ASML Holding (ASML) 21 Jul 212021 Q2 Earnings call transcript

Thank you for standing by. Welcome to the ASML 2021 Second Quarter Financial Results Conference Call on July 21, 2021. Throughout today’s introduction, all participants will be in a listen-only mode. After ASML’s introduction, there will be an opportunity to ask questions. I'll now hand the floor to our speakers. Instructions]. [Operator now call to to the turn like over conference Mr. I'd Miller. Skip your Please begin meeting.

you, This Welcome, Vice right. operator. All Thank everyone. Investor at President Relations is ASML. of Miller, Skip

live call remarks Peter following taken order The Internet subject and be today's available over on of that is the results. broadcast received. Joining second ASML's also XX in of the questions of our opening this website This The me Dassen. the asml.com. ASML's minutes, management's length call today of CEO, the Roger is the CFO, this Wennink; call. they and transcript A shortly be of XXXX call on our at be being quarter are conclusion replay call is will the will and will call a

forward-looking caution of Before this during within call by begin, like we federal and I'd the that securities involve the comments made forward-looking management listeners These uncertainties. will statements statements meaning material include risks conference to laws.

For to ASML's statement for XX-F to review I brief over that, press turn website the encourage Wennink a report on at documents in Form other like a with filed annual introduction. and as Securities Exchange you asml.com, release Commission. our on Peter harbor in today's and contained factors, and safe of the I'd to discussion presentation and found risk With call the

and our joining Roger on QX session, financial before the complete additional would Welcome, quarter us But commentary are want. Thank results with and our and the of if Roger, the and will provide and families will future thank you I outlook, you business call. for XXXX an to review comments begin provide the Q&A a for our all And current as second healthy you, Skip. we of of some comments I introduction added your performance on on overview like I and business some everyone, you well and the as short-term our outlook. conference XXXX QX Roger hope start our quarters. environment coming with view with safe.

subsequent welcome, I second to quarter and in sales in €X.X that on quarter the Peter, the of financial acceptance factory acceptance. within site will lower everyone. first possible. Net billion bring into XXXX. recognized quickly receive Two as acceptance testing quarter. billion. in factory after quarter due third subsequent in completion you, guidance systems will will and desire provide shipped guidance acceptance revenue this We XX this so customer quarter recognized came testing number Thank quarter a and recognized shipped to guided without then The systems of due production at was customers' at of systems from as X revenue customer the be did quarters not after systems systems the revenue be site. accomplishments testing €X.X Therefore, to review EUV revenue EUV

R&D sales deep remaining above systems upgrade Memory for with by in at guidance, to demand this the €X.X the primarily to at expenses, XX% UV lower Memory. more towards and QX representing income SG&A the net in in The revenue operating to came €X.X was in in QX. €XXX again result QX weighted than the increased DRAM. testing, is sales site Net complete On €X.XX. system can software shipped €X.X without XX.X% acceptance one-off guidance. Again, at from drives XX.X% in million we Logic X driven acceptance was above slightly million, in billion EUV was factory systems test the environment. Net upgrade productivity Installed came for XX%, continue was as able expenses business that mainly QX. billion, margin strength we in Logic which For billion, revenue at our both quarter and recognize semiconductor guidance is revenue of pull business Gross and accounting to The additional EUV of quickly Management EPS quarter revenue. and in increase system forward and were due was customers due of €XXX software the expenses releases. upgrades sales high an business of resulting and net Base

equivalents second quarter Turning billion. short-term balance of We sheet. a to the cash at investments and with the €X.X ended cash, level

record across DRAM Memory XXXX. order that and for all this With for customers. the of Logic the deep from with like quarter, of global of to to including very for multiple was billion is environment markets. the €X.X driven reflection but come orders for The demand from net bookings, quarter strong systems. Moving turn the QX expectations and accounting €X.X for customers book, intake order XX%. coming intake I a The order came to Logic also third Order UV remaining XX% by a to EUV largely billion, at intake majority EUV continued in had bookings our EUV system of EUV our would largest the we both

We to billion net expect be total QX between and sales billion. €X.X €X.X

billion. €XXX R&D expected sales The XX% be €XXX sales. QX million of around around for Base XX% expenses between XXXX expected €X.X for at Installed SG&A expected are come QX expenses million. be to to our be are R&D expected margin QX is around expect for in Management Gross to to and XX%. and We around is

We expect around sales of to for SG&A remain X% XXXX.

In for dividend total program X.X compared million a around ASML XXXX, for under XX%. Together billion. of total per of a million. ordinary paid expected results ASML XXXX of €X.XX to the Our is ordinary estimated share a share. QX This XXXX, shares in this per increase tax dividend. to XXXX in dividend around or is effective €XXX QX, €X.XX annualized with final dividend interim the the be paid a In XXXX €X.X amount XX% purchased rate XXXX-XXXX

its XXXX and to dividends is to share XXXX. cash policy start share ASML growing executed and XX, ASML's July buyback will return shareholders December a which excess to of announces be program on buybacks, by XX through new part As financial

be As be €X previous million part to the of billion, €X buyback repurchase turn With million to program. total ASML like program over billion repurchased. expect call to the amount an buyback we shares of new used approximate X.XX will repurchased will program to approximately billion, in a not XX.X ASML remainder light shares intends program, the through for to cover up of which ASML shares up the I’d which share of €X.X shares share XXXX, to of share cancel an full under this that, will The Peter. the has and completed new the of of intends which back amount replace for amount XXXX employee plans. to

Thank you, Roger.

As profitability. Roger and has both highlighted, sales we had good quarter a in

seeing strong segments, expected in we output now our ability this customer quarter all expect to to growth XX% we nodes, growth work meet market across from an the revenue annual from across factories rate product to to both demand portfolio. driving are our sales strong demand towards and as be where up Compared customers advanced We from XX%, increase mature we comes sales supply last continued our demand. chain the and entire higher year. in around our The

to across be next demand changes around we Compared up expect to the we now be to be stronger XX% now revenue this advanced Memory growth last XXXX across we year, than last up expected year. Looking upgrades upgrade Base around quarter, year-on-year, we Memory Base quarter expected year. space nodes. application expect XX% Memory, up Logic output Compared markets. from in business now second to been year. In row, to quarter business, a be mature quarter our both up our looking wafer up XX% Base this revenue a in Compared XX% we XXXX increase Logic XXXX capability. be fastest to year continuing tight expect has market last continues year-on-year, XX% all path we provide for into this where guided. where Customers to expect now stronger revenue and In revenue customers to to and Installed see to last around to at dynamics are Installed to quarter be XX% be year. on rates we revenue Logic, where supply-demand the their different In global broad up strong expected to segments Installed the

on from As is year, we our the UV strengthen business. the majority continue to increase outlook our the of deep coming

expect meet to growing our customers now in and UV growth demand increased XXXX. planned in higher deep factory have We output

able to revenue inventory to output. On manufacturing the stocking the around of from output a While minimum We increase EUV, our limited the increase ASML usage to of expect an levels, keeping XX% continue due EUV have at communicated was the capability growth and XX% been partly in now push quarter. service its suppliers. and increased we in last realize mind year-on-year,

shipped in capability to also systems EUV systems, XXXXD XX% the our systems. half higher will increased our We deliver wafer will be first productivity a of than the which XX% vast QX system XXXXD this The in in half, into between for the in to majority systems XXXXC second contributing summarize and gross full about of the output capacity we expect margin our second XX% account customers' year. improvements XX%, now and XX% the growth To sales a year, planned fabs. taking

quarter you catch-up industry likely can to see you during reported is will three first Looking semiconductor cyclical or continue demand. we causing shortages, have we since and industries. read driven beyond last a drive into next the the other Chip to automotive demand that to if partly papers year. the more XXXX, pandemic, This expect global equipment continue highlighted the in made decisions due trends moved

more it array rapidly is technologies a of digital applications moving mature infrastructure. using out More XG, in devices the semiconductors. machine connected, transformation drivers the distributed such high from require This space, is not and nature. connected The rapidly also for applications people a sensing the to to demand where also the importantly, computing, machine but with edge edge is technologies underway technology to wide to only are high-performance as required is digital these machine secular that requires but build often growing as of only support growth power to that machine. world the also secular fueling not Computing expanding demand other to people, performance leading compute application AI, becomes for

and some chain building expand crucial semiconductor the to this a manufacturers Lastly, in additional inefficiency are countries equipment which large few geographical although be supply likely the managed sovereignty very semiconductor create or manufacturing inefficiency and potential this as an in push regional technological we regions to in will will demand risks. capabilities believe that are additional rationally infrastructure. of thus by semiconductor This planning manufacturing level for manage attempt establish

long-term fuels entire which We for and expect years, demand demand these trends next continue for for the drives product our and both to portfolio. Logic several Memory

future is demand EUV, For stronger with growth increasing on counts nodes. demand by Logic, advanced wafer EUV primarily and layer driven

as We are across implement seeing EUV demand customers EUV EUV for in three to DRAM are growing with in customers. plans also volume Memory future nodes production on ramping

required quarter, XX% capacity. our and the time. to EUV technology. brings see dry deep the covers nodes our for this with UV for hard total our of being advanced Logic, billion, Memory which in for and With longer. is customers' market to which both in this both both we supply billion, is Logic. over demand, UV Immersion chain long the XXXX. wafer includes EUV see required approximately In of advanced order stronger reflection healthy our for order the backlog are we very demand meet €XX.X to today strong of is and for certainly intake growing increasing €XX.X technology mature environment Future are We term the a in advanced more deep Memory driven products, with the increase output working and demand planned We demand, dry by mature nodes and increasing

buildings and well chain deep looking We determine continue output as to supply with to as or add are increase our to our different both across UV. in activities equipment need have suppliers, Each times, drive horizons cycle EUV for we time people, supply where these capability manufacturing our to in we down our the of Jointly factory to chain. materialize.

next years on market inventories to update execute early started year demand, with our increase to specific systems. our details yet as capacity to dry our For finalized we capacity needed a but our as soon the UV, able plans since deep This primarily therefore we parts confirmed as key sales, do XXXX response in is will will to surplus as we and not modules fuel beyond targeted have plans XXXX. we suppliers, for use need increase will provide we in plans. have will significantly in again our and to and an have the of coming UV increases we capacity, bit It’s deep to to be provide too these with capacity not the

For chain XXXX in in EUV, capacity of to for increase the we to are further EUV and a are looking systems around our EUV supply systems planning XX XX over capacity XXXX.

addition also driving higher we In capacity, deliver capacity. increase productivity our are roadmap system increasing systems our wafer to to product effective to

All the confidence an both so nodes, is growth to XXXXD provide With chip We of future strong our The on working the demand to planned please meet more customer digital questions. systems. long-term update be advanced we shipments mature Investor to demand your is will growth across book outlook. happy of future XXth, the our our world our and take Day on we the segments output demand. productivity in at trends increases to very transformation all connected XXXX fueling would the part In as to in and which a you summary, date. secular are at scenarios be higher our maximize September only plan market that,

operator you, session. right. the All will you Thank Roger. protocol Peter Q&A the The on momentarily and instruct for

you I will as X to allow short question as callers yourself that necessary. Beforehand, to many to with get like follow-up, possible. limit to kindly us would ask if This X

then final question, the operator, we Now your could and have please? instructions first

[Operator Instructions].

Bouvignies of comes question the UBS. Francois from line of first Our

I if is what new upside color one, I on a would Logic And we at had, of your trailing-edge, local how ties question dynamic, interesting a on at what new Peter, you the Logic analog? you the about shortage. And dry slice demand mean and when and up relates that look your consequence, is first look this in that, we I DUV, your the Maybe significant to of the some there may, second have between have Memory you to the and, a Would the leading-edge two. capacity? And for market obviously strong be maybe, as concern capacity video. top to talked

probably domestic to the is one kind understand is between these orders, of trying I'm supply demand what i.e., So shortage some that concern and the creating of with disconnect X factors local capacity. the inflation and

you when you about risk? how do UV this think in and EUV? this manage deep overcapacity So adding assess do How risk you of capacity

good Very questions.

I first edge leading Whether me deep EUV. to a plans. upside of need fabs in we on answer Let the good say, the dry have of know the layer terms or edge let's or, terms UV. it's built, on the driven mature? dry leading know in layer the stacks. we trailing think reasonably composition new as our And what customers of course, ramp-up immersion view by We

say. So That's more I yes, would more but that's plannable, -- insights. have growing, that's we

have also into some because non-leading-edge and U.S., explainable areas. it's the power, to from, And I that Asia. sensors, bit next a over time lead-in all It's say, and it's think if with Europe, let's the where Even in can in which your in surprised it's very us manufacturers. see the and place. has it we are really where industrial in And the automotive semiconductor a microcontrollers, to is of think this customers, contacts shortages do image it's across from with is demand globe. strong it's some other you what going analog, question good I the is

this see happening actually we So everywhere.

times in in simply in appliances analog, lead household shortage. because appliances going microcontrollers up, are You household sensors, see power,

and of rollout finally seeing are of pipe. is the big the it's we Internet what we have Things the the basically, it's XG, -- So

actually So you the And pipe use transfer actually seeing that data big we're now. what and to transport can the data. that's

in in it's we're transition the what -- the just right which the the mature semiconductors, would the basically, So that big reflection really yes, specialty middle. digital was surprise call is a we or of

assess answer there. into basically leading capacity is completely do that that It's then risk this how the assess the this All hoax? happening a we not risk we're It's an this happening. do we that question, a It's second planning digitization, we digital rollout to so infrastructure, So at misjudge. is speed the not how of for? your of increase

think and of shortages rid underlying I get is time to given take a our those will are I in the the where high think of in the trend, level there it mind. shortages, there, reality growth

the only the can started I structurally, And years, X target think capacity. industry. that market build think be I will scenario I over to for certain And year I XX X add, we've we of we and you, -- a time, the give assumption might but we So to XXXX, years underestimated growth got it last the in early. a out on first based anecdotal there have

And time that it, to scenario we got XXXX. We And mid-market that, you we billion, X gave did are effectively which years that billion, about early. The close our we did second the we're the €XX today. €XX.X are we early. we in years guiding is, again for that time was one that was third

So this we capacity. the building structurally that underestimated growth not I'm in concerned industry. in

We it. will use

Fargo. of comes the question of Joe next Our Quatrochi Wells line from

So remain the DUV about is side, into orders curious you I stretching really was the catch-up your on talked XXXX. strong. effect

place, curious as Or more dynamic? continuing half XXXX? that with just the second of with of So that your that the half book, in into catch you're you XXXX first is a capacity increases do putting order is see up

then them and depends get It Yes, increase, from -- is the happened next And products jam. which into did products can especially pandemic, because supply I it mature depends ask said extend get traffic for capacity, disruption or the double-digit half supply the a with the significant I global good that's the to increase and the confirmation earlier, a which question. get could in can our capacity a second I dry that it's speed we we I this on think our on we that easily of year. Like the say. chain, should their during chain of think like

You have and at industry. chain XX we chain again, at what And you everything it in the basically players that And again. this global key and not efficient It's many, all those basically supply locks, customers actually there. When minutes, same going the in of that yet that to time, customers' It's ecosystem start locks key in customers. what's many customers starts traffic you a now all the global take and are takes on time. aligned hour the a there it And out happening finding jam that's get supply and they're over time. put are see. They're out to fully with the an also supply depleted reassessing players the this their planning. into in effectively We of see not shortages takes before inventories whereby making our will chain place, seamless resolved. take are customers

a mid you order tapering easily. year. this relief XXXX maybe also But supply peers year, second I and of I half our into we'll some supply continue next our chain can the of if supply then, the next our the off into follow and see first half, And not lead otherwise, think will but So will chain only intake. -- the chain of we yes, think see then

the capabilities EUV you're the this maybe then manufacturing And the on Got reflective for tool than bit little door. that mix to and another maybe like revenue this richer it out configurations maybe any addition or entered to when But of a it. a year, bit or sounds just around some of outlook in perspective, things that, XXXXD is we a stronger the improve expected That's get revenue your doing from increased being sort curious, being little year? expectations helpful. to

got think those combination you It's I a Joe. Yes, of things. it,

as the customers what the than indeed over the asked is -- year, was stronger during quarters saw result saw of that to quarter that and I be you the say what for. last the you ASP think you out that think options turned I

our the ASP So, so of you than they gen were you on configurations saw is, richer saw an XXXXC XXX. there

albeit You see this small. very some in but XXXXD higher, quarter even there a very, bit

one doing element of decrease the of out tools. that's or to second So more and the one cycle two result that, utmost element time further that our a as we're crank with

increase that's in than uptick rather the to last comparison reason the behind XX% the to year, XX%. So

Our next question Sandeep of JPMorgan. Deshpande comes from line the

other on gross I the the such, really, margin. more older view mean, mean just you Clearly, shift margin capacity there that I DUV all out -- Peter, sensors or in it you capacity have this the the as higher much over midterm see shipments? margin helped as mean intend these you this do trying for you second of well intend trend, laid EUV. are at overall I gross both and helps is DUV and in higher to I Markets Day year next point? I'm to outlay how And change mean you understand as ship, additions is likely clearly years your the Do my the your EUV. DUV as I need DUV has are you mean that of Capital your to this well. question outlay on tools and DUV to few this the capacity because at that -- because

question answer. think the Roger I second will Well,

we people deep perhaps the giving all supply intention. you insight we capacity the because think only building chain, confirmed we not suppliers, who deep get dry, capacity, definitely but end need we in UV that the a more we on capacity insight think specifically to the and firm our the our on I are have on, into immersion have more UV get commitment, that of customer. that want commitment definitely would an yes, more quarter. from going the I want somewhat specific I by and it we some of think confirmations we is from we're you that give that I the get on give EUV, we But this -- actually to so you by do our e-mail firm that to will CEO, number comfortable If from key -- in think On we're feel

So the to our on we and will, demand there, we based capacity an you is quite want be in-depth don't that could we'll disappoint customers. that orders, to say, it's going orders because if accept

a So that's the expect ongoing that to to of and it's But it's been that you to process we be and time at the months. hope for able intention couple you have we give I our will that do definitely all that give I information think last I be honest, number. that to

the Yes, talking with of margin were terms you the products Sandeep, about becomes deltas smaller. therefore, the the see D do the as model, particularly on know, becomes in effect different gross between side, you the smaller. introduction And of that margin that you

important. last gross product look the there You for at quarter, terms you quarter, you the deep to immersion, relevant or last saw us. the was are strong. come. very said -- of system was lower. you, before. is very, that an in to in the see QX that And look sales a the our expectedly margin still down instance, one to which I is margin QX impact from course, the a And was to more that's is And products why immersion. on perspective, that, good say, had What watch. at quarters But is bit realistic XX% between little gross particularly you would for of why a differences also think because gross gone know less, also that we based, a This if year, that, for margin, And to build this calls for the had quarter, XX%. towards XX% I UV, reset that's as quarters within is more a we've immersion Immersion in for different margin that And of gross we you mirrors still QX. result what in percentage indicated XX% up or QX. the to that's that as the come, of

ship drive margins than a because generally more mature in dry because have were in immersion to there's more the and Dry advanced been different is on which going lower the dry. competition we the somewhat margins, there, there's market. also market, And cost the also

are the -- as use lower-priced which profile, it than as KrF you is So with tools but immersion on configuration yes, energy number, that's low to double-digit very margins. That's lower a tool. these a depends a our single-digit different a

Dominik comes of Olszewski Morgan Our Stanley. next of question line from the

the successfully I point you when question first research in purposes U.S. discuss tools, tools? the be the base? maybe in the do second specifically to any policymakers, mentioned. was there share of China your to specifically at then your and as think to out market just to the consider technological silicon The solvency, emerging on shipments curious for anticipating topic customer And -- gains XXXX? to Immersion. is of to Is one further Logic to momentum you I'm gets you time China buffer you with or in for allow wanted rolling prospects EUV the in conversations that domestic that the on access get you're EUV Are seeing momentum, tools

Yes.

pretty think I share I market on is market still think gains, already immersion high. our share

EUV, And in many, Wassenaar at according the think, country, that, to export to case, there's mean, this exporting license EUV yes, Arrangement, it a a subject that times control that's many these of Netherlands. requires I leave an under the we've is between agreement discussed I government is calls, XX from which, is that. the Let's And that export multilateral control the countries. during

review. I think under still that's

speculate would forward time think I and introduce the not the on and place -- if is that what So mean we High-NA. going this to

not different I see what think I our think there's to -- countries governments what they want we, of it's course, between do in-depth know to there discussions do. And role. of are

but course, government. see I And the wait happens. think of to we we're it's what in just contact, and up

demand will EUV be before, willingness made the the the to. is not EUV high-end end demand where end then Korea the advanced to ship semiconductors, for whether or or we semiconductor be value I've leading-edge we're the by ship those machines for will that which semiconductors, U.S. probably wherever, market in of tools. of tools drive Now buy -- from, created EUV. The products we in ability to will will it said EUV be in by by drive going will determined demand is these the and impacted not and And it world EUV impacted make those the will been products, where devices and yes, the Europe ship or where that's to

Our line SocGen. of the next Aleksander comes from of Peterc question

of on maxed anything much pertaining first the want place can just It seems follow-up can to we're will guidance XXXX? will imply in I'd understand your increase in that second would second what capacity. like XXXX. [certain quarter-on-quarter. speed on the in year-on-year that out saw Or on phasing if you first in to true-ups] that The your be due the QX down really pull-in -- in what do your to be you just the And in be I pretty of that you area the one the if to you that? on just and that's of quarter? Are revenue. basically understand just comments put

I can be we're meters, which what but also a basically more X the to to same call is in And And the are going we a the the reduction one by there's can the comment of true machine which Yes, you second shortages. that's you And of supply now for months. your machines, cycle earlier, you can made months. us shortage months supply XX But into XX lead a that when? XX you do has X towards is buy our that's in because chain, capacity. squeezing of the which see of you seeing It's That's chip also of just it's I to think hire the ways machines. brings of we Which, being you first if could what we the the process, efficient, industry I what chain. especially even increase XXXX. today. in square XX everything half is people, And be basically, it capacity, second XXXX. way, also, generally That just out get X That's time term. production the to time. use increase think short there what do

people their XXXX. lead I is, then to maxed third And you it machines. X need to which out. inches you time in meters or of square suit then more time the years, same a And bring on And that, square because if footage, the has machines, kind think everybody to XXXX, cycle is well, are capacity and reduction. of think time this out you year, so that or be square which focusing build, more has people, next meters, cycle reduction, -- only within I that's one will we're capacity, machines, 'XX. we year be maxed on think time want X it's to I It this people, increase so to square works for add and then the same reduction. And we're in software square going to meters

the question is observation. your bit, little first Aleksander, line on I of a to understood that and the And the half up second the but of installed question your revenue correct broke base over your half second and the year. be distribution a

the with quite would of in last of €X.X we over the base. second year, for year. half, half you're XX% first to get had indication €X.X you And billion So growth the right. installed for And revenue billion the

pull-in the by customers capacity us who machine we quite been relatively some particularly software-related having much to without increase time. want also As upgrades a to give too way has of easy indicated, there

software of got more in a second than actually half. So yes, pull-in we from both the upgrades there QX of is there we And QX, related bit anticipated. and these

the So observation. correct that's

line question BHF. comes the of ODDO next from Houri of Stephane Our

linked of you fact I services if improvement, gross on of improvement you of same but margins together your put if the the follow-up services. evolution you're also margin EUV basically tools? question margin the the that update that, kind Yes, for I'm EUV now what be, your And question. the if us rest margins, the And the maybe my which the margins. on at could carries, that's of have correct, view, a the question to selling in that the gross would is, XXXXD, back potential so

Okay.

year we that. margin, So you even EUV gross as of terms broke service on in know, last

customers more by more and the intent get wafers more by driving time, That's believe margin gross as that approximately efficiently, we therefore. we level. I primarily on margin get down helping years' guided said such and service. gross machines think And that EUV is, that that quarter, to about This that a what compensated produced. And XX% that, X is the costs, run within level wafers get corporate we've we to margin we result gross of

aggressive XX% a couple course, model time, quarter's is think in an the that's uptick. a of that there. So from zero of curve. But I is big And

is, improvement XX% slow first development. big then that see course, a will But you the So of gradually down.

systems of terms gross margin. In

the On us the That's the tool way gross look D, to it. to margin. D gets at corporate the

UV margin, corporate margin. deep the but gross the gross at below still So

the be what to EUV that And get at years UV or the -- And of That's stage, now. deep from deep same under get the X of level. margin type we're With a should a looking at really to UV have gross deep we And to at. that course, the the that's the intent. levels. tool, hope E will margin That's be years and X little us E in UV the gross level. introduced from one

the from New Rolf next Our comes line of Street Research. Bulk of question

come think because tools EUV is manufacturers and times EUV EUV a DRAM is, You as year lithography years question EUV are around pullback today. being manufacturers by buy for mentioned that toes My should that maybe need business for we spending in risk see that of still DRAM billion bit do a And year. to context times about cycle DRAM the of for in long in for not capacity X of to the down, capacity €X advance this beyond, lead very how Do your 'XX. next tools anymore. -- are X.X purchased primarily 'XX, you and

Yes.

this a -- I bit think won't year I X.X exact -- probably think we number is it's so higher. the be billion, the

bit I be to to are -- need later. guidance XXXX, additions of at you the those billion going or machines and you mean, really the right, X.X of guidance, So look EUV from Memory not I in capacity it's mean in DRAM XXXX our

go maps, need look and for customer place will fab when on not plans when times go XXXX, I order tools deep see -- open the years the so of are DRAM, and when know, they based on down, because effect it these that significant down, have of yes, basically shipments will think but driven lead out. number they we are the by more as they at And as the a as the times when planning. tools build-outs the orders planning. much XXXX, fab maps, road EUV capacity then sometimes the more a it's so higher on you we cycle -- also And are yes,

we planning of visibility. X, X So years have

of those ordered, the [now] will lead -- we as with later going last times. our because and order we times that the there as which significant deal, capacity by that capacity pretty big take projection years. is Sales So will of of on there's and quarter, but say, capacity, in yes. coming year And the tools known driven stretches sales potential well going not our will the the deals, impact the next down, be plans change have the you’ve I a our have drive that build on RAM bit have plans long actually so orders, probably EUV mean, point in where lead of coverage be XX% have terms our for will of that a that much that will build I -- and actually with capacity because let's will forward capacity the our are customers. sales. an number came that to in the mean seen And

plans RAM one OBV they plan customers the And from layer point. that give clear manufacturing. very count that's to layer on in data based you also indicate DRAM the those are count. of just And increase to And more

you're this at EUV XX% So looking year, revenue. the approximately of

year. -- number. assume same billion, And I So of, percentage the let's it's think next X fair that of apply XX% the the to X.X to billion, will say, the that's

at -- capacity So you that as you least and year. we're for gives EUV next for know, expanding

in commensurate growth we that do revenue an gives So into in insertion you see growth the that. continued indication and EUV with from that the DRAM

numbers and you likely will keep year, which absolute of will capacity, that we'll DRAM. also XX an from we'll have means for point number for next probably that. So view, it it because units shipment Logic grow, But said, very growing sell will both like absolute

the comes Deutsche Robert question line next Bank. our And at of from Sanders

think transition EUV close scaling be one that X-nanometer from from from observers which there will to about had the pitch as most when is layer just did TSMC to be gate-all-around, to nanometer. That’s FinFET was I X seem TSMC XX-nanometer to introducing when will introduced. count XX zero

if that's you're plan. anticipating your was in I So wondering just something

that No, view. I have don't -- we don't

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a we So different have view.

to from layer count transition be FinFET the view, gate-all-around will agnostic. our In

layered. to So going be that's

Yes.

there in an of patterning is doesn't matter. moment. will Roger that at But double the introduction terms mean scale, correct, pitch be layers, On it of I

the line comes Barclays. of from next at Gardiner The Andrew question

back you the DUV -- were year's of baseline, by about revenue revenue guidance, that I come to math how on low is stocks, can inventory of particular, right DUV this of based doing your being talking level to this In billion driven just give a you've try of that this got? the now a around capacity. €X wanted drawdown I us If the year, as buffer a to and my year. we're sense of point making much the for you establish to

that’s how yes, inventory? of So the much from coming

Yes.

think a me let -- way. different answer put I me it that let in

it's to is deep have go inventory, this our -- you in really the service in chain, the inventory. it’s supply because I think into suppliers’

by and have I But some if that you think could. we our creating numbers. sales this But depletion will at immersion, I of deep you this, give the in the deeper KrF about them go we think percentage. So to would shipment terms improvement currently really immersion of we UV the an I in where much year. is immersion course, number for onetime because especially were as be to year, of same XXXX, everywhere we, look XXXX stocks, not this that's for so say, terms could plans that Whereby can from exact see would helped of

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that's the the So it. you I there, some it. questions, numbers capacity. KrF, because year look actually next earlier see the is was at season higher this also we where need answer we the of And one dry And where on way do could would that that see to

demand think basically which the coming basically dry would I is specialty markets of of, this markets, I say, see mature out out or we everywhere. the

hopefully, answers question, So Andrew. that your

it is mean But in you're the we the point. could kind if couple I of something XX%. be up years, just significant, all come obvious of I significant about quickly. starting next I follow reasonable? is just to the with going XX% to Would But to minus, double-digit that I if a mean online mean effect, I ballpark? that mean, feels talking that not That 'XX. And like or capacity does. it a look DUV. perhaps increase is I for know you of over in plus Yes, want not you're that talking Clearly, to out save presumably September.

and when know specific what it in end But long you’ve assess terms, time the XX%, we of can it customers. out. so capacity to be and when pointed But between -- make get comes you mean yes, significant the that's lead the online, means a probably in part, I not tools we you our the when can as we'll we more ship comes also is, a capacity also the us September, time, for the models, online, what September. there's can

square January in be right. So X, that double-digit, increase, in XXXX, which extra I then indeed be XXXX, to that's to we need But XX pointed there. effect that to yes, have capacity to that installed. and -- mean, and online, significant an produce, come and it's before out, will takes months people it then available, machines And are potentially need not part needs they it I capacity meters, will and XX XXXX. of When will then you that it's then using produce

I much out year. So seen, together that definitely remains occurring and And how can think next for our of that be that to still increase capacity that we figuring we will we're suppliers. see use output, with

Our of next of question the comes America. from Scemama Bank of line Didier

quick first touched have on of question that market I thoughts maybe, you with follow-up. drivers. long-term Peter, a X your the a your us on and And debate sort a if could a in -- of also you share one the

in being a they've what's being U.S., the and what's gap between the identified U.S. in effectively produced consumed. So

the numbers correctly. remember are XX% and if XX%, think I I

lease if got to is And you take And gap I've will we actually to were it how to two, question follow-up. narrow number how my need one? happen, then get number equipment there a long So on spending much realistically? that to substantially, quick that

-- happening Because assume think this more the that knowledge I made established you in them much. build right manage -- have in the if was be are a I that the a Europe. that exact, say competence but capability yes, think be copy look and if would those more it -- These new I the products. be that's leaders the the say, going just we expansions capacity, b it's know types, I the I think, of by you players, assumption, U.S., because company don't few concrete might those it's to but build be -- but are coming companies, and which doesn't going matter just rational. you can say with will those of going we be will be from to to let's it have and completely use to have go process make Europe. online, U.S. world are inefficient. to a the you to surprised, then just the at They those build, discussion plans, it’d And they going expansion to as and those niche CEOs the that. to to to word, may one the processes to into I can that of sure not going that be administration other are companies idle, which parts that into to it's market fabs do for think supply that those companies, And the they want going not any

few we it's only those information those to have the have that So build to yes. that going And companies rational. capability fabs, to points be

my piggyback in inefficiency, a a because, part of there I where your world. if you're some different on will the in little So new it view, building think you yes, place point yes, new for cannot be of you’re do fab, ecosystem, local operations

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XXXX, take? will think will fabs long XXXX. how anything I don't we coming before see it of those Now, out

will So years then three to and those to couple I take need mean, two fabs say really, it's I out. ramp. years of they a

they fabs. And these will at big ramp be phases. don’t you As ramp once, all know, in they

yes. onwards, So it's 'XX, 'XX, XXXX going to be

of might few will from manufacturers, the the manufacturing assumption yes, risk focuses be manufacturers point next on yes. really drive that, by to well semiconductor which that view, this double the going again, very industry capability driven over very not a XX think risk point also of large of logical, sovereignty technological industry few from or that the across do to it's desire sales so based means a that, the in geographical globe, But seems years, is view, I the manufacturing our a spread customers, have just a this that industry just And the terms to the of -- short-term. for

by massive it that’s think It I driven think create it -- too. will will I be so of course will I not by inefficiency, government think it and us will some bit, driven which subsidies, rationality, be will happen. a inefficiency, help that

in when your a that's jurisdictions, So those world. you're it's taxpayer

your answer. for you Thank

wanted to to quick come a to back is Peter, follow-up, I very question As DUV. you, just My simple.

the saying cetera. I'm you with the demand you're customer capacity, now XX that pricing never of effectively slightly -- next the base pricing that can reasons but not different Over market to exert years, now position, that But years, semiconductor for imagine. a doubling in et managed power the that that triple given industry would talking time worried it that that are all the your has the should power, the investments abuse And over about advance derisk hey, we double you're make DUV eliminate pay ask or and so this model completely to for ordering ordering? for customers be those that you completely have effectively risk to to your tools in ASML feasible the particularly shareholders also to for that, add you is right much and

which And charge deep I happens. our to honest, machines. that mean, and our the I good yes, which on will I think as also they very don't only think never also, completely handful of handful, increase think value on is UV, derisk deal And will their those to with Well, entitled entrepreneur we example, UV we the will give value pay customers, that model. customers, customers of question our we it's NXT ask us. I equipment a always platform, are way to the But players. which need we an of significantly will for a be to to part And which a productivity I KrF to think and an put deep you business there's it's

that back customer way. not years, That's works. we're should then relationship. provide this traditional be -- say, I for way really squeeze couple to at I but could in think then a customers industry of think back the prices So will again. situation, which this this more push customers is industry And well, And value, to we're a the and way to in our normal look this don't we supply last not increasing work

for have have asking and value, customers a the price, higher opportunities value. will and customer our we provide to the That's we thereby get create how work. We many value but to

reason and underlying the that underestimated increases, said today, is sell extra I especially structurally and the are dry is growth capacity that space think on good the the risk that we're before: of we I of capacity. very in will see, those capacity that believe deep -- add there of deep a industry, application everything And think UV and I servicing, think I we good reasons where this a we demand the need what it there UV because to we've There's too. seeing to

more I we'll small the will We shareholders think cycles; money, have think I satisfy make risk. limited. I we and see risk the longer our Short-term, but and always term, is don't

course, of in the paying And to everyone advance, does in front. that advance EUV on terms in paying happen just of remind

have front, given past the with the our in XX long on from So are and lead clear, customers, of free I think, the the schedules cash ASML which EUV do we significant flow months. also times, generation prepayment

because we it that. just made, -- have. that that a comment that not way, very of think in times the long it of this but think matter principle, circumstance, lead we're the I in I doing as to you specific don't do So But do we

will strong seeing. in in very only And Roger, risk, times capacity limited. good we we But can mean, demand think the need is because not base, of on manage that developments conviction are but forward, we and a lead I which increase because capacity means the that you a supply lot point, But also, supply the UV deep we also the shorter, the chain. of That's our that also going that believe, better. I based that again, market are

Thank All right. you.

We one last time for have question.

to If department contact the ASML question. feel questions, on Relations you get with Investor unable have to this and through please call your free were still

we caller, please? Now may have operator, the last

of at That's C.J. Evercore Muse the line ISI.

Were I commentary Peter, new or wanted adding to a a next before availability comment question, was flat, made you around capacity? first guiding immersion clarify to guess units Andrew. that you I year supply

say, convoluted -- answer, a I been Yes. do to you because would It have what giving also might but messages. bit X, basically was trying I

a is have, you the because could year, this of say, can We terms have in depleting -- XXXX, fact we that of sales spurt we find everything we're which inventory. in

our of real some we're make argue machines. And minimum some to for be might service would levels minimum, at using that everything a because stocking our

step-up, is this onetime gives immersion an that which that So high. you number is

year this I to that be step-up. for have think looking that we're don't will onetime have ability we also number for, where that the probably next

that that's time should and I of at to we So from of of we're to can effectively view, do. think we getting what a level. that some in we But putting terms do basically next work terms what capacity can year in reduction extra seeing, point I are increasing we capacity same how is look think cycle people because with

the effectively, but capacity, at up So ending the increasing in number. about same

quick a XX-plus follow-up, Day, Roger. last percent just your then And At you gross Helpful. Okay. Analyst margin. targeted

kind be why a warranty XX-plus, 'XX? 'XX robust that service they As pretty mix in off moving EUV of approaching we think you of and DUV, as wouldn't calendar with about from and exiting come calendar margins higher this year EUV number

think we If XX Day there, I had entirely it, So to have to XX. your front that. of X in mentioned don't leaving it arrows first did all, we recall wanted how but Capital Markets far stretch we correctly, of in imagination I you

year, D the a bit way number already for good on So there have too has that from we're that. -- the seen -- XX at I you the promise I perspective, margin would that's of for dynamics quite early sure, guidance basis. think give to any there. in definitive but would you guiding 'XX, trajectory That But it's gross of a look if now based next the over that the on you percentage has quarter, XX, XX see certainly in mentioned, a

year, next would D. course, everything be Of

year, the than benefit Next would would year. a XXXX from you you bit more this

So it's to there's on there, bit give but still any potential a year. a early going what bit too it's look to like next of guidance

All right.

is COVID remind Before to our that currently September held off, I'd XX, be on Day permitting. we in planned London to you XXXX, conditions Investor like sign

you you'll able be details hope to join us. keep on and posted will We

thank Now I to like us conclude you. ASML, for call, all of Thank on you could you it. if I'd behalf Operator, joining the today. appreciate formally would

attending. you very now all much This the you. Thank meeting. for Thank concludes

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