamental changes in our global support infrastructure. This includes a significant
simplification and streamlining of our warehousing operations and the further strengthening of the global sales & service organization which was created last year.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The leveraging of research and development and our product portfolio by reprioritization of strategic programs in order to maximize their potential.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



The following table summarizes the
aggregated restructuring expenses by type:



|                                      |  |                         |       |  |      |  |        |      |  |  |        | 
|------------------------------------- |  | ----------------------- | ----- |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                      |  | Year ended December 31, |      
|                                      |  | 2008                    |       |  | 2009 |  |        | 2010 | 
|Employee related expenses             |  |                         |      |  |      |  | 19,437 |      |  |  | 4,534  | 
|Contract termination related expenses |  |                         |      |  |      |  | 2,799  |      |  |  | 779    | 
|Impairment charges                    |  |                         | 7,068 |  |      |  | 4,623  |      |  |  |       | 
|Transition expenses                   |  |                         |      |  |      |  | 4,366  |      |  |  | 3,806  | 
|Expenses buy out RTP                  |  |                         |      |  |      |  | 3,940  |      |  |  |       | 
|Other expenses                        |  |                         |      |  |      |  | 522    |      |  |  | 2,082  | 
|                                      |  |                         |       |  |      |  |        |      |  |  |        | 
|Total restructuring expenses          |  |                         | 7,068 |  |      |  | 35.687 |      |  |  | 11,201 | 
|                                      |  |                         |       |  |      |  |        |      |  |  |        | 



Related to these execution plans, an
amount of 11.2 million in restructuring expenses was recorded for of 2010. These expenses were mainly costs for severance packages,
retention costs, provisions for vacancy and other costs related to the transition of activities to Singapore.



Related to these execution plans, an amount of 35.7 million in restructuring expenses was recorded in 2009. These charges include:



| |  |  | Employee related expenses of 19.4 million.
Included are unconditional one-time termination benefits of 15.8 million, conditional one-time termination benefits subject to the
final termination date of 1.7 million and other employee related expenses of
1.9 million.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Contract termination related expenses of 2.8
million. These expenses mainly relate to operational lease contracts and include both the valuating of the onerous contracts at fair value, the decommissioning expenses and impairments of leasehold improvements.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



48



---

##### Table of Contents

| |  |  | Impairment charges of 4.6 million mainly
related to machinery and equipment. We impaired certain demo tools which were as a result of the strategic reorientation determined end of life. The impairment charges were determined based on the difference between the assets estimated fair
value and their carrying amount.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expenses of 4.4 million resulting from the
transition of our global Front-end manufacturing operations from Europe, the United States and Japan, into our Front-end manufacturing operations in Singapore.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expenses of 3.9 million related to the
management buy-out of our RTP.
| | - |  | ----------------------------------------------------------------------



| |  |  | Other expenses of 0.6 million.
| | - |  | -------------------------------



Result from Operations.The
following table shows earnings (loss) from operations for our Front-end and Back-end segments for the full year 2010 compared to the same period in 2009. In order to improve comparability, impairment and restructuring charges have been disclosed
separately in the table below:



|                                             |  |      |        |   |      |  |       |        |  |  |       | 
|-------------------------------------------- |  | ---- | ------ | - | ---- |  | ----- | ------ |  |  | ----- | 
|(EUR millions)                               |  | 2009 |        |   | 2010 |  |       | Change | 
|Front-end:                                   |  |      |        |   |      |  |       |        |  |  |       | 
|Before impairments and restructuring charges |  |      | (60.4  | ) |      |  | 27.1  |        |  |  | 87.5  | 
|Impairments and restructuring charges        |  |      | (59.9  | ) |      |  | (11.2 | )      |  |  | 48.7  | 
|                                             |  |      |        |   |      |  |       |        |  |  |       | 
|After impairments and restructuring charges  |  |      | (120.3 | ) |      |  | 15.9  |        |  |  | 136.1 | 
|Back-end                                     |  |      | 95.1   |   |      |  | 312.8 |        |  |  | 217.6 | 
|                                             |  |      |        |   |      |  |       |        |  |  |       | 
|Total result from operations                 |  |      | (25.2  | ) |      |  | 328.6 |        |  |  | 353.8 | 
|                                             |  |      |        |   |      |  |       |        |  |  |       | 



The strengthening of the Yen, U.S.
dollar and U.S. dollar related currencies against the Euro in 2010 as compared to the same period of 2009 impacted operating result by 6%.



Net Interest Expense. Net interest expense amounted to 14.5 million in 2010 compared to the net interest expense of 7.5 million in 2009.
This increase in net interest expenses mainly resulted from a higher average debt , higher interest rates and a strengthening of the USD in 2010 against the Euro.



Accretion interest expense convertible notes. Both our
convertible bonds due 2010, 2011 and 2014, include a component that creates a financial liability to the Company and a component that grants an option to the holder of the convertible note to convert it into common shares of the Company
(conversion option). ASC 815 requires separate recognition of these components.



The fair value of the liability component is estimated using the prevailing market interest rate at the date of issue, for similar non-convertible debt. Subsequently, the liability is measured at amortized cost.
The interest expense on the liability component is calculated by applying the market interest rate for similar non-convertible debt at the date of issue to the liability component of the instrument. The difference between this amount and the
interest paid is added to the carrying amount of the convertible subordinated notes, thus creating a non-cash interest expense. For 2010 this accretion interest was 6.0 million (2009; 4.3 million).



Revaluation conversion option.All convertible bonds include a component that creates a financial liability to the
Company and a component that grants an option to the holder of the convertible note to convert it into common shares of the Company (conversion option). ASC 815 requires separate recognition of these components.



For the conversion options of the convertible bonds due 2010 and 2011
the accounting is different from that for the conversion option of the convertible bonds due 2014. As the convertible bonds due 2010 and 2011 are denominated in USD and the ASM International common shares in which they can be converted to are
denominated in Euro, these conversion options are recognized as a liability measured at fair value. The conversion option is measured at fair value through the income statement, for 2010 this revaluation at fair value resulted in a loss of 19.0 million (2009: 24.4
million).



For the conversion options of the convertible
bonds due 2014 the fixedfor-fixed principle is met as both the debt instrument (the bond) and the entitys equity shares in which they can be converted to are denominated in the functional currency (Euro). Based on the before mentioned
criteria the conversion option qualifies as permanent equity.



Gain (expense) resulting from early extinguishment of debt.In 2010 US$ 56.5 million convertible subordinated notes have been
repurchased for a market value of US$ 74.6 million. The loss from the early



49



---

##### Table of Contents

extinguishment of the notes of 3,609, which includes the write-off of unamortized
issuance costs and the amortization of unamortized interest expenses, has been recorded as a loss from early extinguishment of debt in the Consolidated Statement of Operations for the year 2010.



In 2009 US$ 4.0 million 5.25% convertible subordinated notes due
2010 and US$ 26.3 million 4.25% convertible subordinated notes due 2011 were repurchased for a market value of US$ 38.9 million. The loss from the early extinguishment of the notes of
1.8 million, which includes the write-off of unamortized issuance costs, has been recorded as a loss from early extinguishment of
debt in the Consolidated Statement of Operations for the year 2009.



Income Tax Expense. Income tax expense increased from 3.8 million in 2009 to 42.9 million in 2010, resulting from the increase of result before tax in 2010.



Net Earnings (Loss) allocated to the shareholders of the parent.The following table shows net earnings (loss) for our Front-end and Back-end segments for the full year 2010 compared to the same period in 2009. In order to improve comparability, impairment and restructuring charges, results on early
extinguishment of debt and the fair value changes of the conversion option have been disclosed separately in the table below:



|                                                                                                                          |  |      |        |   |      |  |       |        |  |  |       |  
|------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | - | ---- |  | ----- | ------ |  |  | ----- | -
|(EUR millions)                                                                                                            |  | 2009 |        |   | 2010 |  |       | Change | 
|Front-end:                                                                                                                |  |      |        |   |      |  |       |        |  |  |       |  
|Before impairments, restructuring charges, result on early extinguishment of debt and fair value change conversion option |  |      | (65.5  | ) |      |  | (1.8  | )      |  |  | 63.7  |  
|Impairments and restructuring charges                                                                                     |  |      | (59.9  | ) |      |  | (11.2 | )      |  |  | 48.7  |  
|Loss from early extinguishment of debt                                                                                    |  |      | (1.8   | ) |      |  | (3.6  | )      |  |  | (1.9  | )
|Fair value change conversion options                                                                                      |  |      | (24.4  | ) |      |  | (19.0 | )      |  |  | 5.3   |  
|                                                                                                                          |  |      |        |   |      |  |       |        |  |  |       |  
|Incomparable items                                                                                                        |  |      | (86.0  | ) |      |  | (33.8 | )      |  |  | 52.2  |  
|                                                                                                                          |  |      |        |   |      |  |       |        |  |  |       |  
|After impairments, restructuring charges result on early extinguishment of debt and fair value change conversion options  |  |      | (151.5 | ) |      |  | (35.7 | )      |  |  | 115.8 |  
|Back-end                                                                                                                  |  |      | 44.0   |   |      |  | 146.3 |        |  |  | 102.3 |  
|                                                                                                                          |  |      |        |   |      |  |       |        |  |  |       |  
|Total net earnings (loss) allocated to the shareholders of the parent                                                     |  |      | (107.5 | ) |      |  | 110.6 |        |  |  | 218.1 |  
|                                                                                                                          |  |      |        |   |      |  |       |        |  |  |       |  



Net earnings for the Back-end segment
reflect our 52.36% ownership of ASM Pacific Technology (2009; 52.59%).



Information regarding the hedging of foreign currency net investments is provided in Item 11, and is incorporated herein by reference.



B. 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.



Cash flow



Net cash provided by operations in 2011 was 217 million as compared to
260 million for 2010. This decrease results mainly from investments in working capital and higher tax payments, partly offset by
improved net earnings. Net cash used in investing activities in 2011 of 80 million was lower compared to 101 million for 2010. Net cash used in financing activities in 2011 was 79 million compared to 123 million for the same period in 2010.



Debt



In May 2010 the remaining outstanding US$ 16.9 million of our
5.25% Convertible bonds due 2010 were converted into common shares. In January, July and December 2010 respectively US$ 39.4 million, US$ 7.2 million and US$ 9.9 million of our 4.25% Convertible bonds due 2010 were repurchased. In
January , 2011 we announced the redemption for all of the outstanding principal balance of our 4.25%



50



---

##### Table of Contents

Convertible Subordinated Notes due 2011, which resulted in the conversion of all remaining notes prior to the redemption date scheduled for February 15, 2011.



In July 2011 we finalized the increase and extension of ASMIs
existing standby revolving credit facility. The credit commitment was increased from 90 million to 150 million and the maturity date was extended from 1 November 2012 until July 31 2014. In the event all outstanding convertible
bonds due 6 November 2014 are converted, repaid or replaced prior to 30 June 2014, the maturity date will be 31 July 2015. As per December 31, 2011 the amount outstanding of the 6.5% Convertible Subordinated Loan (due 2014) is 150 million. As a result of the dividend paid in 2011 the conversion rated decreased from
17.06 to 16.85.



See notes 4, 5, 14, 17, 18 and 23 to our consolidated
financial statements for discussion of our funding, treasury policies and our long-term debt.



Liquidity



At
December 31, 2011, the Companys principal sources of liquidity consisted of 390 million in cash and cash equivalents and 249 million in undrawn bank lines. Approximately 162 million of the cash and cash equivalents and 92 million of the undrawn bank lines
are restricted to use in the Companys Back-end operations. 20 million of the cash and cash equivalents and 7 million in undrawn bank lines are restricted to use in the Companys Front-end operations in Japan.



For the most part, our cash and cash equivalents are not guaranteed by
any governmental agency. We place our cash and cash equivalents with high quality financial institutions to limit our credit risk exposure.



The net cash of ASMI, excluding Back-end, at December 31, 2011 was 65 million (2010; net debt 73 million). This net cash position is the balance of 228 million cash and
163 million debt. The debt of
163 million consists of
135 million convertible debt and 28 million other debt. Furthermore, ASMI, excluding Back-end, has useable undrawn credit lines of
150 million.



Working capital



Net working capital, consisting of accounts receivable, inventories, other current assets, accounts payable, accrued expenses, advance payments from
customers and deferred revenue, increased from 293 million December 31, 2010 to 407 million at December 31, 2011. The number of outstanding days of working capital, measured based on quarterly sales, increased
from 76 days at December 31, 2010 to 106 days at December 31, 2011. For the same period, our Front-end segment increased from 93 days to 100 days and our Back-end segment increased from 70 days to 109 days.



Pension plans



The Companys employees of the Front-end segment in the Netherlands, approximately 170 FTE, participate in a
multi-employer union plan ,Bedrijfstakpensioenfonds Metalektro, (PME) determined in accordance with the collective bargaining agreements effective for the industry in which ASMI operates. This collective bargaining agreement
has no expiration date. This multiemployer union plan covers approximately 1,220 companies and 130,000 contributing members. ASMIs contribution to the multiemployer union plan is less than 5.0% of the total contribution to the plan as per the
annual report for the year ended December 31, 2010. The plan monitors its risks on a global basis, not by company or employee, and is subject to regulation by Dutch governmental authorities. By law (the Dutch Pension Act), a multiemployer union
plan must be monitored against specific criteria, including the coverage ratio of the plan assets to its obligations. This coverage ratio must exceed 104.3% for the total plan. Every company participating in a Dutch multiemployer union plan
contributes a premium calculated as a percentage of its total pensionable salaries, with each company subject to the same percentage contribution rate. The premium can fluctuate yearly based on the coverage ratio of the multiemployer union plan. The
pension rights of each employee are based upon the employees average salary during employment.



ASMIs net periodic pension cost for this multiemployer union plan for any period is the amount of the required contribution for that period. A
contingent liability may arise from, for example, possible actuarial losses relating to other participating entities because each entity that participates in a multiemployer union plan shares in the actuarial risks of every other participating
entity or any responsibility under the terms of a plan to finance any shortfall in the plan if other entities cease to participate



The coverage ratio of the multiemployer union plan decreased to 90.0% as of December 31, 2011 (December 31, 2010: 96.0%). Because of the low
coverage ratio PME prepared and executed a so-called Recovery Plan which was approved by De Nederlandsche Bank, the Dutch central bank, which is the



51



---

##### Table of Contents

supervisor of all pension companies in the Netherlands. Due to the low coverage ratio and according the obligation of the Recovery Plan the pension premium percentage will increase
from 23.0% in 2011 to 24.0% in 2012. The coverage ratio is calculated by dividing the plan assets by the total sum of pension liabilities and is based on actual market interest.



ASMPT



Our Back-end segment, which is conducted through ASM Pacific
Technology, our 52.17%-owned subsidiary, is entirely self-financed and at December 31, 2011 had no long-term debt. The cash resources and borrowing capacity of ASM Pacific Technology are not available to our Front-end segment due to
restrictions imposed by the Hong Kong Stock Exchange, on which the ASM Pacific Technology common shares are listed.



We historically relied on dividends from ASM Pacific Technology for a portion of our cash flow for use in our Front-end operations. Cash dividends
received from ASM Pacific Technology during 2009, 2010 and 2011 were 21.4 million,
65.6 million and
86.9 million, respectively. In November 2006, we announced our commitment that for at least the next three years we would not use
these cash dividends to support our Front-end business, but instead would use such dividends to retire outstanding convertible debt, repurchase our common shares, pay dividends on our common shares or, in the event of dilution resulting from the
exercise of employee stock options in ASM Pacific Technology, purchase shares of ASM Pacific Technology to maintain our percentage ownership at its current level.



At our Annual General Meeting of Shareholders in May 2010 we decided to
extend this policy for at least the years 2010 and 2011.



The following table shows the dividends received from ASM Pacific Technology and the use of those dividends within the Front-end business:



|               |  |                                              |       |  |                                              |  |       |                              |  |  |                                                  |   |  |                              |       |   |  |  |       |  
|-------------- |  | -------------------------------------------- | ----- |  | -------------------------------------------- |  | ----- | ---------------------------- |  |  | ------------------------------------------------ | - |  | ---------------------------- | ----- | - |  |  | ----- | -
|(EUR millions) |  | Dividends receivedfrom ASM PacificTechnology |       |  | Repurchasedcommon shares ofASM International |  |       | RepurchasedConvertible bonds |  |  | Dividend paid toshareholders ofASM International |   |  | Balance ofdividends received |      
|2007           |  |                                              | 49.1  |  |                                              |  |      |                              |  |  | (32.9                                            | ) |  |                              | (5.4  | ) |  |  | 10.8  |  
|2008           |  |                                              | 49.1  |  |                                              |  | (36.5 | )                            |  |  | (27.1                                            | ) |  |                              |      |   |  |  | (14.5 | )
|2009           |  |                                              | 21.4  |  |                                              |  |      |                              |  |  | (27.0                                            | ) |  |                              |      |   |  |  | (5.6  | )
|2010           |  |                                              | 65.6  |  |                                              |  |      |                              |  |  | (55.8                                            | ) |  |                              |      |   |  |  | 9.8   |  
|2011           |  |                                              | 86.9  |  |                                              |  |      |                              |  |  |                                                 |   |  |                              | (22.1 | ) |  |  | 64.8  |  
|               |  |                                              |       |  |                                              |  |       |                              |  |  |                                                  |   |  |                              |       |   |  |  |       |  
|Total          |  |                                              | 272.1 |  |                                              |  | (36.5 | )                            |  |  | (142.8                                           | ) |  |                              | (27.5 | ) |  |  | 65.3  |  
|               |  |                                              |       |  |                                              |  |       |                              |  |  |                                                  |   |  |                              |       |   |  |  |       |  



Although certain directors of ASM
Pacific Technology are directors of ASM International, ASM Pacific Technology is 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 ASM Pacific Technology at the end of 2011 was approximately 1,799 million. At the end of 2010 this was
approximately 1,962 million.



C. Research and Development, Patents and Licenses, etc.



Research and development



See Item 4.B. Business Overview, Research and
Development and Item 5.A. Operating Results, Operating and Financial Review and Prospects.



Intellectual property matters



See Item 3.D. Risk Factors, 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. , 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. and Item 4.B. Business Overview, Intellectual Property and Trademarks.



D. Trend information



Backlog



Our backlog includes orders for which purchase orders or letters of intent have been accepted, typically for up to one year. Historically, orders
have been subject to cancellation or rescheduling by customers. In



52



---

##### Table of Contents

addition, orders have been subject to price negotiations and changes in specifications as a result of changes in customers requirements. Due to possible customer changes in
delivery schedules and requirements and to cancellation of orders, our backlog at any particular date is not necessarily indicative of actual sales for any succeeding period.



The following table shows the level of new orders during 2010 and 2011,
and the backlog and book-to-bill ratios at December 31, 2010 and 2011:



|                                                     |  |           |         |  |      |  |         |          |  |  |     |   
|---------------------------------------------------- |  | --------- | ------- |  | ---- |  | ------- | -------- |  |  | --- | --
|(EUR millions, except book-to-bill ratio)            |  | Full year |        
|                                                     |  | 2010      |         |  | 2011 |  |         | % Change | 
|Front-end:                                           |  |           |         |  |      |  |         |          |  |  |     |   
|New orders                                           |  |           | 404.8   |  |      |  | 398.3   |          |  |  | (2  | )%
|Backlog at December 31                               |  |           | 162.9   |  |      |  | 105.1   |          |  |  | (35 | )%
|Book-to-bill ratio (new orders divided by net sales) |  |           | 1.4     |  |      |  | 0.9     |          |  |  |     |   
|Back-end:                                            |  |           |         |  |      |  |         |          |  |  |     |   
|New orders                                           |  |           | 1,113.3 |  |      |  | 971.2   |          |  |  | (13 | )%
|Backlog at December 31                               |  |           | 336.9   |  |      |  | 225.5   |          |  |  | (33 | )%
|Book-to-bill ratio (new orders divided by net sales) |  |           | 1.2     |  |      |  | 0.8     |          |  |  |     |   
|Total                                                |  |           |         |  |      |  |         |          |  |  |     |   
|New orders                                           |  |           | 1,518.1 |  |      |  | 1,369.5 |          |  |  | (10 | )%
|Backlog at December 31                               |  |           | 499.8   |  |      |  | 330.6   |          |  |  | (34 | )%
|Book-to-bill ratio (new orders divided by net sales) |  |           | 1.2     |  |      |  | 0.8     |          |  |  |     |   



Outlook



We have developed forecasts and projections of cash flows and
liquidity needs for the upcoming year taking into account the current market conditions, reasonably possible changes in trading performance based on such conditions, and our ability to modify our cost structure as a result of changing economic
conditions and sales levels. We have also considered in the forecasts the total cash balances amounting to 390.3 million as of
December 31, 2011, available borrowings, the ability to renew debt arrangements and to access additional indebtedness and whether or not we will maintain compliance with our financial covenants. Based on this, we believe that our cash on hand
at the end of 2011 is adequate to fund our operations, our investments in capital expenditures and to fulfill our existing contractual obligations for the next twelve months.



E. Off-Balance Sheet Arrangements



We have contractual obligations, some of which are required to be
recorded as liabilities in our consolidated financial statements, including long- and short-term debt. Other contractual arrangements, such as operating lease commitments and purchase obligations, are not generally required to be recognized as
liabilities on our consolidated balance sheet, but are required to be disclosed.



F. Tabular Disclosure of Contractual Obligations



The following table summarizes our contractual obligations as of December 31, 2011 aggregated by type of contractual obligation:



|                                    |  |       |         |  |                 |  |         |          |  |  |          |  |  |                  |        |  |  |  |        | 
|----------------------------------- |  | ----- | ------- |  | --------------- |  | ------- | -------- |  |  | -------- |  |  | ---------------- | ------ |  |  |  | ------ | 
|                                    |  | Total |         |  | Less than1 year |  |         | 1-3years |  |  | 3-5years |  |  | More than5 years |       
|Notes payable to banks1             |  |       | 41,456  |  |                 |  | 41,456  |          |  |  |         |  |  |                  |       |  |  |  |       | 
|Long-term debt1,
2                  |  |       | 20,527  |  |                 |  | 4,671   |          |  |  | 15,856   |  |  |                  |       |  |  |  |       | 
|Convertible subordinated debt1      |  |       | 177,625 |  |                 |  | 9,750   |          |  |  | 167,875  |  |  |                  |       |  |  |  |       | 
|Operating leases                    |  |       | 78,645  |  |                 |  | 21,933  |          |  |  | 27,952   |  |  |                  | 16,943 |  |  |  | 11,817 | 
|Pension liabilities                 |  |       | 9,887   |  |                 |  | 92      |          |  |  | 171      |  |  |                  | 209    |  |  |  | 9,415  | 
|Purchase obligations:               |  |       |         |  |                 |  |         |          |  |  |          |  |  |                  |        |  |  |  |        | 
|Purchase commitments to suppliers   |  |       | 174,532 |  |                 |  | 170,421 |          |  |  | 4,111    |  |  |                  |       |  |  |  |       | 
|Capital expenditure commitments     |  |       | 17,433  |  |                 |  | 17,433  |          |  |  |         |  |  |                  |       |  |  |  |       | 
|Unrecognized tax benefits (ASC 740) |  |       | 21,749  |  |                 |  | 21,749  |          |  |  |         |  |  |                  |       |  |  |  |       | 
|                                    |  |       |         |  |                 |  |         |          |  |  |          |  |  |                  |        |  |  |  |        | 
|Total contractual obligations       |  |       | 541,854 |  |                 |  | 287,505 |          |  |  | 215,965  |  |  |                  | 17,152 |  |  |  | 21,232 | 
|                                    |  |       |         |  |                 |  |         |          |  |  |          |  |  |                  |        |  |  |  |        | 



|(1) | Including interest expense based on the percentages at the reporting date.
|--- | --------------------------------------------------------------------------

|(2) | Capital lease obligations of 141 thousand are included in
long-term debt.
|--- | --------------------------------------------------------------------------



53



---

##### Table of Contents

For a further discussion of our contractual obligations see Notes 14, 17, 18, 21, 23 and 26 to our
Consolidated Financial Statements, which are incorporated herein by reference.



We outsource a substantial portion of the manufacturing of our Front-end operations to certain suppliers. As our products are technologically complex, the lead times for purchases from our suppliers can vary and
can be as long as nine months. 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 have flexible delivery schedules
depending on the market conditions, which allow us, to a certain extent, to delay delivery beyond originally planned delivery schedules.



New Accounting Pronouncements



For information regarding new accounting pronouncements, see Note 1 to our Consolidated Financial Statements, which is incorporated herein by
reference.



Item 6. Directors, Senior
Management and Employees



A. Directors and
senior management.



The members of our Supervisory
Board and Management Board and our other senior manager are as follows:



|                             |  |                                                                         |  |               |      |  |             |  |      | 
|---------------------------- |  | ----------------------------------------------------------------------- |  | ------------- | ---- |  | ----------- |  | ---- | 
|Name                         |  | Position                                                                |  | Year of Birth |      |  | TermExpires | 
|Gert-Jan Kramer2             |  | Chairman of the Supervisory Board                                       |  |               | 1942 |  |             |  | 2013 | 
|Johan M.R. Danneels2         |  | Member of the Supervisory Board                                         |  |               | 1949 |  |             |  | 2012 | 
|Heinrich W. Kreutzer1        |  | Member of the Supervisory Board                                         |  |               | 1949 |  |             |  | 2014 | 
|Jan C. Lobbezoo1             |  | Member of the Supervisory Board                                         |  |               | 1946 |  |             |  | 2013 | 
|Martin C.J. van Pernis2      |  | Member of the Supervisory Board                                         |  |               | 1945 |  |             |  | 2014 | 
|Ulrich H.R. Schumacher1      |  | Member of the Supervisory Board                                         |  |               | 1958 |  |             |  | 2012 | 
|Charles D. (Chuck) del Prado |  | Chairman of the Management Board, President and Chief Executive Officer |  |               | 1961 |  |             |  | 2014 | 
|Peter A.M. van Bommel        |  | Member of the Management Board and Chief Financial Officer              |  |               | 1957 |  |             |  | 2014 | 
|W.K. Lee                     |  | Chief Executive Officer of ASM Pacific Technology Ltd.                  |  |               | 1954 |  |             |  |     | 



|(1) | Member of Audit Committee
|--- | -------------------------

|(2) | Member of Nomination, Selection and Remuneration Committee
|--- | ----------------------------------------------------------



Gert-Jan Kramerwas elected to the Supervisory Board in May 2009 and is currently Chairman of the Supervisory Board. Mr. Kramer served
as President and Chief Executive Officer of Fugro N.V. for more than 20 years until his retirement in 2005. Mr. Kramer serves on the Supervisory Boards of Scheuten Solar Holding B.V. (Chairman), Damen Shipyards Group N.V. (Vice-Chairman), Fugro
N.V., Bronwaterleiding Doorn, Energie Beheer Nederland B.V. Trajectum B.V. (Advisor), previously known as Mammoet, IRO (Chairman), a trade association of suppliers of the oil and gas industry in the Netherlands (till 1 January 2012), as well as
Nederland Maritiem Land (till 1 January 2012) and the Advisory Board of Delft Technical University (Chairman). Furthermore, he is also on the Board of the Service Organisation of Protestant Churches in the Netherlands (Chairman), Foundation of
Friends of the Pieterskerk Leiden (Chairman) and the Pieterskerk Leiden (Chairman of the Board). He also serves on the Boards of many cultural organisations, such as several museums: the Foundation Beelden aan Zee, the Frans Hals Museum and the
Advisory Board of De Nieuwe Kerk / Hermitage Amsterdam. Moreover, he also serves at several orchestras: Amsterdam Sinfonietta (Chairman), the Hague Philharmonic (Chairman) and the Concertgebouw Fund Foundation.



Johan M.R. Danneels was elected a member of the Supervisory
Board in May 2000. Mr. Danneels served most recently as Group Vice President of STMicroelectronics. Prior to that, he was Corporate Executive Vice President of Alcatel NV and Chief Executive Officer of Alcatel Microelectronics. He spent 25
years in Alcatel in different management functions of all major productlines. In January 2005 Mr. Danneels founded Essensium N.V., a spin-off from the research institute IMEC of which he was Chairman since 2000. Currently Mr. Danneels
serves as Chief Executive Officer at Essensium. Mr. Danneels holds a Ph.D. degree in engineering from the KULeuven, Belgium and a MBA degree from Boston University.



Heinrich W. Kreutzer was elected a member of the Supervisory
Board in November 2006 and was reappointed on May 20, 2010 for a period of 4 years. Mr. Kreutzer is currently on the Board of Directors of Micronas Semiconductor AG (Chairman) in Zurich, Switzerland, Micronas Semiconductor GmbH (Chairman)



54



---

##### Table of Contents

in Freiburg, Germany and BKtel Communications GmbH (Chairman), Germany. He worked at several companies, including General Telephone & Electronics in Waltham, USA and Alcatel in
Stuttgart, Germany. From 1999 to 2003, Mr. Kreutzer was a member of the Management Board, and was the Chief Operating Officer and Chief Technology Officer of Alcatel SEL AG. From 2004 to April 2006 he was Managing Director of Kabel Deutschland
GmbH in Munich, Germany. Furthermore, Mr. Kreutzer is Diplom-Ingenieur and Diplom-Ökonom, and studied at the Technical University of Berlin and the University of Hagen.



Jan C. Lobbezoowas elected a member of the Supervisory Board in
May 2009. Mr. Lobbezoo served as Executive Vice-President and Chief Financial Officer of Royal Philips Electronics semiconductor division from 1994 until 2005. He was a member of the Board of Taiwan Semiconductor Manufacturing Company (TSMC)
for 12 years until 2007, and remains its advisor, specifically in the areas of US corporate governance, international reporting and financial review. He is on the Board of FEI, a US-based nano-technology equipment company and on the Supervisory
Boards of TMC Group N.V. (Chairman), Smartrac N.V. (Chairman of the Audit Committee) (till 31 May 2011), Mapper Lithography B.V. (Chairman), Mutracx B.V. (Chairman), Salland Engineering B.V. (Chairman), ALSI N.V. and Point One Innovation Fund
(Chairman). Furthermore, Mr. Lobbezoo holds a master degree in Business Economics from the Erasmus University Rotterdam, the Netherlands and is a Dutch Registered Accountant.



Martin C.J. van Perniswas elected a member of the Supervisory
Board in May 2010. Mr. van Pernis retired from the Siemens Group in the end of 2009. In his last position as Chairman of the Management Board of Siemens Nederland N.V. Mr. van Pernis had the responsibility of oversight of all Siemens
activities in the Netherlands. He joined Siemens in 1971 and his working experience has been mainly in senior management positions. Furthermore, Mr. van Pernis is on the Supervisory Board of Batenburg Techniek N.V. (Chairman), Dutch Space
B.V.(Chairman), which is a subsidiary of EADS, Aalberts Industries N.V., Feyenoord Rotterdam N.V., GGZ Delfland (Chairman), Vlietland Hospital (Chairman), The Hague Marketing (Chairman), The Institute of Protocol The Hague (Chairman), The Royal
Institute of EngineersKIVI NIRIA (President), Dutch-Israelian Chamber of Commerce (President) and The Platform Vernieuwing Bouw (President).



Ulrich H.R. Schumacherwas elected a member of the Supervisory Board in May 2008. Dr. Schumacher was the CEO & President and
member of the Board of Grace Semiconductor Manufacturing Corporation in Shanghai from September 2007 till September 2010. From 2004 until September 2007, Dr. Schumacher was a partner of Francisco Partners, a private equity investment company
based in the U.S. From 1986 through 1999, Dr. Schumacher served in various engineering and management roles at Siemens AG and was CEO and President of Siemens Semiconductor Group from 1996 until it was spun off in 1999 by Siemens as Infineon
Technologies AG. He served as President and CEO of Infineon Technologies AG until 2004. Furthermore, Mr. Schumacher studied Electrical Engineering and Business Administration at the University of Aachen, Germany, and was awarded a Doctorate of
Engineering.



Charles D. (Chuck) del Prado became a
member of the Management Board in May 2006 and the President and Chief Executive Officer on March 1, 2008. From January 1, 2008 until February 29, 2008, he was the Executive Vice President Front-end Operations. He was President and
General Manager of ASM America from February 2003 until August 2007. In March 2001, he was appointed Director Marketing, Sales & Service of ASM Europe. From February 1996 to 2001, he held various management positions at ASML in
manufacturing and sales in Taiwan and in the Netherlands. Mr. Del Prado worked at IBM Nederland N.V. from 1989 to 1996 in several marketing and sales positions. Furthermore, Mr. Del Prado received a Master of Science degree in Industrial
Engineering and Technology Management from the University of Twente, the Netherlands.



Peter A.M. van Bommelbecame a member of the Management Board per July 1, 2010 and Chief Financial Officer on September 1, 2010. Mr Van Bommel has more than twenty years of experience in the
electronics and semiconductor industry. He spent most of his career at Philips, which he joined in 1979. From the mid-1990s until 2005 he acted as CFO of several business units of the Philips group. Between 2006 and 2008 he was CFO at NXP (formerly
Philips Semiconductors) and was CFO of Odersun AG, a manufacturer of thin-film solar cells and modules until August 31, 2010. Furthermore Mr. Van Bommel holds a Masters degree in economics from the Erasmus University Rotterdam, the
Netherlands.



W.K. Lee became a member of the
Management Board of the Company and Chief Executive Officer of ASM Pacific Technology Ltd. effective January 1, 2007 and has been General Manager Southern Region of ASM Pacific Technology since 1990. He has been employed by ASM Pacific
Technology for over 25 years. Prior to becoming in 1990 General Manager of ASM Pacific Technologys activities in Singapore, Mr. W.K. Lee was involved in product development. Mr. W.K. Lee studied at the Chinese University of Hong Kong
(Bachelor of Science and Master of Philosophy in Electronics) and has a Master Degree in Business Administration from the National University of Singapore.



55



---

##### Table of Contents

B. Compensation.



For information regarding remuneration of members of our Management Board and Supervisory Board, see Note 30 to our
Consolidated Financial Statements, which is incorporated herein by reference.



For further information regarding remuneration of members of our Management Board, see our Remuneration Policy and Remuneration Reports, which are posted on our website (www.asm.com).



We have granted stock options to certain key employees. For information
regarding such options see Note 20 to our Consolidated Financial Statements, which is incorporated herein by reference.



C. Board practices.



Under Netherlands law, the Supervisory Board has the duty to supervise and advise the Management Board. Persons nominated by the Supervisory Board
to be appointed by the shareholders to the Supervisory Board are elected if they receive a majority of the votes cast at a meeting of shareholders. Nominees to the Supervisory Board who are not proposed by the Supervisory Board are appointed if
they receive the affirmative vote of a majority of the votes cast at a meeting, which affirmative votes represent at least one third of our issued capital. A resolution to remove a member of the Supervisory Board, other than in accordance with a
proposal of the Supervisory Board, shall require the affirmative vote of a majority of the votes cast, which affirmative votes represent at least one third our issued capital. The Supervisory Board members serve a four year term and may be
re-elected after each term. The Supervisory Board members may be re-elected twice.



The Management Board is entrusted with our management under the supervision of the Supervisory Board and has the general authority to enter into binding agreements with third parties. Persons nominated by the
Supervisory Board to be appointed by the shareholders to the Management Board are elected if they receive a majority of the votes cast at a meeting of shareholders. Nominees to the Management Board who are not proposed by the Supervisory Board
are appointed if they receive the affirmative vote of a majority of the votes cast at a meeting, if such affirmative votes represent at least one third of our issued capital. A Management Board member may at any time be suspended by the Supervisory
Board. A Management Board member may, in accordance with a proposal of the Supervisory Board, be dismissed by the General Meeting of Shareholders with a majority of the votes cast. A resolution to suspend or to dismiss a member of the Management
Board, other than in accordance with a proposal of the Supervisory Board, shall require the affirmative vote of a majority of the votes cast at a meeting, which affirmative votes represent at least one third of our issued capital.



The Audit Committee of the Supervisory Board has a supervisory task
with regard to monitoring the integrity of our financial reports and risk management. The Audit Committee consists of Mr. Lobbezoo (Chairman), Mr. Kreutzer and Mr. Schumacher. The Audit Committee supervises the activities of the
Management Board with respect but not limited to:



| |  |  | the operation of the internal risk management and control systems, including supervision of the enforcement of the relevant legislation and regulations, and
supervising the operation of codes of conduct;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our release of financial information;
| | - |  | -------------------------------------



| |  |  | compliance with recommendations and observations of external auditors;
| | - |  | ----------------------------------------------------------------------



| |  |  | our policy on tax planning;
| | - |  | ---------------------------



| |  |  | relations with the external auditor, including, in particular, its independence, remuneration and any non-audit services performed for us;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our financing and financial position; and
| | - |  | -----------------------------------------



| |  |  | the applications of information and communication technology (ICT).
| | - |  | -------------------------------------------------------------------



The Audit Committee meets periodically to nominate 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 auditors independence.



The Nomination, Selection and Remuneration committee of the Supervisory Board advises the Supervisory Board on matters relating to the selection and
nomination of the members of the Management Board and Supervisory Board. The committee further monitors and evaluates the remuneration policy for the Management Board. This committee consists of Mr. Kramer (Chairman), Mr. Danneels and
Mr. van Pernis.



We have entered into indemnity
agreements with each of our Supervisory Board and Management Board members in which we agree to hold each of them harmless, to the extent permitted by law, from



56



---

##### Table of Contents

damage resulting from a failure to perform or a breach of duties by our board members, and to indemnify each of them for serving in any capacity for the benefit of the Company, except in the case
of willful misconduct or gross negligence in certain circumstances.



D. Employees.



As of December 31, 2011, we had 16,194 employees, including 1,385 employees primarily involved in research and development activities, 674 in
marketing and sales, 1,594 in customer service, 922 in finance and administration, and 11,619 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, exclusive of temporary workers:



|                    |           |                   |       |          |                   |  |        |                   |  |           |        |  |          |  |       |       |  |  |           |  |  |          |        |  |       |  |       |  |  |  |        |  |  |  |        | 
|------------------- | --------- | ----------------- | ----- | -------- | ----------------- |  | ------ | ----------------- |  | --------- | ------ |  | -------- |  | ----- | ----- |  |  | --------- |  |  | -------- | ------ |  | ----- |  | ----- |  |  |  | ------ |  |  |  | ------ | 
|Geographic Location |           | December 31, 2009 |       |          | December 31, 2010 |  |        | December 31, 2011 | 
|                    | Front-end |                   |       | Back-end |                   |  | Total  |                   |  | Front-end |        |  | Back-end |  |       | Total |  |  | Front-end |  |  | Back-end |        |  | Total | 
|Europe              |           |                   |       |          |                   |  |        |                   |  |           |        |  |          |  |       |       |  |  |           |  |  |          |        |  |       |  |       |  |  |  |        |  |  |  |        | 
|The Netherlands     |           |                   | 193   |          |                   |  | 8      |                   |  |           | 201    |  |          |  | 148   |       |  |  | 10        |  |  |          | 158    |  |       |  | 165   |  |  |  | 9      |  |  |  | 174    | 
|EMEA                |           |                   | 132   |          |                   |  | 5      |                   |  |           | 137    |  |          |  | 136   |       |  |  | 5         |  |  |          | 141    |  |       |  | 157   |  |  |  | 883    |  |  |  | 1,040  | 
|United States       |           |                   | 353   |          |                   |  | 11     |                   |  |           | 364    |  |          |  | 361   |       |  |  | 10        |  |  |          | 371    |  |       |  | 457   |  |  |  | 87     |  |  |  | 544    | 
|Japan               |           |                   | 206   |          |                   |  | 22     |                   |  |           | 228    |  |          |  | 180   |       |  |  | 21        |  |  |          | 201    |  |       |  | 182   |  |  |  | 21     |  |  |  | 203    | 
|Southeast Asia      |           |                   | 410   |          |                   |  | 10,727 |                   |  |           | 11,137 |  |          |  | 625   |       |  |  | 15,203    |  |  |          | 15,828 |  |       |  | 670   |  |  |  | 13,563 |  |  |  | 14,233 | 
|                    |           |                   |       |          |                   |  |        |                   |  |           |        |  |          |  |       |       |  |  |           |  |  |          |        |  |       |  |       |  |  |  |        |  |  |  |        | 
|Total               |           |                   | 1,294 |          |                   |  | 10,773 |                   |  |           | 12,067 |  |          |  | 1,450 |       |  |  | 15,249    |  |  |          | 16,699 |  |       |  | 1,631 |  |  |  | 14,563 |  |  |  | 16,194 | 
|                    |           |                   |       |          |                   |  |        |                   |  |           |        |  |          |  |       |       |  |  |           |  |  |          |        |  |       |  |       |  |  |  |        |  |  |  |        | 



Our Netherlands operations, which
employed 172 persons as of February 29, 2012, 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. We believe that our employee relations are good.



E. Share ownership.



Information with respect to shares and options held by members of our Supervisory Board and Management Board is included in Item 7, Major Shareholders and Related Party Transactions and Notes 30
and 31 to our Consolidated Financial Statements, which are incorporated herein by reference. With the exception of Chuck del Prado, as of February 29, 2012, none of the members of our Supervisory Board or Management Board owned beneficially
more than 1% of our outstanding common shares.



We maintain
various stock option plans for the benefit of our employees. For information about our stock option plans, see Note 20 to our Consolidated Financial Statements, which is incorporated herein by reference.



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 29, 2012 by each beneficial owner known to us of more than 5% of our common shares:



|                     |  |                 |            |  |          |  |       | 
|-------------------- |  | --------------- | ---------- |  | -------- |  | ----- | 
|                     |  | Number ofShares |            |  | Percent1 | 
|Arthur H. del Prado2 |  |                 | 11,346,323 |  |          |  | 20.48 | 



|(1) | Calculated on the basis of 55,414,160 Common Shares outstanding as of February 29, 2012, and without regard to options.
|--- | -----------------------------------------------------------------------------------------------------------------------

|(2) | Includes 3,039 common shares owned by Stichting Administratiekantoor ASMI, a trust controlled by Arthur H. del Prado and 713,000 common shares beneficially owned by Chuck D. del
Prado, Arthur H. del Prados son.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A
beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares (i) voting power which includes the



57



---

##### Table of Contents

power to vote, or to direct the voting of, such security and/or (ii) investment power which includes the power to dispose, or to direct the disposition, of such security. In addition, a
person shall be deemed to be the beneficial owner of a security if that person has the right to acquire beneficial ownership of such security, as defined above, within 60 days, including but not limited to any right to acquire: (i) through the
exercise of any option, warrant or right; (ii) through the conversion of a security; or (iii) pursuant to the power to revoke, or pursuant to the automatic termination of, a trust, discretionary account, or similar arrangement.



On May 28, 1997, we entered into an agreement with Stichting
Continuïteit ASM International (Stichting), pursuant to which Stichting was granted an option to acquire up to a number of our preferred shares corresponding with a total par value equal to 50% of the par value of our common shares issued and
outstanding at the date of the exercise of the option. Stichting is a non-membership organization organized under Netherlands law. The objective of Stichting is to serve the interests of the Company. To that objective Stichting may, amongst others,
acquire, own and vote our preferred shares in order to maintain our independence and/or continuity and/or identity. The members of the board of Stichting are:



|                                  |  |                                                 
|--------------------------------- |  | ------------------------------------------------
|Michael J.C. van Galen (chairman) |  | Retired Managing Director, Breevast N.V.        
|                                  | 
|Rinze Veenenga Kingma             |  | President Archeus Consulting B.V.               
|                                  | 
|Jan Klaassen                      |  | Emeritus Professor, Vrije Universiteit Amsterdam



On May 14, 2008, Stichting
exercised its right to acquire preferred shares in the Company and acquired 21,985 preferred shares representing 21,985,000 votes, which constituted 29.9% of the total voting power of our outstanding capital stock as of May 14, 2008. Stichting
paid  219,850, which constituted one-fourth of the nominal value of the preferred shares acquired, in accordance with the option
agreement. This amount was paid by Stichting using an existing credit line. On May 14, 2009, the Annual Meeting of Shareholders resolved to cancel the outstanding preferred shares and to reissue an option to Stichting Continuïteit to
acquire preferred shares.



During 2008, two ASMI
shareholders requested the Dutch Enterprise Court to investigate certain matters in relation to the issuance of preferred shares to Stichting. In August 2009, the Enterprise Court ordered an inquiry in respect of the affairs of the Company. In July
2010, the Dutch Supreme Court annulled the order of the Enterprise Court and remanded the decision to the Enterprise Court to consider certain observations of the Supreme Court. The Enterprise Court dismissed the inquiry in June 2011, and the
plaintiffs appealed the dismissal ruling to the Dutch Supreme Court. The Dutch Supreme Court has not yet rendered a new decision.



Except as described above regarding Stichting, 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 (including shares held by major shareholders) entitle the holder to the same voting rights. Our preferred shares entitle the holder to 1,000 votes per share.



Of our 55,414,160 outstanding common shares at February 29, 2012,
2,142,039 are registered with us in the Netherlands, 45,313,788 are registered with our transfer agent in the Netherlands, ABN AMRO Bank N.V., and 7,958,333 are registered with our transfer agent in the United States, Citibank, N.A., New York. Our
common shares registered with Citibank, N.A., New York are listed on the NASDAQ Global Select Market under the symbol ASMI. As of February 29, 2012 there were approximately 150 record holders of our common shares registered with
Citibank. The common shares registered with ABN AMRO Bank N.V., are in bearer form and are traded on Euronext Amsterdam under the symbol ASM.



B. Related party transactions.



For information regarding related party transactions, see Note 31 to our Consolidated Financial Statements, which is incorporated herein by
reference.



C. Interest of Experts &
Counsel.



Not applicable.



Item 8. Financial Information



A. Consolidated statements and other financial
information



Consolidated financial statements



See Item 18, Financial Statements.



58



---

##### Table of Contents

Legal proceedings



See Item 4.B., Business Overview and Note 22 to our
Consolidated Financial Statements, which is incorporated herein by reference. See also Item 3.D, Risk FactorsWe are subject to various legal proceedings and claims, the outcomes of which are uncertain. If we fail to accurately
evaluate the probability of loss or the amount of possible losses, an adverse outcome may materially and adversely affect our financial condition and results of operations.



Dividend policy



ASMI aims, as part of its financing policy, to pay a sustainable annual dividend. Annually the Supervisory Board, upon proposal of the Management
Board, will assess the amount of dividend that will be proposed to the Annual General Meeting of Shareholders. The decision that a dividend be proposed to the Annual General Meeting of Shareholders will be subject to the availability of
distributable profits as well as retained earnings and may be affected by our potential future funding requirements. Accordingly, dividend payments may fluctuate and could decline or be omitted in any year.



In 2007, we paid an interim dividend of 0.10 per common share. We did not pay dividends in 2008, 2009, 2010 and in any year prior to 2007. In 2011, we paid a dividend of 0.40 per common share. In 2012 we intend to propose to the forthcoming Annual General Meeting of Shareholders to declare a dividend of 0.50 per share.



B. Significant changes



No significant changes have occurred since the date of our Consolidated Financial Statements.



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 Global Select Market and the high and low closing prices as reported on Euronext Amsterdam:



Price Range of Common Shares



|                      |  |                      |       |  |                        |   |       |      |  |   |       |  |  |   |       | 
|--------------------- |  | -------------------- | ----- |  | ---------------------- | - | ----- | ---- |  | - | ----- |  |  | - | ----- | 
|                      |  | NASDAQClosing Prices |       |  | EuronextClosing Prices |  
|                      |  | High                 |       |  | Low                    |   |       | High |  |   | Low   | 
|Annual Information    |  |                      |       |  |                        |   |       |      |  |   |       |  |  |   |       | 
|2007                  |  | $                    | 30.32 |  |                        | $ | 20.94 |      |  |  | 21.08 |  |  |  | 15.08 | 
|2008                  |  |                      | 32.66 |  |                        |   | 6.60  |      |  |   | 20.96 |  |  |   | 5.00  | 
|2009                  |  |                      | 25.75 |  |                        |   | 6.30  |      |  |   | 17.80 |  |  |   | 4.92  | 
|2010                  |  |                      | 35.09 |  |                        |   | 19.10 |      |  |   | 26.50 |  |  |   | 15.32 | 
|2011                  |  |                      | 44.60 |  |                        |   | 22.23 |      |  |   | 31.68 |  |  |   | 16.01 | 
|                      |  |                      |       | 
|Quarterly Information |  |                      |       |  |                        |   |       |      |  |   |       |  |  |   |       | 
|2010:                 |  |                      |       |  |                        |   |       |      |  |   |       |  |  |   |       | 
|First Quarter         |  | $                    | 26.90 |  |                        | $ | 20.98 |      |  |  | 20.30 |  |  |  | 15.33 | 
|Second Quarter        |  |                      | 28.81 |  |                        |   | 19.10 |      |  |   | 21.45 |  |  |   | 15.32 | 
|Third Quarter         |  |                      | 26.31 |  |                        |   | 19.37 |      |  |   | 19.98 |  |  |   | 15.48 | 
|Fourth Quarter        |  |                      | 35.09 |  |                        |   | 23.28 |      |  |   | 26.50 |  |  |   | 17.25 | 
|                      |  |                      |       | 
|2011:                 |  |                      |       |  |                        |   |       |      |  |   |       |  |  |   |       | 
|First Quarter         |  | $                    | 41.64 |  |                        | $ | 33.72 |      |  |  | 30.66 |  |  |  | 24.99 | 
|Second Quarter        |  |                      | 44.60 |  |                        |   | 35.84 |      |  |   | 31.68 |  |  |   | 25.02 | 
|Third Quarter         |  |                      | 40.87 |  |                        |   | 22.23 |      |  |   | 28.18 |  |  |   | 16.01 | 
|Fourth Quarter        |  |                      | 30.94 |  |                        |   | 22.67 |      |  |   | 22.76 |  |  |   | 16.78 | 
|                      |  |                      |       | 
|Monthly Information   |  |                      |       |  |                        |   |       |      |  |   |       |  |  |   |       | 
|September 2011        |  | $                    | 26.68 |  |                        | $ | 23.47 |      |  |  | 19.30 |  |  |  | 17.02 | 
|October 2011          |  |                      | 30.94 |  |                        |   | 22.67 |      |  |   | 21.80 |  |  |   | 16.78 | 
|November 2011         |  |                      | 30.62 |  |                        |   | 24.20 |      |  |   | 21.94 |  |  |   | 18.45 | 
|December 2011         |  |                      | 29.33 |  |                        |   | 26.14 |      |  |   | 22.76 |  |  |   | 19.98 | 
|January 2012          |  |                      | 34.94 |  |                        |   | 29.39 |      |  |   | 26.68 |  |  |   | 22.64 | 
|February 2012         |  |                      | 38.33 |  |                        |   | 33.94 |      |  |   | 29.11 |  |  |   | 25.70 | 



|(1) | Through February 29, 2012.
|--- | --------------------------



59



---

##### Table of Contents

B. Plan of distribution.



Not applicable.



C. Markets.



Our common shares are listed on the NASDAQ Global Select Market under the symbol ASMI and listed on Euronext Amsterdam under the symbol
ASM. See item 9.A. Offer and listing Details.



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 and articles of association.



The information required by Item 10.B. is incorporated by
reference to Exhibit 1.1 in our Form 20-F filed with the United States Securities and Exchange Commission on March 16, 2007 and the Form 6-K filed on April 30, 2007. Our current Articles of Association are filed as Exhibit 1.1 in our Form
20-F filed on March 25, 2011.



C. Material
contracts.



We entered into a trust deed on
November 6, 2009 with Citicorp Trustee Company Limited as trustee, under which we issued  150 million aggregate principal
amount of 6.5% senior unsecured convertible bonds due 6 November 2014. The terms of the bonds issued under the trust deed are summarized in Note 18 to our consolidated financial statements, which summary is incorporated herein by reference. A
copy of the trust deed was filed as Exhibit 2.1 to our Form 20-F filed March 26, 2010.



As discussed in Item 4, ASMPT acquired the SEAS business from Siemens AG. In January 2011 nominal consideration was paid by ASMPT to Siemens for the business as well as certain loan and equity commitments were
made by ASMPT to fund the ongoing acquired business. A copy of the acquisition agreement was filed as Exhibit 4.13 to our Form 20-F filed on March 26, 2011.



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.



E. Taxation



Summary of Dutch Tax Provisions Applicable to Nonresident Shareholders with a particular focus on U.S. Shareholders



The statements below briefly summarize the current Dutch tax laws,
based on the laws as in force at January 1, 2012. The description is limited to the tax implications for shareholders who neither are nor are



60



---

##### Table of Contents

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 15%. The expression dividends distributed includes, among other things:



| |  |  | direct and indirect 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, to the extent there are net profits (zuivere
winst). Exception to this rule may apply in case the general meeting of our shareholders has decided in advance to make such repayment and the par value of the ordinary shares concerned has been reduced by an amount equal to the repayment by way of
an amendment to the articles of association.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



If a holder of ordinary shares resides in a country that signed a double taxation convention with the Netherlands and such convention is in effect, such holder of ordinary shares may, depending on the terms of that
double taxation convention, be eligible for a full or partial 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 corporate 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 U.S. Tax Treaty may be eligible for a reduction of the 15% Netherlands withholding tax. In the case of
certain U.S. corporate shareholders owning at least 10% of ASM International voting power, the Netherlands withholding tax may be reduced 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. A full exemption of Netherlands withholding tax is applicable for a U.S. corporate shareholder
owning at least 80% of voting power in the Company for a period of at least twelve months prior to the distribution, provided that this shareholder meets specific tests of the limitation of benefits clause of the U.S. Tax Treaty. The U.S. 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 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 15% 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 only claim the benefits of the U.S. Tax Treaty if:



| |  |  | 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 U.S. Tax Treaty.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



Under current Dutch law, in situations
where we distribute dividends which we received ourselves (flow through dividends) from subsidiaries established in countries with which the Netherlands has concluded a tax treaty, 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 during the calendar year and the two
preceding calendar years. 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



61



---

##### Table of Contents

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. The Dutch Supreme Court has defined that a person is a beneficial owner if: (i) that person is the legal owner of the dividend coupons and (ii) is in the position to freely
dispose of the dividends so received and (iii), not acting in the capacity of an agent or fiduciary for someone else. A receiver of a dividend is not considered to be the beneficial owner of a dividend 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 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. This regime may also apply to the transfer of shares or the entitlement to dividend distributions as described above, if the avoidance of dividend withholding tax is not the main purpose of the transfer.



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 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;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 us, or, if such holder has a substantial interest or a deemed substantial interest in us, 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.



62



---

##### Table of Contents

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 does not die 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 on inheritances may be
avoided if the inheritance is subject to Netherlands and/or U.S. inheritance tax and the deceased was a resident of either the Netherlands or the United States.



United States Federal Income Taxation



The following is a general description of select U.S. federal income tax consequences of the ownership and disposition of our common shares by a
U.S. Holder (as defined below). This summary only applies to U.S. Holders (as defined below) that hold their shares as capital assets. This discussion does not purport to be a comprehensive description of all U.S. federal income taxation
considerations that may be relevant to holders of shares in view of their particular circumstances, and does not deal with holders subject to special rules, such as, but not limited to, the alternative minimum tax provisions of the Internal Revenue
Code of 1986 (Internal Revenue Code) or the Internal Revenue Codes provisions applicable 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, tax-qualified employer plans and other tax-qualified accounts, 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, as amended to the date hereof, final, temporary and proposed U.S. Treasury Department
regulations promulgated thereunder, and administrative and judicial interpretations thereof, any or all of which could be changed subsequent to the date of this summary, possibly with retroactive effect. Any such change could affect the tax
consequences described in this summary. We will not update this summary to reflect any such changes after the date of this annual report. In addition, there can be no assurance that the Internal Revenue Service will not challenge any tax treatment
that is based upon or consistent with any discussion of tax consequences described in this summary, 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 common 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 to any tax
consequences that may arise under the U.S. federal estate or gift tax laws or under any state, local or foreign tax laws with respect to the ownership and disposition of our common shares.



The following discussion is a summary of the tax rules applicable to U.S. Holders of common shares and does not consider
any U.S. federal income tax consequences to non-U.S. Holders. As used in this summary, U.S. Holder means a beneficial owner of common shares that is (i) an individual citizen or resident alien of the United States (as defined for
U.S. federal income tax purposes), (ii) a corporation (or any 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 State, (iii) an estate the
income of which is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if either (a) 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 (b) a valid election is in place to treat the trust as



63



---

##### Table of Contents

a U.S. person. A non-U.S. Holder is a beneficial owner of common shares that is not a U.S. Holder as so defined herein.



If a partnership (or other entity treated as a partnership for US federal income tax purposes) holds common shares, the
tax treatment of a partner in that partnership generally will depend upon the status and tax residency of the partner and the activities of the partnership. Partners in a partnership that holds common shares are urged to consult their own tax
advisor regarding the specific tax consequences of the owning and disposing of such common shares by the partnership.



Taxation of Dispositions



A U.S. Holder will recognize gain or loss for U.S. federal income tax purposes upon a taxable sale or other disposition of common shares. The amount
of such gain or loss will equal the difference between the amount realized by the U.S. Holder and the U.S. Holders adjusted tax basis in the common shares. For these purposes, a U.S. Holders adjusted tax basis in the common shares
generally will equal the U.S. dollar cost of the common shares to the U.S. Holder. Subject to the passive foreign investment company rules described below, gain or loss realized by a U.S. Holder on a sale or other disposition of common shares
generally will be treated as capital gain or loss, and will be long-term capital gain or loss if the common shares were held for more than one year as of the date of the sale or other disposition. Any such gain generally will 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 our common shares, the repurchase may qualify to be treated as a sale or exchange of the common 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 Distributions. U.S. Holders should consult their own tax advisors concerning the
U.S. federal income tax consequences of our repurchase of their common shares.



Taxation of Distributions



Subject to the anti-deferral tax rules described below, the gross amount (before reduction for Netherlands withholding taxes) of any distribution actually or constructively paid with respect to common shares will
be included in the gross income of the U.S. Holder as foreign source dividend income to the extent the 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. To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits, 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 common shares (thereby increasing the amount of gain or decreasing the amount of loss to be recognized on the subsequent
disposition of the common shares), and to the extent that such distribution exceeds the U.S. Holders adjusted tax basis in the common 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 whether or to what extent a distribution should be treated as a dividend. Distributions treated as dividends generally will not be eligible for the dividends
received deduction allowed to corporations under the Internal Revenue Code. The availability of this deduction is subject to several complex limitations which are beyond the scope of this summary.



If a U.S. Holder receives a dividend in euros, the amount of the
dividend for U.S. federal income tax purposes should 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.



Dividends received by a U.S. Holder generally will be taxed at ordinary
income rates. However, certain dividends received by individuals through taxable years beginning on or before December 31, 2012, may qualify to be taxed at capital gain rates (15% or less), provided (i) the recipient has held the
underlying stock for more than 60 days during the 121 day period beginning 60 days before the ex-dividend date and (ii) the dividends are received from a qualified foreign corporation. A non-U.S. corporation (other than a non-U.S.
corporation treated as a passive foreign investment company in the taxable year in which the dividend is paid, or the preceding taxable year) generally will be considered to be a qualified foreign corporation if (i) the shares of
the non-U.S. corporation are readily tradable on an established securities market in the



64



---

##### Table of Contents

United States or (ii) the non-U.S. corporation is eligible with respect to substantially all of its income for the benefits of a comprehensive income tax treaty with the United States which
contains an exchange of information program. We believe that we are, and will continue to be, a qualified foreign corporation. Individual U.S. Holders should consult their tax advisors regarding the impact of distributions paid with
respect to their common shares in light of their particular situations.



Foreign Tax Credit



Dividends distributed by us generally are subject to a withholding tax imposed by the Netherlands at a rate of 15% (see Summary of Dutch Tax Provisions Applicable to Nonresident Shareholders with a particular
focus on U.S. Shareholders  Withholding Tax). Subject to certain conditions and limitations set forth in the Internal Revenue Code, foreign withholding tax 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 the amount of foreign withholding taxes, but only for a year for which the 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 retain a portion of Netherlands taxes we withhold from dividends paid to our shareholders, rather than pay that portion of the withheld taxes to the
taxing authorities in the Netherlands (see Summary of Dutch Tax Provisions Applicable to Nonresident Shareholders with a particular focus on U.S. Shareholders  Withholding Tax). This amount generally may not exceed 3% of the total
dividend distributed by us during the calendar year and the two preceding calendar years. If we retain a portion of the Netherlands withholding taxes, the retained 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 retain any Netherlands taxes on dividends paid to U.S. Holders.



There are two principal classes (passive and general) of income for
purposes of calculating foreign tax credit limitations. Dividends will generally constitute passive category income but could, in the case of certain U.S. Holders, constitute general category income. Gain from a sale,
exchange or other disposition of our common shares by a U.S. Holder will be treated as U.S. source income for foreign tax credit purposes unless the U.S. Holder makes an election under the Internal Revenue Code to treat any such gain as foreign
source. 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 the U.S. shareholders of certain foreign corporations 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 controlled foreign corporation(CFC) rules. Other provisions of the Internal Revenue Code impose potentially adverse tax consequences on the U.S. shareholders of a non-U.S. corporation that qualifies as a
passive foreign investment company (PFIC). While we do not believe that we should be classified as either a CFC or a PFIC, 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 common shares any particular U.S. Holder will own. Accordingly, we will only briefly summarize those provisions and then only the rules that we believe may have the greatest
likelihood of applying to us in the future.



Passive
Foreign Investment Company. As a foreign corporation with U.S. Holders, we could potentially be treated as a passive foreign investment company (PFIC) as defined in the Internal Revenue Code.



The PFIC provisions of the Internal Revenue Code can have significant
adverse 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 (which generally includes interest, dividends and certain rents and royalties); 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 proportionate 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, then a U.S. Holder would likely incur increased tax liabilities (possibly including an interest charge) upon the sale or other



65



---

##### Table of Contents

disposition of our common shares or upon receipt of excess distributions. In such case, gain recognized by a U.S. Holder on a sale or other disposition of our common shares would be
allocated ratably over the U.S. Holders holding period for the common shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount
allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, and an interest charge would be imposed on the amount allocated to that taxable year. Further, any
distribution in excess of 125 percent of the average of the annual distributions on common shares received by the U.S. Holder during the preceding three years or the U.S. Holders holding period, whichever is shorter, would be subject to
taxation as described above. Although certain elections may be available (including a qualified electing fund election and a mark to market election) to U.S. Holders that might mitigate the adverse consequences resulting from PFIC status, in the
event we are determined to be a PFIC in the current or a future taxable year we do not anticipate providing U.S. Holders with the information necessary to support a qualified electing fund election. In addition, if we are treated as a PFIC in a
taxable year in which we pay a dividend, or in the preceding taxable year, the 15% capital gain rate (discussed above) currently applicable in the U.S. with respect to certain dividends paid to U.S. Holders on or before to December 31, 2012
would not apply.



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 current year or in the future. You may be required in some cases to report ownership of our shares on Internal Revenue Service Form 8938. In
addition, if you own our shares during any year that we are a PFIC, you may be required to file Internal Revenue Service Form 8621.



The PFIC rules are very complex and U.S. Holders should consult their own tax advisors on this issue.



Controlled Foreign Corporation Rules. If more than 50% of the
voting power or total value of all classes of our common 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 common shares, we could be treated as a
controlled foreign corporation (CFC) under Subpart F of the Internal Revenue Code. This classification would result in many complex consequences, including the required inclusion into income by such 10% or greater shareholders of 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 common shares by any U.S. Holder who is or was a 10%
or greater U.S. 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 common 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 common shares and is a corporation may be entitled to an indirect foreign tax credit for a portion of the 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 cannot 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 common shares and the proceeds received on the disposition of the common shares paid within the U.S. (and in certain cases, outside the
U.S.). Such amounts may be subject to a 28% U.S. backup withholding tax unless the U.S. Holder otherwise establishes an exemption. For example, backup withholding generally will not apply to a U.S. Holder who (1) is a corporation or qualifies
under 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.



Backup withholding is not an additional tax. 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 of the purchase, ownership and disposition of common shares
including the tax consequences under state, local and other laws and the possible effects of changes in United States federal and other tax laws.



66



---

##### Table of Contents

F. Dividends and paying agents.



Not Applicable.



G. Statement by experts.



Not Applicable.



H. Documents on display.



We are subject to certain reporting requirements of the U.S.
Securities Exchange Act of 1934 (the Exchange Act). As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing certain disclosure and procedural requirements for proxy solicitations, and our
officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act, with respect to their purchases and sales of shares. In addition,
we are not required to file reports and financial statements with the Commission as frequently or as promptly as companies that are not foreign private issuers whose securities are registered under the Exchange Act. However, we are required to file
with the Commission, within four months after the end of each fiscal year, an annual report on Form 20-F containing financial statements audited by an independent accounting firm and interactive data comprising financial statements in
extensible business reporting language which, with respect to our annual report on Form 20-F for the year ended December 31, 2011, should be furnished within 30 days of filing our annual report on Form 20-F. We publish unaudited
interim financial information after the end of each quarter. We furnish this quarterly financial information to the Commission under cover of a Form 6-K.



Documents we file with the Commission are publicly available at its public reference facilities at 100 F Street, N.E., Washington, DC
20549. Copies of the documents are available at prescribed rates by writing to the Public Reference Section of the Commission at 100 F Fifth Street, NE, Washington DC 20549. The Commission also maintains a website that contains reports and
other information regarding registrants that are required to file electronically with the Commission. The address of this website is http://www.sec.gov. Please call the Commission at 1-800-SEC-0330 for further information on the operation of the
public reference facilities.



I. Subsidiary
information.



See Item 4.C. Organizational
Structure.



Item  11. Quantitative
and Qualitative Disclosures about Market Risk



We are
exposed to market risks (including foreign exchange rate risk and interest rate risk), credit risk and liquidity risk. We use forward exchange contracts to hedge foreign exchange risk. We do not enter into financial instrument transactions for
trading or speculative purposes.



Foreign exchange rate risk management



We conduct business in a number of foreign countries,
with certain transactions denominated in currencies other than the functional currency of ASM International (euro) or one of our subsidiaries conducting the business. The purpose of the Companys foreign currency management is to manage the
effect of exchange rate fluctuations on revenues, costs and cash flows and assets and liabilities denominated in selected foreign currencies, in particular denominated in U.S. dollars.



We use forward exchange contracts to hedge its foreign exchange risk of anticipated sales or purchase transactions in the
normal course of business, which occur within the next twelve months, for which it has a firm commitment from a customer or to a supplier. The terms of these contracts are consistent with the timing of the transactions being hedged. The hedges
related to forecasted 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 accumulated other comprehensive income in Shareholders Equity, and is reclassified into earnings when the hedged transaction affects earnings.



The majority of revenues and costs of our Front-end segment are denominated in Singapore dollars and U.S. dollars. Since foreign currency exposure
is not significant, no forward exchange contracts are used. The effect of exchange rate fluctuations on revenues, costs and cash flows and assets and liabilities denominated in foreign currencies is periodically reviewed.



The majority of revenues and costs of our Back-end segment are
denominated in Hong Kong dollars, Chinese Yuan and U.S. dollars. The functional currency of our Back-end segment (Hong Kong dollar) is



67



---

##### Table of Contents

linked to the U.S. dollar. The effect of exchange rate fluctuations on revenues, costs and cash flows and assets and liabilities denominated in foreign currencies is periodically reviewed.



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. We record all derivatives, including forward exchange contracts, on the balance sheet at fair value in other current assets or accrued
expenses.



No unrealized gains were included in accumulated
other comprehensive income as of December 31, 2011. Hedge ineffectiveness was insignificant for the years ended December 31, 2011 and December 31, 2010.



Furthermore, we might manage the currency exposure of certain
receivables and payables using derivative instruments, such as forward exchange contracts (fair value hedges) and currency swaps, and non-derivative 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 receivables and payables denominated in foreign currencies. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under foreign currency exchange
gains (losses) in the Consolidated Statement of Operations. Receivables and payables denominated in foreign currencies 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 foreign currency exchange gains (losses) in the Consolidated Statement of Operations.



We do not use forward exchange contracts for trading or speculative purposes.



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 Consolidated Shareholders Equity. For the year ended December 31, 2010, we recorded a favorable movement
of 30.6 million. For the year ended December 31, 2011, we recorded a favorable movement of 13.4 million. See Note 19 to our Consolidated Financial Statements, which is incorporated herein by reference.



The following table summarizes our financial instruments as of
December 31, 2011 and analyzes 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 foreign currency
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 with all other variables kept constant. A favorable
10% change indicates a strengthening of the currency in which our financial instruments are denominated, primarily the U.S. dollar, against the euro and an unfavorable change indicates a weakening of the currency in which our financial instruments
are denominated, primarily the U.S. dollar, against the euro. The selection of 10% favorable or unfavorable change in foreign currency exchange rates should not be construed as a prediction by us of future market events, but rather, to illustrate
the potential impact of such an 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.



|                                                               |  |                            |      |  |                          |  |         |                            |  |  |                      |  |  |  |       |  |  |  |       |  |  |  |       | 
|-------------------------------------------------------------- |  | -------------------------- | ---- |  | ------------------------ |  | ------- | -------------------------- |  |  | -------------------- |  |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                                                               |  | Currency andnotionalamount |      |  | Carryingamount           |  |         | Fair value                 |  |  | Sensitivity analysis | 
|                                                               |  |                            |      |  | FavorableFX changeof 10% |  |         | UnfavorableFX changeof 10% | 
|                                                               |  |                            |      |  | (in millions)            |  |         |                            |  |  |                      |  |  |  |      
|As of December 31, 2011:                                       |  |                            |      |  |                          |  |         |                            |  |  |                      |  |  |  |       |  |  |  |       |  |  |  |       | 
|Notes payable to banks, due within twelve months               |  |                            | yen  |  |                          |  | 775.0   |                            |  |  | 7.7                  |  |  |  | 7.7   |  |  |  | 7.0   |  |  |  | 8.5   | 
|                                                               |  |                            | HK$  |  |                          |  | 331.1   |                            |  |  | 32.9                 |  |  |  | 32.9  |  |  |  | 29.6  |  |  |  | 36.2  | 
|                                                               |  |                            |      |  |                          | 
|Long-term debt with maturities:                                |  |                            |      |  |                          |  |         |                            |  |  |                      |  |  |  |       |  |  |  |       |  |  |  |       | 
|due from 20122014                                             |  |                            | yen  |  |                          |  | 1,969.1 |                            |  |  | 19.7                 |  |  |  | 19.7  |  |  |  | 17.7  |  |  |  | 21.6  | 
|                                                               |  |                            |      |  |                          | 
|Convertible subordinated debt:                                 |  |                            |      |  |                          |  |         |                            |  |  |                      |  |  |  |       |  |  |  |       |  |  |  |       | 
|due November 6, 2014                                           |  |                            | euro |  |                          |  | 150.0   |                            |  |  | 150.0                |  |  |  | 220.4 |  |  |  | 150.0 |  |  |  | 150.0 | 
|                                                               |  |                            |      |  |                          | 
|Foreign exchange contracts:                                    |  |                            |      |  |                          |  |         |                            |  |  |                      |  |  |  |       |  |  |  |       |  |  |  |       | 
|sale of currency contracts to be settled within twelve months: |  |                            | US$  |  |                          |  | 57.0    |                            |  |  | 1.8                  |  |  |  | 1.8   |  |  |  | 1.6   |  |  |  | 1.9   | 



68



---

##### Table of Contents

For long-term debt, the estimated fair values of our long-term debt are based on current interest
rates available to us for debt instruments with similar terms and remaining maturities. The fair values of our convertible subordinated debt borrowings are based on our estimates. For forward exchange contracts, market values based on external
quotes from banks have been used to determine the fair value.



The following tables analyze our sensitivity to a hypothetical 10% strengthening and 10% weakening of the U.S. dollar, Singapore dollar, Hong Kong
dollar or Japanese yen against the euro as of December 31, 2011. This analysis includes foreign currency denominated monetary items and adjusts their translation at year end for a 10% increase and 10% decrease of the U.S. dollar, Singapore
dollar, Hong Kong dollar or Japanese yen against the euro.



A positive amount indicates an increase in equity. Recognized in equity is the revaluation effect of subsidiaries denominated in U.S. dollars,
Singapore dollars, Hong Kong dollars and Japanese yen.



|                                             |  |                 |         |   |                 |  |         |  
|-------------------------------------------- |  | --------------- | ------- | - | --------------- |  | ------- | -
|                                             |  | 2010            |         |   | 2011            | 
|                                             |  | Impact onequity |         |   | Impact onequity | 
|10% increase of U.S. dollar versus euro      |  |                 | 1,061   |   |                 |  | 3,656   |  
|10% decrease of U.S. dollar versus euro      |  |                 | (1,061  | ) |                 |  | (3,656  | )
|10% increase of Singapore dollar versus euro |  |                 | 1,431   |   |                 |  | 5,028   |  
|10% decrease of Singapore dollar versus euro |  |                 | (1,431  | ) |                 |  | (5,028  | )
|10% increase of Hong Kong dollar versus euro |  |                 | 53,458  |   |                 |  | 66,702  |  
|10% decrease of Hong Kong dollar versus euro |  |                 | (53,458 | ) |                 |  | (66,702 | )
|10% increase of Japanese yen versus euro     |  |                 | 5,016   |   |                 |  | 4,908   |  
|10% decrease of Japanese yen versus euro     |  |                 | (5,016  | ) |                 |  | (4,908  | )
|                                             |  |                 |         |   |                 |  |         |  



A positive amount indicates a gain in
net earnings.



A hypothetical 10% strengthening or 10%
weakening of any currency other than the U.S. dollar, Singapore dollar, Hong Kong dollar or Japanese yen against the euro as of December 31, 2010 and December 31, 2011 would not result in a material impact on equity.



The following table analyzes our sensitivity to a hypothetical 10%
strengthening and 10% weakening of the U.S. dollar, Hong Kong dollar and Japanese Yen against the euro at average exchange rates for the years 2010 and 2011. A positive amount indicates an increase in net earnings.



|                                             |  |                       |         |   |                       |  |         |  
|-------------------------------------------- |  | --------------------- | ------- | - | --------------------- |  | ------- | -
|                                             |  | 2010                  |         |   | 2011                  | 
|                                             |  | Impact onNet earnings |         |   | Impact onNet earnings | 
|10% increase of Japanese yen versus euro     |  |                       | 617     |   |                       |  | (519    | )
|10% decrease of Japanese yen versus euro     |  |                       | (617    | ) |                       |  | 519     |  
|10% increase of U.S. dollar versus euro      |  |                       | (549    | ) |                       |  | 1,887   |  
|10% decrease of U.S. dollar versus euro      |  |                       | 549     |   |                       |  | (1,887  | )
|10% increase of Hong Kong dollar versus euro |  |                       | 14,632  |   |                       |  | 14,392  |  
|10% decrease of Hong Kong dollar versus euro |  |                       | (14,632 | ) |                       |  | (14,392 | )
|                                             |  |                       |         |   |                       |  |         |  



A hypothetical 10% strengthening or 10%
weakening of any currency other than the U.S. dollar, Hong Kong dollar and Japanese Yen against the euro at average exchange rates for the years 2010 and 2011 would not result in a material impact on net earnings.



Interest risk



We are exposed to interest rate risk primarily through our borrowing activities. The Company does not enter into
financial instrument transactions for trading or speculative purposes or to manage interest rate exposure. At December 31, 2011 the Company had convertible subordinated debt borrowings outstanding of 150 million at a fixed rate, maturing in November 2014, 19,651 thousand in long-term debt at fixed interest rates and 40,680 thousand in
other borrowings with variable short-term interest rates. A hypothetical change in the average interest rate by 10% on the portion of the Companys debt bearing interest at variable rates would not result in a material change in interest
expense at December 31, 2010 and December 31, 2011 borrowing levels.



Credit risk



Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, accounts
receivable and derivative instruments. These instruments contain a risk of



69



---

##### Table of Contents

counterparties failing to discharge their obligations. We monitor credit risk and manage credit risk exposure by type of financial instrument by assessing the creditworthiness of counterparties.



Our customers are semiconductor device manufacturers
located throughout the world. 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.



A significant percentage of our revenue is derived from a small number
of large customers. Our largest customer accounted for approximately 6.4% of net sales in 2011 (2010: 5.2%; 2009: 9.1%) and the ten largest customers accounted for approximately 27.9% of net sales in 2011 (2010: 27.9%; 2009: 32.9%). Sales to these
large customers also may fluctuate significantly from time to time depending on the timing and level of purchases by these customers. Significant orders from such customers may expose us to a concentration of credit risk and difficulties in
collecting amounts due, which could harm our financial results. At December 31, 2011 one customer accounted for 4.5% of the outstanding balance in accounts receivable (2010: 6.0%; 2009: 7.8%).



We place our cash and cash equivalent and derivative instruments with
high quality financial institutions to limit the amount of credit risk exposure.



The maximum credit exposure is equal to the carrying values of cash and cash equivalent and accounts receivable.



|Item | 12. Description of Securities Other Than Equity Securities
|---- | ----------------------------------------------------------



Not applicable.



70



---

##### Table of Contents

PART II



Item 13. Defaults, Dividend Arrearages and
Delinquencies



None.



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



On May 14,
2008, Stichting Continuïteit ASM International (Stichting) exercised an option under a 1997 agreement with us and acquired 21,985 preferred shares representing 21,985,000 votes on matters to be acted on by our shareholders. All such
preferred shares were cancelled in 2009 and an option was reissued to Stichting to acquire preferred shares. See the discussion of Stichting under Item 7.A., Major Shareholders and Related Party TransactionsMajor shareholders,
above.



Item 15. Controls and Procedures



(a) Disclosure Controls and Procedures: Our CEO and
CFO, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Form 20-F, have concluded that as of December 31, 2011 our disclosure
controls and procedures were effective.



(b)
Managements Annual Report on Internal Control Over Financial Reporting: Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial
reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with applicable generally accepted accounting principles. Internal control over financial reporting
includes policies and procedures for maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial
statements; providing reasonable assurance that receipts and expenditures of Company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets
that could have a material effect on our financial statements would be prevented or detected on a timely basis. Management, including our CEO and CFO, conducted an evaluation of the effectiveness of our internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) based on the framework in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this
evaluation, management concluded that the Companys internal control over financial reporting was effective as of December 31, 2011. Deloitte Accountants B.V., an independent registered public accounting firm, has audited the Consolidated
Financial Statements included in this annual report on Form 20-F and, as part of the audit, has issued an attestation report, included herein, on ASMIs internal control over financial reporting.



(c) Attestation Report of the Registered Public Accounting Firm: The
attestation report of Deloitte Accountants B.V. is included in this annual report on Form 20-F and is incorporated by reference herein.



(d) Changes in Internal Control Over Financial Reporting: There were no changes to our internal control over financial reporting that occurred
during the period covered by this Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



Inherent Limitations on Effectiveness of Controls



All internal control systems no matter how well designed and
implemented have inherent limitations. Even systems determined to be effective may not prevent or detect misstatements or fraud and can only provide reasonable assurance with respect to disclosure and financial statement presentation and reporting.
Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changed conditions and the degree of compliance with the policies or procedures may deteriorate.



Item 16



A. Audit Committee Financial Expert



The Supervisory Board has determined that Mr. Lobbezoo, an
independent member of the Supervisory Board, qualifies as an Audit Committee Financial Expert. For Mr. Lobbezoos experience see Item 6 Directors, Senior Management and Employees.



71



---

##### Table of Contents

B. Code of Ethics



Our code of ethics applies to all of our employees worldwide, as well as our Supervisory Board and Management Board. The
code of ethics is designed to promote honest and ethical conduct and timely and accurate disclosure in our periodic financial reports.



For further information, see the Code of Ethics and other related policies including our Rules Concerning Insider Trading, which are posted on our
website (www.asm.com).



C. Principal Accountant
Fees and Services



Audit fees.



Deloitte Accountants B.V. (Deloitte), has served as our
independent registered public accounting firm for each of the three financial years up to December 31, 2011. The following table sets out the aggregate fees for professional audit services and other services rendered by Deloitte Accountants
B.V. and its member firms and/or affiliates in 2010 and 2011:



|                   |  |               |       |  |                      |  |       |      |  |  |      |   |  |  |     |  
|------------------ |  | ------------- | ----- |  | -------------------- |  | ----- | ---- |  |  | ---- | - |  |  | --- | -
|                   |  | EUR thousands |       |  | As a % of total fees | 
|                   |  | 2010          |       |  | 2011                 |  |       | 2010 |  |  | 2011 |  
|Audit fees         |  |               | 1,798 |  |                      |  | 1,345 |      |  |  | 68   | % |  |  | 77  | %
|Audit-related fees |  |               |      |  |                      |  | 193   |      |  |  |     |   |  |  | 11  | %
|Tax fees           |  |               | 665   |  |                      |  | 218   |      |  |  | 25   | % |  |  | 12  | %
|All other fees     |  |               | 197   |  |                      |  |      |      |  |  | 7    | % |  |  |    |  
|                   |  |               |       |  |                      |  |       |      |  |  |      |   |  |  |     |  
|Total              |  |               | 2,660 |  |                      |  | 1,756 |      |  |  | 100  | % |  |  | 100 | %
|                   |  |               |       |  |                      |  |       |      |  |  |      |   |  |  |     |  



Audit Committee pre-approval policies.



The Audit Committee has determined that the provision
of services by Deloitte described in the preceding paragraphs is compatible with maintaining Deloittes independence. All audit and permitted non-audit services provided by Deloitte during 2011 were pre-approved by the Audit Committee.



The Audit Committee has adopted the following policies and
procedures for pre-approval of all audit and permitted non-audit services provided by our independent registered public accounting firm:



Audit Services. Management submits to the Audit Committee for pre-approval the scope and estimated fees for specific services directly
related to performing the independent audit of our Consolidated Financial Statements for the current year.



Audit-Related Services.The Audit Committee may pre-approve expenditures up to a specified amount for services included in identified service
categories that are related extensions of audit services and are logically performed by the auditors. Additional services exceeding the specified pre-approved limits require specific Audit Committee approval.



Tax Services. The Audit Committee may pre-approve expenditures
up to a specified amount per engagement and in total for identified services related to tax matters. Additional services exceeding the specified pre-approved limits, or involving service types not included in the pre-approved list, require specific
Audit Committee approval.



Other Services. In the
case of specified services for which utilizing our independent registered public accounting firm creates efficiencies, minimizes disruption, or preserves confidentiality, or for which management has determined that our independent registered public
accounting firm possesses unique or superior qualifications to provide such services, the Audit Committee may pre-approve expenditures up to a specified amount per engagement and in total. Additional services exceeding the specified pre-approved
limits, or involving service types not included in the pre-approved list, require specific Audit Committee approval.



D. Exemptions from the Listing Standards for Audit Committees



Not applicable.



E. Purchases of Equity Securities by the Issuer and
Affiliated Purchasers



On May 23, 2011, the
General Meeting of Shareholders authorized, for an 18-month period, to be calculated from the date of the General Meeting to cause the Company to repurchase its own shares up to a maximum of 10% of the number of common shares issued, at a price at
least equal to the shares nominal value and at most a price equal to 110% of the shares average closing price according to the listing on the NYSE Euronext Amsterdam stock exchange during the five trading days preceding the acquisition
date.



72



---

##### Table of Contents

No shares were repurchased during 2011 under the authorization of May 23, 2011.



The maximum number of shares that may yet be purchased under the
authorization takes into account any treasury shares held by the Company (at December 31, 2011 there are no treasury shares held by the Company) and the maximum number of common shares which the Company can hold is 10% of the number of common
shares issued.



Of our treasury shares, 2,552,071 shares
were held for our account by Lehman Brothers International (Europe) (Lehman), which was placed into administration on September 15, 2008. These shares were cancelled in 2009 by resolution of the 2009 Annual General Meeting of
Shareholders.



During 2008, we engaged Lehman to repurchase
ordinary ASMI shares on the Euronext and Nasdaq markets. As of September 15, 2008, Lehman had purchased and held 2,552,071 shares for our account. Lehman went into bankruptcy administration on September 15, 2008, and we
subsequently filed a submission giving notice of our proprietary interest in the shares believed to be held in custody by Lehman. At our May 2009 AGM, our shareholders resolved to cancel all of these treasury shares and we so notified Lehman of
the cancellation. However we were notified in September 2010 by the Lehman administrators that there is a possible shortfall in the number of shares held by Lehman as reflected in the statements of our accounts with Lehman. To the extent the
number of treasury shares held by Lehman as of the date of their cancellation is lower than 2,552,071 only such lower number of shares have been cancelled and the shortfall of shares may still be considered outstanding. The Lehman administrators
report that some time prior to its bankruptcy, Lehman put into a segregated client omnibus account a cash sum on our behalf of $6,758,796, which the administrators apparently regard as money to which we have a proprietary right in lieu of some or
all of the missing shares. We are uncertain at this time as to the accuracy of the shortfall of shares, the sufficiency of this cash sum to cover the value of any such discrepancy, and our entitlement to all or a portion of such sum when
distributions are determined and made since there is likely to also be a shortfall in Lehman assets subject to proprietary rights. Given the magnitude of the overall Lehman administration, the timeline for clarity and resolution of this item is
expected to be considerable, perhaps up to several years.



F. Change in Registrants Certifying Accountant



Not applicable.



G. Corporate Governance



Because we are a Netherlands public limited liability company, with principal executive offices outside of the U.S., some of our corporate practices
vary from those required by the NASDAQ Listing Rules, as follows:



(i)
Listing Rule 5620(c): Quorum



Pursuant to Dutch
corporate law (section 2:120 sub 2 Dutch Civil Code) the validity of a resolution by the general meeting of shareholders does not depend on the proportion of the capital or shareholders represented at the meeting (i.e. quorum), unless the law or
articles of association of a company otherwise provide. It is the generally accepted business practice for Dutch companies not to provide for a quorum requirement in their articles, and there is no contrary requirement in the Dutch securities laws
or under the rules of NYSE Euronext Amsterdam. Accordingly, our Articles of Association provide that a resolution of the general or any extraordinary meeting of shareholders will be adopted upon the favorable vote of a majority of the
votes cast at the meeting. With the exception as outlined below, our Articles of Association do not provide for a quorum other than for resolutions in relation to the limitation of pre-emptive rights of existing shareholders and the
cancellation of outstanding shares, which quorum requirements correspond with mandatory Dutch law. Furthermore, our Articles of Association provide that in the case of a shareholder appointment of persons to, or dismissal of
persons from, our Supervisory Board and Management Board not proposed by our Supervisory Board, such resolution requires the affirmative vote of a majority of the votes cast at an annual or extraordinary shareholders meeting, which
affirmative votes represent at least one third of our issued capital. To this extent, our practice varies from the requirement of Listing Rule 5620(c), which requires an issuer to provide in its bylaws for a quorum, and that such quorum may not be
less than one-third of the outstanding voting stock.



(ii) Listing Rule
5620(b): Proxies



The solicitation of proxies and the
distribution of proxy statements for meetings of shareholders are not required under Dutch law or by the rules of Euronext Amsterdam. It is still business practice for Dutch companies not to solicit proxies or distribute proxy statements in respect
of European shareholders. In part



73



---

##### Table of Contents

this is because a substantial portion of shares held by these shareholders are held in bearer form. This is the case for our common shares traded on NYSE Euronext Amsterdam and, accordingly, it
is impractical to solicit proxies as to these shares. As a result, our practice in respect of the holders of shares other than our common shares listed on the NASDAQ Global Select Market varies from that required by Listing Rule 5620(b), which
provides that issuers shall solicit proxies and provide proxy statements for all meetings of shareholders.



As to our common shares listed on the NASDAQ Global Select Market, which we refer to as New York registry shares, we prepare a proxy statement and
solicit proxies from the holders of such shares since there are procedures in place under the Securities Exchange Act of 1934, as amended, for soliciting proxies from beneficial owners.



(iii) Listing Rule 5615(a)(3): Shareholder Approval of Equity Plans



Nasdaq Listing Rule 5635(c) requires shareholder approval prior to the issuance of securities in connection with
equity-based compensation of officers, directors, employees or consultants. On December 30, 2011, our Supervisory Board adopted the ASM International N.V. 2011 Stock Option Plan for Members of the Management Board and the ASM International N.V.
2011 Stock Option Plan for Employees (the Stock Option Plans). In lieu of the specific shareholder approval prior to the issuance of securities in connection with equity-based compensation of officers, directors, employees or
consultants, required by Nasdaq Listing Rule 5635(c), we followed Dutch company law regarding the issuance of shares or securities in connection with the remuneration of the management board and/or the employees of a Dutch listed public company
(beursgenoteerde naamloze vennootschap).



According to Dutch
company law, a Dutch public company may issue shares or grant rights to acquire shares pursuant to a resolution of the general meeting of shareholders or pursuant to a resolution of another corporate body designated by the general meeting of
shareholders. Consistent with previous years, at our 2011 Annual General Meeting of Shareholders on May 23, 2011, our shareholders designated the Management Board as the competent body to issue common shares, subject to Supervisory Board
approval, including granting rights to acquire common shares. Furthermore, our shareholders designated our Management Board as the competent body to issue common shares, subject to Supervisory Board approval, including granting rights to acquire
common shares in connection with our stock option plans for employees and the stock option plan for the Management Board.



Pursuant to Dutch company law, the remuneration policy (including any amendments thereto) for the management board of a Dutch public company shall
be determined by the general meeting of shareholders. Individual compensation of management board members shall be determined by the general meeting of shareholders unless the articles of association appoint another corporate body as such. Our
Articles of Association provide that the individual compensation of Management Board members shall be determined by the Supervisory Board. Pursuant to Dutch company law, the remuneration (including any equity components) of employees is not subject
to prior shareholder approval.



At our 2010 Annual General
Meeting of Shareholders on May 20, 2010, our shareholders determined the remuneration policy of the Management Board. The remuneration policy includes a framework for the granting of stock options to the Management Board members, to be
determined by the Supervisory Board. The remuneration policy is publicly available on our website: www.asm.com.



The Stock Option Plans provide the terms and conditions governing the procedures for the granting of stock options to employees and the Management
Board. These terms and conditions include, among others, the determination of the exercise price and the vesting period. The Stock Option Plans do not grant rights to Management Board members or employees to acquire shares, nor do the Stock Option
Plans provide for an obligation by us to grant such rights. The granting of rights to acquire shares through stock options is, with respect to members of our Management Board, determined by the Supervisory Board, and with respect to employees,
determined by the Management Board.



74



---

##### Table of Contents

PART III



Item 17. Financial Statements



Not Applicable.



Item 18. Financial Statements



See pages F-1 through F-52, which are incorporated herein by
reference.



Item 19. Exhibits
(*)



|              |      |  |             |                                                                                                                                                               |                               |                                                                    |                 |  |   | 
|------------- | ---- |  | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------- | ------------------------------------------------------------------ | --------------- |  | - | 
|ExhibitNumber |      |  | Description |                                                                                                                                                               | Incorporated by Reference to: |                                                                    | IncludedHerein: | 
|              | 1.1  |  |             | English Informal Translation of ASM International N.V.s Articles of Association, as amended                                                                  |                               | Exhibit 1.1 to the Registrants Form 20-F
filed on March 25, 2011  |                 |  |   | 
|              |      |  |            
|              | 2.1  |  |             | Trust Deed dated November 6, 2009 for the 6.5% Senior Unsecured Convertible Bonds                                                                             |                               | Exhibit 2.3 to the Registrants Form 20-F filed on March 26, 2010  |                 |  |   | 
|              |      |  |            
|              | 4.1  |  |             | 2001 Stock Option Plan                                                                                                                                        |                               | Exhibit 99.1 to the Registrants Form S-8 filed on April 30, 2002  |                 |  |   | 
|              |      |  |            
|              | 4.2  |  |             | 1994 Stock Option Plan                                                                                                                                        |                               | Exhibit 99.1 to the Registrants S-8 filed October 25, 1999        |                 |  |   | 
|              |      |  |            
|              | 4.3  |  |             | Trust Deed and Rules of The ASM Pacific Technology Employee Share Incentive Scheme, dated March 23, 1990                                                      |                               | Exhibit 4.14 to the Registrants
Form 20-F filed on April 17, 2003 |                 |  |   | 
|              |      |  |            
|              | 4.4  |  |             | Deed of Adherence Relating to Participation in the Employee Share Incentive Scheme of ASM Pacific Technology Limited, dated April 12, 1999                    |                               | Exhibit 4.15 to the Registrants
Form 20-F filed on April 17, 2003 |                 |  |   | 
|              |      |  |            
|              | 4.5  |  |             | Supplemental Deed Relating to the Employee Share Incentive Scheme of ASM Pacific Technology Limited                                                           |                               | Exhibit 4.16 to the Registrants
Form 20-F filed on April 17, 2003 |                 |  |   | 
|              |      |  |            
|              | 4.6  |  |             | Overview of Remuneration of Members of the Management Board, dated May 18, 2006                                                                               |                               | Exhibit 4.23 to the Registrants
Form 20-F filed on March 16, 2007 |                 |  |   | 
|              |      |  |            
|              | 4.7  |  |             | Overview of Remuneration of Mr. Peter van Bommel                                                                                                              |                               | Exhibit 4.7 to the Registrants
Form 20-F filed on March 25, 2011  |                 |  |   | 
|              |      |  |            
|              | 4.8  |  |             | Form of Supervisory Board Member Indemnification Agreement                                                                                                    |                               | Exhibit 10.1 to the Registrants
Form 20-F filed on March 16, 2007 |                 |  |   | 
|              |      |  |            
|              | 4.9  |  |             | Form of Management Board Member Indemnification Agreement                                                                                                     |                               | Exhibit 10.2 to the Registrants
Form 20-F filed on March 16, 2007 |                 |  |   | 
|              |      |  |            
|              | 4.10 |  |             | Amended and Restated Settlement Agreement dated as of December 16, 1998 by and among ASM International N.V., ASM America, Inc. and Applied Materials, Inc. ** |                               | Exhibit 10.3 to the Registrants
Form 20-F filed on March 16, 2007 |                 |  |   | 
|              |      |  |            
|              | 4.11 |  |             | Summary of the material elements of employment contract with Mr. C.D. del Prado (effective as of March 1, 2008)                                               |                               | Exhibit 99.9 to the Registrants Form 6-K filed on May 20, 2008    |                 |  |   | 
|              |      |  |            
|              | 4.12 |  |             | Overview of remuneration of Mr. W.K. Lee                                                                                                                      |                               | Exhibit 4.13 to the Registrants
Form 20-F filed on March 16, 2007 |                 |  |   | 
|              |      |  |            
|              | 4.13 |  |             | Master Sale and Purchase Agreement re SEAS acquisition dated July 28, 2010                                                                                    |                               | Exhibit 4.24 to the Registrants
Form 20-F filed on March 25, 2011 |                 |  |   | 
|              |      |  |            
|              | 4.14 |  |             | ASM International N.V. 2011 Stock Option Plan for Members of the Management Board                                                                             |                               |                                                                    |                 |  | X | 



75



---

##### Table of Contents

|              |      |  |             |                                                                            |                               |  |                 |  |   | 
|------------- | ---- |  | ----------- | -------------------------------------------------------------------------- | ----------------------------- |  | --------------- |  | - | 
|ExhibitNumber |      |  | Description |                                                                            | Incorporated by Reference to: |  | IncludedHerein: | 
|              | 8.1  |  |             | Subsidiaries                                                               |                               |  |                 |  | X | 
|              |      |  |            
|              | 12.1 |  |             | Certification of CEO pursuant to Rule 13a-14(a)                            |                               |  |                 |  | X | 
|              |      |  |            
|              | 12.2 |  |             | Certification of CFO pursuant to Rule 13a-14(a)                            |                               |  |                 |  | X | 
|              |      |  |            
|              | 13.1 |  |             | Certification of CEO and CFO pursuant to Rule 13a-14(b) and 18 U.S.C. 1350 |                               |  |                 |  | X | 
|              |      |  |            
|              | 15.1 |  |             | Consent of Independent Registered Public Accounting Firm                   |                               |  |                 |  | X | 



|* | Pursuant to Instruction 2(b)(ii), 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.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Redacted version, originally filed as an exhibit to Registrants Form 6-K filed February 11, 1999. Portions of the Agreement have been omitted pursuant to a request for
confidential treatment.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



76



---

##### Table of Contents

SIGNATURES



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



|                     |  |                         
|-------------------- |  | ------------------------
|                     |  | ASM INTERNATIONAL N.V.  
|                     | 
|Date: March 28, 2012 |  | /S/ CHARLES D. DEL PRADO
|                     |  | Charles D. del Prado    
|                     |  | Chief Executive Officer 



S-1



---

##### Table of Contents

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                     |  |        
|---------------------------------------------------------------------------------------------------- |  | -------
|Report of Independent Registered Public Accounting Firm                                              |  | F-2, F3
|Consolidated Balance Sheets as of December 31, 2010 and 2011                                         |  | F-4    
|Consolidated Statements of Operations for the years ended December 31, 2009, 2010 and 2011           |  | F-5    
|Consolidated Statements of Comprehensive Income for the years ended December 31, 2009, 2010 and 2011 |  | F-6    
|Consolidated Statements of Total Equity for the years ended December 31, 2009, 2010 and
2011         |  | F-7    
|Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2010 and 2011           |  | F-8    
|Notes to the Consolidated Financial Statements                                                       |  | F-9    



F-1



---

##### Table of Contents

Report of Independent Registered Public Accounting Firm



To: the Supervisory Board and Shareholders of

ASM International N.V.



We have audited the accompanying consolidated balance sheets of ASM International N.V. and subsidiaries (the Company) as of
December 31, 2011 and 2010, and the related consolidated statements of operations, comprehensive income, total equity, and cash flows for each of the three years in the period ended December 31, 2011. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 present fairly, in all material respects, the financial position of ASM International N.V. and subsidiaries at December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.



We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Companys internal
control over financial reporting as of December 31, 2011, based on the criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated
March 28, 2012 expressed an unqualified opinion on the Companys internal control over financial reporting.



/s/ Deloitte Accountants B.V.

Amsterdam, the Netherlands



March 28, 2012



F-2



---

##### Table of Contents

Report of Independent Registered Public Accounting Firm



To: the Supervisory Board and Shareholders of

ASM International N.V.



We have audited the internal control over financial reporting of ASM International N.V. and subsidiaries (the Company) as of
December 31, 2011, based on criteria established in Internal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission. The Companys management is responsible for maintaining
effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Annual Report on Internal Control over Financial Reporting.
Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit.



We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in
the circumstances. We believe that our audit provides a reasonable basis for our opinion.



A companys internal control over financial reporting is a process designed by, or under the supervision of, the companys principal executive and principal financial officers, or persons performing
similar functions, and effected by the companys board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.



Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness
of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2011, based on the criteria established in Internal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway
Commission.



We have also audited, in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2011 of the Company and our report dated March 28, 2012 expressed an unqualified
opinion on those financial statements.



/s/
Deloitte Accountants B.V.

Amsterdam, the Netherlands



March 28, 2012



F-3



---

##### Table of Contents

Consolidated Balance Sheets



|                                                                                                         |  |       |  |              |           |   |      |  |           |  
|-------------------------------------------------------------------------------------------------------- |  | ----- |  | ------------ | --------- | - | ---- |  | --------- | -
|                                                                                                         |  |       |  | December 31, |          
|(EUR thousands except per share data)                                                                    |  | Notes |  | 2010         |           |   | 2011 | 
|Assets                                                                                                   |  |       |  |              |           |   |      |  |           |  
|Cash and cash equivalents                                                                                |  | 4     |  |              | 340,294   |   |      |  | 390,250   |  
|Accounts receivable, net                                                                                 |  | 6     |  |              | 271,271   |   |      |  | 330,891   |  
|Inventories, net                                                                                         |  | 7     |  |              | 254,557   |   |      |  | 376,667   |  
|Income taxes receivable                                                                                  |  |       |  |              | 57        |   |      |  | 907       |  
|Deferred tax assets                                                                                      |  | 26    |  |              | 8,567     |   |      |  | 14,350    |  
|Other current assets                                                                                     |  |       |  |              | 59,405    |   |      |  | 82,715    |  
|                                                                                                         |  |       |  |              |           |   |      |  |           |  
|Total current assets                                                                                     |  |       |  |              | 934,149   |   |      |  | 1,195,779 |  
|                                                                                                         |  |       | 
|Pledged cash                                                                                             |  | 5     |  |              |          |   |      |  | 20,000    |  
|Debt issuance costs                                                                                      |  | 18    |  |              | 5,564     |   |      |  | 4,389     |  
|Deferred tax assets                                                                                      |  | 26    |  |              | 5,807     |   |      |  | 13,072    |  
|Other intangible assets, net                                                                             |  | 8     |  |              | 6,804     |   |      |  | 14,776    |  
|Goodwill, net                                                                                            |  | 9     |  |              | 50,815    |   |      |  | 52,131    |  
|Evaluation tools at customers                                                                            |  | 12    |  |              | 6,644     |   |      |  | 13,987    |  
|Investments                                                                                              |  | 13    |  |              | 50        |   |      |  | 1,044     |  
|Property, plant and equipment, net                                                                       |  | 10    |  |              | 197,937   |   |      |  | 260,180   |  
|Assets held for sale                                                                                     |  | 11    |  |              | 6,347     |   |      |  | 6,862     |  
|                                                                                                         |  |       |  |              |           |   |      |  |           |  
|Total assets                                                                                             |  |       |  |              | 1,214,117 |   |      |  | 1,582,221 |  
|                                                                                                         |  |       |  |              |           |   |      |  |           |  
|Liabilities and shareholders equity                                                                     |  |       |  |              |           |   |      |  |           |  
|Notes payable to banks                                                                                   |  | 14    |  |              | 8,297     |   |      |  | 40,680    |  
|Accounts payable                                                                                         |  |       |  |              | 170,553   |   |      |  | 157,549   |  
|Provision for warranty                                                                                   |  | 15    |  |              | 8,273     |   |      |  | 42,684    |  
|Accrued expenses and other                                                                               |  | 16    |  |              | 117,401   |   |      |  | 152,890   |  
|Income taxes payable                                                                                     |  |       |  |              | 47,493    |   |      |  | 54,878    |  
|Deferred tax liabilities                                                                                 |  | 26    |  |              |          |   |      |  | 3,513     |  
|Current portion convertible subordinated debt                                                            |  | 18    |  |              | 32,439    |   |      |  |          |  
|Current portion conversion option                                                                        |  | 18    |  |              | 23,875    |   |      |  |          |  
|Current portion of long-term debt                                                                        |  | 17    |  |              | 15,950    |   |      |  | 4,332     |  
|                                                                                                         |  |       |  |              |           |   |      |  |           |  
|Total current liabilities                                                                                |  |       |  |              | 424,282   |   |      |  | 456,527   |  
|                                                                                                         |  |       | 
|Pension liabilities                                                                                      |  | 20    |  |              | 7,167     |   |      |  | 9,887     |  
|Deferred tax liabilities                                                                                 |  | 26    |  |              | 321       |   |      |  | 868       |  
|Provision for warranty                                                                                   |  | 15    |  |              |          |   |      |  | 6,828     |  
|Long-term debt                                                                                           |  | 17    |  |              | 4,316     |   |      |  | 15,319    |  
|Convertible subordinated debt                                                                            |  | 18    |  |              | 130,804   |   |      |  | 135,078   |  
|                                                                                                         |  |       |  |              |           |   |      |  |           |  
|Total liabilities                                                                                        |  |       |  |              | 566,890   |   |      |  | 624,507   |  
|                                                                                                         |  |       | 
|Commitments and contingencies                                                                            |  | 21,22 |  |              |           |   |      |  |           |  
|                                                                                                         |  |       | 
|Common shares:                                                                                           |  |       |  |              |           |   |      |  |           |  
|Authorized 110,000,000 shares, par value  0.04, issued and outstanding 52,931,881 and 55,377,020 shares |  |       |  |              | 2,117     |   |      |  | 2,215     |  
|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                                                                           |  |       |  |              | 311,841   |   |      |  | 376,217   |  
|Retained earnings                                                                                        |  |       |  |              | 131,741   |   |      |  | 301,515   |  
|Accumulated other comprehensive loss                                                                     |  |       |  |              | (34,239   | ) |      |  | (20,151   | )
|                                                                                                         |  |       |  |              |           |   |      |  |           |  
|Total shareholders equity                                                                               |  | 19    |  |              | 411,460   |   |      |  | 659,796   |  
|Non-controlling interest                                                                                 |  |       |  |              | 235,767   |   |      |  | 297,918   |  
|                                                                                                         |  |       |  |              |           |   |      |  |           |  
|Total equity                                                                                             |  |       |  |              | 647,227   |   |      |  | 957,714   |  
|                                                                                                         |  |       |  |              |           |   |      |  |           |  
|Total liabilities and shareholders equity                                                               |  |       |  |              | 1,214,117 |   |      |  | 1,582,221 |  
|                                                                                                         |  |       |  |              |           |   |      |  |           |  



See Notes to Consolidated Financial Statements.



F-4



---

##### Table of Contents

Consolidated Statements of Operations



|                                                                                                   |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|-------------------------------------------------------------------------------------------------- |  | ----- |  | ----------------------- | -------- | - | ---- |  | --------- | ---- |  |  | ---------- | -
|                                                                                                   |  |       |  | Year ended December 31, |         
|(EUR thousands, except per share data)                                                             |  | Notes |  | 2009                    |          |   | 2010 |  |           | 2011 | 
|Net sales                                                                                          |  | 27    |  |                         | 590,739  |   |      |  | 1,222,900 |      |  |  | 1,634,334  |  
|Cost of sales                                                                                      |  |       |  |                         | (409,224 | ) |      |  | (673,322  | )    |  |  | (1,063,708 | )
|                                                                                                   |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Gross profit                                                                                       |  | 27    |  |                         | 181,515  |   |      |  | 549,578   |      |  |  | 570,626    |  
|Operating expenses:                                                                                |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Selling, general and administrative                                                                |  |       |  |                         | (107,777 | ) |      |  | (130,596  | )    |  |  | (174,107   | )
|Research and development, net                                                                      |  | 24    |  |                         | (62,806  | ) |      |  | (78,785   | )    |  |  | (129,400   | )
|Amortization of other intangible assets                                                            |  | 8     |  |                         | (401     | ) |      |  | (357      | )    |  |  | (911       | )
|Impairment charge property, plant and equipment                                                    |  | 10    |  |                         |         |   |      |  |          |      |  |  | (8,038     | )
|Restructuring expenses                                                                             |  | 25    |  |                         | (35,687  | ) |      |  | (11,201   | )    |  |  |           |  
|                                                                                                   |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Total operating expenses                                                                           |  |       |  |                         | (206,671 | ) |      |  | (220,939  | )    |  |  | (312,455   | )
|                                                                                                   |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Operating income:                                                                                  |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Gain on bargain purchase                                                                           |  | 3     |  |                         |         |   |      |  |          |      |  |  | 109,279    |  
|                                                                                                   |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Result from operations                                                                             |  | 27    |  |                         | (25,156  | ) |      |  | 328,640   |      |  |  | 367,450    |  
|Interest income                                                                                    |  |       |  |                         | 1,018    |   |      |  | 1,221     |      |  |  | 2,902      |  
|Interest expense                                                                                   |  |       |  |                         | (8,556   | ) |      |  | (15,677   | )    |  |  | (13,497    | )
|Loss resulting from early extinguishment of debt                                                   |  | 18    |  |                         | (1,759   | ) |      |  | (3,609    | )    |  |  | (824       | )
|Accretion interest expense convertible notes                                                       |  | 18    |  |                         | (4,286   | ) |      |  | (6,010    | )    |  |  | (4,401     | )
|Revaluation conversion option                                                                      |  | 18    |  |                         | (24,364  | ) |      |  | (19,037   | )    |  |  | (4,378     | )
|Foreign currency exchange gains (losses), net                                                      |  |       |  |                         | (1,384   | ) |      |  | (65       | )    |  |  | 5,604      |  
|                                                                                                   |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Earnings (loss) before income taxes                                                                |  |       |  |                         | (64,487  | ) |      |  | 285,462   |      |  |  | 352,855    |  
|Income tax expense                                                                                 |  | 26    |  |                         | (3,786   | ) |      |  | (42,939   | )    |  |  | (36,692    | )
|                                                                                                   |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Net earnings (loss)                                                                                |  |       |  |                         | (68,273  | ) |      |  | 242,523   |      |  |  | 316,164    |  
|                                                                                                   |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Net earnings (loss) for allocation between shareholders of the parent and non-controlling interest |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Allocation of net earnings (loss)                                                                  |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Shareholders of the parent                                                                         |  |       |  |                         | (107,517 | ) |      |  | 110,639   |      |  |  | 186,770    |  
|Non-controlling interest                                                                           |  |       |  |                         | 39,244   |   |      |  | 131,884   |      |  |  | 129,394    |  
|Net earnings (loss) per share (in euro):                                                           |  | 29    |  |                         |          |   |      |  |           |      |  |  |            |  
|Basic net earnings (loss) from continuing operations                                               |  |       |  |                         | (2.08    | ) |      |  | 2.11      |      |  |  | 3.38       |  
|Diluted net earnings (loss) from continuing operations                                             |  |       |  |                         | (2.08    | ) |      |  | 2.09      |      |  |  | 3.16       |  
|                                                                                                   |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Weighted average number of shares used in computing per share amounts (in thousands):              |  |       |  |                         |          |   |      |  |           |      |  |  |            |  
|Basic                                                                                              |  |       |  |                         | 51,627   |   |      |  | 52,435    |      |  |  | 55,210     |  
|Diluted                                                                                            |  |       |  |                         | 51,627   |   |      |  | 61,494    |      |  |  | 65,189     |  
|                                                                                                   |  |       |  |                         |          |   |      |  |           |      |  |  |            |  





See Notes to Consolidated Financial Statements.



F-5



---

##### Table of Contents

Consolidated Statements of Comprehensive Income



|                                                                      |  |       |    |  |                         |  |          |      |  |  |         |   |  |  |         |  
|--------------------------------------------------------------------- |  | ----- | -- |  | ----------------------- |  | -------- | ---- |  |  | ------- | - |  |  | ------- | -
|                                                                      |  |       |    |  | Year ended December 31, | 
|(EUR thousands)                                                       |  | Notes |    |  | 2009                    |  |          | 2010 |  |  | 2011    |  
|Net earnings (loss)                                                   |  |       |    |  |                         |  | (68,273  | )    |  |  | 242,523 |   |  |  | 316,164 |  
|Other comprehensive income (loss):                                    |  |       |    |  |                         |  |          |      |  |  |         |   |  |  |         |  
|Foreign currency translation effect                                   |  |       |    |  |                         |  | (4,939   | )    |  |  | 41,309  |   |  |  | 18,062  |  
|Unrealized gains (losses) on derivative instruments,net of tax        |  |       |    |  |                         |  | (170     | )    |  |  | 136     |   |  |  | (13     | )
|Reclassification transition obligation into retained earnings         |  |       |    |  |                         |  | 877      |      |  |  |        |   |  |  |        |  
|Amortization unrecognized actuarial results                           |  |       |    |  |                         |  | 26       |      |  |  |        |   |  |  |        |  
|Result on curtailment and settlement unrecognized pension obligations |  |       |    |  |                         |  | 852      |      |  |  |        |   |  |  |        |  
|Actuarial loss                                                        |  |       |    |  |                         |  | (370     | )    |  |  | (87     | ) |  |  | 1,139   |  
|                                                                      |  |       |    |  |                         |  |          |      |  |  |         |   |  |  |         |  
|Total other comprehensive income (loss)                               |  |       | 19 |  |                         |  | (3,724   | )    |  |  | 41,358  |   |  |  | 19,188  |  
|                                                                      |  |       |    |  |                         |  |          |      |  |  |         |   |  |  |         |  
|Comprehensive income (loss)                                           |  |       |    |  |                         |  | (71,997  | )    |  |  | 283,881 |   |  |  | 335,352 |  
|                                                                      |  |       |    |  |                         |  |          |      |  |  |         |   |  |  |         |  
|Allocation of comprehensive income (loss):                            |  |       |    |  |                         |  |          |      |  |  |         |   |  |  |         |  
|Common shareholders                                                   |  |       |    |  |                         |  | (108,184 | )    |  |  | 141,154 |   |  |  | 200,858 |  
|Preferred shareholders                                                |  |       |    |  |                         |  | 5        |      |  |  |        |   |  |  |        |  
|Non-controlling interest                                              |  |       | 19 |  |                         |  | 36,182   |      |  |  | 142,727 |   |  |  | 134,494 |  







See Notes to Consolidated Financial Statements.



F-6



---

##### Table of Contents

Consolidated Statements of Total Equity



|                                                                                         |  |       |  |                      |            |   |                         |  |         |              |  |  |                 |   |  |                            |      |   |                       |  |         |                  |  |  |                                             |   |  |                           |          |   |                         |  |         |             |  |  |          |   |  |  |         |   |  |  |         |  
|---------------------------------------------------------------------------------------- |  | ----- |  | -------------------- | ---------- | - | ----------------------- |  | ------- | ------------ |  |  | --------------- | - |  | -------------------------- | ---- | - | --------------------- |  | ------- | ---------------- |  |  | ------------------------------------------- | - |  | ------------------------- | -------- | - | ----------------------- |  | ------- | ----------- |  |  | -------- | - |  |  | ------- | - |  |  | ------- | -
|                                                                                         |  |       |  |                      |            |   |                         |  |         | EUR          | 
|(thousands, except for share data)                                                       |  | Notes |  | Numberofcommonshares |            |   | Numberofpreferredshares |  |         | Commonshares |  |  | Preferredshares |   |  | Capitalinexcessof parvalue |      |   | Treasurysharesat cost |  |         | Retainedearnings |  |  | Accumulatedothercomprehens-ive income(loss) |   |  | Totalshare-holdersequity |          |   | Non-controllinginterest |  |         | Totalequity | 
|Balance January 1, 2009                                                                  |  |       |  |                      | 54,275,131 |   |                         |  | 21,985  |              |  |  | 2,171           |   |  |                            | 220  |   |                       |  | 324,707 |                  |  |  | (37,215                                     | ) |  |                           | 92,111   |   |                         |  | (64,092 | )           |  |  | 317,902  |   |  |  | 125,139 |   |  |  | 443,041 |  
|Compensation expense stock options                                                       |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  | 2,127   |                  |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  | 2,127    |   |  |  |        |   |  |  | 2,127   |  
|Withdrawal of common shares                                                              |  | 19    |  |                      | (2,553,000 | ) |                         |  |        |              |  |  | (102            | ) |  |                            |     |   |                       |  | (35,529 | )                |  |  | 35,631                                      |   |  |                           |         |   |                         |  |        |             |  |  |         |   |  |  |        |   |  |  |        |  
|Dividend tax paid on withdrawal of common shares                                         |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  | (3,399  | )                |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  | (3,399   | ) |  |  |        |   |  |  | (3,399  | )
|Withdrawal of preferred shares                                                           |  | 19    |  |                      |           |   |                         |  | (21,985 | )            |  |  |                |   |  |                            | (220 | ) |                       |  |        |                  |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  | (220     | ) |  |  |        |   |  |  | (220    | )
|Exercise of stock options out of treasury shares                                         |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  | (323    | )                |  |  | 1,584                                       |   |  |                           | (25      | ) |                         |  |        |             |  |  | 1,236    |   |  |  |        |   |  |  | 1,236   |  
|Exercise stock options by issue of common shares                                         |  | 19    |  |                      | 23,009     |   |                         |  |        |              |  |  | 1               |   |  |                            |     |   |                       |  | 185     |                  |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  | 186      |   |  |  |        |   |  |  | 186     |  
|Reclassification transition obligation related to pensions (ASC 715)                     |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           | (877     | ) |                         |  |        |             |  |  | (877     | ) |  |  |        |   |  |  | (877    | )
|Impact of initial adoption of ASC 815 regarding the accounting for the convertible notes |  | 18    |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           | 7,902    |   |                         |  |        |             |  |  | 7,902    |   |  |  |        |   |  |  | 7,902   |  
|Recognition conversion option subsequent to issuance of convertible notes                |  | 18    |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           | 23,601   |   |                         |  |        |             |  |  | 23,601   |   |  |  |        |   |  |  | 23,601  |  
|Net earnings to common shareholders                                                      |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           | (107,522 | ) |                         |  |        |             |  |  | (107,522 | ) |  |  | 39,244  |   |  |  | (68,278 | )
|Other comprehensive income                                                               |  | 19    |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           |         |   |                         |  | (662    | )           |  |  | (662     | ) |  |  | (3,062  | ) |  |  | (3,724  | )
|Other movements in non-controlling interest:                                             |  |       |  |                      |            |   |                         |  |         |              |  |  |                 |   |  |                            |      |   |                       |  |         |                  |  |  |                                             |   |  |                           |          |   |                         |  |         |             |  |  |          |   |  |  |         |   |  |  |         |  
|Dividend paid                                                                            |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  |         |   |  |  | (19,099 | ) |  |  | (19,099 | )
|Dilution                                                                                 |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           | 956      |   |                         |  |        |             |  |  | 956      |   |  |  | 2,462   |   |  |  | 3,418   |  
|                                                                                         |  |       |  |                      |            |   |                         |  |         |              |  |  |                 |   |  |                            |      |   |                       |  |         |                  |  |  |                                             |   |  |                           |          |   |                         |  |         |             |  |  |          |   |  |  |         |   |  |  |         |  
|Balance December 31, 2009                                                                |  |       |  |                      | 51,745,140 |   |                         |  |        |              |  |  | 2,070           |   |  |                            |     |   |                       |  | 287,768 |                  |  |  |                                            |   |  |                           | 16,145   |   |                         |  | (64,754 | )           |  |  | 241,229  |   |  |  | 144,684 |   |  |  | 385,913 |  
|Compensation expense stock options                                                       |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  | 2,526   |                  |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  | 2,526    |   |  |  |        |   |  |  | 2,526   |  
|Conversion of debt into common shares                                                    |  | 18    |  |                      | 878,491    |   |                         |  |        |              |  |  | 35              |   |  |                            |     |   |                       |  | 17,614  |                  |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  | 17,649   |   |  |  |        |   |  |  | 17,649  |  
|Exercise stock options by issue of common shares                                         |  | 19    |  |                      | 308,250    |   |                         |  |        |              |  |  | 12              |   |  |                            |     |   |                       |  | 3,932   |                  |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  | 3,944    |   |  |  |        |   |  |  | 3,944   |  
|Net earnings to common shareholders                                                      |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           | 110,639  |   |                         |  |        |             |  |  | 110,639  |   |  |  | 131,884 |   |  |  | 242,523 |  
|Other comprehensive income                                                               |  | 19    |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           |         |   |                         |  | 30,515  |             |  |  | 30,515   |   |  |  | 10,843  |   |  |  | 41,358  |  
|Other movements in non-controlling interest:                                             |  |       |  |                      |            |   |                         |  |         |              |  |  |                 |   |  |                            |      |   |                       |  |         |                  |  |  |                                             |   |  |                           |          |   |                         |  |         |             |  |  |          |   |  |  |         |   |  |  |         |  
|Dividend paid                                                                            |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  |         |   |  |  | (58,162 | ) |  |  | (58,162 | )
|Dilution                                                                                 |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           | 4,957    |   |                         |  |        |             |  |  | 4,957    |   |  |  | 6,518   |   |  |  | 11,475  |  
|                                                                                         |  |       |  |                      |            |   |                         |  |         |              |  |  |                 |   |  |                            |      |   |                       |  |         |                  |  |  |                                             |   |  |                           |          |   |                         |  |         |             |  |  |          |   |  |  |         |   |  |  |         |  
|Balance December 31, 2010                                                                |  |       |  |                      | 52,931,881 |   |                         |  |        |              |  |  | 2,117           |   |  |                            |     |   |                       |  | 311,841 |                  |  |  |                                            |   |  |                           | 131,741  |   |                         |  | (34,239 | )           |  |  | 411,460  |   |  |  | 235,767 |   |  |  | 647,227 |  
|Compensation expense stock options                                                       |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  | 1,872   |                  |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  | 1,872    |   |  |  |        |   |  |  | 1,872   |  
|Conversion of debt into common shares                                                    |  | 18    |  |                      | 2,151,020  |   |                         |  |        |              |  |  | 86              |   |  |                            |     |   |                       |  | 58,439  |                  |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  | 58,525   |   |  |  |        |   |  |  | 58,525  |  
|Exercise stock options by issue of common shares                                         |  | 19    |  |                      | 294,119    |   |                         |  |        |              |  |  | 12              |   |  |                            |     |   |                       |  | 4,065   |                  |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  | 4,077    |   |  |  |        |   |  |  | 4,077   |  
|Net earnings to common shareholders                                                      |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           | 186,770  |   |                         |  |        |             |  |  | 186,770  |   |  |  | 129,395 |   |  |  | 316,164 |  
|Dividend paid to common shareholders                                                     |  |       |  |                      |            |   |                         |  |         |              |  |  |                 |   |  |                            |      |   |                       |  |         |                  |  |  |                                             |   |  |                           | (22,262  | ) |                         |  |         |             |  |  | (22,262  | ) |  |  |        |   |  |  | (22,262 | )
|Other comprehensive income                                                               |  | 19    |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           |         |   |                         |  | 14,088  |             |  |  | 14,088   |   |  |  | 5,100   |   |  |  | 19,188  |  
|Other movements innon-controlling interest:                                              |  |       |  |                      |            |   |                         |  |         |              |  |  |                 |   |  |                            |      |   |                       |  |         |                  |  |  |                                             |   |  |                           |          |   |                         |  |         |             |  |  |          |   |  |  |         |   |  |  |         |  
|Dividend paid                                                                            |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           |         |   |                         |  |        |             |  |  |         |   |  |  | (79,474 | ) |  |  | (79,474 | )
|Dilution                                                                                 |  |       |  |                      |           |   |                         |  |        |              |  |  |                |   |  |                            |     |   |                       |  |        |                  |  |  |                                            |   |  |                           | 5,266    |   |                         |  |        |             |  |  | 5,266    |   |  |  | 7,130   |   |  |  | 12,396  |  
|                                                                                         |  |       |  |                      |            |   |                         |  |         |              |  |  |                 |   |  |                            |      |   |                       |  |         |                  |  |  |                                             |   |  |                           |          |   |                         |  |         |             |  |  |          |   |  |  |         |   |  |  |         |  
|Balance December 31, 2011                                                                |  |       |  |                      | 55,377,020 |   |                         |  |        |              |  |  | 2,215           |   |  |                            |     |   |                       |  | 376,217 |                  |  |  |                                            |   |  |                           | 301,515  |   |                         |  | (20,151 | )           |  |  | 659,796  |   |  |  | 297,918 |   |  |  | 957,714 |  
|                                                                                         |  |       |  |                      |            |   |                         |  |         |              |  |  |                 |   |  |                            |      |   |                       |  |         |                  |  |  |                                             |   |  |                           |          |   |                         |  |         |             |  |  |          |   |  |  |         |   |  |  |         |  



See Notes to Consolidated Financial
Statements.



F-7



---

##### Table of Contents

Consolidated Statements of Cash Flows



|                                                                                            |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|------------------------------------------------------------------------------------------- |  | ---- | ---- |  | ----------------------- | ---- | ------- | - | ---- |  | -------- | - |  |  | --------- | -
|                                                                                            |  | Note |      |  | Year ended December 31, |     
|(EURO thousands)                                                                            |  |      | 2009 |  |                         | 2010 |         |   | 2011 | 
|Cash flows from operating activities:                                                       |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Net earnings (loss)                                                                         |  |      |      |  |                         |      | (68,273 | ) |      |  | 242,523  |   |  |  | 316,164   |  
|Adjustments required to reconcile net earnings(loss) to net cash from operating activities: |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Depreciation and amortization                                                               |  |      | 8,10 |  |                         |      | 37,323  |   |      |  | 37,794   |   |  |  | 49,450    |  
|Impairments                                                                                 |  |      | 10   |  |                         |      | 4,628   |   |      |  |         |   |  |  | 8,038     |  
|Gain on bargain purchase                                                                    |  |      |      |  |                         |      |        |   |      |  |         |   |  |  | (109,279  | )
|Share-based compensation                                                                    |  |      | 20   |  |                         |      | 5,812   |   |      |  | 13,901   |   |  |  | 13,452    |  
|Non cash result components convertible bonds                                                |  |      | 18   |  |                         |      | 30,409  |   |      |  | 28,656   |   |  |  | 8,779     |  
|Increase (decrease) in allowance for doubtful receivables                                   |  |      | 6    |  |                         |      | 1,667   |   |      |  | (187     | ) |  |  | (4,694    | )
|Deferred income taxes                                                                       |  |      |      |  |                         |      | (9,081  | ) |      |  | 4,092    |   |  |  | (27,691   | )
|Changes in assets and liabilities:                                                          |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Accounts receivable                                                                         |  |      |      |  |                         |      | 1,338   |   |      |  | (95,073  | ) |  |  | 71,987    |  
|Inventories                                                                                 |  |      |      |  |                         |      | 30,044  |   |      |  | (77,236  | ) |  |  | 8,390     |  
|Other current assets                                                                        |  |      |      |  |                         |      | 3,929   |   |      |  | (20,732  | ) |  |  | (20,335   | )
|Accounts payable and accrued expenses                                                       |  |      |      |  |                         |      | 22,891  |   |      |  | 104,485  |   |  |  | (94,601   | )
|Accruals for restructuring expenses                                                         |  |      |      |  |                         |      | 26,657  |   |      |  | 1,863    |   |  |  |          |  
|Payment restructuring expenses                                                              |  |      |      |  |                         |      | (16,105 | ) |      |  | (9,297   | ) |  |  | (3,159    | )
|Current income taxes                                                                        |  |      |      |  |                         |      | (8,586  | ) |      |  | 29,096   |   |  |  | 80        |  
|                                                                                            |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Net cash provided by operating activities                                                   |  |      |      |  |                         |      | 62,652  |   |      |  | 259,884  |   |  |  | 216,581   |  
|Cash flows from investing activities:                                                       |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Capital expenditures                                                                        |  |      | 10   |  |                         |      | (12,718 | ) |      |  | (102,974 | ) |  |  | (89,218   | )
|Net purchase of intangible assets                                                           |  |      | 8    |  |                         |      | (3,294  | ) |      |  | (624     | ) |  |  | (7,051    | )
|Acquisition of business                                                                     |  |      | 9    |  |                         |      | (50     | ) |      |  |         |   |  |  | (994      | )
|Cash acquired in business combination                                                       |  |      | 3    |  |                         |      |        |   |      |  |         |   |  |  | 43,434    |  
|Pledged bank deposit in business combination                                                |  |      | 5    |  |                         |      |        |   |      |  |         |   |  |  | (20,000   | )
|Proceeds from sale of property, plant and equipment                                         |  |      | 10   |  |                         |      | 570     |   |      |  | 3,032    |   |  |  | 3,794     |  
|                                                                                            |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Net cash used in investing activities                                                       |  |      |      |  |                         |      | (15,493 | ) |      |  | (100,566 | ) |  |  | (70,035   | )
|Cash flows from financing activities:                                                       |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Debt redemption                                                                             |  |      |      |  |                         |      | (32,246 | ) |      |  | (68,810  | ) |  |  | (23,096   | )
|Debt proceeds, net                                                                          |  |      |      |  |                         |      | 144,407 |   |      |  |          |   |  |  | 42,173    |  
|Proceeds from issuance of shares and exercise of stock options                              |  |      |      |  |                         |      | 1,227   |   |      |  | 3,945    |   |  |  | 4,122     |  
|Dividend tax paid on withdrawal of common shares                                            |  |      |      |  |                         |      | (3,399  | ) |      |  |         |   |  |  |          |  
|Dividends to common shareholders of ASMI                                                    |  |      |      |  |                         |      |        |   |      |  |         |   |  |  | (22,262   | )
|Dividends to minority shareholders ASMPT                                                    |  |      |      |  |                         |      | (19,099 | ) |      |  | (58,162  | ) |  |  | (79,474   | )
|                                                                                            |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Net cash provided by / (used in) financing activities                                       |  |      |      |  |                         |      | 90,890  |   |      |  | (123,027 | ) |  |  | (78,537   | )
|Foreign currency translation effect                                                         |  |      |      |  |                         |      | (1,427  | ) |      |  | 10,096   |   |  |  | (18,052   | )
|                                                                                            |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Net (decrease) increase in cash and cash equivalents                                        |  |      |      |  |                         |      | 136,623 |   |      |  | 46,387   |   |  |  | 49,956    |  
|Cash and cash equivalents at beginning of year                                              |  |      | 4    |  |                         |      | 157,277 |   |      |  | 293,902  |   |  |  | 340,294   |  
|                                                                                            |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Cash and cash equivalents at end of year                                                    |  |      | 4    |  |                         |      | 293,902 |   |      |  | 340,294  |   |  |  | 390,250   |  
|                                                                                            |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Supplemental disclosures of cash flow information                                           |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Cash paid during the year for:                                                              |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Interest                                                                                    |  |      |      |  |                         |      | 5,918   |   |      |  | 14,786   |   |  |  | 10,742    |  
|Income taxes                                                                                |  |      |      |  |                         |      | 21,144  |   |      |  | 9,751    |   |  |  | 39,929    |  
|                                                                                            |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Supplemental on cash investing and financing activities:                                    |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  
|Subordinated debt converted                                                                 |  |      | 18   |  |                         |      |        |   |      |  | 13,473   |   |  |  | 32,202    |  
|Subordinated debt converted into number of shares                                           |  |      | 18   |  |                         |      |        |   |      |  | 878,491  |   |  |  | 2,151,020 |  
|                                                                                            |  |      |      |  |                         |      |         |   |      |  |          |   |  |  |           |  





See Notes to Consolidated Financial Statements.



F-8



---

##### Table of Contents

Notes to Consolidated Financial Statements



1- General Information / Summary of Significant Accounting Policies



General information



ASM International N.V. (ASMI or the Company)
is a Netherlands public liability company domiciled in the Netherlands with its 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 mainly semiconductor devices.



We are an equipment supplier mainly to the semiconductor, LED and electronics manufacturing industry. We design, manufacture and sell equipment and services to our customers for the production of semiconductor
devices, or integrated circuits, for the production of LEDs, and for electronics manufacturing in general. The semiconductor capital equipment market is composed of three major market segments: wafer processing equipment, assembly and packaging
equipment, and test equipment. ASMI is mainly active in the wafer processing and assembly and packaging market segments. The wafer processing segment is referred to as Front-end. Assembly and packaging is referred to as
Back-end. We also sell lead frames for semiconductor assembly. In addition, ASM AS, the newly acquired surface-mount technology (SMT) business unit is offering SMT placement tools for the global electronics manufacturing
industries.



The Companys shares are listed for
trading on the NASDAQ (symbol ASMI) and the Euronext Amsterdam Stock Exchange (symbol ASM).



The accompanying consolidated financial statements include the financial statements of ASM International N.V. headquartered in Almere, the Netherlands, and its consolidated subsidiaries (together referred to as
ASMI or the Company).



Basis
of preparation



The Company follows accounting
principles generally accepted in the United States of America (U.S. GAAP) and applies the going concern basis in preparing its consolidated financial statements. Historical cost is used as the measurement basis unless otherwise
indicated.



The accompanying consolidated financial
statements are stated in thousands of Euros (EUR) unless indicated otherwise. Amounts in these financial statements are rounded to the nearest thousand Euro; therefore amounts may not equal (sub) totals due to rounding.



Use of estimates



The preparation of financial statements in conformity with U.S. GAAP
requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, ASMI evaluates
its estimates. ASMI bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.



Consolidation



The consolidated financial statements include the accounts of ASMI
N.V. and all of its subsidiaries where ASMI holds a controlling interest. The non-controlling interest is disclosed separately in the consolidated financial statements. All intercompany profits, transactions and balances have been eliminated in
consolidation.



Subsidiaries are all entities over which
ASMI has the power to govern the financial and operating policies.



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. Results on dilution of investments in subsidiaries are accounted for directly in equity.



Subsidiaries are fully consolidated from the date on which control is
transferred to ASMI and are deconsolidated from the date on which ASMIs control ceases.



F-9



---

##### Table of Contents

Business combinations



ASC Topic 805 (Business Combinations) requires that
companies record acquisitions under the purchase method of accounting. Accordingly, the purchase price is allocated to the tangible assets and liabilities and intangible assets acquired, based on their estimated fair values. The excess purchase
price over the fair value is recorded as goodwill. Purchased intangibles with definite lives are amortized over their respective useful lives. When a bargain purchase incurs, which is the case when the fair value of the acquired business exceeds the
purchase price, this surplus in fair value is recognized as a gain from bargain purchase.



Segment reporting



The Company organizes its activities in two operating segments, Front-end and Back-end. Operating segments are reported in a manner consistent with
the internal reporting provided to the Chief Executive Officer (CEO), which is the chief operating decision maker (according to ASC 280).



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. In January 2011 ASMPT acquired the surface-mount
technology from Siemens. The segment is organized in ASM Pacific Technology Ltd., in which the Company holds a majority of 52.17% interest, whilst the remaining shares are listed on the Stock Exchange of Hong Kong.



Foreign currency translation



Items included in the financial statements of each ASMIs
entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial information is presented in euro (EUR), which is the functional currency of the Company
and the groups presentation currency.



In the
preparation of ASMIs consolidated financial statements, assets and liabilities of foreign subsidiaries of which the functional currency is not the euro, are translated into euros at the exchange rate in effect on the respective balance sheet
dates. Income and expenses are translated into euros based on the average exchange rates for the corresponding period. Resulting translation adjustments are directly recorded in shareholders equity. Currency differences on intercompany loans
that have the nature of a long-term investment are also accounted for directly in shareholders equity.



Derivative financial instruments



ASMI and its subsidiaries conduct business in a number of foreign countries, with certain transactions denominated in currencies other than the
functional currency of the Company (euro) or one of its subsidiaries conducting the business. The purpose of the Companys foreign currency management is to manage the effect of exchange rate fluctuations on income, expenses, cash flows and
assets and liabilities denominated in selected foreign currencies, in particular denominated in U.S. dollar.



The Company uses forward exchange contracts to hedge its foreign exchange risk of anticipated sales or purchase transactions in the normal course of
business, which occur within the next twelve months, for which the Company has a firm commitment from a customer or to a supplier. The terms of these contracts are consistent with the timing of the transactions being hedged. The hedges related to
forecasted 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
accumulated other comprehensive income (loss) net of taxes in shareholders equity, and is reclassified into earnings when the hedged transaction affects earnings.



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. The Company records all derivatives, including forward exchange contracts, on the balance sheet at fair value in other current assets or accrued expenses and
other.



Substantially all amounts, which are net of taxes,
included in accumulated other comprehensive loss at December 31, 2011 will be reclassified to net earnings within the next twelve months, upon completion of the underlying transactions. 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 foreign currency exchange gains (losses) in the consolidated statement of operations.





F-10



---

##### Table of Contents

Furthermore, the Company might manage the currency exposure of certain receivables and payables using
derivative instruments, such as forward exchange contracts (fair value hedges) and currency swaps, and non-derivative 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 receivables and payables denominated in foreign currencies. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under foreign currency exchange gains (losses) in the
consolidated statement of operations. Receivables and payables denominated in foreign currencies 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
foreign currency exchange gains (losses) in the consolidated statement of operations.



The Company does not use forward exchange contracts for trading or speculative purposes.



Cash and cash equivalents



Cash and cash equivalents comprise deposits held at call with banks and other short-term highly liquid investments with original maturity of three
months or less. Bank overdrafts are included in notes payable to banks in current liabilities.



Cash and cash equivalents of the Companys subsidiaries ASMPT and ASM Japan are restricted to be used only in the operations of ASMPT and ASM Japan respectively.



Accounts receivable



Accounts receivable are stated at nominal value less an allowance for
doubtful accounts.



A significant percentage of our accounts
receivable is derived from sales to a limited number of large multinational semiconductor device manufacturers located throughout the world. In order to monitor potential credit losses, we perform ongoing credit evaluations of our customers
financial condition. An allowance for doubtful accounts is maintained for potential credit losses based upon managements assessment of the expected collectability of all accounts receivable. The allowance for doubtful accounts is reviewed
periodically to assess the adequacy of the allowance. In making this assessment, management takes into consideration any circumstances of which we are aware regarding a customers inability to meet its financial obligations; and our judgments
as to potential prevailing economic conditions in the industry and their potential impact on the Companys customers.



Inventories



Inventories are stated at the lower of cost (first-in, first-out method) or market value. Inventory in the newly acquired SEAS business is generally
determined on the basis of an average method. Costs include net prices paid for materials purchased, charges for freight and custom duties, production labor cost and factory overhead. Allowances are made for slow moving, obsolete or unsellable
inventory.



Allowances for obsolescence of inventory are
determined based on the expected demand as well as the expected market value of the inventory. 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 write downs for inventory based on the above factors and take into account worldwide quantities and demand into our analysis.



Evaluation tools at customers



Evaluation tools at customers (evaluation tools) are
systems generally delivered to customers under evaluation or a conditional purchase order and include substantial customization by ASM engineers and ASM-R&D staff in the field. Evaluation tools are recorded at cost and depreciated over their
useful life (5 years). The depreciation period may be shorter, depending on circumstances. The depreciation expenses are reported as Cost of sales.



On final acceptance of the system the purchase consideration is recognized as revenue. The carrying value of the evaluation tool at that point in
time is recognized as cost of sales. In the circumstance that the system is returned, at the end of the evaluation period, a detailed impairment review takes place, and future sales opportunities and additional costs are identified. Only when the
fair value is below the carrying value of the evaluation tool an additional depreciation is recognized. The remaining carrying value is recognized as finished goods (inventory).



F-11



---

##### Table of Contents

Long-lived assets



Long-lived assets include goodwill, other intangible assets and
property, plant and equipment. Property, plant and equipment are carried at cost, less accumulated depreciation and any accumulated impairment losses. 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 leasehold improvement or the term of the underlying lease.



Business combinations are accounted for under the purchase acquisition
method. The Company tests its recorded goodwill and other intangible assets with indefinite lives for impairment each year on December 31 and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable.



Goodwill is allocated to reporting units for
purposes of impairment testing and tested for impairment on a two-step approach. The implied fair value of goodwill is determined. First the recoverability is tested by comparing the carrying amount of the goodwill with the fair value being the sum
of the discounted future cash flows. If the carrying amount of the goodwill at reporting unit level is higher than the fair value of the goodwill, the second step should be performed. The goodwill impairment is measured as the excess of the carrying
amount of the goodwill over its fair value.



Other
intangible assets with finite lives are amortized over the estimated useful lives using the straight-line method.



Recoverability of long-lived asset



Long-lived assets (except those not being amortized) to be held and used by the Company are reviewed by the Company 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. 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. Long-lived assets
and other intangibles (except those not being amortized) to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.



Revenue recognition



The Company recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has
occurred or services have been rendered; sellers price to buyer is fixed or determinable; and collectability is reasonably assured.



Our Front-end sales frequently involve sales of complex equipment, which may include customer-specific criteria, sales to new customers or sales of
equipment with new technology. For each sale, the decision whether to recognize revenue is, in addition to shipment and factory acceptance, based on: the contractual agreement with a customer; the experience with a particular customer; the
technology and the number of similarly configured equipment previously delivered. Based on these criteria we may decide to defer revenue until completion of installation at the customers site and obtaining final acceptance from the customer.
Revenue in our newly acquired SEAS business on sales subjected to customer acceptance is not recognized until customer acceptance occurs.



A major portion of our revenue is derived from contractual arrangements with customers that have multiple deliverables, such as equipment and
installation. For each of the specified deliverables ASMI determines the selling price by using either vendor specific objective evidence (VSOE), third party evidence (TPE) or by best estimate of the selling price
(BESP). For transactions entered into, or materially modified, as of January 1, 2011, when the Company is unable to establish relative selling price using VSOE or TPE, the Company uses BESP in its allocation of arrangement
consideration. The total arrangement consideration is allocated at inception of the arrangement to all deliverables on the basis of their relative selling price. The revenue relating to the undelivered elements of the arrangements is deferred at
their relative selling prices until delivery of these elements. At December 31, 2009, December 31, 2010 and December 31, 2011 we have deferred revenues from installations in the amount of 2.5million, 4.4 million and 6.3 million respectively.



In general, we recognize revenue from sales of equipment upon transfer of title, which is upon shipment of the equipment, only if testing at the
factory has proven that the equipment has met substantially all of the customers criteria and specifications



F-12



---

##### Table of Contents

The Company recognizes revenue from installation of equipment upon completion of installation at the
customers site. At the time of shipment, the Company defers that portion of the sales price related to the relative selling price of installation. The relative selling price of the installation process is measured based upon the per-hour
amounts charged by third parties for similar installation services. Installation is completed when testing at the customers site has proven that the equipment has met all of the customers criteria and specifications. The completion of
installation is signed-off by the customer (final acceptance).



We provide training and technical support service to customers. Revenue related to such services is recognized when the service is rendered. Revenue from the sale of spare parts and materials is recognized when
transfer of title took place, in general upon shipment of the goods. Freight charges billed to customers are recognized as revenue, the related costs are recognized as cost of sales. Revenues are recognized excluding the taxes levied on revenues.



Cost of sales



Cost of sales comprise direct costs such as labor, materials, cost of
warranty, depreciation, shipping and handling costs and related overhead costs. Cost of sales also includes third party commission, depreciation expenses of evaluation tools at customers, royalty payments and costs relating to prototype and
experimental products, which the Company may subsequently sell to customers. Costs of warranty include the cost of labor, material and related overhead necessary to repair a product during the warranty period.



Warranty



We provide maintenance on our systems during the warranty period,
usually one to two years. Costs of warranty include the cost of labor, material and related overhead necessary to repair a product during the warranty period. We accrue for the estimated cost of the warranty on products shipped in a provision for
warranty, upon recognition of the sale of the product. The costs are estimated based on actual historical expenses incurred and on estimated future expenses related to current sales, and are updated periodically.



Research and development costs



Research and development costs are expensed as incurred. Costs, which
relate to prototype and experimental models and 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. The research and development expenses are presented net of the development credits.



Share-based compensation expenses



The cost relating to employee stock options (compensation expense) are recognized based upon the grant date fair value of the stock options. The
fair value at grant date is estimated using a Black-Scholes option valuation model. This model requires the use of assumptions including expected stock price volatility, the estimated life of each award and the estimated dividend yield.



The grant date fair value of the stock options is expensed on a
straight-line basis over the vesting period, based on the Companys estimate of stock options that will eventually vest. The impact of the true up of the estimates is recognized in the consolidated statement of operations in the period in which
the revision is determined.



For further information on
ASMIs employee stock option plans reference is made to Note 20.



Restructuring costs



Restructuring expenses are recognized for exit or disposal activities when the liability arising from restructuring plans is incurred. Reference is made to Note 25. Distinction is made in one-time employee
termination expenses, contract termination expenses and other associated expenses. For the accounting on the distinguished elements of restructuring expenses we apply to the policy as mentioned below. The expenses have been charged to
restructuring expenses.



One-time termination
expenses represent the payments provided to employees that have become redundant and are terminated under the terms and conditions of a restructuring plan. A restructuring plan exists at the date the plan meets all of the following criteria and has
been communicated to employees:



| |  |  | Management commits to the plan.
| | - |  | -------------------------------



| |  |  | The plan identifies the number of employees that become redundant and the expected completion date.
| | - |  | ---------------------------------------------------------------------------------------------------



F-13



---

##### Table of Contents

| |  |  | The plan sets out the terms and conditions of the arrangement in sufficient detail to enable employees to determine the type and amount of benefits they will
receive.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------



The timing of the recognition and
measurement of a liability for one-time termination expenses depends on whether employees will be retained to render service beyond a minimum retention period.



Contract termination expenses are related to the termination of an operating lease or another contract. These expenses are distinguished in:



| |  |  | Expenses related to the termination of the contract before the end of its term. These expenses are recognized when the contract is terminated .The liability is
measured at its fair value in accordance with the contract terms.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expenses related to contracts that will last for its remaining term without economic benefit to the entity. This is the case when a lease contract for premises
is not terminated while the premises are not (completely) in use anymore. The liability is accrued for at the cease-use date, the date the company determined that it would no longer occupy the premises, which is conveyed to it under the contractual
operating lease. The liability is measured at its fair value in accordance with the contract terms.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Other costs related to restructuring include costs to consolidate or close facilities and relocate employees. A liability for other expenses related
to a restructuring such as transition costs is recognized and measured in the period in which the liability is incurred. The costs incurred are directly related to the restructuring activity. The definition of exit costs excludes expected future
operating losses.



Income taxes



The Company recognizes 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 carry forwards. 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 Consolidated Statement of Operations in the period in which the enacted rate
changes. Deferred tax assets are reduced through 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.



On January 1, 2007 the Company adopted Interpretation 48,
Accounting for Uncertainty in Income Taxes (ASC 740). ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements in accordance with Statement of Financial
Accounting Standard ASC 740, Accounting for Income Taxes. ASC 740 prescribes a two-step approach for recognizing and measuring tax positions taken or expected to be taken in a tax return. Prior to recognizing the benefit of a tax
position in the financial statements, the tax position must be more-likely-than-not of being sustained based solely on its technical merits. Once this recognition threshold has been met, tax positions are recognized at the largest amount that is
more-likely-than-not to be sustained. ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition.



Pension plans and similar commitments



The Company has retirement plans covering substantially all employees.
The principal plans are defined contribution plans, except for the plans of the Companys operations in the Netherlands, Germany and Japan. The Companys employees in the Netherlands participate in a multi-employer plan. Payment to defined
contribution plans and the multi-employer plan are recognized as an expense in the Consolidated Statement of Operations as they fall due.



The Companys employees in Germany and Japan participate in a defined benefit plan. Pension costs in respect of these defined benefit plans are
determined using the projected unit credit method. These costs primarily represent the increase in the actuarial present value of the obligation for pension benefits based on employee service during the year and the interest on this obligation in
respect of employee service in previous years, net of the expected return on plan assets.



For the defined benefit plan in Japan actuarial gains and losses are recognized in income, spread over the average remaining service lives of employees, using the corridor approach. In accordance with ASC

715, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans the Company



F-14



---

##### Table of Contents

recognizes in its Consolidated Balance Sheet an asset or a liability for the plans overfunded status or underfunded status respectively. For the defined benefit plan in Germany regarding
our AS business the unfunded status is recognized as a liability. Actuarial gains and losses are recognized in other comprehensive income when incurred. Reference is made to Note 20.



Commitments and contingencies



The Company has various contractual obligations, some of which are
required to be recorded as liabilities in the Companys consolidated financial statements, including long- and short-term debt. Others, namely operating lease commitments, purchase commitments and commitments for capital expenditure, are
generally not required to be recognized as liabilities on the Companys balance sheet but are required to be disclosed. Reference is made to Note 21.



Comprehensive income



Comprehensive income consists of net earnings (loss) and other comprehensive income. Other comprehensive income includes gains and losses that are
not included in net earnings, but are recorded directly in Shareholders Equity.



New accounting pronouncements



In September 2009, the EITF reached final consensus on ASU 2009-13, Revenue Arrangements with Multiple Deliverables. ASU 2009-13 amends the current guidance on arrangements with multiple deliverables
(ASC 605-25) to (1) eliminate the separation criterion that requires entities to establish objective and reliable evidence of fair value for undelivered elements, (2) establish a selling price hierarchy to help entities allocate
arrangement consideration to the separate units of account (i.e. separate elements of the sales agreement), (3) require the relative selling price allocation method for all arrangements (i.e., eliminate the residual method), and
(4) significantly expand required disclosures. The final consensus is effective for financial years beginning after June 15, 2010. The adoption of ASU 2009-13 in 2011, did not have a material impact on the Companys consolidated
financial statements.



In September 2009, the EITF reached
final consensus on ASU 2009-14, Certain Revenue Arrangements that include Software elements. ASU 2009-14 amends the scoping guidance for software arrangements (ASC 985-605) to exclude tangible products that contain software elements and non-software
elements that function together to interdependently deliver the products essential functionality. ASU 2009-14 also provides considerations and examples for entities applying this guidance. This issue will be effective prospectively for new or
materially modified agreements entered into in financial years beginning on or after June 15, 2010. The adoption of ASU 2009-14 in 2011, did not have a material impact on the Companys consolidated financial statements.



In January 2010, the EITF reached final consensus on ASU 2010-06,
Improving Disclosures about Fair Value Measurements. This ASU amends ASC 820 to add new requirements for disclosures about transfers into and out of Levels 1 and 2 and separate disclosures about purchases, sales issuances and settlements
relating to Level 3 measurements. The ASU also clarifies existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair value. The ASU is effective for annual reporting periods
beginning after December 15, 2009. Level 3 related amendments are effective for annual periods beginning after December 15, 2010. The adoption of the ASU did not have any impact on the Companys consolidated financial statements but
resulted in some additional disclosures.



In December 2010,
the FASB amended its existing guidance for goodwill and other intangible assets. This authoritative guidance (ASU 2010-28) modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those
reporting units, an entity is required to perform Step 2 of the goodwill impairment test if there are qualitative factors indicating that it is more likely than not that a goodwill impairment exists. The qualitative factors are consistent with the
existing guidance which requires goodwill of a reporting unit to be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying
amount. This authoritative guidance effective for annual periods beginning after December 15, 2010. The implementation of this authoritative guidance did not have any impact on ASMIs financial position or results of operations.



In December 2010, the FASB issued authoritative guidance on
business combinations (ASU 2010-29). This authoritative guidance requires a public entity that presents comparative financial statements to disclose the revenue and earnings of the combined entity as though the business combinations that

occurred during the current year had occurred as of the beginning of the prior annual reporting period. In



F-15



---

##### Table of Contents

addition, this authoritative guidance expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly
attributable to the business combination included in the reported pro forma revenue and earnings. This authoritative guidance is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after December 15, 2010. ASMI adopted this authoritative guidance in its reporting on the SEAS acquisition (see note 3).



In June 2011, the FASB issued authoritative guidance on the
presentation of comprehensive income (ASU 2011-05) to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of
comprehensive income or in two separate but consecutive statements. This authoritative guidance eliminates the option to present the components of other comprehensive income as part of the statement of equity. This guidance is effective for ASMI for
the year 2012, with early adoption permitted, and should be applied retrospectively. The implementation of this authoritative guidance will not change the presentation of comprehensive Income.



In May 2011, the FASB issued ASU 2011-04 Fair Value Measurement (Topic 820) to provide a consistent
definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. This authoritative guidance limits the highest-and-best-use measure to
nonfinancial assets, permits certain financial assets and liabilities with offsetting positions in market or counterparty credit risks to be measured at a net basis, and provides guidance on the applicability of premiums and discounts. This
authoritative guidance also expands the disclosures on Level 3 inputs by requiring quantitative disclosure of the unobservable inputs and assumptions, as well as description of the valuation processes and the sensitivity of the fair value to changes
in unobservable inputs. The new guidance will be effective for ASMI in 2012. The implementation of this authoritative guidance is not expected to have a material impact on ASMIs financial position or results of operations.



In September 2011, the FASB issued ASU No. 2011-08,
Intangibles-Goodwill and Other (Topic 350). The amendments in this ASU will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step Quantitative goodwill impairment test. Under
these amendments, an entity would not be required to calculate the fair value of a reporting unit unless the entity determines based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount.
The ASU is effective for annual periods beginning after September 15, 2011. Early adoption is permitted. The ASU 2011-08 will not have any effect on ASMIs consolidated financial statements.



In September 2011, the FASB issued ASU 2011-09, 
Compensation-retirement benefits-multiemployer plans (subtopic 715-80). The amendments in this ASU require additional disclosure about an employers participation in a multiemployer plan. The ASU is effective for annual periods ending
after December 15, 2011. We implemented this ASU in 2011 and refer to note 20 for further information. The implementation of this ASU resulted in a limited additional disclosure and had no impact on ASMIs financial position or results of
operations.



F-16



---

##### Table of Contents

2- List of Significant Subsidiaries



|                                                             |  |                                                  |  |                         |        |   |  |  |        |  
|------------------------------------------------------------ |  | ------------------------------------------------ |  | ----------------------- | ------ | - |  |  | ------ | -
|Name                                                         |  | Location                                         |  | % OwnershipDecember 31, |       
|                                                             |  | 2010                                             |  |                         | 2011   |  
|ASM Europe B.V.1                                             |  | Almere, the Netherlands                          |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM United Kingdom Sales B.V.1                               |  | Almere, the Netherlands                          |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM Germany Sales B.V.1                                      |  | Almere, the Netherlands                          |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM Pacific Holding B.V.3                                    |  | Almere, the Netherlands                          |  |                         | 100.00 | % |  |  | 100.00 | %
|Advanced Semiconductor Materials (Netherlands Antilles) N.V. |  | Willemstad, Curacao, NetherlandsAntilles         |  |                         | 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                                        |  | Helsinki, Finland                                |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM Services and Support Ireland Ltd.                        |  | Dublin, Ireland                                  |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM Services and Support Israel Ltd                          |  | Tel Aviv, Israel                                 |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM America, Inc.                                            |  | Phoenix, Arizona, United States                  |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM Japan K.K.                                               |  | Tokyo, Japan                                     |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM Wafer Process Equipment Ltd.                             |  | Quarry Bay, Hong Kong, PeoplesRepublic of China |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM China Trading 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, Taiwan                                 |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM Front-End Sales & Services Taiwan Co., Ltd.              |  | Hsin-Chu, Taiwan                                 |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM Front-End Manufacturing Singapore Pte Ltd.               |  | Singapore                                        |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM NuTool, Inc.                                             |  | Phoenix, Arizona, United States                  |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM Genitech Korea Ltd.                                      |  | Cheonan, South Korea                             |  |                         | 100.00 | % |  |  | 100.00 | %
|ASM Pacific Technology Ltd.                                  |  | Kwai Chung, Hong Kong, PeoplesRepublic of China |  |                         | 52.36  | % |  |  | 52.17  | %
|ASM Assembly Automation Ltd.2                                |  | Kwai Chung, Hong Kong, PeoplesRepublic of China |  |                         | 52.36  | % |  |  | 52.17  | %
|ASM Assembly Materials Ltd.2                                 |  | Kwai Chung, Hong Kong, PeoplesRepublic of China |  |                         | 52.36  | % |  |  | 52.17  | %
|ASM Technology Singapore Pte Ltd.2                           |  | Singapore                                        |  |                         | 52.36  | % |  |  | 52.17  | %
|ASM Technology (M) Sdn. Bhd.2                                |  | Johor Bahru, Malaysia                            |  |                         | 52.36  | % |  |  | 52.17  | %
|ASM Semiconductor Materials (Shenzhen) Co. Ltd.2             |  | Shenzhen, Peoples Republic ofChina              |  |                         | 52.36  | % |  |  | 52.17  | %
|Edgeward Development Ltd.2                                   |  | Guernsey, Channel Islands                        |  |                         | 52.36  | % |  |  | 52.17  | %
|Shenzhen ASM Micro Electronic Technology Co. Ltd.2           |  | Shenzhen, Peoples Republic ofChina              |  |                         | 52.36  | % |  |  | 52.17  | %
|ASM Assembly Systems Management GmbH.4                       |  | Munich, Germany                                  |  |                         | n/a    |   |  |  | 52.17  | %
|ASM Assembly Systems Management GmbH &C o K G4               |  | Munich, Germany                                  |  |                         | n/a    |   |  |  | 52.17  | %
|ASM Assembly Systems
Ltd4                                    |  | Shanghai, Peoples Republic of China             |  |                         | n/a    |   |  |  | 52.17  | %
|ASM Assembly Systems
Ltd4                                    |  | Manchester, United Kingdom                       |  |                         | n/a    |   |  |  | 52.17  | %
|ASM Assembly Systems
SAS4                                    |  | Bussy Saint Georges, France                      |  |                         | n/a    |   |  |  | 52.17  | %
|ASM (Assembly Systems) GmbH4                                 |  | Vienna, Austria                                  |  |                         | n/a    |   |  |  | 52.17  | %
|ASM (Assembly Systems) GmbH & C o K G4                       |  | Vienna, Austria                                  |  |                         | n/a    |   |  |  | 52.17  | %
|ASM Assembly Systems,
LLC4                                   |  | Suwanee, United States                           |  |                         | n/a    |   |  |  | 52.17  | %
|ASM Assembly Systems S. de R.L. de C. V.4                    |  | Jalisco, Mexico                                  |  |                         | n/a    |   |  |  | 52.17  | %
|ASM Assembly Systems Pte. Ltd.4                              |  | Singapore                                        |  |                         | n/a    |   |  |  | 52.17  | %
|ASM Assembly Systems AB.4                                    |  | Sollentuna, Sweden                               |  |                         | n/a    |   |  |  | 52.17  | %
|ASM Assembly Systems S.r.l.4                                 |  | Milan, Italy                                     |  |                         | n/a    |   |  |  | 52.17  | %
|ASM Sistemas para Montagem de Componentes Eletrônicos Ltda4  |  | São Paulo, Brazil                                |  |                         | n/a    |   |  |  | 52.17  | %



|(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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | 100% subsidiaries of ASM Pacific Technology Ltd.
|--- | ------------------------------------------------

|(3) | Established in 2008, ASM Pacific Holding B.V. is holding 52.17% of the shares in ASM Pacific Technology Ltd.
|--- | ------------------------------------------------------------------------------------------------------------

|(4) | 100% subsidiaries of ASM Pacific Technology Ltd., Acquired January 7, 2011.
|--- | ---------------------------------------------------------------------------



F-17



---

##### Table of Contents

The accounts of the above mentioned entities and of certain insignificant subsidiaries not mentioned
above have been consolidated in the Consolidated Financial Statements.



3- Acquisition



On January 7, 2011 ASMPT acquired the entire (voting) equity interest of SEAS Entities for a cash consideration of 36.5 million from Siemens Aktiengesellschaft. The principal activities of the SEAS Entities are development, production, sale and service
of surface mount technology placement machines. We consider that the surface mount technology (SMT) industry is a natural field of expansion for ASMPT and an area to achieve significant synergies given it has similar engineering,
technical and production process characteristics compared to the semiconductor equipment industry.



The headquarter of SEAS is located in Munich, Germany with production sites in Germany and Singapore. It also has marketing, sales and service offices in China, Unites States of America (USA), Austria,
United Kingdom, France, Sweden, Italy, Mexico and Brazil.



Apart from the cash consideration paid, ASMPT entered into certain financial commitments to the ASM AS Entities and Siemens AG pursuant to the
Master Sale and Purchase Agreement of the Acquisition entered into between Siemens AG and the Company (the MSP Agreement) which are summarized as set out below.



ASMPT undertook to pay an equity amount of 20.0 million as a capital injection to increase ASM AS KGs registered limited partnership interest, and to grant ASM AS KG a
revolving loan facility of up to 20.0 million for a period of at least three years from the completion of the acquisition subject to
the terms and conditions as set out in the MSP Agreement (the Loan Commitment). ASMPT shall not alter, rescind, rewind or in any other way contradict the letter of support granted to ASM AS KG up to an amount of 120.0 million valid as for a duration of six years following the completion of the acquisition. The letter of support is to procure that
ASM AS KG will for a period of six years after the completion of the acquisition be in position to fulfill its obligations towards its creditors when the obligations become due. ASMPT undertook to procure that ASM AS KG will not reduce or decrease
the registered limited partnership interest of ASM AS KG for a period of three years following the completion of the acquisition.



Further, ASMPT undertook to Siemens AG that for a period of three years from date of the completion of the acquisition that the ASMPT would not
directly or indirectly, (i) make, resolve, initiate, enable or accept any withdrawals from ASM AS KG or any of its partial or entire successors conducting the business or parts thereof (the Sustained Business), (ii) make,
resolve on, initiate, enable or accept dividend payments or loan repayments by the Sustained Business, (iii) encumber, induce or impose the encumbrance of any assets of ASM AS KG or any of its successors other than in the ordinary course for
the regular operative business of ASM AS KG, (iv) accept other non-arms length advantages from the Sustained Business, or (v) change, alter, rescind, rewind or in any other way contradict the equity commitment and loan commitment as
set out in the MSP Agreement; (vi) impose transaction or management fees on the target companies; (vii)enter into any consultancy agreement in excess of 100 thousand ; enter into any agreement or transaction which may result in a partial or entire change of the shareholding in the target companies or in the transfer of any asset relevant for the
business from the target companies.



In addition, ASMPT
undertook to Siemens AG that certain employment protection clauses of ASM AS KG as included in the MSP Agreement, including the maintenance of existing site in Munich, Germany and Munich as the headquarters of the group comprising principally the
ASM AS Entities, and compliance with certain collective labor agreements, for a period of 3 years after closing date. ASMPT also undertook for a period of 3 years after closing date not to lay off any employees of SEAS KG for operational reason.



ASMPT also undertook to pay Siemens AG liquidated damages
in the amount up to 20.0 million if ASMPT does not comply with its obligations in respect of the Sustained Business and employment
protection as set out in the MSP Agreement and is not able to cure such non-compliance within a reasonable period of time. ASMPT agreed to provide Siemens AG with a bank guarantee which shall secure the obligations of ASMPT as set out above in an
amount of not less than 20.0 million. The guarantee is to cover a period of four years and the aggregate expense to ASMPT would be 600,000 which represents part of the acquisition cost and is regarded as part of the consideration for the acquisition.



F-18



---

##### Table of Contents

The following table summarizes the total purchase consideration and the identified assets and
liabilities that are separately recognized in the purchase price allocation.



|                              |  |                                                               |         |  |                         |  |        |           |  |  |         |  
|----------------------------- |  | ------------------------------------------------------------- | ------- |  | ----------------------- |  | ------ | --------- |  |  | ------- | -
|                              |  | Carrying value of net assetsacquired (excludingacquired cash) |         |  | Purchasepriceallocation |  |        | Fairvalue | 
|Inventories                   |  |                                                               | 91,812  |  |                         |  | 11,529 |           |  |  | 103,341 |  
|Trade and other receivables   |  |                                                               | 132,418 |  |                         |  |       |           |  |  | 132,418 |  
|                              |  |                                                               |         |  |                         |  |        |           |  |  |         |  
|Current assets                |  |                                                               | 224,230 |  |                         |  | 11,529 |           |  |  | 235,759 |  
|Property, plant and equipment |  |                                                               | 13,077  |  |                         |  |        |           |  |  | 13,077  |  
|Intangible assets             |  |                                                               | 1,542   |  |                         |  | 3,520  |           |  |  | 5,062   |  
|Other non-current assets      |  |                                                               | 494     |  |                         |  |       |           |  |  | 494     |  
|                              |  |                                                               |         |  |                         |  |        |           |  |  |         |  
|Non-current assets            |  |                                                               | 15,113  |  |                         |  | 3,520  |           |  |  | 18,633  |  
|                              |  |                                                               |         |  |                         |  |        |           |  |  |         |  
|Total Assets                  |  |                                                               | 239,343 |  |                         |  | 15,049 |           |  |  | 254,392 |  
|                              |  |                                                               |         |  |                         |  |        |           |  |  |         |  
|Trade and other payables      |  |                                                               | 151,624 |  |                         |  |       |           |  |  | 151,624 |  
|Short-term debt               |  |                                                               | 6,738   |  |                         |  |       |           |  |  | 6,738   |  
|Deferred tax liabilities      |  |                                                               | 16,199  |  |                         |  |       |           |  |  | 16,199  |  
|                              |  |                                                               |         |  |                         |  |        |           |  |  |         |  
|Current liabilities           |  |                                                               | 174,561 |  |                         |  |       |           |  |  | 174,561 |  
|Deferred tax liabilities      |  |                                                               | 4,428   |  |                         |  |       |           |  |  | 4,428   |  
|Other non-current liabilities |  |                                                               | 10,699  |  |                         |  |       |           |  |  | 10,699  |  
|                              |  |                                                               |         |  |                         |  |        |           |  |  |         |  
|Non-current liabilities       |  |                                                               | 15,127  |  |                         |  |       |           |  |  | 15,127  |  
|                              |  |                                                               |         |  |                         |  |        |           |  |  |         |  
|Total liabilities             |  |                                                               | 189,688 |  |                         |  |       |           |  |  | 189,688 |  
|                              |  |                                                               |         |  |                         |  |        |           |  |  |         |  
|Identified net assets         |  |                                                               | 49,655  |  |                         |  | 15,049 |           |  |  | 64,704  |  
|Cash acquired                 |  |                                                               |         |  |                         |  |        |           |  |  | 81,075  |  
|                              |  |                                                               |         |  |                         |  |        |           |  |  |         |  
|                              |  |                                                               |         |  |                         |  |        |           |  |  | 145,779 |  
|Total consideration           |  |                                                               |         |  |                         |  |        |           |  |  | (36,500 | )
|                              |  |                                                               |         |  |                         |  |        |           |  |  |         |  
|Gain bargain purchase         |  |                                                               |         |  |                         |  |        |           |  |  | 109,279 |  
|                              |  |                                                               |         |  |                         |  |        |           |  |  |         |  



The purchase price allocation resulted
in the valuation of acquired technology. Acquisition related costs have been excluded from the cost of acquisition and recognized as an expense in the year when incurred as within the general and administrative expenses line item in the
consolidated statement of operations. Cumulative acquisition related costs in respect of the acquisition amounted to 5.2 million of
which 0.8 million,
3.6 million and
0.7 million incurred in respectively 2009, 2010 and 2011.



The gain from a bargain purchase of 109,279 was recognized upon completion of the acquisition of the SEAS entities. The gain from a bargain purchase on acquisition was mainly
attributable to depressed market value of the acquired business because of years of losses due to challenging economic environment and the bad global economic environment during the period of negotiation of the acquisition.



Estimated future amortization expense associated with the intangible
assets acquired SEAS at December 31, 2011 is as follows:



|     |  |  |       | 
|---- |  |  | ----- | 
|2012 |  |  | 1,012 | 
|2013 |  |  | 1,012 | 
|2014 |  |  | 1,012 | 
|2015 |  |  | 1,012 | 



The following unaudited pro forma
summary presents information as if SEAS had been acquired as of January 1, 2009, the first day of the Companys 2009 fiscal year. In addition to an adjustment to amortization expense to reflect the value of intangibles recorded for this
acquisition. No adjustment was made to reduce historical interest income to reflect the Companys use of available cash in this acquisition. The proforma amounts do not reflect any benefits from economies that might be achieved from combining
the operations of the two companies.



F-19



---

##### Table of Contents

The pro forma information presented below (in thousands, except per share data) does not necessarily
reflect the actual results that would have occurred had the companies been combined during the periods presented, nor is it necessarily indicative of the future results of operations of the combined companies.



|                           |  |              |          |   |      |   |           | 
|-------------------------- |  | ------------ | -------- | - | ---- | - | --------- | 
|                           |  | December 31, |         
|                           |  | 2009         |          |   | 2010 |  
|Net sales                  |  |              | 808,042  |   |      |   | 1,571,357 | 
|Net income                 |  |              | (185,001 | ) |      |   | 271,240   | 
|Basic earnings per share   |  |             | (3.27    | ) |      |  | 2.40      | 
|Diluted earnings per share |  |             | (3.27    | ) |      |  | 2.33      | 



Since the acquisition date,
January 7, 2011, SEAS contributed 444 million to net sales and 53 million to result from operations as reported in the consolidated statement of operations.



4- Cash and Cash Equivalents



At December 31, 2011, cash and cash equivalents of the Companys subsidiaries ASMPT and ASM Japan amounted to 162,136 and 20,302
respectively, which are restricted to be used only in the operations of ASMPT and ASM Japan respectively. No further restrictions on usage of cash and cash equivalents exist. The carrying amount approximates their fair value.



5- Pledged bank deposit



Pursuant to the Master Sale and Purchase Agreement of the acquisition
(see note 3) entered into between ASMPT and Siemens Aktiengesellschaft , ASMPT provided a bank guarantee to Siemens AG upon completion of the acquisition for the purpose of securing certain obligations to an amount of 20 million. At 31 December 2011, a bank deposit amounting to 20 million is pledged for the purpose of securing the bank guarantee. The pledged bank deposit will be released on 7 January 2015.



The pledged bank deposit carried interest at market rates of 0.95% per annum.



6- Accounts receivable



The carrying amount of accounts receivable is as follows:



|                  |  |         |         |  |                  |  |        |                     |  |  |                      |  |  |                   |        |  |       |  |       |  |  |  |         | 
|----------------- |  | ------- | ------- |  | ---------------- |  | ------ | ------------------- |  |  | -------------------- |  |  | ----------------- | ------ |  | ----- |  | ----- |  |  |  | ------- | 
|                  |  | Current |         |  | Overdue< 30 days |  |        | Overdue31  60 days |  |  | Overdue61  120 days |  |  | Overdue> 120 days |        |  | Total | 
|December 31, 2010 |  |         | 213,059 |  |                  |  | 28,684 |                     |  |  | 15,814               |  |  |                   | 10,368 |  |       |  | 3,346 |  |  |  | 271,271 | 
|December 31, 2011 |  |         | 264,224 |  |                  |  | 31,529 |                     |  |  | 12,126               |  |  |                   | 13,579 |  |       |  | 9,433 |  |  |  | 330,891 | 



The changes in the allowance for
doubtful accounts receivable are as follows:



|                                                        |  |  |        |  
|------------------------------------------------------- |  |  | ------ | -
|Balance January 1, 2009                                 |  |  | (7,300 | )
|Charged to selling, general and administrative expenses |  |  | (2,812 | )
|Utilization                                             |  |  | 1,145  |  
|Foreign currency translation effect                     |  |  | (1     | )
|                                                        |  |  |        |  
|Balance December 31, 2009                               |  |  | (8,968 | )
|Charged to selling, general and administrative expenses |  |  | (461   | )
|Utilization                                             |  |  | 648    |  
|Foreign currency translation effect                     |  |  | (522   | )
|                                                        |  |  |        |  
|Balance December 31, 2010                               |  |  | (9,304 | )
|Charged to selling, general and administrative expenses |  |  | (356   | )
|Utilization                                             |  |  | 2,109  |  
|Foreign currency translation effect                     |  |  | (50    | )
|                                                        |  |  |        |  
|Balance December 31, 2011                               |  |  | (7,601 | )
|                                                        |  |  |        |  



The carrying amount of the accounts
receivable approximates their fair value.



F-20



---

##### Table of Contents

7- Inventories



Inventories consist of the following:



|                             |  |              |         |   |      |  |         |  
|---------------------------- |  | ------------ | ------- | - | ---- |  | ------- | -
|                             |  | December 31, |        
|                             |  | 2010         |         |   | 2011 | 
|Components and raw materials |  |              | 138,965 |   |      |  | 189,174 |  
|Work in process              |  |              | 128,728 |   |      |  | 175,564 |  
|Finished goods               |  |              | 28,165  |   |      |  | 70,918  |  
|                             |  |              |         |   |      |  |         |  
|Total inventories, gross     |  |              | 295,857 |   |      |  | 435,656 |  
|Allowance for obsolescence   |  |              | (41,301 | ) |      |  | (58,989 | )
|                             |  |              |         |   |      |  |         |  
|Total inventories, net       |  |              | 254,557 |   |      |  | 376,667 |  
|                             |  |              |         |   |      |  |         |  



The changes in the allowance for
obsolescence are as follows:



|                                    |  |  |         |  
|----------------------------------- |  |  | ------- | -
|Balance January 1, 2009             |  |  | (32,615 | )
|Charged to cost of sales            |  |  | (27,236 | )
|Utilization                         |  |  | 11,818  |  
|Foreign currency translation effect |  |  | 1,094   |  
|                                    |  |  |         |  
|Balance December 31, 2009           |  |  | (46,939 | )
|Charged to cost of sales            |  |  | (3,248  | )
|Utilization                         |  |  | 14,628  |  
|Foreign currency translation effect |  |  | (5,742  | )
|                                    |  |  |         |  
|Balance December 31, 2010           |  |  | (41,301 | )
|Charged to cost of sales            |  |  | (28,122 | )
|Utilization                         |  |  | 12,526  |  
|Foreign currency translation effect |  |  | (2,092  | )
|                                    |  |  |         |  
|Balance December 31, 2011           |  |  | (58,989 | )
|                                    |  |  |         |  



F-21



---

##### Table of Contents

8- Other Intangible Assets



Other intangible assets include purchased technology from third
parties and software developed or purchased (including licences) for internal use. The changes in the amount of other intangible assets are as follows:



|                                    |  |          |        |   |                                              |  |        |       |  |  |        |  
|----------------------------------- |  | -------- | ------ | - | -------------------------------------------- |  | ------ | ----- |  |  | ------ | -
|                                    |  | Software |        |   | Purchasedtechnologyand otherintangibleassets |  |        | Total | 
|At cost:                            |  |          |        |   |                                              |  |        |       |  |  |        |  
|Balance January 1, 2010             |  |          | 13,324 |   |                                              |  | 2,920  |       |  |  | 16,244 |  
|Additions                           |  |          | 624    |   |                                              |  |       |       |  |  | 624    |  
|Reclassification                    |  |          | 131    |   |                                              |  |       |       |  |  | 131    |  
|Foreign currency translation effect |  |          | 354    |   |                                              |  | 272    |       |  |  | 626    |  
|                                    |  |          |        |   |                                              |  |        |       |  |  |        |  
|Balance December 31, 2010           |  |          | 14,433 |   |                                              |  | 3,192  |       |  |  | 17,625 |  
|Additions                           |  |          | 3,417  |   |                                              |  | 3,682  |       |  |  | 7,099  |  
|Acquisitions                        |  |          | 44     |   |                                              |  | 4,782  |       |  |  | 4,826  |  
|Disposals                           |  |          | (104   | ) |                                              |  | (47    | )     |  |  | (151   | )
|Foreign currency translation effect |  |          | 252    |   |                                              |  | 603    |       |  |  | 855    |  
|                                    |  |          |        |   |                                              |  |        |       |  |  |        |  
|Balance December 31, 2011           |  |          | 18,042 |   |                                              |  | 12,212 |       |  |  | 30,254 |  
|                                    |  |          |        |   |                                              |  |        |       |  |  |        |  
|Accumulated amortization:           |  |          |        |   |                                              |  |        |       |  |  |        |  
|Balance January 1, 2010             |  |          | 4,887  |   |                                              |  | 2,420  |       |  |  | 7,307  |  
|Amortization for the year           |  |          | 2,376  |   |                                              |  | 358    |       |  |  | 2,735  |  
|Reclassification                    |  |          | 240    |   |                                              |  |       |       |  |  | 240    |  
|Foreign currency translation effect |  |          | 305    |   |                                              |  | 233    |       |  |  | 538    |  
|                                    |  |          |        |   |                                              |  |        |       |  |  |        |  
|Balance December 31, 2010           |  |          | 7,809  |   |                                              |  | 3,011  |       |  |  | 10,820 |  
|Amortization for the year           |  |          | 2,901  |   |                                              |  | 1,570  |       |  |  | 4,471  |  
|Disposals                           |  |          | (104   | ) |                                              |  | (47    | )     |  |  | (151   | )
|Foreign currency translation effect |  |          | 179    |   |                                              |  | 159    |       |  |  | 338    |  
|                                    |  |          |        |   |                                              |  |        |       |  |  |        |  
|Balance December 31, 2011           |  |          | 10,785 |   |                                              |  | 4,693  |       |  |  | 15,478 |  
|                                    |  |          |        |   |                                              |  |        |       |  |  |        |  
|                                    |  |          |       
|Other intangible assets, net:       |  |          |        |   |                                              |  |        |       |  |  |        |  
|December 31, 2010                   |  |          | 6,624  |   |                                              |  | 181    |       |  |  | 6,804  |  
|December 31, 2011                   |  |          | 7,257  |   |                                              |  | 7,519  |       |  |  | 14,776 |  
|                                    |  |          |        |   |                                              |  |        |       |  |  |        |  



Other intangible assets are amortized
over useful lives of 3 to 7 years. Estimated amortization expenses relating to other intangible assets are as follows:



|     |  |  |        | 
|---- |  |  | ------ | 
|2012 |  |  | 5,054  | 
|2013 |  |  | 4,279  | 
|2014 |  |  | 2,784  | 
|2015 |  |  | 1,640  | 
|2016 |  |  | 860    | 
|2017 |  |  | 159    | 
|     |  |  |        | 
|     |  |  | 14,776 | 
|     |  |  |        | 



9- Goodwill



The changes in the carrying amount of goodwill are as follows:



|                                    |  |           |        |  |          |  |        |       |  |  |        | 
|----------------------------------- |  | --------- | ------ |  | -------- |  | ------ | ----- |  |  | ------ | 
|                                    |  | Front-end |        |  | Back-end |  |        | Total | 
|Balance January 1, 2010             |  |           | 10,395 |  |          |  | 36,828 |       |  |  | 47,223 | 
|Foreign currency translation effect |  |           | 798    |  |          |  | 2,794  |       |  |  | 3,592  | 
|                                    |  |           |        |  |          |  |        |       |  |  |        | 
|Balance December 31, 2010           |  |           | 11,193 |  |          |  | 39,622 |       |  |  | 50,815 | 
|Foreign currency translation effect |  |           |       |  |          |  | 1,316  |       |  |  | 1,316  | 
|                                    |  |           |        |  |          |  |        |       |  |  |        | 
|Balance December 31, 2011           |  |           | 11,193 |  |          |  | 40,938 |       |  |  | 52,131 | 
|                                    |  |           |        |  |          |  |        |       |  |  |        | 



F-22



---

##### Table of Contents

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



|                           |  |              |        |  |      |  |        | 
|-------------------------- |  | ------------ | ------ |  | ---- |  | ------ | 
|                           |  | December 31, |       
|                           |  | 2010         |        |  | 2011 | 
|Front-end segment:         |  |              |        |  |      |  |        | 
|ASM Microchemistry Oy      |  |              | 3,560  |  |      |  | 3,560  | 
|ASM Genitech Korea Ltd     |  |              | 7,633  |  |      |  | 7,633  | 
|                           |  |             
|Back-end segment:          |  |              |        |  |      |  |        | 
|ASM Pacific Technology Ltd |  |              | 39,622 |  |      |  | 40,938 | 
|                           |  |              |        |  |      |  |        | 
|Total                      |  |              | 50,815 |  |      |  | 52,131 | 
|                           |  |              |        |  |      |  |        | 



We perform an annual impairment test at
December 31 of each year or if events or changes in circumstances indicate that the carrying amount of goodwill exceeds its fair value. Our Front-end impairment test and the determination of the fair value is based on a discounted future cash
flow approach that uses our estimates of future revenues, driven by assumed market growth and estimated costs as well as appropriate discount rates. Our Back-end impairment test is based on the market value of the listed shares of ASMPT.



The material assumptions used for the fair value calculation of the
reporting unit are:



| |  |  | A discount rate of 20.5% (unchanged from 2010) representing the pre-tax weighted average cost of capital. This relative high rate is a consequence of the current
situation whereby certain production lines are in the early phase of the product lifecycle, hence reflecting a higher risk.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For Front- end external market segment data, historical data and strategic plans to estimate cash flow growth per product line have been used.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cash flow calculations are limited to five years of cash flow; after these five years perpetuity growth rates are set based on market maturity of the products.
For maturing product the perpetuity growth rates used are 1% or less and for enabling technology products the rate used is 3% or less.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For Back-end the market value of the listed shares of ASMPT on the Hong Kong Stock exchange has been used in our analysis.
| | - |  | --------------------------------------------------------------------------------------------------------------------------



These estimates are consistent with the plans and estimated costs we
use to manage the underlying business. Based on this analysis management believes that as per December 31, 2011 the fair value of the reporting units exceeded the carrying value.



F-23



---

##### Table of Contents

10- Property, Plant and Equipment



The changes in the amount of property, plant and equipment are as
follows:



|                                    |  |                                         |         |   |                                          |  |         |       |  |  |         |  
|----------------------------------- |  | --------------------------------------- | ------- | - | ---------------------------------------- |  | ------- | ----- |  |  | ------- | -
|                                    |  | Land,buildings andleaseholdimprovements |         |   | Machinery,equipment,furnitureandfixtures |  |         | Total | 
|At cost:                            |  |                                         |         |   |                                          |  |         |       |  |  |         |  
|Balance January 1, 2010             |  |                                         | 96,475  |   |                                          |  | 316,935 |       |  |  | 413,410 |  
|Capital expenditures                |  |                                         | 24,716  |   |                                          |  | 78,258  |       |  |  | 102,974 |  
|Retirements and sales               |  |                                         | (1,612  | ) |                                          |  | (18,787 | )     |  |  | (20,399 | )
|Reclassification                    |  |                                         | 74      |   |                                          |  | (206    | )     |  |  | (132    | )
|Foreign currency translation effect |  |                                         | 11,778  |   |                                          |  | 33,690  |       |  |  | 45,468  |  
|                                    |  |                                         |         |   |                                          |  |         |       |  |  |         |  
|Balance December 31, 2010           |  |                                         | 131,431 |   |                                          |  | 409,889 |       |  |  | 541,320 |  
|Capital expenditures                |  |                                         | 38,993  |   |                                          |  | 50,226  |       |  |  | 89,218  |  
|Acquisition                         |  |                                         | 276     |   |                                          |  | 11,249  |       |  |  | 11,525  |  
|Impairment                          |  |                                         | (1,416  | ) |                                          |  | (6,622  | )     |  |  | (8,038  | )
|Retirements and sales               |  |                                         | (9,361  | ) |                                          |  | (30,692 | )     |  |  | (40,053 | )
|Reclassification                    |  |                                         | (235    | ) |                                          |  | 235     |       |  |  |        |  
|Foreign currency translation effect |  |                                         | 8,186   |   |                                          |  | 20,666  |       |  |  | 28,852  |  
|                                    |  |                                         |         |   |                                          |  |         |       |  |  |         |  
|Balance December 31, 2011           |  |                                         | 167,874 |   |                                          |  | 454,950 |       |  |  | 622,824 |  
|                                    |  |                                         |        
|Accumulated depreciation:           |  |                                         |         |   |                                          |  |         |       |  |  |         |  
|Balance January 1, 2010             |  |                                         | 62,583  |   |                                          |  | 236,016 |       |  |  | 298,599 |  
|Depreciation for the year           |  |                                         | 7,092   |   |                                          |  | 23,538  |       |  |  | 30,630  |  
|Retirements and sales               |  |                                         | (1,607  | ) |                                          |  | (15,757 | )     |  |  | (17,364 | )
|Reclassification                    |  |                                         |        |   |                                          |  | (240    | )     |  |  | (240    | )
|Foreign currency translation effect |  |                                         | 6,147   |   |                                          |  | 25,609  |       |  |  | 31,756  |  
|                                    |  |                                         |         |   |                                          |  |         |       |  |  |         |  
|Balance December 31, 2010           |  |                                         | 74,216  |   |                                          |  | 269,167 |       |  |  | 343,383 |  
|Depreciation for the year           |  |                                         | 9,170   |   |                                          |  | 30,815  |       |  |  | 39,985  |  
|Retirements and sales               |  |                                         | (9,310  | ) |                                          |  | (26,920 | )     |  |  | (36,230 | )
|Foreign currency translation effect |  |                                         | 3,020   |   |                                          |  | 12,485  |       |  |  | 15,505  |  
|                                    |  |                                         |         |   |                                          |  |         |       |  |  |         |  
|Balance December 31, 2011           |  |                                         | 77,096  |   |                                          |  | 285,547 |       |  |  | 362,643 |  
|                                    |  |                                         |        
|Property, plant and equipment, net: |  |                                         |         |   |                                          |  |         |       |  |  |         |  
|December 31, 2010                   |  |                                         | 57,215  |   |                                          |  | 140,722 |       |  |  | 197,937 |  
|December 31, 2011                   |  |                                         | 90,778  |   |                                          |  | 169,403 |       |  |  | 260,180 |  



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



ASM Japan has pledged real estate with
a carrying value of 6,088 to secure loan facilities outstanding in Japan.



In 2011 the Company recorded an impairment charge of 8,038 related to machinery and equipment. The Company impaired certain items of property, plant and equipment related to the Back-end lead frame business. The impairment loss of 8,038 was recognized based on the recoverable amount of the relevant assets.



In 2009 the Company recorded impairment charges of 4,628 mainly related to machinery and equipment. The Company impaired certain demo tools which were as a result of the strategic reorientation determined end of life. Valuations of these assets are
classified as Level 3 in the fair value hierarchy since their fair values were determined based on unobservable inputs. The impairment charges were determined based on the difference between the assets estimated fair value and their carrying
amount.



In 2009 the decision was made to dispose certain
items of property, plant and equipment. These assets are reported as held for sale.



F-24



---

##### Table of Contents

11- Assets held for sale



The changes in the carrying value of assets held for sale are as
follows:



|                                    |  |       |       |  |                 |  |     |       |  |  |       | 
|----------------------------------- |  | ----- | ----- |  | --------------- |  | --- | ----- |  |  | ----- | 
|                                    |  | Japan |       |  | The Netherlands |  |     | Total | 
|Balance January 1, 2010             |  |       | 5,231 |  |                 |  | 277 |       |  |  | 5,508 | 
|Foreign currency translation effect |  |       | 839   |  |                 |  |    |       |  |  | 839   | 
|                                    |  |       |       |  |                 |  |     |       |  |  |       | 
|Balance December 31, 2010           |  |       | 6,070 |  |                 |  | 277 |       |  |  | 6,347 | 
|Foreign currency translation effect |  |       | 515   |  |                 |  |    |       |  |  | 515   | 
|                                    |  |       |       |  |                 |  |     |       |  |  |       | 
|Balance December 31, 2011           |  |       | 6,585 |  |                 |  | 277 |       |  |  | 6,862 | 
|                                    |  |       |       |  |                 |  |     |       |  |  |       | 



In 2009 the decision was made to
dispose certain items of property, plant and equipment. These assets represent a carrying value as per December 31, 2011 of 6,862.
The assets held for sale are located in Japan and The Netherlands. In Japan (Tama) a building that was used for research and development activities was ceased to be used in December 2009. The carrying value of 5.7 million is lower than the fair value less cost to sell. Also in Japan, a piece of land that was purchased to build a research and
development center has now been regarded as held for sale. The carrying value of 0.9 million is below the expected selling price.
The expected selling prices were determined, based on various inputs and considerations, including an appraisal from an outside firm performed during 2011. In the Netherlands the former ASMI head office located in Bilthoven has been regarded as held
for sale. The carrying value of 0.3 million is lower than the fair value less cost to sell. The expected selling prices were
determined, based on various inputs and considerations, including an appraisal from an outside firm performed during 2009. During 2011 both the Japanese and the Dutch properties were under the interest of the market, though the assets have not been
sold yet, the outside firms maintain the expected selling prices.



12-
Evaluation tools at customers



The changes in the
amount of evaluation tools are as follows:



|                                    |  |  |        |  
|----------------------------------- |  |  | ------ | -
|Balance January 1, 2010             |  |  | 11,282 |  
|Evaluation tools shipped            |  |  | 5,381  |  
|Depreciation                        |  |  | (2,477 | )
|Evaluation tools sold               |  |  | (8,526 | )
|Foreign currency translation effect |  |  | 984    |  
|                                    |  |  |        |  
|Balance December 31, 2010           |  |  | 6,644  |  
|Evaluation tools shipped            |  |  | 14,901 |  
|Depreciation                        |  |  | (2,518 | )
|Evaluation tools sold               |  |  | (7,830 | )
|Transfer from inventories           |  |  | 1,913  |  
|Foreign currency translation effect |  |  | 877    |  
|                                    |  |  |        |  
|Balance December 31, 2011           |  |  | 13,987 |  
|                                    |  |  |        |  
|Useful lives in years:              |  |  | 5      |  



Evaluation tools are systems delivered
to customers under evaluation agreements. Evaluation tools are recorded at cost and depreciated over their useful life (5 years). The depreciation period may be shorter, depending on circumstances. The depreciation expenses are reported as Cost of
sales.



13- Investments



The investment of
1,044 as per December 31, 2011 reflects the cost of the interest in Levitech B.V. Resulting from the management buy-out in 2009 of
the RTP business, ASM International N.V. obtained a 20% interest in Levitech B.V. During 2011 the capital of Levitech B.V was increased, ASMI participated in this capital increase maintaining a 20% interest.



F-25



---

##### Table of Contents

14- Notes Payable to Banks



Information on notes payable to banks is as follows:



|                                |  |              |       |  |      |  |        | 
|------------------------------- |  | ------------ | ----- |  | ---- |  | ------ | 
|                                |  | December 31, |      
|                                |  | 2010         |       |  | 2011 | 
|Short-term debt outstanding in: |  |              |       |  |      |  |        | 
|Japan                           |  |              | 7,130 |  |      |  | 7,734  | 
|Singapore                       |  |              | 1,167 |  |      |  |       | 
|ASMPT                           |  |              |      |  |      |  | 32,946 | 
|                                |  |              |       |  |      |  |        | 
|Total                           |  |              | 8,297 |  |      |  | 40,680 | 
|                                |  |              |       |  |      |  |        | 



Short-term debt outstanding in local
currencies is as follows (in thousands):



|                 |  |              |         |  |      |  |         | 
|---------------- |  | ------------ | ------- |  | ---- |  | ------- | 
|                 |  | December 31, |        
|                 |  | 2010         |         |  | 2011 | 
|Japanese yen     |  |              | 775,000 |  |      |  | 775,000 | 
|Singapore dollar |  |              | 2,000   |  |      |  |        | 
|Hong Kong dollar |  |              |        |  |      |  | 331,144 | 



Short-term debt outstanding in Japan in
the amount of 7,734 is collateralized by real estate with a carrying value of
9,525 of ASM Japan.



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 1.9% at December 31, 2011.



Total short-term lines of credit amounted to 289,528 at December 31, 2011. The amount outstanding at December 31, 2011 was
40,680 and the undrawn portion totaled  248,848. The undrawn portion includes the Companys standby revolving credit facility of
150,000 with a consortium of banks. The facility is available through July 31 2014. In the event all outstanding convertible bonds
due 6 November 2014 are converted, repaid or replaced prior to 30 June 2014, the maturity date will be 31 July 2015. Once the facility is used, this usage is secured by a portion of the Companys shareholding in ASMPT. The
undrawn portion further includes 92,262 for ASMPT, which amount is restricted to be used only in the operations of ASMPT. The undrawn
portion further includes 6,587 for ASM Japan, which amount is restricted to be used only in the operations of ASM Japan.



The credit facility of
150,000 bank includes two financial covenants: a minimum long-term committed capital and a total net debt/equity ratio. These financial
covenants are measured twice each year, at June 30 and December 31. The minimum level of long-term committed capital for the year ended December 31, 2011 was 320 million, the long-term committed capital as per that date was  810 million. Long-term
committed capital is defined as the consolidated total equity plus the nominal value of the Convertible bonds due 2014. The net debt/equity ratio should not exceed 2.0, whereby equity is defined as consolidate total equity. For the year ended
December 31, 2011 net cash was 30.4 million and total equity 660 million. The Company is in compliance with these financial covenants as of June 30, 2011 and as of December 31, 2011.



Short-term line of credits of ASM Japan of 1,747 include financial covenants, of which the most important covenants, measured at December 31 of each year are, no two loss making
years in a row and no annual loss in excess of a certain percentage of the equity of ASM Japan. ASM Japan is in compliance with these financial covenants as of December 31, 2011.



ASMI is guarantor with respect to a credit line of  14,321, with 7,734 outstanding, of ASM Japan. ASMI does not provide guarantees for borrowings
of ASMPT and there are no guarantees from ASMPT to secure indebtedness of ASMI. Under the rules of the Stock Exchange of Hong Kong, ASMPT is precluded from providing loans and advances other than trade receivables in the normal course of business,
to ASMI or its non ASMPT subsidiaries.



F-26



---

##### Table of Contents

15- Provision for Warranty



The changes in the amount of provision for warranty are as follows:



|                                    |  |  |         |  
|----------------------------------- |  |  | ------- | -
|Balance January 1, 2010             |  |  | 5,650   |  
|Charged to cost of sales            |  |  | 7,066   |  
|Deductions                          |  |  | (4,824  | )
|Foreign currency translation effect |  |  | 381     |  
|                                    |  |  |         |  
|Balance December 31, 2010           |  |  | 8,273   |  
|Charged to cost of sales            |  |  | 29,809  |  
|Acquisition SEAS                    |  |  | 33,733  |  
|Deductions                          |  |  | (24,822 | )
|Foreign currency translation effect |  |  | 2,519   |  
|                                    |  |  |         |  
|Balance December 31, 2011           |  |  | 49,512  |  
|Non-current portion                 |  |  | (6,828  | )
|                                    |  |  |         |  
|Current portion                     |  |  | 42,684  |  
|                                    |  |  |         |  



The increase of the deductions in 2011
is mainly caused by the newly acquired SEAS business.



Costs
of warranty include the cost of labor, material and related overhead necessary to repair a product during the warranty period. The warranty period is usually one to two years. The Company accrues for the estimated cost of the warranty on its
products shipped in the provision for warranty, upon recognition of the sale of the product. The costs are estimated based on actual historical expenses incurred and on estimated future expenses related to current sales, and are updated
periodically. Actual warranty costs are charged against the provision for warranty.



16- Accrued Expenses and Other



Accrued expenses and other consist of the following:



|                                                                   |  |              |         |  |      |  |         | 
|------------------------------------------------------------------ |  | ------------ | ------- |  | ---- |  | ------- | 
|                                                                   |  | December 31, |        
|                                                                   |  | 2010         |         |  | 2011 | 
|Advance payments from customers                                    |  |              | 28,272  |  |      |  | 29,621  | 
|Accrual for employee contract termination benefits                 |  |              | 2,065   |  |      |  |        | 
|Accrual for onerous contracts                                      |  |              | 1,449   |  |      |  | 446     | 
|Deferred revenue                                                   |  |              | 4,367   |  |      |  | 6,340   | 
|Accrual for salaries, wages and related taxes and expenses         |  |              | 47,060  |  |      |  | 60,039  | 
|Interest payable                                                   |  |              | 2,102   |  |      |  | 1,881   | 
|Payables arising from acquisition of property, plant and equipment |  |              | 18,251  |  |      |  | 20,509  | 
|Other                                                              |  |              | 13,835  |  |      |  | 34,054  | 
|                                                                   |  |              |         |  |      |  |         | 
|                                                                   |  |              | 117,401 |  |      |  | 152,890 | 
|                                                                   |  |              |         |  |      |  |         | 



The accrual for employee termination
benefits relates to the benefits payable to employees that have become redundant and are terminated under the terms and conditions of a restructuring plan. The accrual for onerous contracts relates to operating lease contracts for buildings for
which no economic benefits are expected. The accrual for onerous contracts is expected to be utilized by 2013.



17- Long-term Debt



Long-term debt consists of the following:



|                                 |  |              |         |   |      |  |        |  
|-------------------------------- |  | ------------ | ------- | - | ---- |  | ------ | -
|                                 |  | December 31, |        
|                                 |  | 2010         |         |   | 2011 | 
|Term loans:                      |  |              |         |   |      |  |        |  
|Japan, 1.2-2.0%, due 2012  2014 |  |              | 16,606  |   |      |  | 17,764 |  
|Singapore, 4.5%, due 2011        |  |              | 337     |   |      |  |       |  
|Mortgage loans:                  |  |              |         |   |      |  |        |  
|Japan, 2.1-2.2%, due 2012        |  |              | 2,898   |   |      |  | 1,746  |  
|Capital lease commitments:       |  |              |         |   |      |  |        |  
|Japan, 1.8%, due 2012            |  |              | 425     |   |      |  | 141    |  
|                                 |  |              |         |   |      |  |        |  
|                                 |  |              | 20,266  |   |      |  | 19,651 |  
|Current portion                  |  |              | (15,950 | ) |      |  | (4,332 | )
|                                 |  |              |         |   |      |  |        |  
|                                 |  |              | 4,316   |   |      |  | 15,319 |  
|                                 |  |              |         |   |      |  |        |  



F-27



---

##### Table of Contents

Long-term debt, including current portion, in local currencies is as follows (in thousands):



|                  |  |              |           |  |      |  |           | 
|----------------- |  | ------------ | --------- |  | ---- |  | --------- | 
|                  |  | December 31, |          
|                  |  | 2010         |           |  | 2011 | 
|Japanese yen      |  |              | 2,166,175 |  |      |  | 1,969,097 | 
|Singapore dollars |  |              | 578       |  |      |  |          | 



Aggregate annual principal repayments
for years subsequent to December 31, 2011 are:



|     |  |  |        | 
|---- |  |  | ------ | 
|2012 |  |  | 4,332  | 
|2013 |  |  | 349    | 
|2014 |  |  | 14,970 | 
|     |  |  |        | 
|     |  |  | 19,651 | 
|     |  |  |        | 



Long-term debt outstanding in Japan in
the amount of 15,120 is collateralized by real estate with a carrying value of
6,088 of ASM Japan.



Long-term debt of ASM Japan of
11,976 includes financial covenants, of which the most important covenants, measured at December 31 of each year are as follows:



| |  |  | no two loss making years in a row;
| | - |  | ----------------------------------



| |  |  | no annual loss in excess of a certain percentage of the equity of ASM Japan.
| | - |  | ----------------------------------------------------------------------------



ASM Japan is in compliance with these financial covenants as of December 31, 2011.



ASMI is guarantor with respect to 2,794 long-term debt outstanding of ASM Japan.



Capital lease commitments relate to commitments for equipment and machinery.



18- Convertible Subordinated Debt



As per 1 January 2009, ASMI applies ASC 815 Determining
Whether an Instrument (or Embedded Feature) Is Indexed to an Entitys Own Stock.



Our convertible bonds due 2011 and 2014, include a component that creates a financial liability to the Company and a component that grants an option to the holder of the convertible note to convert it into common
shares of the Company (conversion option). ASC 815 requires separate recognition of these components.



For the conversion options of the convertible bonds due 2011 the accounting was different from that for the conversion option of the convertible
bonds due 2014. As the convertible bonds due 2011 were denominated in USD and the ASM International common shares in which they can be converted to are denominated in Euro, these conversion options were recognized as a liability measured at fair
value. The conversion option was measured at fair value through the income statement, for 2011 this revaluation at fair value resulted in a loss of 4.4 million (2010 19.0 million). For the conversion options of the convertible bonds
due 2014 the fixedfor-fixed principle is met as both the debt instrument (the bond) and the Companys equity shares, in which they can be converted to, are denominated in the same currency (Euro). Based on this criterion the conversion
option qualifies as permanent equity.



The fair value of the
liability component is estimated using the prevailing market interest rate at the date of issue, for similar non-convertible debt. Subsequently, the liability is measured at amortized cost. The interest expense on the liability component is
calculated by applying the market interest rate for similar non-convertible debt at the date of issue to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the
convertible subordinated notes, thus creating a non-cash interest expense. For the financial year 2011 this accretion interest expense was
4,401 (2010; 6,010).



On December 31, 2010 we initiated a full redemption
for all of the outstanding principal balance of our 4.25% Convertible Subordinated notes due 2011, as per February 15, 2011. This proposal for redemption resulted in an almost full conversion of convertible notes into common shares. Until
conversion, the conversion option was valued at fair value resulting in a non-cash loss during 2011 of 4.4million.



F-28



---

##### Table of Contents

The changes in the outstanding amounts of convertible subordinated debt are as follows:



|                                                  |  |                                            |         |   |                                            |  |         |                                         |  |  |         |  
|------------------------------------------------- |  | ------------------------------------------ | ------- | - | ------------------------------------------ |  | ------- | --------------------------------------- |  |  | ------- | -
|                                                  |  | 5.25%convertiblesubordinatednotes, due2010 |         |   | 4.25%convertiblesubordinatednotes, due2011 |  |         | 6.50%convertibleunsecurednotes, due2014 | 
|Liability at redemption value at date of issuance |  |                                            | 79,267  |   |                                            |  | 111,682 |                                         |  |  | 150,000 |  
|Conversion component at date of issuance          |  |                                            | (13,653 | ) |                                            |  | (18,329 | )                                       |  |  | (23,601 | )
|                                                  |  |                                            |         |   |                                            |  |         |                                         |  |  |         |  
|Liability component at date of issuance           |  |                                            | 65,614  |   |                                            |  | 93,353  |                                         |  |  | 126,399 |  
|                                                  |  |                                            |         |   |                                            |  |         |                                         |  |  |         |  
|Balance January 1, 2010                           |  |                                            | 11,542  |   |                                            |  | 65,394  |                                         |  |  | 126,955 |  
|Conversion of notes                               |  |                                            | (12,677 | ) |                                            |  | (5      | )                                       |  |  |        |  
|Accrual of interest                               |  |                                            | 181     |   |                                            |  | 1,560   |                                         |  |  | 3,849   |  
|Repurchasing of notes                             |  |                                            |        |   |                                            |  | (38,276 | )                                       |  |  |        |  
|Foreign currency translation effect               |  |                                            | 954     |   |                                            |  | 3,765   |                                         |  |  |        |  
|                                                  |  |                                            |         |   |                                            |  |         |                                         |  |  |         |  
|Balance December 31, 2010                         |  |                                            |        |   |                                            |  | 32,439  |                                         |  |  | 130,804 |  
|Conversion of notes                               |  |                                            |        |   |                                            |  | (32,536 | )                                       |  |  |        |  
|Accrual of interest                               |  |                                            |        |   |                                            |  | 126     |                                         |  |  | 4,274   |  
|Foreign currency translation effect               |  |                                            |        |   |                                            |  | (29     | )                                       |  |  |        |  
|                                                  |  |                                            |         |   |                                            |  |         |                                         |  |  |         |  
|Balance December 31, 2011                         |  |                                            |        |   |                                            |  |        |                                         |  |  | 135,078 |  
|                                                  |  |                                            |         |   |                                            |  |         |                                         |  |  |         |  
|Reported as non-current liabilities               |  |                                            |        |   |                                            |  |        |                                         |  |  | 135,078 |  
|Reported as current liabilities                   |  |                                            |        |   |                                            |  |        |                                         |  |  |        |  



|                      |  |                                            |   |  |                                            |  |        |                                            |  |  |         | 
|--------------------- |  | ------------------------------------------ | - |  | ------------------------------------------ |  | ------ | ------------------------------------------ |  |  | ------- | 
|                      |  | 5.25%convertiblesubordinatednotes, due2010 |   |  | 4.25%convertiblesubordinatednotes, due2011 |  |        | 6.50%convertiblesubordinatednotes, due2014 | 
|Nominal value in US$: |  |                                            |   |  |                                            |  |        |                                            |  |  |         | 
|December 31, 2010     |  |                                            |  |  |                                            |  | 44,909 |                                            |  |  | n/a     | 
|December 31, 2011     |  |                                            |  |  |                                            |  |       |                                            |  |  | n/a     | 
|                      |  |                                            |   |  |                                            |  |        |                                            |  |  |         | 
|Nominal value in
:   |  |                                            |   |  |                                            |  |        |                                            |  |  |         | 
|December 31, 2010     |  |                                            |  |  |                                            |  | 33,609 |                                            |  |  | 150,000 | 
|December 31, 2011     |  |                                            |  |  |                                            |  |       |                                            |  |  | 150,000 | 
|                      |  |                                            |   |  |                                            |  |        |                                            |  |  |         | 



5.25% convertible subordinated notes, due 2010



In May 2003, ASMI issued US$ 90.0 million in
principal amount of 5.25% convertible subordinated notes due in May 2010 in a private offering. Interest on the notes was payable on May 15 and November 15 of each year. The notes were subordinated in right of payment to all of the
Companys existing and future senior indebtedness. The notes were convertible, at the option of the holder, into shares of the Companys common stock initially at a conversion rate of 52.0237 shares of common stock for each US$ 1,000
principal amount of notes, subject to adjustment in certain circumstances. This was equivalent to an initial conversion price of US$ 19.22 per share. On or after May 20, 2006, the Company could redeem any of the notes at a redemption price
equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest, if the closing price of the Companys common shares exceeded 150% of the conversion price for at least 20 trading days in any period of 30
consecutive trading days and if certain other conditions were satisfied. In the event of a change in control, the Company could be required to repurchase the notes.



In 2007, US$ 20.8 million of the US$ 90.0 million convertible
subordinated notes were repurchased. The US$ 20.8 million were repurchased for a market value of US$ 29.0 million. The loss for the early extinguishment of the notes of 6,309, which includes the premium paid above par and the write-off of unamortized issuance costs, was recorded as expense from early extinguishment of debt in the Consolidated Statement of Operations for the
year 2007.



In 2008, US$ 48.3 million convertible
subordinated notes was repurchased. The US$ 48.3 million was repurchased for a market value of US$ 37.7 million. The gain from the early extinguishment of the notes of 7,957, which includes the premium paid under par and the write-off of unamortized issuance costs, was recorded as a gain from early extinguishment of debt in the Consolidated Statement of Operations for the
year 2008.



In 2008 US$ 0.01 million in convertible
subordinated notes were converted into 520 common shares out of the treasury shares, previously purchased by the Company.



F-29



---

##### Table of Contents

In 2009 US$ 4.0 million convertible subordinated notes was repurchased for a market value of
US$ 5.2 million. The loss from the early extinguishment of the notes of 211 thousand, which includes the premium paid
above par and the write-off of unamortized issuance costs, was recorded as a loss from early extinguishment of debt in the Consolidated Statement of Operations for the year 2009.



In 2010 the remaining US$ 16.9 million in convertible subordinated
notes were converted into 878,154 common shares, newly issued by the Company.



4.25% convertible subordinated notes, due 2011



In December 2004, ASMI issued US$ 150.0 million in principal amount of 4.25% convertible subordinated notes due in December 2011 in a private
offering. Interest on the notes was payable on June 6 and December 6 of each year. The notes were subordinated in right of payment to all of the Companys existing and future senior indebtedness. The notes were convertible, at the
option of the holder, into shares of the Companys common stock initially at a conversion rate of 48.0307 shares of common stock for each US$ 1,000 principal amount of notes, subject to adjustment in certain circumstances. This was
equivalent to an initial conversion price of US$ 20.82 per share. Effective December 6, 2007, the conversion price was adjusted for the cash dividend paid in September 2007 to US$ 20.71 per share. On or after December 6, 2007,
the Company could redeem any of the notes at a redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest, if the closing price of the Companys common shares exceeded 130% of the
conversion price for at least 20 trading days in any period of 30 consecutive trading days. In the event of a change in control, the Company could be required to repurchase the notes.



In 2007, US$ 14.6 million of the US$ 150.0 million convertible subordinated notes were repurchased. The US$
14.6 million were repurchased for a market value of US$ 19.4 million. The loss for the early extinguishment of the notes of
 3,740, which includes the premium paid above par and the write-off of unamortized issuance costs, was recorded as expense from
early extinguishment of debt in the Consolidated Statement of Operations for the year 2007.



In 2008 US$ 7.7 million in convertible subordinated notes were converted into 372,426 common shares of which 102,509 consisted of the treasury shares previously purchased by the Company and 269,917 newly
issued common shares.



In 2009 US$ 26.3 million
convertible subordinated notes were repurchased for a market value of US$ 33.7 million. The loss from the early extinguishment of the notes of 1,548 thoussand, which includes the write-off of unamortized issuance costs and the amortization of unamortized interest expenses, was recorded as a loss from early extinguishment of debt in the Consolidated
Statement of Operations for the year 2009.



In 2010 US$
56.5 million convertible subordinated notes was repurchased for a market value of US$ 74.6 million. The loss from the early extinguishment of the notes of 3,609, which includes the write-off of unamortized issuance costs and the amortization of unamortized interest expenses, was recorded as a loss from early extinguishment of debt in the Consolidated Statement
of Operations for the year 2010.



In 2010 US$
7 thousand in convertible subordinated notes were converted into 337 common shares, newly issued by the Company.



On January 3, 2011 we announced that we initiated a full redemption for all of the outstanding principal balance of the 4.25% Convertible
Subordinated Notes due 2011. The Notes which were not converted into common shares were redeemed on February 16, 2011, at a redemption price of 100.00% of the principal amount thereof, plus accrued and unpaid interest to February 15,
2011. The Notice of Redemption for the Notes was sent to all registered holders on January 3, 2011.



The 4.25% convertible subordinated notes ranked pari passu with the 5.25% convertible subordinated notes.



6.50% convertible subordinated notes, due 2014



In November 2009, ASMI issued 150.0 million in principal amount of 6.50% convertible unsecured notes due in November 2014 in a private offering. Interest on the notes
is payable on February 6, May 6, August 6 and November 6 of each year. The notes are subordinated in right of payment to all of the Companys existing and future senior indebtedness. The notes are convertible into shares of
the Companys common stock only, initially at a conversion rate of 58.5851 shares of common stock for each 1,000 principal amount of
notes, subject to adjustment in certain circumstances. This is equivalent to an initial



F-30



---

##### Table of Contents

conversion price of 17.09 per share. As a result of the dividend paid on
common shares during 2011 the conversion price was adjusted to 16.85. On or after November 27, 2012, the Company may redeem any of
the notes at a redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest, if the closing price of the Companys common shares has exceeded 130% of the conversion price for at least 20
trading days in any period of 30 consecutive trading days. In the event of a change in control, the Company may be required to repurchase the notes.



The 6.50% convertible subordinated notes rank pari passu amongst themselves and equally with all other unsecured and unsubordinated obligations of
the Company.



Conversion option



The conversion component of the subordinated notes qualifying as a
liability was measured at fair value. The fair values for these options were determined using a Black-Scholes option valuation model.



Debt issuance costs



The fees incurred for the issuance of the convertible subordinated notes are included as debt issuance costs in the Consolidated Balance Sheet and
amortized by the effective interest method as interest expense during the economic life of the debts. Debt issuance costs of 1,093 are
expected to be amortized in 2012.



19- Shareholders Equity



Common shares, preferred and financing preferred shares



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 55,377,020 common shares, no preferred and no financing preferred shares were outstanding as at December 31, 2011. All shares have one vote per 0.04 par value. Treasury shares held by the Company cannot be voted on.



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 the
Companys 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 are entitled to a cumulative preferred
dividend based on the amount paid-up on such shares. Financing preferred shares are entitled to a cumulative dividend based on the par value and share premium paid on such shares. The preferred dividend on the amount paid-up was 5 for the year 2009.



In the event preferred shares are issued, the Management Board must, within two years after such preferred shares were issued, submit to the general
meeting a proposal to annul the preferred shares. On May 14, 2008, 21,985 preferred shares were issued to Stichting Continuïteit ASM International (Stichting). The amount paid-up by Stichting was 220, which is the equivalent of one/fourth of the nominal value of the preferred shares. On May 14, 2009 the Annual Meeting of
Shareholders resolved to cancel the outstanding preferred shares and to reissue an option to Stichting Continuïteit to acquire preferred shares.



During 2008, ASM engaged Lehman Bros (Lehman). to repurchase ordinary ASMI shares on the Euronext and Nasdaq markets on behalf of
ASMI. As of September 15, 2008, at the time it went into bankruptcy administration, Lehman reported that it had purchased and held on our behalf 2,552,071 shares, which were accounted for as treasury shares accordingly. ASM filed a
submission with the Lehman administrators giving notice of the shares held in custody by Lehman. At ASMIs May 2009 Annual General Meeting, our shareholders resolved to cancel all of these treasury shares which, accordingly, was accounted
for in our 2009 Annual Report as a reduction of the number of outstanding shares. Lehman was notified of the cancellation of shares at the time.



In September 2010, Lehmans administrators notified us that there is a possible shortfall in the number of shares held by Lehman of 479,279
shares (out of the 2,552,071 shares), which cannot currently be accounted for by Lehman. During 2011 we received further information based on which we conclude that the possible shortfall in the number of shares held by Lehman is now reduced to
246,983 shares



F-31



---

##### Table of Contents

The Lehman administrators also reported a segregated collateral cash account of US$ 6,759, that ASMI
may be entitled to in the absence of the shares. We have not been able to obtain additional information to confirm and understand the potential shortfall of shares or our ability to recover the US$ 6,759 from the Lehman bankruptcy proceedings
in lieu of the shares. Accordingly, we are uncertain at this time as to the accuracy of the shortfall of shares, our ability to claim the collateral cash sum to cover the value of any such discrepancy, and our entitlement to all or a portion of such
sum when distributions are determined and made by the administrator since there is likely to also be a shortfall in Lehman assets subject to proprietary rights. Given the magnitude of the overall Lehman administration, we believe it may take several
years to obtain clarity or resolution about the potential shortfall or claim to cash. ASMI is in the process of filing a claim with the Lehman administrators to safeguard our interests.



Considering the factual and legal uncertainties, it is premature to conclude that the 246,983 shares should still be
considered as outstanding or that ASMI has a US$ 6,759 receivable from Lehman. ASMI has, therefore, neither reversed the cancellation of these shares that we recorded in 2009, nor recorded a receivable from Lehman. If the shares would be considered
as outstanding, the negative impact on our basic and diluted earnings per share (EUR 1) as at December 31, 2011 would have been
0.015 and 0.012
respectively per share.



Retained earnings



Distributions to common shareholders are limited to the extent
the total amount of shareholders equity exceeds the amounts of nominal paid-in share capital (exclusive any share premium) and any reserves to be formed pursuant to law or the Companys articles of association. The amounts are
derived from the Statutory Financial Statements of ASM International N.V.



Results on dilution of investments in subsidiaries are accounted for directly in equity. The 2009 results and changes in equity have been adjusted accordingly. For 2011 and 2010 these dilution gains were 5,263 and 4,957 respectively.



Accumulated other comprehensive loss



The changes in the amount of accumulated other comprehensive loss are
as follows:



|                                                                         |  |                                   |         |   |                                                             |  |      |                                           |  |  |       |   |  |  |         |  
|------------------------------------------------------------------------ |  | --------------------------------- | ------- | - | ----------------------------------------------------------- |  | ---- | ----------------------------------------- |  |  | ----- | - |  |  | ------- | -
|                                                                         |  | Foreigncurrencytranslationeffects |         |   | Unrealized gains(losses) onderivativeinstruments,net of tax |  |      | Unrecognizedpensionobligations,net of tax |  |  | Total |  
|Balance January 1, 2010                                                  |  |                                   | (64,240 | ) |                                                             |  | (123 | )                                         |  |  | (391  | ) |  |  | (64,754 | )
|Foreign currency translation effect on translation of foreign operations |  |                                   | 30,553  |   |                                                             |  |     |                                           |  |  | (87   | ) |  |  | 30,466  |  
|Increase in fair value of derivative instruments, net of tax             |  |                                   |        |   |                                                             |  | 136  |                                           |  |  |      |   |  |  | 136     |  
|Actuarial loss                                                           |  |                                   |        |   |                                                             |  |     |                                           |  |  | (87   | ) |  |  | (87     | )
|                                                                         |  |                                   |         |   |                                                             |  |      |                                           |  |  |       |   |  |  |         |  
|Total change in accumulated other comprehensive loss                     |  |                                   | 30,553  |   |                                                             |  | 136  |                                           |  |  | (174  | ) |  |  | 30,515  |  
|                                                                         |  |                                   |         |   |                                                             |  |      |                                           |  |  |       |   |  |  |         |  
|Balance December 31, 2010                                                |  |                                   | (33,687 | ) |                                                             |  | 13   |                                           |  |  | (565  | ) |  |  | (34,239 | )
|Foreign currency translation effect on translation of foreign operations |  |                                   | 13,357  |   |                                                             |  |     |                                           |  |  |      |   |  |  | 13,357  |  
|Increase in fair value of derivative instruments, net of tax             |  |                                   |        |   |                                                             |  | (13  | )                                         |  |  |      |   |  |  | (13     | )
|Actuarial loss                                                           |  |                                   |        |   |                                                             |  |     |                                           |  |  | 744   |   |  |  | 744     |  
|                                                                         |  |                                   |         |   |                                                             |  |      |                                           |  |  |       |   |  |  |         |  
|Total change in accumulated other comprehensive loss                     |  |                                   | 13,357  |   |                                                             |  | (13  | )                                         |  |  | 744   |   |  |  | 14,088  |  
|                                                                         |  |                                   |         |   |                                                             |  |      |                                           |  |  |       |   |  |  |         |  
|Balance December 31, 2011                                                |  |                                   | (20,330 | ) |                                                             |  |     |                                           |  |  | 179   |   |  |  | (20,151 | )
|                                                                         |  |                                   |         |   |                                                             |  |      |                                           |  |  |       |   |  |  |         |  



Purchases of Equity Securities by the Issuer and
Affiliated Purchasers



On May 23, 2011, the
General Meeting of Shareholders authorized the Company, for an 18-month period, to be calculated from the date of the General Meeting, to repurchase its own shares up to the statutory maximum, at a price at least equal to the shares nominal
value and at most a price equal to 110% of the shares average closing price according to the listing on the Euronext Amsterdam stock exchange during the five trading days preceding the purchase date.



F-32



---

##### Table of Contents

Per February 29, 2012 no shares were bought back under the authorization of May 23, 2011.



The maximum of shares that may yet be purchased under the
program takes into account the treasury shares held by the Company (at December 31, 2011 there were no treasury shares held) and the maximum number of common shares which the Company can hold according to its Articles of Association. This
maximum is 10% of the number of common shares issued.



20- Employee
Benefits



Pension plans



Front-end



For the Front-end segment the Company has retirement plans covering
substantially all employees. The principal plans are defined contribution plans, except for the plans of the Companys operations in the Netherlands and Japan.



The Companys employees of the Front-end segment in the
Netherlands, approximately 165 FTE, participate in a multi-employer union plan ,Bedrijfstakpensioenfonds Metalektro, (PME) determined in accordance with the collective bargaining agreements effective for the industry in which
ASMI operates. This collective bargaining agreement has no expiration date. This multiemployer union plan covers approximately 1,220 companies and 130,000 contributing members. ASMIs contribution to the multiemployer union plan is less than
5.0% of the total contribution to the plan as per the annual report for the year ended December 31, 2010. The plan monitors its risks on a global basis, not by company or employee, and is subject to regulation by Dutch governmental authorities.
By law (the Dutch Pension Act), a multiemployer union plan must be monitored against specific criteria, including the coverage ratio of the plan assets to its obligations. This coverage ratio must exceed 104.3% for the total plan. Every company
participating in a Dutch multiemployer union plan contributes a premium calculated as a percentage of its total pensionable salaries, with each company subject to the same percentage contribution rate. The premium can fluctuate yearly based on the
coverage ratio of the multiemployer union plan. The pension rights of each employee are based upon the employees average salary during employment.



ASMIs net periodic pension cost for this multiemployer union plan for any period is the amount of the required contribution for that period. A
contingent liability may arise from, for example, possible actuarial losses relating to other participating entities because each entity that participates in a multiemployer union plan shares in the actuarial risks of every other participating
entity or any responsibility under the terms of a plan to finance any shortfall in the plan if other entities cease to participate.



The coverage ratio of the multiemployer union plan decreased to 90.0% as of December 31, 2011 (December 31, 2010: 96.0%). Because of the low
coverage ratio PME prepared and executed a so-called Recovery Plan which was approved by De Nederlandsche Bank, the Dutch central bank, which is the supervisor of all pension companies in the Netherlands. Due to the low coverage ratio
and according the obligation of the Recovery Plan the pension premium percentage will increase from 23.0% in 2011 to 24.0% in 2012. The coverage ratio is calculated by dividing the plan assets by the total sum of pension liabilities and
is based on actual market interest.



The Companys
employees of the Front-end segment in Japan participate in a defined benefit plan. The funded status of the plan and the amounts not yet recognized in the Consolidated Statement of Operations and the amounts recognized in the Consolidated Balance
Sheet are as follows:



|                                |  |              |        |   |      |  |        |  
|------------------------------- |  | ------------ | ------ | - | ---- |  | ------ | -
|                                |  | December 31, |       
|                                |  | 2010         |        |   | 2011 | 
|Defined benefit obligations     |  |              | (8,805 | ) |      |  | (9,485 | )
|Fair value of plan assets       |  |              | 3,189  |   |      |  | 4,090  |  
|                                |  |              |        |   |      |  |        |  
|Funded status deficit           |  |              | (5,617 | ) |      |  | (5,395 | )
|Unrecognized actuarial loss     |  |              | 954    |   |      |  | 1,215  |  
|Unrecognized prior service cost |  |              |       |   |      |  | (684   | )
|                                |  |              |        |   |      |  |        |  
|Net liabilities                 |  |              | (4,663 | ) |      |  | (4,864 | )
|                                |  |              |        |   |      |  |        |  



F-33



---

##### Table of Contents

The changes in defined benefit obligations and fair value of plan assets are as follows:



|                                    |  |              |       |   |      |  |       |  
|----------------------------------- |  | ------------ | ----- | - | ---- |  | ----- | -
|                                    |  | December 31, |      
|                                    |  | 2010         |       |   | 2011 | 
|Defined benefit obligations         |  |              |       |   |      |  |       |  
|Balance January 1                   |  |              | 6,560 |   |      |  | 8,805 |  
|Current service cost                |  |              | 629   |   |      |  | 664   |  
|Interest on obligation              |  |              | 139   |   |      |  | 107   |  
|Actuarial losses (gains)            |  |              | 795   |   |      |  | (53   | )
|Benefits paid                       |  |              | (819  | ) |      |  | (176  | )
|Curtailment and settlement          |  |              |      |   |      |  | (630  | )
|Foreign currency translation effect |  |              | 1,502 |   |      |  | 768   |  
|                                    |  |              |       |   |      |  |       |  
|Balance December 31                 |  |              | 8,805 |   |      |  | 9,485 |  
|Fair value of plan assets           |  |              |       |   |      |  |       |  
|Balance January 1                   |  |              | 2,119 |   |      |  | 3,189 |  
|Expected return on plan assets      |  |              | 77    |   |      |  | 103   |  
|Actuarial losses                    |  |              | 658   |   |      |  | (219  | )
|Company contribution                |  |              | 647   |   |      |  | 852   |  
|Benefits paid                       |  |              | (819  | ) |      |  | (176  | )
|Foreign currency translation effect |  |              | 507   |   |      |  | 342   |  
|                                    |  |              |       |   |      |  |       |  
|Balance December 31                 |  |              | 3,189 |   |      |  | 4,090 |  
|                                    |  |              |       |   |      |  |       |  



The net periodic benefit cost consists
of the following:



|                                     |  |              |     |   |      |  |     |      |  |  |      |  
|------------------------------------ |  | ------------ | --- | - | ---- |  | --- | ---- |  |  | ---- | -
|                                     |  | December 31, |    
|                                     |  | 2009         |     |   | 2010 |  |     | 2011 | 
|Current service cost                 |  |              | 675 |   |      |  | 629 |      |  |  | 664  |  
|Interest on obligation               |  |              | 154 |   |      |  | 139 |      |  |  | 107  |  
|Expected return on plan assets       |  |              | (98 | ) |      |  | (77 | )    |  |  | (103 | )
|Amortization deferred actuarial loss |  |              | 44  |   |      |  | 1   |      |  |  | 6    |  
|Amortization of past service cost    |  |              |    |   |      |  |    |      |  |  | (13  | )
|                                     |  |              |     |   |      |  |     |      |  |  |      |  
|Net periodic pension benefit cost    |  |              | 775 |   |      |  | 692 |      |  |  | 662  |  
|                                     |  |              |     |   |      |  |     |      |  |  |      |  



The actual return on plan assets was 78, 734 and (116) for the years ended December 31, 2009, 2010 and 2011 respectively.



The assumptions in calculating the actuarial present value of benefit obligations and net periodic benefit cost are as
follows:



|                                       |  |              |      |   |      |  |      |      |  |  |      |  
|-------------------------------------- |  | ------------ | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                       |  | December 31, |     
|                                       |  | 2009         |      |   | 2010 |  |      | 2011 | 
|Discount rate for obligations          |  |              | 1.70 | % |      |  | 1.25 | %    |  |  | 1.25 | %
|Expected return on plan assets         |  |              | 3.00 | % |      |  | 3.00 | %    |  |  | 3.00 | %
|Expected rate of compensation increase |  |              | 2.93 | % |      |  | 2.93 | %    |  |  | 2.93 | %



The allocation of plan assets is as
follows:



|            |  |              |       |  |      |  |     |   |  |  |       |  |  |  |     |  
|----------- |  | ------------ | ----- |  | ---- |  | --- | - |  |  | ----- |  |  |  | --- | -
|            |  | December 31, |      
|            |  | 2010         |       |  | 2011 | 
|Equity      |  |              | 798   |  |      |  | 25  | % |  |  | 940   |  |  |  | 23  | %
|Bonds       |  |              | 1,965 |  |      |  | 62  | % |  |  | 2,488 |  |  |  | 60  | %
|Loans       |  |              | 235   |  |      |  | 7   | % |  |  | 368   |  |  |  | 9   | %
|Real estate |  |              | 51    |  |      |  | 2   | % |  |  | 66    |  |  |  | 2   | %
|Other       |  |              | 140   |  |      |  | 4   | % |  |  | 227   |  |  |  | 6   | %
|            |  |              |       |  |      |  |     |   |  |  |       |  |  |  |     |  
|            |  |              | 3,189 |  |      |  | 100 | % |  |  | 4,090 |  |  |  | 100 | %
|            |  |              |       |  |      |  |     |   |  |  |       |  |  |  |     |  



Equity securities consist primarily of
publicly trades Japanese companies and common collective funds. Publicly traded equities are valued at the closing prices reported in the active market in which the individual securities are traded (level 1). Common collective funds are valued at
the net asset value (level 1) per share multiplied by the number of shares held as of the measurement date.



F-34



---

##### Table of Contents

Fixed income (bonds and loans) consists of corporate bonds, government securities and common
collective funds. Corporate and government securities are valued by third-party pricing sources (level 2). Common collective funds are valued at the net asset value per share (level 2) multiplied by the number of shares held as of the measurement
date.



Real estate fund and other values are primarily
reported by the fund manager and are based on valuation of the underlying investments(level 3) which include inputs such as cost, discounted cash flows, independent appraisals and market based comparable data.



The plan assets do not include any of the Companys shares.



Back-end



For the Back-end segment the ASMPT has retirement plans covering a substantial portion of its employees. The principal
plans are defined contribution plans.



The plans for
employees in Hong Kong are registered under the Occupational Retirement Schemes Ordinance (ORSO Scheme) and a Mandatory Provident Fund Scheme (MPF Scheme) established under the Mandatory Provident Fund Schemes Ordinance in
December 2000. The assets of the schemes are held separately from those of ASMPT in funds under the control of trustees. The ORSO Scheme is funded by monthly contributions from both employees and ASMPT at rates ranging from 5% to 12.5% of the
employees basic salary, depending on the length of services with ASMPT. For members of the MPF Scheme, ASMPT contributes 5% of relevant payroll costs to the MPF Scheme subject only to the maximum level of payroll costs amounting to HK$20,000
(equivalent of 2,000) per employee, which contribution is matched by the employees.



The employees of ASMPT in Mainland China, Singapore and Malaysia are
members of state managed retirement benefit schemes operated by the relevant governments. ASMPT is required to contribute a certain percentage of payroll costs to these schemes to fund the benefits. The only obligation of ASMPT with respect to these
schemes is to make the specified contributions. The assets of the schemes are held separately from those of ASMPT in funds under the control of trustees, and in the case of Singapore and Malaysia, by the Central Provident Fund Board of Singapore and
Employee Provident Fund of Malaysia respectively.



Certain
ASM AS (the former SEAS) entities operate funded defined benefits pension scheme for all their qualified employees. Pension benefits provided by ASM AS Entities are currently organized primarily through defined benefit pension plans which cover
virtually all German employees and certain foreign employees of ASM AS entities. Furthermore, ASM AS entities provide other post-employment benefits, which consist of transition payments and death benefits to German employees after retirement. These
predominantly unfunded other post-employment benefit plans qualify as defined benefit plans. Defined benefit plans determine the entitlements of their beneficiaries. An employees final benefit entitlement at regular retirement age may be
higher than the fixed benefits at the reporting date due to future compensation or benefit increases. The net present value of this ultimate future benefit entitlement for service already rendered is represented by the Defined Benefit Obligation
(DBO), which is calculated with consideration of future compensation increases by actuaries. The DBO is calculated based on the projected unit credit method and reflects the net present value as of the reporting date of the accumulated
pension entitlements of active employees, former employees with vested rights and of retirees and their surviving dependents with consideration of future compensation and pension increases.



In the case of unfunded plans, the recognized pension liability is equal to the DBO adjusted by unrecognized past service
cost. In the case of funded plans, the fair value of the plan assets is offset against the benefit obligations. The net amount, after adjusting for the effects of unrecognized past service cost, is recognized as a pension liability or prepaid
pension asset.



|                            |  |                  |         |  
|--------------------------- |  | ---------------- | ------- | -
|                            |  | December 31,2011 |        
|Defined benefit obligations |  |                  | (22,303 | )
|Fair value of plan assets   |  |                  | 21,364  |  
|                            |  |                  |         |  
|Funded status deficit       |  |                  | (939    | )
|                            |  |                  |         |  



F-35



---

##### Table of Contents

The changes in defined benefit obligations and fair value of plan assets are as follows:



|                                                                    |  |                  |        |  
|------------------------------------------------------------------- |  | ---------------- | ------ | -
|                                                                    |  | December 31,2011 |       
|Defined benefit obligations                                         |  |                  |        |  
|Balance January 1                                                   |  |                  |       |  
|Obligation assumed in the acquisition of SEAS                       |  |                  | 22,305 |  
|Current service cost                                                |  |                  | 1,502  |  
|Interest on obligation                                              |  |                  | 898    |  
|Actuarial losses                                                    |  |                  | (2,662 | )
|Benefits paid                                                       |  |                  | (26    | )
|Transfers                                                           |  |                  | (65    | )
|Contribution participants                                           |  |                  | 89     |  
|Foreign currency translation effect                                 |  |                  | 262    |  
|                                                                    |  |                  |        |  
|Balance December 31                                                 |  |                  | 22,303 |  
|                                                                    | 
|Fair value of plan assets                                           |  |                  |        |  
|Balance January 1                                                   |  |                  |       |  
|Fair value of plan assets at completion date of acquisition of SEAS |  |                  | 22,199 |  
|Expected return                                                     |  |                  | 673    |  
|Actuarial losses                                                    |  |                  | (1,646 | )
|Contribution participants                                           |  |                  | 89     |  
|Foreign currency translation effect                                 |  |                  | 50     |  
|                                                                    |  |                  |        |  
|Balance December 31                                                 |  |                  | 21,364 |  
|                                                                    |  |                  |        |  



The assumptions in calculating the
actuarial present value of benefit obligations and net periodic benefit cost are as follows:



|                                       |  |                  |      |  
|-------------------------------------- |  | ---------------- | ---- | -
|                                       |  | December 31,2011 |     
|Discount rate for obligations          |  |                  | 5.25 | %
|Expected return on plan assets         |  |                  | 4.00 | %
|Expected rate of compensation increase |  |                  | 2.26 | %



The allocation of plan assets is as
follows:



|                                 |  |                  |        |  |  |  |     |  
|-------------------------------- |  | ---------------- | ------ |  |  |  | --- | -
|                                 |  | December 31,2011 |       
|Equity                           |  |                  | 3,418  |  |  |  | 16  | %
|Fixed income and corporate bonds |  |                  | 17,519 |  |  |  | 82  | %
|Cash and other assets            |  |                  | 427    |  |  |  | 2   | %
|                                 |  |                  |        |  |  |  |     |  
|                                 |  |                  | 21,364 |  |  |  | 100 | %
|                                 |  |                  |        |  |  |  |     |  



The plan assets do not include any of
the Companys shares.



Other post-employment benefit plans ASMPT.



Employees who joined ASM Assembly Systems
GmbH & Co. KG , a subsidiary located in Germany, on or before 30 September 1983, are entitled to transition payments and death benefits. In respect of the transition payments for the first six months after retirement, participants
receive the difference between their final compensation and the retirement benefits payable under the corporate pension plan. Employees of the Group in France are entitled to retirement indemnity plans as required by the French labor laws.



The reconciliation of the funded status of the other
post-employment benefit plans to the amount recognized in the consolidated statement of financial position per December 31, 2011 is as follows:



|                                      |  |  |        |  
|------------------------------------- |  |  | ------ | -
|Defined benefit obligation (unfunded) |  |  | (1,414 | )
|                                      |  |  |        |  



F-36



---

##### Table of Contents

The reconciliation of the changes in the benefit obligation for the other post-employment benefits for
the year ended 31 December 2011 is as follows:



|                                    |  |                  |       |  
|----------------------------------- |  | ---------------- | ----- | -
|                                    |  | December 31,2011 |      
|Defined benefit obligations         |  |                  |       |  
|Balance January 1                   |  |                  | 1,470 |  
|Current service cost                |  |                  | 63    |  
|Interest on obligation              |  |                  | 65    |  
|Actuarial losses                    |  |                  | (174  | )
|Benefits paid                       |  |                  | (18   | )
|Foreign currency translation effect |  |                  | 9     |  
|                                    |  |                  |       |  
|Balance December 31                 |  |                  | 1,414 |  



The components of the principal pension
benefit plans and the other post-employment benefit plans recognized in the consolidated statement of operations in respect of these defined benefit plans and other post-employment benefits for year ended 31 December 2011 are as follows:



|                                  |  |                              |        |   |                                   |  |      |       |  |  |        |  
|--------------------------------- |  | ---------------------------- | ------ | - | --------------------------------- |  | ---- | ----- |  |  | ------ | -
|                                  |  | December 31, 2011            |       
|                                  |  | Principaldefinedbenefitplans |        |   | Other post-employmentbenefitplans |  |      | Total | 
|Current service cost              |  |                              | (1,502 | ) |                                   |  | (63  | )     |  |  | (1,565 | )
|Interest on obligation            |  |                              | (898   | ) |                                   |  | (65  | )     |  |  | (962   | )
|Expected return on plan assets    |  |                              | 673    |   |                                   |  |     |       |  |  | 673    |  
|                                  |  |                              |        |   |                                   |  |      |       |  |  |        |  
|Net periodic pension benefit cost |  |                              | (1,726 | ) |                                   |  | (128 | )     |  |  | (1,854 | )
|                                  |  |                              |        |   |                                   |  |      |       |  |  |        |  



The actual return on plan assets was 973 for the year ended December 31, 2011.



Other retirement benefit obligations ASMPT.



The consolidated statement of financial position also includes liabilities for other retirement benefit obligations consisting of liabilities for
severance payments in Italy and Austria amounting to 317 as at 31 December 2011.



ASMI expects to contribute 3,033 to the defined benefit plan in 2012. The Company expects to pay benefits for years subsequent to December 31, 2011 as follows:



|                                  |  |                  |       |  |                 |  |     |       |  |  |       | 
|--------------------------------- |  | ---------------- | ----- |  | --------------- |  | --- | ----- |  |  | ----- | 
|                                  |  | Front-endsegment |       |  | Back-endsegment |  |     | Total | 
|2012                              |  |                  | 79    |  |                 |  | 13  |       |  |  | 92    | 
|2013                              |  |                  | 56    |  |                 |  | 10  |       |  |  | 66    | 
|2014                              |  |                  | 93    |  |                 |  | 12  |       |  |  | 105   | 
|2015                              |  |                  | 71    |  |                 |  | 19  |       |  |  | 90    | 
|2016                              |  |                  | 92    |  |                 |  | 27  |       |  |  | 119   | 
|Aggregate for the years 2017-2021 |  |                  | 1,186 |  |                 |  | 299 |       |  |  | 1,485 | 
|                                  |  |                  |       |  |                 |  |     |       |  |  |       | 
|Total                             |  |                  | 1,577 |  |                 |  | 380 |       |  |  | 1,957 | 
|                                  |  |                  |       |  |                 |  |     |       |  |  |       | 



Retirement plan costs consist of the
following:



|                            |  |              |       |  |      |  |        |      |  |  |        | 
|--------------------------- |  | ------------ | ----- |  | ---- |  | ------ | ---- |  |  | ------ | 
|                            |  | December 31, |      
|                            |  | 2009         |       |  | 2010 |  |        | 2011 | 
|Defined contribution plans  |  |              | 6,875 |  |      |  | 10,423 |      |  |  | 15,990 | 
|Multi-employer plans        |  |              | 2,089 |  |      |  | 1,207  |      |  |  | 1,111  | 
|Defined benefit plans       |  |              | 775   |  |      |  | 673    |      |  |  | 1,844  | 
|                            |  |              |       |  |      |  |        |      |  |  |        | 
|Total retirement plan costs |  |              | 9,739 |  |      |  | 12,303 |      |  |  | 18,945 | 
|                            |  |              |       |  |      |  |        |      |  |  |        | 



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



F-37



---

##### Table of Contents

Employee Stock Option Plan



The Company has adopted various stock option plans and has entered
into stock option agreements with various employees. Under these plans, employees may purchase a specific number of shares of the Companys common stock. Options are priced at market value in euros or U.S. 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.



In 2011 a new Stock Option Plan was adopted. In the new plan to limit potential dilution, the amount of outstanding
(vested and non-vested) options granted to the Management Board and to other employees will not exceed 7.5% of the issued ordinary share capital of ASMI. The new Stock Option Plan 2011 consists of two sub-plans: the ASMI Stock Option Plan for
employees (ESOP) and

the ASMI Stock Option for members of the Management Board (MSOP).



A leading principle of the option plans is that options are issued to
employees and Management Board members once per annum as at 31 December of the relevant year, this includes the possible grant to newly hired employees. The number of options outstanding under the option plans or under any other plan or
arrangement in aggregate may never exceed 7.5% of ASMIs share capital. This is in accordance with the ASMI Remuneration Policy.



By resolution of the AGM of 23 May 2011 the formal authority to issue options and shares was allocated to the Management Board subject to the
approval of the Supervisory Board. This authority is valid for 18 months and needs to be refreshed annually by the AGM to allow the continued application of the SOPS beyond 23 November 2012. The ESOP is principally administered by the
Management Board and the MSOP is principally administered by the Supervisory Board. This complies with applicable corporate governance standards. However, the Supervisory Board has no power to represent the Company. For external purposes the
Management Board remains the competent body under both SOPS. The SOPS envisage that the Supervisory Board, orin the case of the ESOPthe Management Board with the approval of the Supervisory Board, will determine the number of options to
be granted to the Management Board members and to employees as of 31 December of any financial year (the Grant date).



For employees and existing Management Board members the Grant Date for all options granted is 31 December of the relevant year. In each of
these situations the three year Vesting Period starts at the Grant Date. The exercise price of all options issued under the SOPS is determined on the basis of the market value of the ASMI shares as at (i.e. immediately prior to) the Grant Date.



The exercise period is 4 years starting
at the 3rdanniversary of the vesting date.



At December 31, 2011, options to purchase 687,114 shares have been
issued under the 2001 Stock Option Plan representing 1.6% of the shares outstanding per December 31,2011. Under previous plans no more options to purchase shares can be issued. Under the various stock option plans a total of 1,835,523 options
to purchase common stock were outstanding at December 31, 2011, expiring at various dates through 2019. The number of options outstanding at December 31, 2010 and 2011 were 1,445,523 and 1,835,067 respectively.



The following is a summary of changes in options outstanding:



|                          |  |                  |          |   |                                    |  |       |                 |  |  |                                   |   |  |  |       | 
|------------------------- |  | ---------------- | -------- | - | ---------------------------------- |  | ----- | --------------- |  |  | --------------------------------- | - |  |  | ----- | 
|                          |  | Number ofoptions |          |   | Weightedaverageexerciseprice inUS$ |  |       | Numberofoptions |  |  | Weightedaverageexerciseprice in  |  
|Balance January 1, 2009   |  |                  | 602,940  |   |                                    |  | 18.47 |                 |  |  | 857,790                           |   |  |  | 14.61 | 
|Options granted           |  |                  | 358,400  |   |                                    |  | 17.83 |                 |  |  | 381,600                           |   |  |  | 14.76 | 
|Options forfeited         |  |                  | (68,740  | ) |                                    |  | 14.27 |                 |  |  | (245,332                          | ) |  |  | 14.43 | 
|Options exercised         |  |                  | (69,700  | ) |                                    |  | 12.99 |                 |  |  | (66,800                           | ) |  |  | 12.20 | 
|                          |  |                  |          |   |                                    |  |       |                 |  |  |                                   |   |  |  |       | 
|Balance December 31, 2009 |  |                  | 822,900  |   |                                    |  | 19.00 |                 |  |  | 927,258                           |   |  |  | 14.89 | 
|Options granted           |  |                  | 42,000   |   |                                    |  | 35.01 |                 |  |  | 64,500                            |   |  |  | 22.53 | 
|Options forfeited         |  |                  | (35,700  | ) |                                    |  | 19.73 |                 |  |  | (67,185                           | ) |  |  | 16.97 | 
|Options exercised         |  |                  | (143,140 | ) |                                    |  | 16.83 |                 |  |  | (165,110                          | ) |  |  | 13.12 | 
|                          |  |                  |          |   |                                    |  |       |                 |  |  |                                   |   |  |  |       | 
|Balance December 31, 2010 |  |                  | 686,060  |   |                                    |  | 20.40 |                 |  |  | 759,463                           |   |  |  | 15.74 | 
|Options granted           |  |                  |         |   |                                    |  |      |                 |  |  | 687,114                           |   |  |  | 22.33 | 
|Options forfeited         |  |                  | (1,080   | ) |                                    |  | 16.65 |                 |  |  |                                  |   |  |  |      | 
|Options exercised         |  |                  | (169,870 | ) |                                    |  | 19.10 |                 |  |  | (126,620                          | ) |  |  | 14.82 | 
|                          |  |                  |          |   |                                    |  |       |                 |  |  |                                   |   |  |  |       | 
|Balance December 31, 2011 |  |                  | 515,110  |   |                                    |  | 20.83 |                 |  |  | 1,319,957                         |   |  |  | 19.08 | 
|                          |  |                  |          |   |                                    |  |       |                 |  |  |                                   |   |  |  |       | 



F-38



---

##### Table of Contents

The weighted average fair values of employee stock options granted in U.S. dollars were US$ 9.31 in
2009 and US17.02 in 2010. The weighted average fair values of employee stock option granted in Euro were 7.26 in 2009, 13.94 in 2010 and 22.33 in
2011.



The weighted average remaining contractual life of
the outstanding options granted in 2011 is 7 years at December 31, 2011.



The total intrinsic value of options exercised was 684, 2,322 and 4,307 for the years
ended December 31, 2009, 2010 and 2011 respectively. In 2009, 2010 and 2011 new shares have been issued for the exercise of 23,009 options, 308,250 options and 296,490 options respectively.



At December 31, 2011 options outstanding and options exercisable
classified by range of exercise prices are:



|                       |  |                     |           |  |                                           |  |          |                               |  |  |                   |  |  |                               |         |  |  |  |       | 
|---------------------- |  | ------------------- | --------- |  | ----------------------------------------- |  | -------- | ----------------------------- |  |  | ----------------- |  |  | ----------------------------- | ------- |  |  |  | ----- | 
|                       |  | Options outstanding |           |  | Options exercisable                       | 
|Range ofexerciseprices |  | Numberoutstanding   |           |  | Weighted averageremainingcontractual life |  |          | Weightedaverageexercise price |  |  | Numberexercisable |  |  | Weightedaverageexercise price |        
|In US$                 |  |                     |           |  | In years                                  |  |          | In US$                        |  |  |                   |  |  | In US$                        |        
|1.00-10.00             |  |                     | 51,000    |  |                                           |  | 7.14     |                               |  |  | 7.52              |  |  |                               | 3,000   |  |  |  | 7.06  | 
|10.00-15.00            |  |                     | 91,510    |  |                                           |  | 4.18     |                               |  |  | 12.10             |  |  |                               | 45,590  |  |  |  | 12.12 | 
|15.00-20.00            |  |                     | 43,800    |  |                                           |  | 5.61     |                               |  |  | 18.42             |  |  |                               | 16,600  |  |  |  | 17.61 | 
|20.00-30.00            |  |                     | 286,800   |  |                                           |  | 4.87     |                               |  |  | 24.28             |  |  |                               | 102,800 |  |  |  | 24.81 | 
|30.00-40.00            |  |                     | 42,000    |  |                                           |  | 5.01     |                               |  |  | 35.01             |  |  |                               |        |  |  |  |      | 
|                       |  |                     |           |  |                                           |  |          |                               |  |  |                   |  |  |                               |         |  |  |  |       | 
|US$1.00-40.00          |  |                     | 515,110   |  |                                           |  | 5.05     |                               |  |  | 20.83             |  |  |                               | 167,990 |  |  |  | 20.34 | 
|                       |  |                     |           |  |                                          
|In
                   |  |                     |           |  |                                           |  | In years |                               |  |  | In               |  |  |                               |         |  |  |  | In   | 
|1.00-10.00             |  |                     | 13,800    |  |                                           |  | 1.91     |                               |  |  | 7.92              |  |  |                               | 4,000   |  |  |  | 7.79  | 
|10.00-15.00            |  |                     | 143,020   |  |                                           |  | 3.89     |                               |  |  | 12.49             |  |  |                               | 126,160 |  |  |  | 12.71 | 
|15.00-20.00            |  |                     | 461,523   |  |                                           |  | 4.16     |                               |  |  | 16.15             |  |  |                               | 178,443 |  |  |  | 17.58 | 
|20.00-30.00            |  |                     | 701,614   |  |                                           |  | 6.89     |                               |  |  | 22.56             |  |  |                               |        |  |  |  |      | 
|                       |  |                     |           |  |                                           |  |          |                               |  |  |                   |  |  |                               |         |  |  |  |       | 
|1.00-30.00            |  |                     | 1,319,957 |  |                                           |  | 5.56     |                               |  |  | 19.08             |  |  |                               | 308,603 |  |  |  | 15.46 | 
|                       |  |                     |           |  |                                           |  |          |                               |  |  |                   |  |  |                               |         |  |  |  |       | 



At December 31, 2011, the
aggregate intrinsic value of all options outstanding and all options exercisable is 8,136 and 3,317 respectively.



The cost relating to employee stock options is measured at fair value on the grant date. The fair value was determined using the Black-Scholes
option valuation model with the following weighted average assumptions:



|                        |  |              |        |   |      |  |       |  
|----------------------- |  | ------------ | ------ | - | ---- |  | ----- | -
|                        |  | December 31, |       
|                        |  | 2010         |        |   | 2011 | 
|Expected life (years)   |  |              | 5  10 |   |      |  | 7     |  
|Risk free interest rate |  |              | 2.8    | % |      |  | 3.51  | %
|Dividend yield          |  |              |       |   |      |  | 0.32  | %
|Expected volatility     |  |              | 45.6   | % |      |  | 40.90 | %



The grant date fair value of the stock
options is expensed on a straight-line basis over the vesting period, based on the Companys estimate of stock options that will eventually vest. The impact of the true up of the estimates is recognized in the consolidated statement of
operations in the period in which the revision is determined. We recorded compensation expenses of 2,127, 2,526 and 1,872 for 2009, 2010
and 2011 respectively.



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 was extended in 1999 for a term up to March 23, 2010. At the annual general meeting of the ASMPT held on 24 April 2009, the shareholders
approved to extend the period of the Scheme for a term of a further 10 years up to 23 March 2020 and allow up to 7.5% of the issued share capital of ASMPT from time to time (excluding any shares subscribed for or purchased pursuant to the
Scheme since 23 March 1990) to be subscribed for or purchased pursuant to the Scheme during such extended period and that no more than 3.5% of the issued share capital of ASMPT from time to time (excluding any shares subscribed for or purchased
pursuant to the Scheme since 23 March 1990) to be subscribed for or purchased pursuant to the Scheme for the period from 24 March 2010 to 23 March 2015.



F-39



---

##### Table of Contents

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 December 2011, 1,518,100 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 2010 and 2009, respectively 1,726,900 and 2,035,400 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 0.19% in 2011, 0.23% in 2010 and 0.28% in 2009. The shares issued under the plan in 2011 have diluted ASMIs ownership in ASMPT to 52.17% as of December 31, 2011. Total compensation expenses related to the Employee
Share Incentive Scheme of respectively 3,685 in 2009, 11,375 in 2010 and 11,580 in 2011 were charged to the Consolidated Statement of Operations.



Dilution investment ASMPT



Results on dilution of investments in subsidiaries are accounted for
directly in equity. The 2009 results and changes in equity have been adjusted accordingly.



21- Commitments and Contingencies



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



|                              |  |              |        |   |      |  |        |  
|----------------------------- |  | ------------ | ------ | - | ---- |  | ------ | -
|                              |  | December 31, |       
|                              |  | 2010         |        |   | 2011 | 
|Machinery and equipment       |  |              | 3,644  |   |      |  | 3,953  |  
|Furniture and fixtures        |  |              | 359    |   |      |  | 389    |  
|                              |  |              |        |   |      |  |        |  
|                              |  |              | 4,003  |   |      |  | 4,342  |  
|Less accumulated depreciation |  |              | (3,211 | ) |      |  | (4,075 | )
|                              |  |              |        |   |      |  |        |  
|                              |  |              | 792    |   |      |  | 267    |  
|                              |  |              |        |   |      |  |        |  



At December 31, 2011 minimum
rental commitments under capital leases and operating leases having initial or remaining non-cancelable terms in excess of one year are as follows:



|                                            |  |               |     |   |                 |  |        | 
|------------------------------------------- |  | ------------- | --- | - | --------------- |  | ------ | 
|                                            |  | Capitalleases |     |   | Operatingleases | 
|2012                                        |  |               | 142 |   |                 |  | 21,933 | 
|2013                                        |  |               |    |   |                 |  | 16,591 | 
|2014                                        |  |               |    |   |                 |  | 11,361 | 
|2015                                        |  |               |    |   |                 |  | 8,903  | 
|2016                                        |  |               |    |   |                 |  | 8,040  | 
|Years thereafter                            |  |               |    |   |                 |  | 11,817 | 
|                                            |  |               |     |   |                 |  |        | 
|Total                                       |  |               | 142 |   |                 |  | 78,645 | 
|Less amount representing interest           |  |               | (1  | ) |                 |  |        | 
|                                            |  |               |     |   |                 |  |        | 
|Present value of net minimum lease payments |  |               | 141 |   |                 |  |        | 
|                                            |  |               |     |   |                 |  |        | 



Aggregate rental expense for operating
leases was 10,719 in 2009,
10,173 in 2010 and 22,335
in 2011. At December 31, 2011 the Company had entered into purchase commitments with suppliers in the amount of 174,532 for
purchases, of which 170,421 for purchases within the next 12 months. Commitments for capital expenditures at December 31, 2011 were 17,433.



Change of Control Transaction



If the Company desires to effect a change of control transaction with a competitor of Applied Materials, Inc., (Applied Materials) the Company must, pursuant to a litigation settlement agreement in
1997, as amended and restated in 1998, first offer the change of control transaction to Applied Materials 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.



22- 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. For
instance, we recently determined that various Applied Materials patents licensed under the 1998 Settlement



F-40



---

##### Table of Contents

Agreement with Applied had expired. Accordingly, as of the third quarter of 2011, we ceased paying such royalties and believe we have overpaid prior related royalties.2010 Applied
disagrees and requests we pay royalties through 2013. This matter is being addressed in accordance with the resolution procedures provided in the agreement. Although the ultimate disposition of legal proceedings (including the royalty
discussions with Applied Materials) 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
material effect on the financial position of the Company, its cash flows and result of operations.



23- Financial Instruments and Risk Management



Financial Instruments



Financial instruments include:



Financial assets:



|                                                      |  |              |         |  |      |  |         | 
|----------------------------------------------------- |  | ------------ | ------- |  | ---- |  | ------- | 
|                                                      |  | December 31, |        
|                                                      |  | 2010         |         |  | 2011 | 
|Cash and cash equivalents                             |  |              | 340,294 |  |      |  | 390,250 | 
|Pledged cash deposits                                 |  |              |        |  |      |  | 20,000  | 
|Accounts receivable                                   |  |              | 271,271 |  |      |  | 330,891 | 
|Derivative instruments designated in cash flow hedges |  |              | 14      |  |      |  |        | 
|                                                      |  |              |         |  |      |  |         | 



Financial liabilities:



|                                                       |  |              |         |  |      |  |         | 
|------------------------------------------------------ |  | ------------ | ------- |  | ---- |  | ------- | 
|                                                       |  | December 31, |        
|                                                       |  | 2010         |         |  | 2011 | 
|Notes payable to banks                                 |  |              | 8,297   |  |      |  | 40,680  | 
|Accounts payable                                       |  |              | 170,553 |  |      |  | 157,549 | 
|Current portion of long-term debt                      |  |              | 15,950  |  |      |  | 4,332   | 
|Current portion of convertible subordinated debt       |  |              | 32,439  |  |      |  |        | 
|Long-term debt                                         |  |              | 4,316   |  |      |  | 15,319  | 
|Convertible subordinated debt                          |  |              | 130,804 |  |      |  | 135,078 | 
|Conversion option                                      |  |              | 23,875  |  |      |  |        | 
|Derivative instruments designated in fair value hedges |  |              | 31      |  |      |  | 1,764   | 
|                                                       |  |              |         |  |      |  |         | 



Gains or losses related to financial
instruments are as follows:



|                                                                |  |                        |         |   |      |  |         |  
|--------------------------------------------------------------- |  | ---------------------- | ------- | - | ---- |  | ------- | -
|                                                                |  | Year endedDecember 31, |        
|                                                                |  | 2010                   |         |   | 2011 | 
|Interest income                                                 |  |                        | 1,221   |   |      |  | 2,902   |  
|Interest expense                                                |  |                        | (15,677 | ) |      |  | (13,497 | )
|Accretion interest expense convertible notes at amortized value |  |                        | (6,010  | ) |      |  | (4,401  | )
|Loss resulting from early extinguishment of debt                |  |                        | (3,609  | ) |      |  | (824    | )
|Revaluation conversion option                                   |  |                        | (19,037 | ) |      |  | (4,378  | )
|Losses Foreign currency exchange, net                           |  |                        | (65     | ) |      |  | 7,040   |  
|Addition to allowance for doubtful accounts receivable          |  |                        | (461    | ) |      |  | (356    | )
|                                                                |  |                        |         |   |      |  |         |  



We adopted ASC 820, Fair Value
Measurements, on January 1, 2008, for financial assets and liabilities and for nonfinancial assets and liabilities that are remeasured at least annually. ASC 820 defines fair value as the price that would be received for an asset or paid to
transfer a liability in an orderly transaction between market participants on the measurement date. ASC 820 establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels.



| |          |  |  |                                                                                                                                                                                         
| | -------- |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |         
| | Level 1. |  |  | Quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1
inputs.
| |         
| | Level 2. |  |  | Observable inputs other than quoted prices in active markets.                                                                                                                           
| |         
| | Level 3. |  |  | Unobservable inputs for which there is little or no market data available. The fair value hierarchy gives the lowest priority to Level 3 inputs.                                        



F-41



---

##### Table of Contents

The following table presents the Companys financial assets and financial liabilities that are
measured at fair value on a recurring basis.



|                                 |  |                   |        |  |                      |  |   |         |  |  |         |  |  |       |   |  |  |  |        | 
|-------------------------------- |  | ----------------- | ------ |  | -------------------- |  | - | ------- |  |  | ------- |  |  | ----- | - |  |  |  | ------ | 
|                                 |  | At carrying value |        |  | At fair valueLevel 1 |  |   | Level 2 |  |  | Level 3 |  |  | Total |  
|December 31, 2010                |  |                   |        |  |                      |  |   |         |  |  |         |  |  |       |   |  |  |  |        | 
|                                 |  |                   |        |  |                     
|Assets:                          |  |                   |        |  |                      |  |   |         |  |  |         |  |  |       |   |  |  |  |        | 
|Derivative financial instruments |  |                   | 14     |  |                      |  |  |         |  |  | 1,743   |  |  |       |  |  |  |  | 1,743  | 
|                                 |  |                   |        |  |                      |  |   |         |  |  |         |  |  |       |   |  |  |  |        | 
|Total                            |  |                   | 14     |  |                      |  |  |         |  |  | 1,743   |  |  |       |  |  |  |  | 1,743  | 
|                                 |  |                   |        |  |                     
|Liabilities:                     |  |                   |        |  |                      |  |   |         |  |  |         |  |  |       |   |  |  |  |        | 
|Conversion options               |  |                   | 23,875 |  |                      |  |  |         |  |  | 23,875  |  |  |       |  |  |  |  | 23,875 | 
|                                 |  |                   |        |  |                      |  |   |         |  |  |         |  |  |       |   |  |  |  |        | 
|Total                            |  |                   | 23,875 |  |                      |  |  |         |  |  | 23,875  |  |  |       |  |  |  |  | 23,875 | 
|                                 |  |                   |        |  |                      |  |   |         |  |  |         |  |  |       |   |  |  |  |        | 
|December 31, 2011                |  |                   |        |  |                      |  |   |         |  |  |         |  |  |       |   |  |  |  |        | 
|                                 |  |                   |        |  |                     
|Liabilities:                     |  |                   |        |  |                      |  |   |         |  |  |         |  |  |       |   |  |  |  |        | 
|Derivative financial instruments |  |                   | 1,764  |  |                      |  |  |         |  |  | 40,461  |  |  |       |  |  |  |  | 40,461 | 
|                                 |  |                   |        |  |                      |  |   |         |  |  |         |  |  |       |   |  |  |  |        | 
|Total                            |  |                   | 1,764  |  |                      |  |  |         |  |  | 40,461  |  |  |       |  |  |  |  | 40,461 | 
|                                 |  |                   |        |  |                      |  |   |         |  |  |         |  |  |       |   |  |  |  |        | 



Financial Risk Factors



ASMI is exposed to a number of risk factors: market risks (including
foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Company uses forward exchange contracts to hedge its foreign exchange risk. The Company does not enter into financial instrument transactions for trading or
speculative purposes.



Foreign Exchange Risk



ASMI and its subsidiaries conduct business in a number of foreign
countries, with certain transactions denominated in currencies other than the functional currency of the Company (euro) or one of its subsidiaries conducting the business. The purpose of the Companys foreign currency management is to manage
the effect of exchange rate fluctuations on revenues, costs and cash flows and assets and liabilities denominated in selected foreign currencies, in particular denominated in U.S. dollar.



We use forward exchange contracts to hedge its foreign exchange risk of anticipated sales or purchase transactions in the
normal course of business, which occur within the next twelve months, for which the Company has a firm commitment from a customer or to a supplier. The terms of these contracts are consistent with the timing of the transactions being hedged. The
hedges related to forecasted 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 accumulated other comprehensive loss in Shareholders Equity, and is reclassified into earnings when the hedged transaction affects earnings.



The majority of revenues and costs of the Companys Back-end segment are denominated in Hong Kong dollars, Chinese Yuan and U.S. dollars. The
effect of exchange rate fluctuations on revenues, costs and cash flows and assets and liabilities denominated in foreign currencies is periodically reviewed.



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. The Company records all derivatives, including forward exchange contracts, on the balance sheet at fair value in other current assets or accrued expenses. 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 foreign currency exchange gains (losses) in the Consolidated Statement of Operations. Unrealized losses included in accumulated other comprehensive loss as of
December 31, 2010 of  13 were reclassified to earnings in 2011. Hedge ineffectiveness was insignificant for the years ended
December 31, 2010 and December 31, 2011.



Furthermore, the Company might manage the currency exposure of certain receivables and payables using derivative instruments, such as forward
exchange contracts (fair value hedges) and currency swaps, and non-derivative 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 receivables and
payables denominated in foreign currencies. The derivative instruments are recorded at fair value and changes in fair value are recorded in earnings under foreign currency exchange gains (losses) in the Consolidated Statement of Operations.
Receivables and payables denominated in foreign currencies 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 foreign currency exchange gains
(losses) in the Consolidated Statement of Operations.



F-42



---

##### Table of Contents

To the extent that exchange rate fluctuations impact the value of the Companys investments in
its foreign subsidiaries, they are not hedged. The cumulative effect of these fluctuations is separately reported in Consolidated Shareholders Equity. Reference is made to Note 19.



The outstanding forward exchange contracts are as follows:



|                            |  |          |  |  |                |  |         |                      |  |  |           |   |  |                                             |         |   |                                                       |  |       |   |  |  |    | 
|--------------------------- |  | -------- |  |  | -------------- |  | ------- | -------------------- |  |  | --------- | - |  | ------------------------------------------- | ------- | - | ----------------------------------------------------- |  | ----- | - |  |  | -- | 
|                            |  | Currency |  |  | Notionalamount |  |         | Forwardcontractvalue |  |  | Fairvalue |   |  | Differencebetweenforwardvalue andfair value |         |   | Included inaccumulatedothercomprehensiveincome (loss) | 
|                            |  |          |  |  |                |  |         | Euro                 |  |  | Euro      |   |  | Euro                                        |         |   | Euro                                                  | 
|December 31, 2010:          |  |          |  |  |                |  |         |                      |  |  |           |   |  |                                             |         |   |                                                       |  |       |   |  |  |    | 
|                            |  |          |  |  |                | 
|Assets:                     |  |          |  |  |                |  |         |                      |  |  |           |   |  |                                             |         |   |                                                       |  |       |   |  |  |    | 
|                            |  |          |  |  |                | 
|Cash flow hedge contracts:  |  |          |  |  |                |  |         |                      |  |  |           |   |  |                                             |         |   |                                                       |  |       |   |  |  |    | 
|Short position              |  | US$      |  |  |                |  | (452    | )                    |  |  | (350      | ) |  |                                             | (336    | ) |                                                       |  | 14    |   |  |  | 13 | 
|Fair value hedge contracts: |  |          |  |  |                |  |         |                      |  |  |           |   |  |                                             |         |   |                                                       |  |       |   |  |  |    | 
|Short position              |  | US$      |  |  |                |  | (1,881  | )                    |  |  | (1,376    | ) |  |                                             | (1,407  | ) |                                                       |  | (31   | ) |  |  |   | 
|                            |  |          |  |  |                | 
|December 31, 2011:          |  |          |  |  |                |  |         |                      |  |  |           |   |  |                                             |         |   |                                                       |  |       |   |  |  |    | 
|                            |  |          |  |  |                | 
|Assets:                     |  |          |  |  |                |  |         |                      |  |  |           |   |  |                                             |         |   |                                                       |  |       |   |  |  |    | 
|                            |  |          |  |  |                | 
|Fair value hedge contracts: |  |          |  |  |                |  |         |                      |  |  |           |   |  |                                             |         |   |                                                       |  |       |   |  |  |    | 
|Short position              |  | US$      |  |  |                |  | (56,975 | )                    |  |  | (42,225   | ) |  |                                             | (40,461 | ) |                                                       |  | 1,764 |   |  |  |   | 



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



The following table analyzes the Companys sensitivity to a hypothetical 10% strengthening and 10% weakening of the U.S. dollar, Singapore dollar, Hong Kong dollar and Japanese yen against the euro as of
December 31, 2010 and December 31, 2011. This analysis includes foreign currency denominated monetary items and adjusts their translation at year end for a 10% increase and 10% decrease of the U.S. dollar, Singapore dollar, Hong Kong
dollar or Japanese yen against the euro. A positive amount indicates an increase in equity. Recognized in equity is the revaluation effect of subsidiaries denominated in U.S. dollar, Singapore dollar, Hong Kong dollar and Japanese yen.



|                                             |  |                  |         |   |      |  |         |  
|-------------------------------------------- |  | ---------------- | ------- | - | ---- |  | ------- | -
|                                             |  | Impact on equity |        
|                                             |  | 2010             |         |   | 2011 | 
|10% increase of U.S. dollar versus euro      |  |                  | 1,061   |   |      |  | 3,656   |  
|10% decrease of U.S. dollar versus euro      |  |                  | (1,061  | ) |      |  | (3,656  | )
|10% increase of Singapore dollar versus euro |  |                  | 1,431   |   |      |  | 5,028   |  
|10% decrease of Singapore dollar versus euro |  |                  | (1,431  | ) |      |  | (5,028  | )
|10% increase of Hong Kong dollar versus euro |  |                  | 53,458  |   |      |  | 66,702  |  
|10% decrease of Hong Kong dollar versus euro |  |                  | (53,458 | ) |      |  | (66,702 | )
|10% increase of Japanese yen versus euro     |  |                  | 5,016   |   |      |  | 4,908   |  
|10% decrease of Japanese yen versus euro     |  |                  | (5,016  | ) |      |  | (4,908  | )
|                                             |  |                  |         |   |      |  |         |  



A hypothetical 10% strengthening or 10%
weakening of any currency other than the U.S. dollar, Hong Kong dollar, Singapore dollar and Japanese yen against the euro as of December 31, 2010 and December 31, 2011 would not result in a material impact on equity.



The following table analyzes the Companys sensitivity to a
hypothetical 10% strengthening and 10% weakening of the U.S. dollar, Hong Kong dollar and Japanese Yen against the euro at average exchange rates for the years 2010 and 2011. A positive amount indicates an increase in net earnings.



|                                             |  |                        |         |   |      |  |         |  
|-------------------------------------------- |  | ---------------------- | ------- | - | ---- |  | ------- | -
|                                             |  | Impact on net earnings |        
|                                             |  | 2010                   |         |   | 2011 | 
|10% increase of Japanese yen versus euro     |  |                        | 617     |   |      |  | (519    | )
|10% decrease of Japanese yen versus euro     |  |                        | (617    | ) |      |  | 519     |  
|10% increase of U.S. dollar versus euro      |  |                        | (549    | ) |      |  | 1,887   |  
|10% decrease of U.S. dollar versus euro      |  |                        | 549     |   |      |  | (1,887  | )
|10% increase of Hong Kong dollar versus euro |  |                        | 14,632  |   |      |  | 14,392  |  
|10% decrease of Hong Kong dollar versus euro |  |                        | (14,632 | ) |      |  | (14,392 | )
|                                             |  |                        |         |   |      |  |         |  



F-43



---

##### Table of Contents

A hypothetical 10% strengthening or 10% weakening of any currency other than the U.S. dollar, Hong
Kong dollar and the Japanese yen against the euro at average exchange rates for the years 2010 and 2011 would not result in a material impact on net earnings.



Interest Risk



We are exposed to interest rate risk primarily through our borrowing activities. The Company does not enter into financial instrument transactions
for trading or speculative purposes or to manage interest rate exposure. At December 31, 2011 the Company had convertible subordinated debt borrowings outstanding of 150,000 at a fixed rate, maturing in November 2014, 19,651 in long-term debt at fixed interest
rates and 40,680 in other borrowings with variable short-term interest rates. A hypothetical change in the average interest rate by 10%
on the portion of the Companys debt bearing interest at variable rates would not result in a material change in interest expense at December 31, 2010 and December 31, 2011 borrowing levels.



Credit Risk



Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and
cash equivalents, accounts receivable and derivative instruments. These instruments contain a risk of counterparties failing to discharge their obligations. The Company monitors credit risk and manages credit risk exposure by type of financial
instrument by assessing the creditworthiness of counterparties. The Company does not anticipate nonperformance by counterparties given their high creditworthiness.



The Companys customers are semiconductor device manufacturers
located throughout the world. 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.



The Company derives a significant percentage of its revenue from a
small number of large customers. The Companys largest customer accounted for approximately 6.4% of net sales in 2011 (2010: 5.2%; 2009: 9.1%) and the ten largest customers accounted for approximately 27.9% of net sales in 2011 (2010: 27.9%;
2009: 32.9%). Sales to these large customers also may fluctuate significantly from time to time depending on the timing and level of purchases by these customers. 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, 2011 one customer accounted for 4.5% of the outstanding balance in accounts receivable (2010: 6.0%; 2009: 7.8%).



The Company places its cash and cash equivalent and
derivative instruments with high quality financial institutions to limit the amount of credit risk exposure.



The maximum credit exposure is equal to the carrying values of cash and cash equivalent and accounts receivable.



Liquidity Risk



The following table summarizes the Companys contractual obligations as at December 31, 2011 aggregated by type
of contractual obligation:



|                                    |  |       |         |  |                 |  |         |          |  |  |          |  |  |                  |        |  |  |  |        | 
|----------------------------------- |  | ----- | ------- |  | --------------- |  | ------- | -------- |  |  | -------- |  |  | ---------------- | ------ |  |  |  | ------ | 
|                                    |  | Total |         |  | Less than1 year |  |         | 1-3years |  |  | 3-5years |  |  | More than5 years |       
|Notes payable to banks1             |  |       | 41,456  |  |                 |  | 41,456  |          |  |  |         |  |  |                  |       |  |  |  |       | 
|Long-term debt1,
2                  |  |       | 20,527  |  |                 |  | 4,671   |          |  |  | 15,856   |  |  |                  |       |  |  |  |       | 
|Convertible subordinated debt1      |  |       | 177,625 |  |                 |  | 9,750   |          |  |  | 167,875  |  |  |                  |       |  |  |  |       | 
|Operating leases                    |  |       | 78,645  |  |                 |  | 21,933  |          |  |  | 27,952   |  |  |                  | 16,943 |  |  |  | 11,817 | 
|Pension liabilities                 |  |       | 9,887   |  |                 |  | 92      |          |  |  | 171      |  |  |                  | 209    |  |  |  | 9,415  | 
|Purchase obligations:               |  |       |         |  |                 |  |         |          |  |  |          |  |  |                  |        |  |  |  |        | 
|Purchase commitments to suppliers   |  |       | 174,532 |  |                 |  | 170,421 |          |  |  | 4,111    |  |  |                  |       |  |  |  |       | 
|Capital expenditure commitments     |  |       | 17,433  |  |                 |  | 17,433  |          |  |  |         |  |  |                  |       |  |  |  |       | 
|Unrecognized tax benefits (ASC 740) |  |       | 21,749  |  |                 |  | 21,749  |          |  |  |         |  |  |                  |       |  |  |  |       | 
|                                    |  |       |         |  |                 |  |         |          |  |  |          |  |  |                  |        |  |  |  |        | 
|Total contractual obligations       |  |       | 541,854 |  |                 |  | 287,505 |          |  |  | 215,965  |  |  |                  | 17,152 |  |  |  | 21,232 | 
|                                    |  |       |         |  |                 |  |         |          |  |  |          |  |  |                  |        |  |  |  |        | 



|(1) | Including interest expense based on the percentages at the reporting date.
|--- | --------------------------------------------------------------------------

|(2) | Capital lease obligations of 141 are included in long-term debt.
|--- | -----------------------------------------------------------------



F-44



---

##### Table of Contents

Total short-term lines of credit amounted to
289,528 at December 31, 2011. The amount outstanding at December 31, 2011 was
40,680 and the undrawn portion totaled 248,848. The undrawn portion includes the standby revolving credit facility of 150,000 with a
consortium of banks. The facility, available through July 31, 2014, is secured by a portion of the Companys shareholding in ASMPT. In the event all outstanding convertible bonds due 6 November 2014 are converted, repaid or replaced
prior to 30 June 2014, the maturity date will be 31 July 2015. The undrawn portion includes 92,262 for ASMPT, which amount is
restricted to be used only in the operations of ASMPT. The undrawn portion includes 6,587 for ASM Japan, which amount is restricted to be
used only in the operations of ASM Japan.



The Company uses
notes payable to banks to manage short term liquidity and uses long-term debt and convertible subordinated debt to manage long term liquidity.



For the majority of purchase commitments, the Company has flexible delivery schedules depending on the market conditions, which allows the Company,
to a certain extent, to delay delivery beyond originally planned delivery schedules.



24- Research and Development



Research and Development consists of the following:



|                                            |  |                         |        |   |      |  |        |      |  |  |         |  
|------------------------------------------- |  | ----------------------- | ------ | - | ---- |  | ------ | ---- |  |  | ------- | -
|                                            |  | Year ended December 31, |       
|                                            |  | 2009                    |        |   | 2010 |  |        | 2011 | 
|Research and development expenses           |  |                         | 63,934 |   |      |  | 79,331 |      |  |  | 130,153 |  
|Research and development grants and credits |  |                         | (1,128 | ) |      |  | (546   | )    |  |  | (753    | )
|                                            |  |                         |        |   |      |  |        |      |  |  |         |  
|Total research and development              |  |                         | 62,806 |   |      |  | 78,785 |      |  |  | 129,400 |  
|                                            |  |                         |        |   |      |  |        |      |  |  |         |  



The Companys operations in the
Netherlands, Germany and the United States receive research and development grants and credits from various sources. The research and development grants and credits received from governmental sources in the Netherlands include a credit which is
contingently repayable to the extent the Company recognizes sales of products to which the credit is related within an agreed upon period. The Company does not recognize a liability on the Consolidated Balance Sheet in respect of this credit until
it recognizes sales of products to which the credit is related, within the agreed upon period and is then charged to cost of sales when such sales are recorded. The repayment amounts to 4.0% of the realized sales of these products.



With the disposal of our RTP business in 2009 the liability has been
transferred to Levitech B.V., the vehicle in which the management buy-out has been constructed. ASM International N.V. participates for 20% in Levitech B.V. With the disposal of our RTP business we have licensed our RTP portfolio of 50 issued
patents and 23 pending patents to Levitech BV.



25- Restructuring
expenses



In 2009 ASMI started the implementation of a
major restructuring in the Front-end segment (PERFORM!) as announced on January 9, 2009 and on July 20, 2009. The main components of the Companys accelerated execution plans are:



| |  |  | The consolidation of our global Front-end manufacturing operations from Europe, the United States and Japan, into our Front-end manufacturing operations in
Singapore by the end of 2010. This will be achieved by completing the previously announced transfer from Almere, the Netherlands, which was finalized during 2009; the phasing out the manufacturing operation in Phoenix, Arizona, in the first half of
2010; and by transferring manufacturing from Nagaoka, Japan, no later than the fourth quarter of 2010.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The reduction of selling, general and administration expenses by making fundamental changes in our global support infrastructure. This includes a significant
simplification and streamlining of our warehousing operations and the further strengthening of the global sales & service organization which was created last year.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The leveraging of research and development and our product portfolio by reprioritization of strategic programs in order to maximize their potential.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



F-45



---

##### Table of Contents

The following table summarizes the aggregated restructuring expenses by type:



|                                      |  |                         |        |  |      |  |        |      |  |  |   | 
|------------------------------------- |  | ----------------------- | ------ |  | ---- |  | ------ | ---- |  |  | - | 
|                                      |  | Year ended December 31, |       
|                                      |  | 2009                    |        |  | 2010 |  |        | 2011 | 
|Employee related expenses             |  |                         | 19,437 |  |      |  | 4,534  |      |  |  |  | 
|Contract termination related expenses |  |                         | 2,799  |  |      |  | 779    |      |  |  |  | 
|Impairment charges                    |  |                         | 4,623  |  |      |  |       |      |  |  |  | 
|Transition expenses                   |  |                         | 4,366  |  |      |  | 3,806  |      |  |  |  | 
|Expenses buy out RTP                  |  |                         | 3,940  |  |      |  |       |      |  |  |  | 
|Other expenses                        |  |                         | 522    |  |      |  | 2,082  |      |  |  |  | 
|                                      |  |                         |        |  |      |  |        |      |  |  |   | 
|Total restructuring expenses          |  |                         | 35,687 |  |      |  | 11,201 |      |  |  |  | 
|                                      |  |                         |        |  |      |  |        |      |  |  |   | 



Related to these execution plans, an
amount of 11.2 million in restructuring expenses was recorded in 2010. These expenses were mainly costs for severance packages,
retention costs, provisions for vacancy and other costs related to the transition of activities to Singapore.



Related to these execution plans, an amount of 35.7 million in restructuring expenses was recorded for of 2009. These charges include:



| |  |  | Employee related expenses of 19.4 million.
Included are unconditional one-time termination benefits of 15.8 million, conditional one-time termination benefits subject to the
final termination date of 1.7 million and other employee related expenses of
1.9 million.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Contract termination related expenses of 2.8
million. These expenses mainly relate to operational lease contracts and include both the valuating of the onerous contracts at fair value, the decommissioning expenses and impairments of leasehold improvements.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Impairment charges of 4.6 million mainly
related to machinery and equipment. We impaired certain demo tools which were as a result of the strategic reorientation determined end of life. The impairment charges were determined based on the difference between the assets estimated fair
value and their carrying amount.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expenses of 4.4 million resulting from the
transition of our global Front-end manufacturing operations from Europe, the United States and Japan, into our Front-end manufacturing operations in Singapore.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expenses of 3.9 million related to the
management buy-out of our RTP.
| | - |  | ----------------------------------------------------------------------



| |  |  | Other expenses of 0.6 million.
| | - |  | -------------------------------



26- Income Taxes



The components of earnings (loss) before income taxes and
Non-controlling interest consist of:



|                                                                 |  |                         |         |   |      |  |         |      |  |  |         |  
|---------------------------------------------------------------- |  | ----------------------- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | -
|                                                                 |  | Year ended December 31, |        
|                                                                 |  | 2009                    |         |   | 2010 |  |         | 2011 | 
|The Netherlands                                                  |  |                         | (92,945 | ) |      |  | (48,177 | )    |  |  | (3,450  | )
|Other countries                                                  |  |                         | 28,458  |   |      |  | 333,639 |      |  |  | 356,305 |  
|                                                                 |  |                         |         |   |      |  |         |      |  |  |         |  
|Earnings (Loss) before income taxes and Non-controlling interest |  |                         | (64,487 | ) |      |  | 285,462 |      |  |  | 352,855 |  
|                                                                 |  |                         |         |   |      |  |         |      |  |  |         |  



The income tax expense consists of:



|                   |  |                         |         |   |      |  |         |      |  |  |         |  
|------------------ |  | ----------------------- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | -
|                   |  | Year ended December 31, |        
|                   |  | 2009                    |         |   | 2010 |  |         | 2011 | 
|Current:           |  |                         |         |   |      |  |         |      |  |  |         |  
|The Netherlands    |  |                         | (297    | ) |      |  | (505    | )    |  |  | (494    | )
|Other countries    |  |                         | (12,570 | ) |      |  | (38,342 | )    |  |  | (64,684 | )
|                   |  |                         |         |   |      |  |         |      |  |  |         |  
|                   |  |                         | (12,867 | ) |      |  | (38,847 | )    |  |  | (65,178 | )
|Deferred:          |  |                         |         |   |      |  |         |      |  |  |         |  
|The Netherlands    |  |                         |        |   |      |  |        |      |  |  |        |  
|Other countries    |  |                         | 9,081   |   |      |  | (4,093  | )    |  |  | 28,486  |  
|                   |  |                         |         |   |      |  |         |      |  |  |         |  
|Income tax expense |  |                         | (3,786  | ) |      |  | (42,939 | )    |  |  | (36,692 | )
|                   |  |                         |         |   |      |  |         |      |  |  |         |  



F-46



---

##### Table of Contents

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



|                                                                  |  |                         |         |   |      |  |         |      |  |  |         |  
|----------------------------------------------------------------- |  | ----------------------- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | -
|                                                                  |  | Year ended December 31, |        
|                                                                  |  | 2009                    |         |   | 2010 |  |         | 2011 | 
|Earnings (Loss) before income taxes and Non-controlling interest  |  |                         | (64,487 | ) |      |  | 285,462 |      |  |  | 352,855 |  
|Netherlands statutory income tax rate                             |  |                         | 25.5    | % |      |  | 25.5    | %    |  |  | 25.0    | %
|Income tax provision at statutory rate                            |  |                         | 16,444  |   |      |  | (72,793 | )    |  |  | (88,214 | )
|Non-deductible expenses                                           |  |                         | (8,376  | ) |      |  | (8,250  | )    |  |  | (8,228  | )
|Foreign taxes at a rate other than the Netherlands statutory rate |  |                         | 16,100  |   |      |  | 24,198  |      |  |  | 12,983  |  
|Valuation allowance                                               |  |                         | (32,087 | ) |      |  | (3,698  | )    |  |  | 17,991  |  
|Non-taxable income                                                |  |                         | 4,870   |   |      |  | 18,536  |      |  |  | 30,156  |  
|Other                                                             |  |                         | (737    | ) |      |  | (932    | )    |  |  | (1,380  | )
|                                                                  |  |                         |         |   |      |  |         |      |  |  |         |  
|Income tax expense                                                |  |                         | (3,786  | ) |      |  | (42,939 | )    |  |  | (36,692 | )
|                                                                  |  |                         |         |   |      |  |         |      |  |  |         |  



Included in non-taxable income for 2011
is 11,275 regarding the Companys manufacturing operations in Singapore and other countries where income covering certain products
is non-taxable or subject to concessional tax rates under tax incentive schemes granted by the local tax authority. The majority of these tax incentive schemes have terms ending by December 31, 2020.



On 29 May 2006 and 8 June 2009 the Singapore Economic
Development Board (EDB) granted Pioneer Certificates to ASM Front End Manufacturing Singapore Pte Ltd (FEMS, a principal subsidiary of the Group,) to the effect that profits arising from certain manufacturing activities by
FEMS of Front End equipment will in principle be exempted from tax for a period of 10 years effective from dates ranging between 1 April 2005 and 1 July 2008, subject to fulfillment of certain criteria during the period.



On 12 July 2010, the EDB granted a Pioneer Certificate to ASM
Technology Singapore Pte Limited (ATS), a principal subsidiary of the Group, to the effect that profits arising from certain products will be exempted from tax for a period of 10 years effective from dates ranging between 1 June
2010 and 1 January 2012 across specified products, subject to fulfillment of certain criteria during the period. EDB had also granted a 5 year Development and Expansion Incentive (DEI) to ATS to the effect that the profits arising from certain
existing products shall be subject a concessionary tax rate of 10% for a period of 5 years from 1 January 2011, subject to the fulfillment of certain criteria during the period.



On the same date, the EDB also granted ATS an International Headquarters (IHQ) Award to the effect that
certain income arising from qualifying activities conducted by ATS, excluding income from business transactions with companies or end customers in Singapore, shall be subject to concessionary tax rate of 5% for a period of 10 years from
1 January 2011, subject to fulfillment of certain criteria during the period.



The Netherlands statutory tax rate amounted to 25.5% in 2009 and 2010, for 2011 this rate was 25.0%. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions. The
Companys deferred tax assets and liabilities have been determined in accordance with these statutory income tax rates.



Deferred income taxes consist of the following:



|                          |  |              |          |   |      |  |         |  
|------------------------- |  | ------------ | -------- | - | ---- |  | ------- | -
|                          |  | December 31, |         
|                          |  | 2010         |          |   | 2011 | 
|Deferred tax assets:      |  |              |          |   |      |  |         |  
|Reserves and allowances   |  |              | 7,020    |   |      |  | 10,415  |  
|Net operating losses      |  |              | 153,407  |   |      |  | 86,720  |  
|Depreciation              |  |              | 2,331    |   |      |  | 363     |  
|Other                     |  |              | 1,216    |   |      |  | 6,391   |  
|                          |  |              |          |   |      |  |         |  
|Gross deferred tax assets |  |              | 163,974  |   |      |  | 103,889 |  
|Less: valuation allowance |  |              | (149,600 | ) |      |  | (76,467 | )
|                          |  |              |          |   |      |  |         |  
|Net deferred tax assets   |  |              | 14,374   |   |      |  | 27,422  |  
|Deferred tax liabilities  |  |              | (321     | ) |      |  | (4,381  | )
|                          |  |              |          |   |      |  |         |  
|Net deferred income taxes |  |              | 14,053   |   |      |  | 23,041  |  
|                          |  |              |          |   |      |  |         |  



F-47



---

##### Table of Contents

Deferred tax assets and liabilities are classified in the consolidated balance sheet as follows:



|                                     |  |              |        |   |      |  |        |  
|------------------------------------ |  | ------------ | ------ | - | ---- |  | ------ | -
|                                     |  | December 31, |       
|                                     |  | 2010         |        |   | 2011 | 
|Deferred tax assetscurrent          |  |              | 8,567  |   |      |  | 14,350 |  
|Deferred tax assetsnon-current      |  |              | 5,807  |   |      |  | 13,072 |  
|Deferred tax liabilitiescurrent     |  |              |       |   |      |  | (3,513 | )
|Deferred tax liabilitiesnon-current |  |              | (321   | ) |      |  | (868   | )
|                                     |  |              |        |   |      |  |        |  
|                                     |  |              | 14,053 |   |      |  | 23,041 |  
|                                     |  |              |        |   |      |  |        |  



Based on tax filings, ASMI and its
individual subsidiaries have net operating losses available at December 31, 2011 of 317,632 for tax return purposes to reduce future
income taxes, mainly in Europe. During fiscal year 2011, the Company entered into transactions due to which considerable net operating losses, that were generated before 2003, were offset. 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 losses,
the Company believes that there is currently insufficient evidence to substantiate recognition of substantially all net deferred tax assets with respect to net operating losses. Accordingly, a valuation allowance of 149,600 in 2010 and 76,467 in
2011 has been recorded.



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



|                     |  |  |         | 
|-------------------- |  |  | ------- | 
|Expiration year      |  |  |        
|2012                 |  |  | 41,031  | 
|2013                 |  |  | 16,309  | 
|2014                 |  |  | 37,607  | 
|2015                 |  |  | 0       | 
|2016                 |  |  | 10,567  | 
|2017                 |  |  | 47,712  | 
|2018                 |  |  | 57,753  | 
|2019                 |  |  | 35,929  | 
|2020                 |  |  | 325     | 
|2021-2028            |  |  | 0       | 
|2029                 |  |  | 17,837  | 
|2030                 |  |  | 3,762   | 
|Unlimited            |  |  | 48,800  | 
|                     |  |  |         | 
|Net operating losses |  |  | 317,632 | 
|                     |  |  |         | 



The Company has not provided for
deferred foreign withholding taxes, if any, on undistributed earnings of its foreign subsidiaries. At December 31, 2011 the undistributed earnings of subsidiaries, subject to withholding taxes, were approximately 63,270. These earnings could become subject to foreign (withholding) taxes if they were remitted as dividends and / or if the Company should
sell its interest in the subsidiaries.



Consistent with the
provisions of ASC 740, as of December 31, 2011, ASMI has a liability of unrecognized tax benefits of 21.7 million. A reconciliation
of the beginning and ending balance of the liability for unrecognized tax benefits is as follows:



|                                              |  |  |        |  
|--------------------------------------------- |  |  | ------ | -
|Balance January 1, 2009                       |  |  | 14,841 |  
|Gross increasestax positions in current year |  |  | 1,381  |  
|Foreign currency translation effect           |  |  | (560   | )
|                                              |  |  |        |  
|Balance December 31, 2009                     |  |  | 15,663 |  
|Gross increasestax positions in current year |  |  | 3,230  |  
|Foreign currency translation effect           |  |  | 1,164  |  
|                                              |  |  |        |  
|Balance December 31, 2010                     |  |  | 20,057 |  
|Gross increasestax positions in current year |  |  | 950    |  
|Foreign currency translation effect           |  |  | 742    |  
|                                              |  |  |        |  
|Balance December 31, 2011                     |  |  | 21,749 |  
|                                              |  |  |        |  



F-48



---

##### Table of Contents

Unrecognized tax benefits mainly relate to transfer pricing positions, operational activities in
countries where the Company is not tax registered and tax deductible costs. The Company estimates that no interest and penalties are related to these unrecognized tax benefits. In the year ended December 31, 2011, no settlement with tax
authorities and no reduction as a result of a lapse of statute of limitations occurred.



Unrecognized tax benefits of 21,749 would, if recognized, impact the Companys effective tax
rate. The Company provided for the full amount of 21,749 to mitigate possible impact in case of an unfavorable outcome. The unrecognized
tax benefits are classified in the consolidated balance sheet under accrued expenses and other and are covered with purchased tax certificates which are classified in the consolidated balance sheet under other current assets.



A summary of open tax years by major jurisdiction is as
follows:



|                |  |          
|--------------- |  | ---------
|Jurisdiction    |  |          
|Japan           |  | 2011     
|Hong Kong       |  | 20002011
|The Netherlands |  | 20072011
|Singapore       |  | 20082011
|United States   |  | 19972011



The calculation of the Companys
tax liabilities involves dealing with uncertainties in the application of complex tax laws. The Companys estimate for the potential outcome of any unrecognized tax benefits is highly judgmental. Settlement of unrecognized tax benefits in
a manner inconsistent with the Companys expectations could have a material impact on the Companys financial position, net earnings and cash flows. The Company is subject to tax audits in its major tax jurisdictions, local tax authorities
may challenge the positions taken by the Company.



27- Disclosures about
Segments and Related Information



The Company organizes
its activities in two operating segments, Front-end and Back-end. Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer (CEO), which is the chief operating decision
maker (according to ASC 280).



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 ASM Pacific Technology Ltd., in which the Company holds a majority of 52.17% interest, whilst the remaining shares are listed on the Stock Exchange of Hong Kong. The segments main
operations are located in Hong Kong, the Peoples Republic of China, Singapore and Malaysia.



F-49



---

##### Table of Contents

|                                                 |  |           |          |   |          |  |         |       |  |  |          |  
|------------------------------------------------ |  | --------- | -------- | - | -------- |  | ------- | ----- |  |  | -------- | -
|                                                 |  | Front-end |          |   | Back-end |  |         | Total | 
|Year ended December 31, 2009                     |  |           |          |   |          |  |         |       |  |  |          |  
|                                                 |  |           |         
|Net sales to unaffiliated customers              |  |           | 160,378  |   |          |  | 430,361 |       |  |  | 590,739  |  
|Gross profit                                     |  |           | 8,726    |   |          |  | 172,789 |       |  |  | 181,515  |  
|Result from operations                           |  |           | (120,269 | ) |          |  | 95,113  |       |  |  | (25,156  | )
|Interest income                                  |  |           | 541      |   |          |  | 477     |       |  |  | 1,018    |  
|Interest expense                                 |  |           | (8,556   | ) |          |  |        |       |  |  | (8,556   | )
|Loss resulting from early extinguishment of debt |  |           | (1,759   | ) |          |  |        |       |  |  | (1,759   | )
|Accretion interest expense convertible notes     |  |           | (4,286   | ) |          |  |        |       |  |  | (4,286   | )
|Revaluation conversion option                    |  |           | (24,364  | ) |          |  |        |       |  |  | (24,364  | )
|Foreign currency exchange gains (losses), net    |  |           | (733     | ) |          |  | (651    | )     |  |  | (1,384   | )
|Income tax expense                               |  |           | 7,890    |   |          |  | (11,676 | )     |  |  | (3,786   | )
|Net earnings (loss)                              |  |           | (151,535 | ) |          |  | 83,262  |       |  |  | (68,273  | )
|                                                 |  |           |         
|Allocation of net earnings (loss):               |  |           |          |   |          |  |         |       |  |  |          |  
|Shareholders of the parent                       |  |           |          |   |          |  |         |       |  |  | (107,517 | )
|Non-controlling interest                         |  |           |          |   |          |  |         |       |  |  | 39,244   |  
|                                                 |  |           |         
|Capital expenditures                             |  |           | 3,269    |   |          |  | 9,450   |       |  |  | 12,718   |  
|Purchase of other intangibles                    |  |           | 2,934    |   |          |  | 360     |       |  |  | 3,294    |  
|Depreciation                                     |  |           | 11,436   |   |          |  | 20,619  |       |  |  | 32,054   |  
|Amortization of other intangible assets          |  |           | 1,884    |   |          |  | 451     |       |  |  | 2,335    |  
|Impairment of property, plant and equipment      |  |           | 4,628    |   |          |  |        |       |  |  | 4,628    |  
|Cash and cash equivalents                        |  |           | 181,681  |   |          |  | 112,222 |       |  |  | 293,902  |  
|Capitalized goodwill                             |  |           | 10,395   |   |          |  | 36,828  |       |  |  | 47,223   |  
|Other intangible assets                          |  |           | 8,440    |   |          |  | 497     |       |  |  | 8,936    |  
|Other identifiable assets                        |  |           | 187,194  |   |          |  | 314,445 |       |  |  | 501,638  |  
|Total assets                                     |  |           | 387,709  |   |          |  | 463,991 |       |  |  | 851,700  |  
|Total debt                                       |  |           | 265,430  |   |          |  |        |       |  |  | 265,430  |  
|Headcount in full-time equivalents1              |  |           | 1,294    |   |          |  | 10,773  |       |  |  | 12,067   |  
|                                                 |  |           |          |   |          |  |         |       |  |  |          |  



|(1) | Headcount includes those employees with a fixed contract, and is exclusive of temporary workers.
|--- | ------------------------------------------------------------------------------------------------



|                                                 |  |           |         |   |          |  |         |       |  |  |           |  
|------------------------------------------------ |  | --------- | ------- | - | -------- |  | ------- | ----- |  |  | --------- | -
|                                                 |  | Front-end |         |   | Back-end |  |         | Total | 
|Year ended December 31, 2010                     |  |           |         |   |          |  |         |       |  |  |           |  
|                                                 |  |           |        
|Net sales to unaffiliated customers              |  |           | 293,356 |   |          |  | 929,544 |       |  |  | 1,222,900 |  
|Gross profit                                     |  |           | 114,624 |   |          |  | 434,954 |       |  |  | 549,578   |  
|Result from operations                           |  |           | 15,954  |   |          |  | 312,686 |       |  |  | 328,640   |  
|Interest income                                  |  |           | 615     |   |          |  | 605     |       |  |  | 1,221     |  
|Interest expense                                 |  |           | (15,677 | ) |          |  |        |       |  |  | (15,677   | )
|Loss resulting from early extinguishment of debt |  |           | (3,609  | ) |          |  |        |       |  |  | (3,609    | )
|Accretion interest expense convertible notes     |  |           | (6,010  | ) |          |  |        |       |  |  | (6,010    | )
|Revaluation conversion option                    |  |           | (19,037 | ) |          |  |        |       |  |  | (19,037   | )
|Foreign currency exchange gains (losses), net    |  |           | (1,809  | ) |          |  | 1,744   |       |  |  | (65       | )
|Income tax expense                               |  |           | (6,106  | ) |          |  | (36,833 | )     |  |  | (42,939   | )
|Net earnings (loss)                              |  |           | (35,679 | ) |          |  | 278,202 |       |  |  | 242,523   |  
|                                                 |  |           |        
|Allocation of net earnings:                      |  |           |         |   |          |  |         |       |  |  |           |  
|Shareholders of the parent                       |  |           |         |   |          |  |         |       |  |  | 110,639   |  
|Non-controlling interest                         |  |           |         |   |          |  |         |       |  |  | 131,884   |  
|                                                 |  |           |        
|Capital expenditures                             |  |           | 17,653  |   |          |  | 85,320  |       |  |  | 102,974   |  
|Purchase of other intangibles                    |  |           | 43      |   |          |  | 582     |       |  |  | 625       |  
|Depreciation property, plant & equipment         |  |           | 8,930   |   |          |  | 21,700  |       |  |  | 30,630    |  
|Depreciation evaluation tools at customers       |  |           | 2,477   |   |          |  |        |       |  |  | 2,477     |  
|Amortization of other intangible assets          |  |           | 2,338   |   |          |  | 397     |       |  |  | 2,735     |  
|Cash and cash equivalents                        |  |           | 142,420 |   |          |  | 197,874 |       |  |  | 340,294   |  
|Capitalized goodwill                             |  |           | 11,193  |   |          |  | 39,622  |       |  |  | 50,815    |  
|Other intangible assets                          |  |           | 6,089   |   |          |  | 715     |       |  |  | 6,804     |  
|Other identifiable assets                        |  |           | 281,076 |   |          |  | 535,129 |       |  |  | 816,204   |  
|Total assets                                     |  |           | 440,777 |   |          |  | 773,340 |       |  |  | 1,214,117 |  
|Total debt                                       |  |           | 215,681 |   |          |  |        |       |  |  | 215,681   |  
|Headcount in full-time equivalents1              |  |           | 1,450   |   |          |  | 15,249  |       |  |  | 16,699    |  
|                                                 |  |           |         |   |          |  |         |       |  |  |           |  



|(1) | Headcount includes those employees with a fixed contract, and is exclusive of temporary workers.
|--- | ------------------------------------------------------------------------------------------------



F-50



---

##### Table of Contents

|                                                 |  |           |         |   |          |  |           |       |  |  |           |  
|------------------------------------------------ |  | --------- | ------- | - | -------- |  | --------- | ----- |  |  | --------- | -
|                                                 |  | Front-end |         |   | Back-end |  |           | Total | 
|Year ended December 31, 2011                     |  |           |         |   |          |  |           |       |  |  |           |  
|                                                 |  |           |        
|Net sales to unaffiliated customers              |  |           | 456,065 |   |          |  | 1,178,270 |       |  |  | 1,634,334 |  
|Gross profit                                     |  |           | 172,318 |   |          |  | 398,308   |       |  |  | 570,626   |  
|Result from operations                           |  |           | 62,581  |   |          |  | 304,869   |       |  |  | 367,450   |  
|Interest income                                  |  |           | 976     |   |          |  | 1,925     |       |  |  | 2,902     |  
|Interest expense                                 |  |           | (13,142 | ) |          |  | (354      | )     |  |  | (13,497   | )
|Loss resulting from early extinguishment of debt |  |           | (824    | ) |          |  |          |       |  |  | (824      | )
|Accretion interest expense convertible notes     |  |           | (4,401  | ) |          |  |          |       |  |  | (4,401    | )
|Revaluation conversion option                    |  |           | (4,378  | ) |          |  |          |       |  |  | (4,378    | )
|Foreign currency exchange gains (losses), net    |  |           | 8,296   |   |          |  | (2,692    | )     |  |  | 5,604     |  
|Income tax expense                               |  |           | (4,581  | ) |          |  | (32,111   | )     |  |  | (36,692   | )
|Net earnings (loss)                              |  |           | 44,527  |   |          |  | 271,637   |       |  |  | 316,164   |  
|                                                 |  |           |        
|Allocation of net earnings:                      |  |           |         |   |          |  |           |       |  |  |           |  
|Shareholders of the parent                       |  |           |         |   |          |  |           |       |  |  | 186,770   |  
|Non-controlling interest                         |  |           |         |   |          |  |           |       |  |  | 129,394   |  
|                                                 |  |           |        
|Capital expenditures                             |  |           | 16,369  |   |          |  | 72,849    |       |  |  | 89,218    |  
|Net purchase of other intangibles                |  |           | 6,141   |   |          |  | 910       |       |  |  | 7,051     |  
|Depreciation property, plant & equipment         |  |           | 9,162   |   |          |  | 30,823    |       |  |  | 39,985    |  
|Depreciation evaluation tools at customers       |  |           | 2,518   |   |          |  |          |       |  |  | 2,518     |  
|Amortization of other intangible assets          |  |           | 2,655   |   |          |  | 1,815     |       |  |  | 4,471     |  
|Impairment of property, plant and equipment      |  |           |        |   |          |  | (8,038    | )     |  |  | (8,038    | )
|Cash and cash equivalents                        |  |           | 228,114 |   |          |  | 162,136   |       |  |  | 390,250   |  
|Capitalized goodwill                             |  |           | 11,193  |   |          |  | 40,939    |       |  |  | 52,131    |  
|Other intangible assets                          |  |           | 9,643   |   |          |  | 5,133     |       |  |  | 14,776    |  
|Other identifiable assets                        |  |           | 336,090 |   |          |  | 788,973   |       |  |  | 1,125,063 |  
|Total assets                                     |  |           | 585,040 |   |          |  | 997,181   |       |  |  | 1,582,221 |  
|Total debt                                       |  |           | 162,464 |   |          |  | 32,946    |       |  |  | 195,409   |  
|Headcount in full-time equivalents1              |  |           | 1,631   |   |          |  | 14,563    |       |  |  | 16,194    |  
|                                                 |  |           |         |   |          |  |           |       |  |  |           |  



|(1) | Headcount includes those employees with a fixed contract, and is exclusive of temporary workers.
|--- | ------------------------------------------------------------------------------------------------



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.



Geographical information is summarized as follows:



|                                    |  |        |         |  |                        |  |         |       |  |  |               |  |  |           |           |  |              |  |         |  |  |  |           | 
|----------------------------------- |  | ------ | ------- |  | ---------------------- |  | ------- | ----- |  |  | ------------- |  |  | --------- | --------- |  | ------------ |  | ------- |  |  |  | --------- | 
|                                    |  | Europe |         |  | UnitedStates ofAmerica |  |         | Japan |  |  | SoutheastAsia |  |  | Corporate |           |  | Consolidated | 
|Year ended December 31, 2009        |  |        |         |  |                        |  |         |       |  |  |               |  |  |           |           |  |              |  |         |  |  |  |           | 
|                                    |  |        |         |  |                        | 
|Net sales to unaffiliated customers |  |        | 40,236  |  |                        |  | 66,955  |       |  |  | 38,834        |  |  |           | 444,714   |  |              |  |        |  |  |  | 590,739   | 
|Long-lived assets                   |  |        | 2,246   |  |                        |  | 4,119   |       |  |  | 15,417        |  |  |           | 92,762    |  |              |  | 267     |  |  |  | 114,811   | 
|Total assets                        |  |        | 36,073  |  |                        |  | 49,350  |       |  |  | 95,350        |  |  |           | 518,344   |  |              |  | 152,583 |  |  |  | 851,700   | 
|Capital expenditures                |  |        | 49      |  |                        |  | 401     |       |  |  | 953           |  |  |           | 11,309    |  |              |  | 6       |  |  |  | 12,718    | 
|Purchase of intangible assets       |  |        |        |  |                        |  | 1       |       |  |  |              |  |  |           | 383       |  |              |  | 2,910   |  |  |  | 3,294     | 
|Year ended December 31, 2010        |  |        |         |  |                        |  |         |       |  |  |               |  |  |           |           |  |              |  |         |  |  |  |           | 
|Net sales to unaffiliated customers |  |        | 76,235  |  |                        |  | 112,863 |       |  |  | 90,394        |  |  |           | 943,408   |  |              |  |        |  |  |  | 1,222,900 | 
|Long-lived assets                   |  |        | 1,978   |  |                        |  | 9,395   |       |  |  | 19,409        |  |  |           | 167,020   |  |              |  | 135     |  |  |  | 197,937   | 
|Total assets                        |  |        | 40,470  |  |                        |  | 85,065  |       |  |  | 92,547        |  |  |           | 839,720   |  |              |  | 156,315 |  |  |  | 1,214,117 | 
|Capital expenditures                |  |        | 186     |  |                        |  | 7,059   |       |  |  | 5,388         |  |  |           | 90,279    |  |              |  | 62      |  |  |  | 102,974   | 
|Purchase of intangible assets       |  |        |        |  |                        |  |        |       |  |  |              |  |  |           | 607       |  |              |  | 17      |  |  |  | 624       | 
|                                    |  |        |         |  |                        | 
|Year ended December 31, 2011        |  |        |         |  |                        |  |         |       |  |  |               |  |  |           |           |  |              |  |         |  |  |  |           | 
|Net sales to unaffiliated customers |  |        | 338,065 |  |                        |  | 185,943 |       |  |  | 96,697        |  |  |           | 1,013,629 |  |              |  |        |  |  |  | 1,634,334 | 
|Long-lived assets                   |  |        | 16,021  |  |                        |  | 13,110  |       |  |  | 18,273        |  |  |           | 212,605   |  |              |  | 171     |  |  |  | 260,180   | 
|Total assets                        |  |        | 406,586 |  |                        |  | 131,498 |       |  |  | 120,717       |  |  |           | 733,571   |  |              |  | 189,850 |  |  |  | 1,582,221 | 
|Capital expenditures                |  |        | 7,425   |  |                        |  | 8,429   |       |  |  | 1,559         |  |  |           | 71,720    |  |              |  | 85      |  |  |  | 89,218    | 
|Purchase of intangible assets       |  |        | 29      |  |                        |  | 779     |       |  |  | 635           |  |  |           | 1,378     |  |              |  | 4,230   |  |  |  | 7,051     | 
|                                    |  |        |         |  |                        |  |         |       |  |  |               |  |  |           |           |  |              |  |         |  |  |  |           | 



F-51



---

##### Table of Contents

Long-lived assets for the years ended December 31, 2009, 2010 and 2011 consist of the
Companys property, plant and equipment.



28- Selected Operating
Expenses and Additional Information



Personnel expenses
for employees were as follows:



|                   |  |              |         |  |      |  |         |      |  |  |         | 
|------------------ |  | ------------ | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                   |  | December 31, |        
|                   |  | 2009         |         |  | 2010 |  |         | 2011 | 
|Wages and salaries |  |              | 157,789 |  |      |  | 236,746 |      |  |  | 318,944 | 
|Social security    |  |              | 14,314  |  |      |  | 17,402  |      |  |  | 42,622  | 
|Pension expenses   |  |              | 9,849   |  |      |  | 12,303  |      |  |  | 18,945  | 
|                   |  |              |         |  |      |  |         |      |  |  |         | 
|                   |  |              | 181,952 |  |      |  | 266,451 |      |  |  | 380,511 | 
|                   |  |              |         |  |      |  |         |      |  |  |         | 



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



|                         |  |              |        |  |      |  |        |      |  |  |        | 
|------------------------ |  | ------------ | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                         |  | December 31, |       
|                         |  | 2009         |        |  | 2010 |  |        | 2011 | 
|The Netherlands          |  |              | 288    |  |      |  | 170    |      |  |  | 167    | 
|Other European countries |  |              | 154    |  |      |  | 139    |      |  |  | 993    | 
|United States of America |  |              | 418    |  |      |  | 358    |      |  |  | 468    | 
|Southeast Asia           |  |              | 10,136 |  |      |  | 13,389 |      |  |  | 15,716 | 
|Japan                    |  |              | 246    |  |      |  | 197    |      |  |  | 181    | 
|                         |  |              |        |  |      |  |        |      |  |  |        | 
|                         |  |              | 11,242 |  |      |  | 14,253 |      |  |  | 17,525 | 
|                         |  |              |        |  |      |  |        |      |  |  |        | 



29- Earnings per Share



Basic net earnings (loss) per common share is computed by dividing net
earnings (loss) by the weighted average ordinary shares outstanding for that period. Diluted net earnings (loss) per ordinary share reflects the potential dilution that could occur if stock options under the ASMI Option Plan were exercised and if
convertible notes were converted, unless potential dilution would have an anti-dilutive effect.



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:



|                                                                                                                                       |  |              |          |   |      |  |         |      |  |  |         | 
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | ---- |  | ------- | ---- |  |  | ------- | 
|                                                                                                                                       |  | December 31, |         
|                                                                                                                                       |  | 2009         |          |   | 2010 |  |         | 2011 | 
|Net earnings used for purpose of computing basic earnings per common share                                                             |  |              | (107,522 | ) |      |  | 110,639 |      |  |  | 186,770 | 
|After-tax equivalent of interest expense on convertible subordinated notes                                                             |  |              |         |   |      |  | 17,670  |      |  |  | 17,670  | 
|                                                                                                                                       |  |              |          |   |      |  |         |      |  |  |         | 
|Net earnings used for purposes of computing diluted net earnings per common share                                                      |  |              | (107,522 | ) |      |  | 128,309 |      |  |  | 204,440 | 
|                                                                                                                                       |  |              |         
|Basic weighted average number of shares outstanding during the year used for purpose of computing basic earnings per share
(thousands) |  |              | 51,627   |   |      |  | 52,435  |      |  |  | 55,210  | 
|Dilutive effect of stock options                                                                                                       |  |              |         |   |      |  | 282     |      |  |  | 570     | 
|Dilutive effect of convertible subordinated notes                                                                                      |  |              |         |   |      |  | 8,777   |      |  |  | 8,902   | 
|                                                                                                                                       |  |              |          |   |      |  |         |      |  |  |         | 
|Dilutive weighted average number of shares outstanding                                                                                 |  |              | 51,627   |   |      |  | 61,494  |      |  |  | 64,682  | 
|                                                                                                                                       |  |              |         
|Net earnings per share:                                                                                                                |  |              |          |   |      |  |         |      |  |  |         | 
|Basic net earnings from continuing operations                                                                                          |  |              | (2.08    | ) |      |  | 2.11    |      |  |  | 3.38    | 
|Diluted net earnings from continuing operations                                                                                        |  |              | (2.08    | ) |      |  | 2.09    |      |  |  | 3.16    | 
|                                                                                                                                       |  |              |          |   |      |  |         |      |  |  |         | 



For the year ended December 31,
2011, 81,500 option rights were not in the money and therefore not implicated in the dilutive effect of stock options.



For the year ended December 31, 2010, the effect of 2,630,113 conversion rights was anti-dilutive.



For the year ended December 31, 2009, the effect of 14,550,780
conversion rights and 80,777 option rights to acquire common stock was anti-dilutive.



F-52



---

##### Table of Contents

During 2008, ASM engaged Lehman Bros (Lehman). to repurchase ordinary ASMI shares on the
Euronext and Nasdaq markets on behalf of ASMI. As of September 15, 2008, at the time it went into bankruptcy administration, Lehman reported that it had purchased and held on our behalf 2,552,071 shares, which were accounted for as
treasury shares accordingly. ASM filed a submission with the Lehman administrators giving notice of the shares held in custody by Lehman. At ASMIs May 2009 Annual General Meeting, our shareholders resolved to cancel all of these
treasury shares which, accordingly, was accounted for in our 2009 Annual Report as a reduction of the number of outstanding shares. Lehman was notified of the cancellation of shares at the time.



In September 2010, Lehmans administrators notified us that there
is a possible shortfall in the number of shares held by Lehman of 479,279 shares (out of the 2,552,071 shares), which cannot currently be accounted for by Lehman. During 2011 we received further information based on which we conclude that the
possible shortfall in the number of shares held by Lehman is now reduced to 246,983 shares



The Lehman administrators also reported a segregated collateral cash account of US$ 6,759, that ASMI may be entitled to in the absence of the shares. We have not been able to obtain additional information to
confirm and understand the potential shortfall of shares or our ability to recover the US$ 6,759 from the Lehman bankruptcy proceedings in lieu of the shares. Accordingly, we are uncertain at this time as to the accuracy of the shortfall of shares,
our ability to claim the collateral cash sum to cover the value of any such discrepancy, and our entitlement to all or a portion of such sum when distributions are determined and made by the administrator since there is likely to also be a shortfall
in Lehman assets subject to proprietary rights. Given the magnitude of the overall Lehman administration, we believe it may take several years to obtain clarity or resolution about the potential shortfall or claim to cash. ASMI is in the process of
filing a claim with the Lehman administrators to safeguard our interests.



Considering the factual and legal uncertainties, it is premature to conclude that the 246,983 shares should still be considered as outstanding or that ASMI has a US$ 6,759 receivable from Lehman. ASMI has,
therefore, neither reversed the cancellation of these shares that we recorded in 2009, nor recorded a receivable from Lehman. If the shares would be considered as outstanding, the negative impact on our basic and diluted earnings per share (eur 1)
as at December 31, 2011 would have been 0.015 and 0.012 respectively per share.



30- Board Remuneration



The following table sets forth as to all current and former members of the Management Board of the Company, information concerning all remuneration
from the Company (including its subsidiaries) for services in all capacities:



|                   |  |                  |     |  |           |  |     |          |  |  |                        |  |  |  |       |  |  |  |       | 
|------------------ |  | ---------------- | --- |  | --------- |  | --- | -------- |  |  | ---------------------- |  |  |  | ----- |  |  |  | ----- | 
|                   |  | Basecompensation |     |  | Bonuses 5 |  |     | Pensions |  |  | Year endedDecember 31, | 
|                   |  |                  |     |  | 2011      |  |     | 2010     | 
|                   |  |                  |     |  | Total     |  |     | Total    | 
|Management Board:  |  |                  |     |  |           |  |     |          |  |  |                        |  |  |  |       |  |  |  |       | 
|C.D. del Prado     |  |                  | 529 |  |           |  | 559 |          |  |  | 69                     |  |  |  | 1,157 |  |  |  | 613   | 
|P.A.M. van Bommel1 |  |                  | 360 |  |           |  | 150 |          |  |  | 54                     |  |  |  | 564   |  |  |  | 168   | 
|W.K. Lee2          |  |                  |    |  |           |  |    |          |  |  |                       |  |  |  |      |  |  |  | 609   | 
|R.A. Ruijter3      |  |                  |    |  |           |  |    |          |  |  |                       |  |  |  |      |  |  |  | 323   | 
|J.F.M. Westendorp4 |  |                  |    |  |           |  |    |          |  |  |                       |  |  |  |      |  |  |  | 155   | 
|                   |  |                  |     |  |           |  |     |          |  |  |                        |  |  |  |       |  |  |  |       | 
|                   |  |                  | 889 |  |           |  | 709 |          |  |  | 123                    |  |  |  | 1,721 |  |  |  | 1,868 | 



|(1) | For the period July 1, 2010 through August 31, 2010 at 40% and for the period September 1, 2010 through December 31, 2010 full time.
|--- | ------------------------------------------------------------------------------------------------------------------------------------

|(2) | All remuneration relates to the compensation Mr. W.K. Lee received in his capacity as member of the Board of ASMPT.
|--- | -------------------------------------------------------------------------------------------------------------------

|(3) | For the period May 15, 2009 through December 31, 2009 and for the period January 1, 2010 through August 31, 2010.
|--- | -----------------------------------------------------------------------------------------------------------------

|(4) | For the period January 1, 2010 through May 20, 2010.
|--- | ----------------------------------------------------

|(5) | Bonuses paid in 2011 were calculated and paid in respect of performance in 2010.
|--- | --------------------------------------------------------------------------------



The remuneration of members of the Management Board has been determined
by the Supervisory Board, with the exception of Mr. W.K. Lee. His compensation has been determined by the Board of ASM Pacific Technology. The remuneration of members of the Supervisory Board has been determined by the General Meeting of
Shareholders.



F-53



---

##### Table of Contents

The following table sets forth as to all current and former members of the Supervisory Board of the
Company information concerning all remuneration (base compensation, no bonuses or pensions were paid) from the Company (including its subsidiaries) for services in all capacities:



|                    |  |                        |     |  |       |  |     | 
|------------------- |  | ---------------------- | --- |  | ----- |  | --- | 
|                    |  | Year endedDecember 31, |    
|                    |  | 2011                   |     |  | 2010  | 
|                    |  | Total                  |     |  | Total | 
|Supervisory Board:  |  |                        |     |  |       |  |     | 
|G.J. Kramer         |  |                        | 68  |  |       |  | 54  | 
|J.M.R. Danneels     |  |                        | 50  |  |       |  | 29  | 
|H.W. Kreutzer       |  |                        | 50  |  |       |  | 30  | 
|J.C. Lobbezoo       |  |                        | 53  |  |       |  | 33  | 
|M.C.J. van Pernis1  |  |                        | 50  |  |       |  | 18  | 
|U.H.R. Schumacher   |  |                        | 50  |  |       |  | 28  | 
|E.A. van Amerongen2 |  |                        |    |  |       |  | 15  | 
|                    |  |                        |     |  |       |  |     | 
|                    |  |                        | 321 |  |       |  | 206 | 
|                    |  |                        |     |  |       |  |     | 



|(1) | For the period May 20, 2010 through December 31, 2010.
|--- | ------------------------------------------------------

|(2) | For the period January 1, 2010 through May 20, 2010.
|--- | ----------------------------------------------------



No stock options have been issued to members of the Supervisory Board.



The following table shows the outstanding options to purchase ASM
International N.V. common shares held by current and former members of the Management Board, and changes in such holdings during 2011:



|                    |  |             |      |  |                           |  |         |                |  |  |                                      |  |  |                  |        |  |                             |  |         |               |  |  |                        |  |  |     |       |  |  |  |   | 
|------------------- |  | ----------- | ---- |  | ------------------------- |  | ------- | -------------- |  |  | ------------------------------------ |  |  | ---------------- | ------ |  | --------------------------- |  | ------- | ------------- |  |  | ---------------------- |  |  | --- | ----- |  |  |  | - | 
|                    |  | Yearofgrant |      |  | OutstandingJanuary 1,2011 |  |         | Grantedin 2011 |  |  | Adjustmentfromvestingcondition2011
5 |  |  | Exercisedin 2011 |        |  | OutstandingDecember 31,2011 |  |         | Exerciseprice |  |  | Remainingterm,in years | 
|Current members:    |  |             |      |  |                           |  |         |                |  |  |                                      |  |  |                  |        |  |                             |  |         |               |  |  |                        |  |  |     |       |  |  |  |   | 
|C.D. del Prado 2    |  |             | 2003 |  |                           |  | 20,000  |                |  |  |                                     |  |  |                  |       |  |                             |  |        |               |  |  | 20,000                 |  |  | US$ | 11.35 |  |  |  | 2 | 
|C.D. del Prado 1    |  |             | 2007 |  |                           |  | 19,645  |                |  |  |                                     |  |  |                  |       |  |                             |  |        |               |  |  | 19,645                 |  |  |    | 19.47 |  |  |  | 4 | 
|C.D. del Prado 1    |  |             | 2008 |  |                           |  | 100,000 |                |  |  |                                     |  |  |                  | 25,000 |  |                             |  |        |               |  |  | 125,000                |  |  |    | 12.71 |  |  |  | 5 | 
|C.D. del Prado 1    |  |             | 2009 |  |                           |  | 50,000  |                |  |  |                                     |  |  |                  |       |  |                             |  |        |               |  |  | 50,000                 |  |  |    | 15.09 |  |  |  | 6 | 
|C.D. del Prado 1    |  |             | 2011 |  |                           |  |        |                |  |  | 75,000                               |  |  |                  |       |  |                             |  |        |               |  |  | 75,000                 |  |  |    | 22.33 |  |  |  | 7 | 
|P.A.M. van Bommel4  |  |             | 2010 |  |                           |  | 25,000  |                |  |  |                                     |  |  |                  |       |  |                             |  |        |               |  |  | 25,000                 |  |  |    | 16.27 |  |  |  | 6 | 
|P.A.M. van Bommel4  |  |             | 2011 |  |                           |  |        |                |  |  | 53,000                               |  |  |                  |       |  |                             |  |        |               |  |  | 53,000                 |  |  |    | 22.33 |  |  |  | 7 | 
|Former members:     |  |             |      |  |                           |  |         |                |  |  |                                      |  |  |                  |        |  |                             |  |         |               |  |  |                        |  |  |     |       |  |  |  |   | 
|A.H. del Prado 1    |  |             | 2007 |  |                           |  | 52,886  |                |  |  |                                     |  |  |                  |       |  |                             |  |        |               |  |  | 52,886                 |  |  |    | 19.47 |  |  |  | 4 | 
|J.F.M. Westendorp 3 |  |             | 2006 |  |                           |  | 56,000  |                |  |  |                                     |  |  |                  |       |  |                             |  | (56,000 | )             |  |  |                       |  |  |    | 15.40 |  |  |  |  | 
|J.F.M. Westendorp 1 |  |             | 2007 |  |                           |  | 22,452  |                |  |  |                                     |  |  |                  |       |  |                             |  |        |               |  |  | 22,452                 |  |  |    | 19.47 |  |  |  | 4 | 
|J.F.M. Westendorp 3 |  |             | 2009 |  |                           |  | 40,000  |                |  |  |                                     |  |  |                  |       |  |                             |  |        |               |  |  | 40,000                 |  |  |    | 15.09 |  |  |  | 6 | 
|                    |  |             |      |  |                           |  |         |                |  |  |                                      |  |  |                  |        |  |                             |  |         |               |  |  |                        |  |  |     |       |  |  |  |   | 
|                    |  |             |      |  |                           |  | 385,983 |                |  |  | 128,000                              |  |  |                  | 25,000 |  |                             |  | (56,000 | )             |  |  | 482,983                |  |  |     |       |  |  |  |   | 
|                    |  |             |      |  |                           |  |         |                |  |  |                                      |  |  |                  |        |  |                             |  |         |               |  |  |                        |  |  |     |       |  |  |  |   | 



|(1) | These options are conditional. A percentagenot exceeding 150%of the options which have been granted conditionally will become unconditional after three years, based
on the total return of the Companys shares for the three years after the options are granted compared to the average total return of the shares of a relevant number of companies which are similar to the Company during the same three-year
period. The options are granted for a term of eight years.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | These options are granted for a term of ten years, and became exercisable in equal parts over a five year period.
|--- | -----------------------------------------------------------------------------------------------------------------

|(3) | These options are granted for a term of five years, and become exercisable in equal parts over a five year period.
|--- | ------------------------------------------------------------------------------------------------------------------

|(4) | These options are granted for a term of seven years and become exercisable after a 3 year vesting period.
|--- | ---------------------------------------------------------------------------------------------------------

|(5) | As a result of the final ranking of ASM International in a predefined peer group the options granted in May 2008 have vested at 125%.
|--- | -------------------------------------------------------------------------------------------------------------------------------------



The fair value per option of options granted to current and former
members of the Management Board was 8.98 in 2009 , 16.92 in 2010 and 10.43 in 2011. The compensation expense recorded in the Consolidated
Statements of Operations related to options held by current and former members of the Management Board was 737 in 2009, 572 in 2010 and 512 in 2011.



F-54



---

##### Table of Contents

In 2011, 56,000 options to purchase ASM International N.V. common shares were exercised and new shares
were issued for the exercise of these options.



The stock
option grants to members of the Management Board have been determined by the Supervisory Board.



31- Share Ownership and Related Party Transactions



The ownership or controlling interest of outstanding common shares of ASM International N.V. by members of the Management Board and Supervisory Board or members of their immediate family are as follows:



|                                                |  |                   |           |  |                                       |  |       |             |  |  |                                       |  |  |  |       |  
|----------------------------------------------- |  | ----------------- | --------- |  | ------------------------------------- |  | ----- | ----------- |  |  | ------------------------------------- |  |  |  | ----- | -
|                                                |  | December 31, 2010 |           |  | December 31, 2011                     | 
|                                                |  | Sharesowned       |           |  | Percentage ofCommon sharesoutstanding |  |       | Sharesowned |  |  | Percentage ofCommon sharesoutstanding | 
|A.H. del Prado                                  |  |                   | 9,200,839 |  |                                       |  | 17.38 | %           |  |  | 9,204,284                             |  |  |  | 16.62 | %
|C.D. del Prado (member of the Management Board) |  |                   | 132,945   |  |                                       |  | 0.26  | %           |  |  | 132,945                               |  |  |  | 0.24  | %
|J.F.M. Westendorp                               |  |                   | 6,000     |  |                                       |  | 0.01  | %           |  |  | 6,000                                 |  |  |  | 0.01  | %
|                                                |  |                   |           | 
|Stichting Administratiekantoor ASMI             |  |                   | 2,142,039 |  |                                       |  | 4.05  | %           |  |  | 2,142,039                             |  |  |  | 3.87  | %
|                                                |  |                   |           |  |                                       |  |       |             |  |  |                                       |  |  |  |       |  



Stichting Administratiekantoor ASMI is
a trust controlled by Mr. A.H. del Prado. The number of shares owned by Stichting Administratiekantoor ASMI includes 713,000 common shares which are beneficially owned by Mr. C.D. del Prado.



The Company has a related party relationship with its subsidiaries,
equity accounted investees and members of the Supervisory Board and the Management Board. Related party transactions are conducted on an at arms length basis with terms comparable to transactions with third parties. For transactions with the
Supervisory Board and the Management Board see note 30 Board Remuneration.



The Group has no significant transactions or outstanding balances with its equity-accounted investees other than its equity-interest holdings.



32- Subsequent events



On February 27 2012 one of the Companys customers, Elpida Memory Inc (Elpida), filed for
bankruptcy protection in Japan. As per 31 December, 2011 the Company had a total outstanding amount on Elpida of 362 million Yen (equivalent to 3.6 million) while about 65 million Yen ( 0,6 million) was collected in January 2012 and
also have a secured claim for the unpaid amount of the delivered equipment under Japanese Law. On March 23, 2012 the Tokyo District Court made the order to commence corporate reorganization proceedings and appointed Trustees to Elpida. Given
such uncertainty, any loss on the outstanding receivable is not yet determinable and ASMI will evaluate the impact (if any) of such plan as soon as they become available.



F-55