Citi Investment Research Technology Conference New York, 2008 Eric Meurice Chief Executive Officer September 3, 2008 |
Safe Harbor |
“Safe Harbor” Statement under the US Private Securities Litigation Reform Act of 1995: the matters discussed in this document may include forward-looking statements, including statements made about our outlook, realization of backlog, IC unit demand, financial results, average sales price, gross margin and expenses. |
These forward looking statements are subject to risks and uncertainties including, but not limited to: economic conditions, product demand and semiconductor equipment industry capacity, worldwide demand and manufacturing capacity utilization for semiconductors (the principal product of our customer base), competitive products and pricing, manufacturing efficiencies, new product development and customer acceptance of new products, ability to enforce patents and protect intellectual property rights, the outcome of intellectual property litigation, availability of raw materials and critical manufacturing equipment, trade environment, changes in exchange rates and other risks indicated in the risk factors included in ASML’s Annual Report on Form 20-F and other filings with the US Securities and Exchange Commission. |
Agenda |
zHOW IS THE OVERALL MARKET DEVELOPING SHORT-TERM? |
zIS THE CURRENT MARKET ENVIRONMENT COMPROMISING ASML SECULAR GROWTH MODEL? |
Current market environment zNo change from last quarter guidance |
zGlobal macro-economic uncertainty drives minimum CAPEX build zWeakness in capacity order bookings from all customers, all sectors, all regions |
zUtilization still good in Logic, but customers with no mid term demand visibility invest sparinglyzDRAM pricing stabilizing after Q2 increaseszUnit FLASH demand at 37% vs. 53% growth forecasts |
zMost orders are for Leading Edge Immersion |
zOver 80% of Q3 sales is expected to be immersionzImmersion demand is sustained:zFoundry 45 nmzFlash 45 nm to 35 nm transitionzDRAM 5x nm ramp |
Leadership in immersionzShipped 30 immersion systems in Q1 + Q2zBooked 20 immersion systems in Q2zBacklog at midyear includes 27 immersion systemszReiterate Q3 bookings guidance — we expect immersion bookings in the third quarter to be similar to that of the second quarter, but cannot easily guide on the number of orders for non-leading edge systems.zOn track to nearly double immersion revenue in 2008 compared with 2007 |
Overall IC unit growth is robust @ 10% Year to Year IC unit sales compared with year before |
Source: ASML Last data point: June 2008 |
Market researchers reduce their 2008 IC revenue forecasts down to 6% on average 2008 Semiconductor revenue growth forecast over time |
DRAM zOperating margins of leading DRAM makers recovering (but for most companies still negative) through aggressive shrink and 200 mm retirementzWeakening end-user demand could delay expected shortages of DRAM from end 2008 into H1 2009zConsolidation efforts within tier 2 players continuingzContinuous price pressure will drive shrink fueling immersion demandzAccess to capital remains critical |
DRAM unit sales compared with year before |
Source: ASML Last data point: June 2008 |
DRAM spot and contract prices moving side ways since beginning of 2008 |
Main DRAM spot & contract prices (01/06 — 2008YTD) |
Source: DRAMeXchange (8/08), ASML MCC |
DRAM 200 mm capacity retirement accelerated in 2008 due to persistent price pressure |
Expected DRAM 200 mm capacity retirement (Q1/08-Q4/09) |
Capacity [200 mm equiv. KWSM] |
Source: ASML estimates |
NAND zNAND ASPs keep declining due to lower than forecasted end-user demandzHowever YTD unit growth still above 40%zCurrent chip production costs above market prices resulting in significant losseszOvercapacity expected to extend into 2009zLong term NAND application roadmap remains a strong driver for shrinkzShort term capex funding continues to be an issue for most manufacturers |
NAND unit sales compared with year before |
Source: ASML Last data point: June 2008 |
Logic + MPU |
zLogic revenues and profitability is very strongzMPU sales recovering from seasonal lowzInvestments expected to recover in 2009, especially for 45 nm, driven by record fab utilizations and additional leading-edge demand |
Logic unit sales compared with year before |
Source: ASML Last data point: June 2008 |
Agenda |
zHOW IS THE OVERALL MARKET DEVELOPING SHORT-TERM? zIS THE CURRENT MARKET ENVIRONMENT COMPROMISING ASML SECULAR GROWTH MODEL? |
Litho Market Secular Growth Drives ASML’s Growth |
The secular growth Model: Market share growth |
Source: ASML, SEMI |
2008- 2009 : Shrink opportunities for all sectors |
Source: ASML May 2008 |
Market share development zA natural “catch up” by our competition on immersion for 55 nm / 45 nm nodes after 1 or 2 years of virtual absence |
zASML leadership still intact for 2008/2009 in tool throughput, overlay and NA, delivering to customerszA cost effective solution for 5X nm / 4X nm nodeszA unique capability to extend to 3X nm / 2X nm nodes |
zASML product leadership to potentially grow with the introduction ofzAn improved TWINSCAN architecture (XT:1950H)zA new architecture in 2009 for double patterningzLitho+ support packagezEUV in 2010 zASML cost leadership to be enhanced byzAggressive overall cost structure reductionszExpected Euro rate stability or slow depreciation |
ASML Vision and Strategy Articulation |
? ASML currently operates within a lithography market which has a potential to double within the next 5 to 10 years. There is significant growth potential for us if we execute |
? Strategy: “Over-execute” in all areas of our business |
? Invest more in R&D to (1) strengthen the lead by introducing new advanced litho products and (2) increase performance regularly on standard products |
? Reduce COGS through continuous redesigns, supply chain partnerships and Asian sourcing |
? Reduce manufacturing cost through cycle time reduction |
? OPEX flex so as to target an income from operations to net sales of 10-15 % at the low end of the business cycle and 20-25% at the high end of the cycle |
ConclusionszGuidance for lower revenue 2008 (may see — 20% versus 2007) unchangedzUncertainty as to when Litho Capacity build orders would materialize, but 2009 strong immersion growth from NAND |
4x nm, DRAM 5x nm and Logic 4x and 3x nm will sustain ASML revenue robustness |
zASML to maintain technology leadership in order to sustain long term growth |