ASML - Earnings call transcript Q3 2020

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Operator

Thank you for standing by. Welcome to the ASML 2020 Third Quarter Financial Results Conference Call on October 14, 2020. 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 would now like to -- wait for the moment. to question-and-answer like now would open queue. the I like the conference Instructions] I over hand now would [Operator call to to Mr. Skip Miller. sir. ahead, go Please

Skip Miller

Yeah. at everyone. President Welcome, Thank Skip you, Vice Miller, This of ASML. is Relations Investor Operator.

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

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

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

Peter Wennink

hope QX families of Welcome, your results Skip. you thank Thank you, safe. I healthy for for everyone, and all and are XXXX us you conference call. joining our and

on the quarter, outlook. our provide you and Roger Roger? outlook some and current as introduction session, complete a well comments the short-term would review with with I performance future commentary quarters. view some -- Q&A be Roger coming on business to will regime. with and provide the And will like begin our we Before QX as an the overview business our And environment the will I third start with comments on additional our financial of on I

Roger Dassen

Peter. financial results and sales will from billion, XXXX. Welcome EUV review above -- quarter revenue. Thank on We the additional of quarter. everyone. system first this Net due EUV you, primarily systems I €X recognize at to then guidance guidance fourth the come revenue shipped XX provide third and XX systems in quarter for

in better of guidance, EUV the entered This is an Net than towards sales core €X.XX. in than complete and came expenses that shipped not expenses, revenue. systems four million of On which part quarter Gross revenue sales, and driven in the €XXX our guided. was service beginning receive Net of for coming €X.XXX was option business and realm shipment, €XXX QX with field at is this in revenues. further before recognize system tests NPS million, quarter DPV as the revenue, and XX EUV acceptance which our in the manufacturing continued an the at XX% higher confirms R&D by first Logic did significant systems the to in the quarter Logic was EUV integral testing EUV this total For base of of operating in was the management activities. a at our sales EUV million system slightly to income good QX. XX.X% for operational XX% expenses Memory. at strength at was system the strength factory came The the which considering total net time high from but €X.X QX is customer representing SG&A in of of EUV we revenue weighted billion value were system more the revenue high from acceptance Installed showing remaining revenue. was has the year. million, outcome XX.X% site €XXX in resulting Margin midpoint again able bringing of quarter XX%

the cash, billion, We cash with level ended balance short-term investments of level last the at quarter is a and sheet. which to as quarter. equivalents third €X.X same Turning

EUV XX% order came resulting for a largely to would driven QX due the EUV booking the I node bookings Moving EUV timing With and Order to We book, at systems. €X.X including saw to remaining in XXXX. our to quarter of of four expectations for net bookings fourth systems. with Memory €XXX delay and system of by billion, was that, in customer’s million reduction intake some Logic a like demand XX%. turn

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

QX QX, €XXX our an mix. for is €XXX and by installed product immersion and be SG&A Gross driven from around DPV driven XX%, growing field and demand volume management with to expect EUV sales expected strong by at expected are to QX be is million which in revenue million, increase expected is than higher come R&D The to higher improved for contribution €XXX which service. is base around million. for upgrades expenses We QX in margin service significantly

Our rate expected around estimated XXXX XX%. be effective tax is still to annualized

allocation capital Finally, to would I working like talk capital. and about

will €X.XX X, dollar The record share. year dividends be of €X years. November to the our dividend the buybacks X, be generation share call the will date dates, in three of Taking payment our to customer a generation, see we in fixing towards quarters. COVID terms. as communicated over well assessment and contracts week into line ex-dividend with our our Peter. this for ordinary to with with earlier Conditions per that As move interim this free total our and cash will free materialize with new executing The plans do starting With mentioned account in contracts flow be will last improvement over to as that, XXXX, quarter, transition euro-U.S. the expect XXXX. work we resume XXXX November some XXXX. will the for to turn these improve We a operate as the cash November XX, to supply contracts we period coming are conversion environment The new back billion payable I’d like ability we made of this be around over the on have improved have improving flow along in dates and chain.

Peter Wennink

Thank you, Roger.

a driven Roger we very profitability, quarter in in billion revenue good had As strong highlighted, with €X strong by Logic. growth and

to -- infrastructure, still performance build support and nodes of secular invest drivers first we solid improving to on they’re our into unchanged for next due QX With of the are Memory, for compute. of indicate a expected we demand longer the be to in innovate qualification in what are customers to quarter. remain for with to customers our digital of this revenue in products. clear Sales largely the COVID-XX, advanced next for stages spite Logic from is consumer system’s continue of the DRAM, the sales customer’s profitability. early QX growth technology both strong this healthy accounted In added our customers with expect reflection future growth to the higher we And continuing demand a as the start demand this this year. believe expect XX% expect Logic, strong lead centers, In in And nodes. continue to recovery litho, starting year to in that at year. to consumer of healthy we account This the and times market the to year drive growth which for grow to recovery in in in and finish of contribute demand for demand macro advanced half year -- uncertainty bid transformation, view drive to electronics. as growth a environment, it continue and year year. our and demand we’re of to such continuation end with of China see Memory expectations seeing this in lithography for includes see continue high We Based continue AI on a XG, data and and is digital taking into improving this schedules

domestic sales a year, skew Memory our year, this with to mixed but Chinese to year. customers billion to includes China, €X sales trending both in this customers Logic and above next expect towards Logic which to sales We to grow memory higher

China, export the ASML are rules. of the in Netherlands. affected ship China, a that ASML to we regulation, set U.S. the Commerce U.S. for according parts DPV requires directly aware can from rules system current export the specific are U.S. systems to by for the shipped customers requirements U.S. or license to to such, from the by lithography and Regarding companies Department as continue

grows, of to with systems aim and business not three is run installed in solid we year. around manufacturing. contribution whilst of quarter and individual as another to installed scale comment more increasing realize the our all policy serve our EUV €X.X revenue support we where revenue business, significant we volume base from around growth still best On to laws set we a customers of jurisdictions world of being, it and customers, expect course, we base the compliance our operate. by the on abilities, this Service mentioned, the our Through expect with these QX. billion, first to Roger as quarters will regulations as service in wafers continue While

revenue improve for On imaging as continue climbing from Memory in shipments deployment in nodes. we upgrades systems service overlay maturity recognition utilize confidence side and this upgrades of year-to-date. we shipped Logic, achieved remarkable demand the test With We we EUV XX curve, although, and and see translating have is acceptance expect in With layer customer of QX. which the shipped performance increasing required customers €X customers quarter, the last of into EUV increasing customer EUV, completion in the XX initial counts future capacity technology, systems quarter, expanding EUV revenue to system our XX increase are and still on systems significant to of billion revenue. four an

year, a But manufacture this to their billion being of next approach despite shipped planning node RAMs up early but shipments we’re customers this €X.X of XX potential shift few year. may readiness, systems revenue and the to next this still to We’re end to targeting base year. due EUV early systems still fab year,

to systems our continue and service of profitability business. We drive EUV

started we gross business and this achieve to at We quarter. are break track on system XX% service least on even margin to

We reductions delivering two systems the more before, said over DPV will as improvement to to margins -- both And to to reach the next margins EUV three we expect in years. EUV comparable we and to service we value. fire costs, margins continue years drive margin and cost expect

year, next reduction our capacity year, this systems. the currently to next We’re backlog an of EUV track backlog respect end €X.X of the to by exiting demand plans get plan with for XX QX of enabling for weeks billion cycle time XX XX% XX with we to shipment on year. a to of have systems EUV With around

demand of orders for we quarter. the due delay net node more four see expect in reduction did in we While some in to timing, QX, next a which in resulted EUV customer systems year bookings

the new due exposure there growth we is nodes, as and of our the early we platform the contain QX. NXT:XXXXi on Although, In RAM lens timing stage, ultimate the customer the uncertainty exact wafer system next business DPV a as where system NXT announcements. stage, revenue well XX% in current of shipped laser currently of performance slope clear QX macro to first the of version the all around size is This which qualified year. the projection environment, based immersion and reticle EUV expect

saw summarize start With of deliver spite support in performance in of of improved via systems first year, see macroeconomic we XXXX, their in and next and in playing these value the therefore are out what ago. innovations, similar the of year we to node customer productivity, the To the app increased introductions. critical quite half the the uncertainty overlay at

at growth growth We With year in end expect profitability strong XX% our sales installed €XX.X expect business. over least over this, and double-digit both leading in to to of Memory another of revenue billion. we base growth and estimated of Logic, significant XX% in

look we detailed plans to we as guidance, are any XXXX, As with too provide to determine forward. working to going customers it’s demand early

growth, the double-digit expected While still There our growth and a around number low of driven view elements system current there of expect are significant determine growth of by will of that XX%. of of are uncertainties, we course. degree uncertainty year another EUV revenue largely

XXXX. uncertainty. predict In U.S.-China serve. predominantly can how seem inventory the the depend geopolitical consistent is COVID additional demand First, impact creates the by impact growth economic see this environment, end nobody will and also growth next in the broadly is because for normalized stronger of comments. will macro year, currently Memory, customer’s the the that dynamics the be bid to bid year. On expect next of markets Memory end environment, this, year of on that global which demand top Customers there’s litho and believe issues stronger the we We will with

However, depend specifically, transitions high course the we be expectation this systems see much field capacity litho on of our of degree of continued growth and to will utilization technology how added. In at the moment. DRAM will in the of support

While we more X DPV still next alpha expect we DRAM is expect Memory demand. remain a go In EUV of driver Logic healthy. key to systems for demand in see to node, support year our will

leading demand roadmaps timing curves. to will next likely on the in will are depend node on have their year. which the recalibrating requirements, our an demand demand shipping and changes continuously driven slope of their However, Customers end ramps final impact by

aspect is determined AI, other of the demand wafers move the timing of demand I ramps fraction mentioned of into as a XG will the health slope will how before, the by end this the year. around next and many The nodes and of each node of be

specific on as continued business at installed both geopolitical expect installed be service predictable lot a will macro In but base dependent real the the level, dynamics well growth base. on we with are as of growth pretty businesses grows and the at business, as more there summary, is level, market Lastly, circumstances. play, upgrade

With of currently end demand such questions. in going your drivers, demand XG, fuel are confidence the for Memory, drives the both a secular XXXX. process as we’ll digital infrastructure, our for with power high to However, nodes, near-term a the and through products. in that, outlook along drivers towards growth compute, period our the long-term to will Therefore, and AI future market continue happy be we our demand only of transformation ongoing advanced which uncertainty, although, increase take Logic

Skip Miller

The Thank will the and session. the Peter. you, for Roget Q&A on momentarily you instruct Operator protocol

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

instructions then the could your question, Operator, you and have Now final first please.

Operator

is from [Operator Instructions] Our question Mr. Sankar. Krish first

Krish Sankar

It’s… Hi. Yeah.

Operator

Please state followed your company question. a name by

Krish Sankar

Hi. It’s question. from my Thanks Krish taking have Cowen. I for two them.

Is the of revenue, growth does unit for be just I on for next had figure in year what First it I’m the a to it one, EUV number Peter, imply XX% trying what year terms for would units? follow for around XX%? then up. out next EUV and

Peter Wennink

that specific quarter instance, and and understand, this to shipments. it question need I get which the mean, quarter that always is you grow -- why But the always the on XXX fab the the what Krish, last was ASP higher last was for we at the like we million, same result of configuration lower, sets included time, upgrades in the Yeah. were on and question get numbers. the unit

the why the is will say, just depends asking is you’re what we yeah. we euro the number this the euro determines how and because actually configuration you ASP richness, ASP, units sales the you number, you number the it who those that And of of of this configuration and many ultimately gives -- ship. on So gave units the could times

this up a believe is units, we give So from year. €X.X is going you to around XX% any we’re we guiding euro which year, be number that just this billion

looked I XX%, picture. yeah, be the So, at think, to think, least I as going it’s at demand we’ve

the with we’re euro that, I forward that think the and it some recalibrations And sell. up coming units nodes you company derisked many we like we do we going tell just nodes think think of and total I the don’t how will we number sales, sell. what DPV. the timing do also for and we we will of you we We tell how just euros with with much

Krish Sankar

Have you scale going you’re from near-term times their of because were DRAM that back on to because that for strength your the then long of marketplace it. the any makes concerns agnostic up DRAM such nuance as lead continuing you’re might seen guys for There or CapEx kind Peter, side, makers just Huawei some Got this away. And Thanks clearly, follow noise? in DPV. of some sense. of the DRAM of a that. seeing

Peter Wennink

Yeah.

drop have of on this potential for else Huawei as think smartphones customer I infrastructure, we question digital a Huawei of somebody impact the doesn’t a the will. key sell customers. When those our or

It before takes and probably to a but in might only fall to move time going that think some somebody I driver. be So up. short-term not a it be that away else, itself disruption is timing. might in can pops Demand

utilization don’t especially customer structural strange we’re just well, electronics. push if that We of then uptake is year, situation is the what we also pretty in And they high. the would end think think, year. conclude maximum you I capacity, it’s server our the our to with demand utilization No, consumer more at out to that corroborate next of seeing the I we relatively that what need we said, it’s that gradually look and the not the seeing listen issue. I then to get and the to think kind the with of we normalize look what that we capacity we’re year, business, our close inventory of the coming throughout in So need a you from at that towards if currently push the a position will utilization customers tools and that’s Yeah, is our think, think a see this is. of grown, the DRAM level say, to -- I our tools situation

on forward. together more in DRAM the all all, us business makes with optimistic going customers that our So,

Krish Sankar

you. you. helpful. very Thank Thank and That’s informative

Operator

Mr. followed state name next company your Quatrochi. Joe is your by from Our Please question question.

Joe Quatrochi

Joe Fargo. from It’s Thanks. Yeah. Quatrochi Wells

better Just slip drivers as are that, a get a fall on could XXXX next potentially ex from is XXXX? actually help And tools XX% actually XXXX and of scenario you into that understand systems early for you there’s in us the some XXXX? from there upside January is XX% then, EUV into we shipped and on get back that visibility, growth that assuming can growth the secondly, year, few that in

Peter Wennink

that. Yeah. stick of we into That’s that And guidance said, the from shipments XXXX, billion, that which so billion, a up always Well, all includes as €X.X said from we to then, about course, good go €X.X question. are over XX% XXXX. we XXXX

draw -- the from can the You at better beginning a a the that conclusion of than the That’s year, ASP seen two richness, configuration been our we anticipated. We’ve that in yeah. bit upgrades, yeah. forecast i.e.,

that yes, into also. of on that’s are answer question So, units, it’s an not to can really Units moves the important and why really vary the -- year next ASP that’s configuration. the of as -- it’s Krish that because I said that because

it So euros. move guide XXXX. just But you we into will

second Now as the upside, that’s question. your

to vessels node. in first, of [ph], down goes we this almost the That, I goes also within other it’s also communicating like happened you’d our our have that. the that But have the think recalibration because in on said what look have of know also customer has of that remarks clearly adjusted on at prepared side. ramp the -- that picture up based way on a demand timing what course, at the node we happens we we and what base

time, demand back have the put happens That lag you our is into all time that adjust at Now, upside. you communicating and between we a downwards what whereas is see the XX%, up. vessel, there’s in bit in of That a coming yeah. not later a same when it when time

I the there that and still account we for say, off to what into time upside XX communicating account what comes the that XXXX. build difference for the we’re actually vessel, why preparing is calibrations we why even, we’ve information taking all what a down in we the higher. chain, That’s could XX to say, comes you, today, It’s organizing is uncertainties tell all today, a systems, that see, said, qualitatively taking it’s upside we talk supply in I’d what be is you clear, that’s up somewhere, actually about also taken potential this there’s to node So because XX and a into systems like have also going that’s see yeah, yeah. XX capacity, yeah, is we’re and

be that we’re could the and there just reasons yes, for I prepared. So, mentioned upside

Joe Quatrochi

Perfect. That’s quick helpful. And then a follow up. just

do we growth? On growth the OpEx for think how low revenue double-digit next about year,

Roger Dassen

SG&A so that develop on no growth, the quarter, side, major OpEx it in seen we’ve to -- I past will uptick as there. I will think, continue mean, the

R&D both on On I looking to some quite roadmap we of the the something the the of progress DPV are on customers, quite which value EUV, on side, this in at terms we’re accelerator which and and down programs also, demonstrable D also different R&D obviously bit tool, pushing done. the High-NA, working successor on requires work a quite mean, will have to and some be our also is still obviously,

past about that salary talked So year we the the with in seen you’ve this for adjusting the increases. there number

we magnitude the if program, probably be fact, of the going higher. a In bit it’s at look to

in with able the to precise time, will a R&D We’re now, that higher of bit guidance increase be more the will because the but provide than the months budgets it. think to of three I finalization salary in assume right in fair just the now in we’re you budgets, of process right so that finalizing the the of salary it’s and be the

Joe Quatrochi

Thank you.

Operator

Our from next give question. Please Deshpande. followed Sandeep by question your is name company Mr. your

Sandeep Deshpande

on things. Yeah. from regarding My Hi. me of Thanks Morgan. JP couple for question a is letting

of can mean, in orders I there talked seen the you And seen whether that have good the XX% growth could customer imply your which expect front And you’ve number. that of push mean, you’re into But EUV demand, that revenue has yours year and I push tools indicated satisfy because intake unit that of past implication one margin? you’ve you’ve already that this Does you you’ve out number another place that, which some the in from cuts you XX order margin EUV amount my front on this pick. that ASML that gross push next the net margin, to from monthly and on customer -- recent on is the time, EUV question is on few but you EUV an the indicating or customers, so some next of about in have better movement year XX% for question a progress, from outs follow XX% there out then been reported Firstly, this next clearly, and see gross to quick because the at quarter. a a this EUV for short-term are on arises up from any gross of is one customer. months? movement so towards much a same Thanks.

Peter Wennink

Okay.

communicating On going just we So, that four what questions to net that squeezing then question that to Well, customer A, retail is Roger little see one so the the the how systems, not us guys If retail by cannot in? stepping a to and yeah, with story answer B, move of see what no not customers. in is of for means way, a you and into all difficult bit of retail, bit all this a timing, it bit the Which we the we more to you could fact, the of one. shop have asking, it for you least needs at it’s for, shop time much it’s five be us, for the takes all is when are customers because prepared their you’re digested. vessels one, are yeah. that, just we’ve do been so probably push get then which your --

in there’s why said So, I timing is difference. this upside, answer, a I yes, because an earlier see

between If other up again, the going vessel things down about think you going communicating part yeah. and

order and that. definitely if to why is follow This really intake time lead hit to more. to point, only we’re then would you be add to I the never XX work. your see it preparing So also is able Because going months

next be you prepare see decent to will ready. upside there because that some you is a chance have you would So for more, that and you expect year

this because XX if more -- is or you you then it’s it yeah, where the But yeah. with deals delivery do is than of expect So you -- so, like that XX could is months -- within that this, that XX way months. don’t actually actually lead course, -- prepare that more time XX month accept months, that’s yourself, a time that’s

whether So, preparing are we it yes, customers the time and for timeframe XXXX. in will more tell need the when

tell. think a could, There’s real but there. time I will they opportunity

Roger Dassen

for the maybe broader on Sandeep margin gross that EUV and a little than that.

EUV, on you are absolutely right. So

we So hope increase will an previous we in in gross think XXXXD see margin the XXXXD said and that to with corporate the I calls have approach the gross margin.

we’re for exceed this probably targeted that for as and said, slightly even the going target we So, an that year. to this improvement over already we year, XX% the --

That year, margin there see that advantage from downside So, be gross yeah, is in gross on a in the margin EUV is that will and CEO the which of you find degrees reduction also a will The in holding next little with for magnitude. to that in some not of gross improvement just we the for year, X% for High-NA. margin will next sales say CFO accounting, in of that And is point, have order comparison downside operating we this we the some margin. next and year. bit with selling a their in be gross even we’re High-NA expenses already about the and of that year, to that we though assume give an you there into have pride. cost the therefore way But this bit accounting an we already both expenses the the have operating company,

year, that gross had clear D, of in the on gross XX%, going we talked minuses we for you’re for margin becomes a minuses that a the a little that plus I the next also that mix in the four somewhere then forward the and in that for the instance, bit we we margin little be yourself So, field into where service that about of have of All for bit then that And you margin and target range also this that from moving then and in just -- to the bit or that a next all, pluses little look all for a DPV we’re probably an going business, pluses swing XX% with of the year level upgrades. target the also a margin increased envisaging. increase to and if target for there. full and the gross then for DPV year and the of EUV find everything, at in negative we that year have QX we’re to mix all the had That’s discussed. with factor also

Sandeep Deshpande

Roger. you, Thank

Operator

Mr. question is company Our Please your next followed name from question. Andrew Gardiner. by your state

Andrew Gardiner

Good taking afternoon, question. Thanks gentlemen. for Barclays. Andrew It’s Gardiner from the

one EUV, please. another on Just

in distinction you’re the next terms plans year. Just of some with for of over customer seeing what

you of the comment to count where looking should three a can EUV are migration said, layer -- in terms we in are we are confident particularly technology, the of expectations. made to node the layers way node in in by Peter, next of customers technology. the, who to commitment think you deployment, in as relative earlier terms node -- the that appreciate but you I more all leading recalibration, some the those

and your reporting suppose be creep a taking the to Memory, also seeing EUV you but about Logic to continuing week if higher in little DRAM that wafers, I even longer are this with commitment terms capacity you -- ultimate one talking visited layer count you similarly there. ramp major of may in of customers press So and

So DRAM, in terms you. of expectations? layer where Thank are similarly count around we

Peter Wennink

Yeah.

on -- lower R&D. think us simplification tech technology the given clear and gives in with the that that layer mean, embraced in that it’s faster I I evidence -- -- of lot and turnaround that in work counts. process, customers the low clearly a to advantages have technology the times

see and that creeping be XX you -- So then, XX we’re think, together on actually we all in over Logic over that’s the when up. take NX and layers NX I will in it we

and advantage take DRAM. patterning go so just -- these and for to strategies, single So fact much has also more to is the away DPV it that which patterning multi that true gives

wafers this of the can course, we the the yeah, a we also same going compared alpha to see as but is forward, And And to productivity much on strategies with it’s to there layers, mean, clearly in we we that’s are more bit but start introducing in have yeah. extremely tools of although, tools? HVM currently per productivity, I to one, add is trend. will it more X dependent Of that six -- that see -- we with beyond simplification introduction and with can terms get see more DRAM, five, process actually how DRAM realize us the hard really out. layers. -- it’s get up we driving is EUV also wafers out can And pushing customers behind You are Logic, additional hour.

introduced. version have the C We

it’s D of going tools there of the is increased more. have discussion, take another tool, to and productivity the discussion at and version need we more maturity looking and at DPV with have a customers going same now the tools consistent because that about, need they That we as level know version We your it the EUV could getting. is wafers. EUV we version uptime question really are to you reliability today, is productivity. time, and please get But D be when up your speed you beyond our the We’re of the

So technical -- are so NX up. that I only drive XX said, they and see it the DRAM. and by EUV fact and using that big and up over has the Logic I layer Like layers, count benefits will creeping economic both in think it’s the of driven

Andrew Gardiner

XX% sort between year on given the going aiming in is range? gross Thank And when make be XX% you saying, right, you, that which Peter. next margin, fourth -- the XQ quarter, guidance could based XXXX if for that sure, you’re of terms just were I to a somewhere just talk follow quickly, on that us for your was ask about in and I you Roger, you’ve want gross prior question, level, margin it somewhere around to you the of are the saying clear what I was the is to up just

Roger Dassen

right. that’s -- So

if you margin XX%. that the about gave in probably for saying year. next for see I’m going is, take and What you if would talked the is, and the you you minuses for range for to this do and you’re anticipated year, XX% the that then you take guidance So pluses gross will QX see all we for about, be just year that full the math the we XX% year full

what where on in Of that up, what that’s on but that, more I is at. guidance directionally firming clarity -- course, time, -- more you’re think the months so three to year that’s looking you

Peter Wennink

the let’s as double-digit compared growth, based That’s say on Yeah. low to…

Roger Dassen

Yeah.

Peter Wennink

issue so have care cannot… additional an profile. of we any of this course, this to have business, we as accounting year, sell High-NA take will the on don’t High-NA but And impact Roger where on said, just the simply we on to margin upside … have

Roger Dassen

could it So margin. be gross the left on forward

Peter Wennink

have in just it cannot anything write off. We capitalize to inventory. We

by is shipping once High-NA this what start So better margins way is, which us give we High-NA. the will

Andrew Gardiner

Thank you, guys.

Peter Wennink

Thanks.

Operator

is next Mr. David question name Please from your Mulholland. your by followed state question. Our company

David Mulholland

other shipments ship Dave UBS. Obviously, I’ve everything space? those China, some able follow cap am equipment made obviously of from out comments you for you into able I the Peter. to you some the still will Netherlands be And face around sanctions from ship afterwards. assuming for got But clear on facing whilst yourself, unable particular of customers any are up to And have semi we’ve buy if XXXX, indirect I you’re if to to Mulholland it’s to that want the impact particularly it’s just Hi. they been up a read, customers. because may follow from they’re those

Peter Wennink

Yeah.

it’s think when about or tools, they talk the at talk be here our you that, company, you customers I EUV other is understand European is a of in can look are about Japan, lot we good have to of a alternative. in process and When Chinese alternatives that question, talk Singapore David. you some some there which tools when a deposition tools. an is There there to and

So Netherlands world. U.S., increasingly other even both in in and Japan there and alternatives the the parts of in metrology, are on the outside

that a the company So on is if it’s alternative litho, Chinese there’s and on you’re yeah. more thing difficult and that one

ship and allow litho Logic in actually we’ve actually been the our for make the of that those on most you that sure under So important solution want rules allows very you we customers about just in customer customer, major that agreements, a get Chinese to of are have our it’s to for to but current tools list, China to for it’s find and their we talking won’t the those look lists wasn’t there -- mean, But to course, I then currently, tools, we customer a to. and to, follow get just Logic at cannot your we litho our litho It’s us ship companies ship tools. I And mean, one we have the order lists. fab. your go tool critical. other the critical tools agreement, is those where litho -- and process

talk us in ship because sure tools hey, with why it’s starts they litho. so why most that’s the expensive that it with you to we that all change just So said, all -- and starts CapEx, the the -- terms strange not in make -- is and still of it tool need, fab it’s that us that’s that not it

David Mulholland

keep you’re up, shipments balance said, that. then Thanks much by open are it, the are of how to sheet you this year, for end or a door funding but more long great. flexibility? potentially elsewhere. leaving if year see next just do for you willing you’ve that that upside are you follow commit you open to and for. the obviously Obviously, door That’s the you to keeping do how quick long got How And making customers

Peter Wennink

Yeah.

I think question. it’s good a

not to at so a and listening also other Of the are I hand, we try favor. course, know call push I’m into it, this myself there, but customers doing

we under So the in -- between, yeah, are part to are extra that more risk circumstances currently see difference these it some we risky we extra between leeway, but Anywhere is our that sure bottom-up room, make numbers some the yeah. that have and capacity. that going and of build obtaining

So But to we’re then not because come myself will a will we of bit it units make and going are it, time number probably ship they I’m to output. think favor, we need in somewhere between take a and our to if maximum able will in, to going get out go But will completely appeal. said, they I doing sure customers that what terms that we’re the react. in them currently maximize listening for so try be all like we to and between of And actually.

David Mulholland

Peter. Thanks,

Operator

Our your name next question is Harchandani. state followed your from by Mr. Amit Please question. company

Amit Harchandani

of the the dynamics of a I on if for readiness could one Logic we give could Amit ecosystem? how but us given in Thank separate on towards for have if you if you. may note, a Good and China, factor, us I sense from the EUV, number perspective overall secondly, appreciate and if could NX sense customers demand sense may. is relates a in playing are maybe a you a readiness terms the technological is you us legislation? help And that quantify afternoon, question you. give terms that what’s us change on puts everyone. and in how where or was potential is derisk contribution Thank from the part there takes ramping, beyond good U.S. NX? give the for some a Two morning, you I to us the for technological questions are of that thinking Citi. the say, about side ramp Harchandani My first

Peter Wennink

if ability is last only we that the cannot thing have yeah. which tools. the of geographical within yeah, and situation, at area is to on planning the behavior specific in That’s because you that this that’s to at and for, operate us company ship the the the what we’re regulations rules of situation in, Europe, the look the that look it know, -- I you On part, Amit, I’m derisk, basically decisions it not you Yeah. what speculating governments, -- that current is is, you

at that beyond what to the is, which and see there. just customers reality what Now, as today upside is, course, there, yeah, four it or is speculate we is, downside that’s just on it’s at there difficult. of major with going of to what deal am powers there just lot we a what is, are how more yeah, we we ASML, have look down work, derisk trying Chinese I’m are or which, and business, several not is I what it a five customers the very that that’s how than --

there, So what going because I governments do. speculate know are I’m not going to don’t to

we to technical an to the EUV, we There’s DPV can and technical is have on maturity ready. immersion It are tools XX% the as ecosystem our it of the do over there. we by got our do are XX% it. -- up It’s we under reaching has way NX tools, XX%, that NX customers it’s maturity uptime. tools in that of and Well, all XX%, of with to uptime, not EUV, to quickly which varies, for XX% On readiness bring, instance, EUV XX%. are the at have are how

tools. do the of the to with maturity has which stability a is it So

which our when time, saw volume lifetime key introduced of So and just really preferably faster, why take having will parts, discussion in more give with pushing The faster, out it we having maturity wafers. saying, us just and and them do, very they yeah. the Why it first okay, are on logical, introduced That’s are what more we’re be, faster. it capacity, when focus stages, we’re customers, because our we is some turns the at they thing order, top, saw we yeah. new the same wafers, completely me all tools EUV that’s this we the manufacturing, on dual the today. it’s discussion okay, that the yeah, of on the market more high want mean, their did before an technology issue is not same them will implemented normal. get normal. improving a tools, customers, to all with we see EUV solutions thing That’s that on field. those And maturity We want only yeah, and the end give yeah, we by immersion, then is -- things, the the customers I customers of which will

lot works. how all. this have was a I but go at I of actually of a detail years So doubts about a the it This couple readiness is question -- that today. into no technological could not ago we

Roger Dassen

in technology that. to at mean, you’re the and you to there about pretty is talking referred So right? things that it’s look sort of list, that typically terms the are I it’s And if mask clear readiness developing -- mask the the being for inspection, ecosystem, typical cater to think of I

at to transmission we only also Photoresist, looking know others. -- pellicle You’re ourselves they’re I both good breakthroughs and some actually there and will is for that some also just the in all which think for where you’ve That’s it It’s recently seen into be you time HVM. the is thing the happen point whole going there -- is see. in development going that at always massive there. what -- is

at also typical Conferences they by slides… So, echoed good that’s elements made. on a being that’s show EUV you is and And think the I our the progress customers there, see these

Amit Harchandani

Yeah.

Roger Dassen

all on about the amber they present it’s … there and of actually where at at they was some is ecosystem talk the and had that look slides And the about you that the today point, slides. green. readiness ago, were you the and gone are to their look assessment progress the Peter’s in if if ecosystem, two quite red years red

Amit Harchandani

Yeah.

Peter Wennink

now -- of being dual stages, also is little when the also, wavelength have tool, you that exposure we around have research this goes in -- we’ve And needs I XX% like, we very that we very customers normal. where you pedicles the also for immersion, we over is advantage transmission, a everything we the a when our mature while. basically… Roger industry, seen XX% true yeah. -- The Things said entire there far it’s production mean, with their So have qualified process, have, which very normal, for only it’s is did it, like, are to where for are we up, in our that and ecosystem change. with it’s is same different did started is to The photoresist. said the This It’s is not and XX%. for, transmission institutes yeah.

Amit Harchandani

Yeah.

Peter Wennink

… climbing…

Amit Harchandani

Yeah.

Peter Wennink

curve maturity we the with is really to … levels saw it going DPV. there on year next home starts hitting for years one and two the be that or maturity that before with us

just take a So it’s to bit time. going of

Amit Harchandani

form you the confidence for to Brilliant. Thank gentlemen.

Operator

question. Duval. Alexander Our state your next Mr. company from followed by your is Please question

Alexander Duval

everyone. It’s from question. Hi, Sachs. for thanks Goldman Yeah. Alex Many

the models go bit wondered invest you to You in could E it roughly and terms next to is in the E year the fair mix going D talk continue is of you up when about assume selling from and the the models and to I progression the direction. to prices talked end coming how EUV a a in they about thanks. Many of numbers? see D and XX% on if that the model the effectively model be we well, And average do

Roger Dassen

the ASP indicated somewhere the and good in what increase a in XX% of we’ve we the between we’ve estimate what increase -- there of Alex, what So, terms is D, ASP. XX% -- is for

X.X that You an tool productivity of productivity, the in see terms X.X. a also see overlay an see XX% -- you of of and you increase in improvement to

uptick being provided the is ASP the value that just about. justifies some to I good which So talked pretty in customer,

so and we’re -- to that as give ASP that there, as But any talk On I to not value that development while some is going that date launch that’s when being but of a about -- we’re that. said, quite pretty there on the E, are the enhancements significant tool. on the indications out, improvements planned approaching more

as of year really next On and units, indicated, composition in model HVM the of model midpoint introducing at the we’ve for plan year. terms on the we D D next of the

spread indication of So the a year. you for gives next kind is how that of bit going be an of to

Alexander Duval

That’s very clear. Many thanks.

Operator

question. is name company state Our next followed Mr. your question Mehdi by from your Please Hosseini.

Mehdi Hosseini

see ups. with the you in if is It would embedded Hosseini could EUV data upgrade you. also, Susquehanna. year? option. us if the acceptance update into few questions earlier of Mehdi you could be give great you two and do next the give And believe shipped the follow What’s was the I update that us field tool this have e-beam, on I an Yes. year. the multibeam Thank mix how a with

Peter Wennink

I at -- to and what give the system going least the don’t prices? -- we I The Okay. I it Mehdi, That’s can have think you don’t mix you’re between upgrades we’re mean… asking

Mehdi Hosseini

Yeah. Yes. Yes.

Peter Wennink

Yeah.

So it was above $XXX…

Mehdi Hosseini

[Inaudible]

Peter Wennink

you is sales, want? EUV our Is is business …of much how that how and system upgrade much what business?

Mehdi Hosseini

Yes. Yes.

have upgrade highlighted the wanted older You and see… I with to models opportunities

Peter Wennink

Yeah.

Mehdi Hosseini

driving … field the -- of is how it’s in that option. much

Peter Wennink

Okay.

Okay. Yeah.

have upgrade, instance, a ASP these upgrades, bit you You while QX for types higher. different an in have yet like, of was

from them. that field B is so already different upgrade have refurb a is that significantly complete you there field You tool that to upgrade that of when adds -- one. we want, the are a into I like are all ship, looking XXXXC. that’s the of But the have almost upgrades on what do we upgrades and upgrade and in customers in tools there included have a C also going mean that you you are the expense in and that’s depends have at more and XXXX

So there want what kind upgrade also do yeah. the you of of them, you mix have

Mehdi Hosseini

Yeah.

Peter Wennink

-- between the actually the in point of And original view in and productivity a current you that the C. are are which from have upgrades, the XXXXB midpoint B

choose. you which also -- is this can what you So

on that terms all customer on as and So forward the it’s give what the very because to it wafers depends is, difficult a in you day. planning outlook plans looking of per capacity very much

give very very when you happens had -- these things discussion number, plans and with we’re these recent So going a also great just scenario different who really change. the they customer, is yeah, scenario. I upgrade a large plan total wants and to yeah, to out, how another to different look pans the on than upgrades depending revenue going want at an scenarios. the where be that Well,

would be I because wouldn’t to dare any give wrong. I even guidance there, you So

Mehdi Hosseini

Sure.

Peter Wennink

Yeah.

Mehdi Hosseini

Yeah.

Peter Wennink

three another mean, the are use the for year wafer year. quarters do So happen to tool, better And is I like process. how are entire inspection multibeam is will -- it that tools toll -- into two integrate tool, also tool and really those the appeals the year over that going It a it’s your this management and And yield uptake of it I this to is to going the tool. half is a customers determine will you just multibeam not we ship that of tools. said, next that MBI,

needs faster, there into that That’s putting us yeah, first are what integration a that’s we yeah. optimism wait the have But is at So and and translate going appeals. customer the be real how confirmed much now of people what we is to believe a that what see six we see. be that we bit tool that deal we’re optimistic, the We seeing advantages a we to customer. for tool least we but that’s value that, of of to that first shipped last are can and believe phase that times ultimately, just in the quarter, the by of have in

another it’s be this. get you on two before Mehdi to be So we or quarter news, patient, to a on one quarters bit clarity so that going have some

Mehdi Hosseini

you Thank so it. Got much.

Operator

Aleksander next state is question followed by company question. your Mr. Peterc. from your Our name Please

Aleksander Peterc

afternoon. Aleks from This is for Good question. Societe the Thanks Generale. Yes.

push us we’ll of we so capital a your a get EUV now terms where happen future? balance quarter, get that realistic that in materialize realistic very will you and then communicating that then working whereby is quantify idea more given big just strong secondly, outs we see Just an these the cash Do year in you scenario? starts first, the one smoothed you Thanks. coming in And in ‘XX, things on could land by scenario to customer, in what Peter, to the back orders, there is orders out progression if for net as jump a a one vessels us? fourth the then for comment, and the with could give sheet on

Roger Dassen

Aleksander. we’re cash in can QX. Thanks, significant flow, flow, free flow very free will that free cash On there a you on generation I cash tell not be guiding a that,

was one is For tools reason into couple shipped slightly quarter that generation was of month the reasons, this And the it fact, there the as the fall which a QX. is, will in low, free main of last matter as cash of that, many a generation many, flow one cash a quarter rather result reason of of negative.

reason generation why will flow That’s we communicated QX. we free will significant interim share why there be cash in resume that announced also we So the the the buyback, dividend.

QX, So we’re the generation very flow free guiding that. in confident on we’re but not cash

Peter Wennink

Well, Well, communicating Yeah. and that time your give time asked was could vessel. we’re And there’s a the difference be? I question, that I so like about of know happen asked it a ‘XX. rightly case my introduction But then movement. in that question? preparing could on the difference was you well, communicating XXXX you in in could is, the that ‘XX, effects what But we in on the about vessels of that and orders, And in the will question, vessel actually we’re in could believe see because I do because But any question do XXXX? big it jump XXXX what say, think context I how communicating said, your know, question the big I ‘XX? about for output you

I see in will manufacturing we’re think in from DRAM. let’s from more and shipments Logic say of and -- the preparing that But then it into This is we nodes think be in more of ‘XXXX. importantly chain there’s point supply for also XXXX, why pulled can an next introduction opportunity a view. the I a

happening, year of the NX could the I think as a we will will transition XXXX be, any they over will will be recipient you case talked in relays. have transitions, about say, XX node whereas -- XXXX which no yeah,

So it’s progression what volumes. would as -- of that the would then see on normal of a top be I EUV

Aleksander Peterc

clear. Very Thanks.

Skip Miller

Okay.

one for time question. have last We

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

please. we may Operator, have Now, caller, the last

Operator

from followed by Yes, question. is state your Adi sir. name Mr. your company Please Metuku. The final question

Adi Metuku

Bank afternoon, questions. of Good It’s America. I guys. two Yeah. had

assuming First what few to Memory about domestic into Chinese discussion Logic a and question of you XXXX. in how you guidance just over growth there’s Can for down exactly services? embedded the have with could low you in secondly, demand terms number on lot what also next sense customers of the assumptions get embedding? the your talk and double-digit years. revenue demand? found this Just you’re of now around for And demand Secondly, been a edge leading market in go the of

you If likely appreciated. on you your give how might and think some cetera, you. you et be that that any be could Thank I trend, is? based us much order do would think sense seeing, discussions that

Peter Wennink

Yeah.

exactly? of mean, -- so that what You do in trending? you want you actually, number on -- the leading to are is how asking a Your know edge? customers the question You’re

Adi Metuku

No.

number could If look edge you producing two years devices at the to leading go do customers down? you of think out, three years

Peter Wennink

Yeah. Yeah. Okay.

Adi Metuku

how you… about when that think something, do that you Is

Peter Wennink

Yeah.

Adi Metuku

your cetera? … et planning, do

Peter Wennink

Yeah. Yeah.

on think I the…

Roger Dassen

questions… the first On

Peter Wennink

the will take second I one.

Roger Dassen

both On the total we’ve it’s, business think question, I EUV. figure Adi, the topline and the you given for for first

factored have number there fact left right. of many uncertainties are mentioned, swing there and -- Peter As some some going that quite that are have quite and factors there course, are into been --

a going next year’s do into we what real but our insight think should first we on in time I results, have the when is full to discussion months have also three year.

that I suggest that to that’s in is about I the time, we’re at what are main drivers. think point talk going what

markets, leave think, just year, look the I stage, I that as at this of at for we would beginning do say, at the at it different and now. would topline we at look of do see drivers do it how good we there? way think indications that we the suggest growth segments the So and I did we the to be given that what that’s those if we’ve

Peter Wennink

Yeah. answer think domestic And China. I’ll on I questions your two

are them Logic go to It they relevant. customers you and in customers, customers that But their devices. have not almost put wafers it’s have Memory, Chinese think that sounds They in into they their realize all ramp, bit the to arrogant. sold. a I are in

does when they very whatever else, will is those with that customers those those think added this added from, that the I and come so another with to need then yeah, need this somewhere come come not not for still reason those just period, max, and -- from need wafers yeah. if so tools we a do said, instance see question communicating for business DRAM, of when and think whatever they yeah, And for from the So towards in exist, of think where shorter is it’s high wafers, EUV, need reason Memory yeah, this utilization one And buy I capacity China wafers we need much DPV, somewhere, customers they a might while capacity time vessel, than to I yeah. again, set yeah.

I So relatively quick. will -- itself is think resolve that it

nodes easier. think can see the -- I customers number on leading Now edge, getting customers only certain. will The of in are And increased the is an deal large thing absolutely with customers next one Things as very not complexity. the that.

our and dear to the in the as technology, it Because is. outlook most years always at seen last and what reduction needed our XX that only But about production, said I of is could large important which and they’re speculate best the continue think figure we’ve leading this less seen confidence yeah, are a only infrastructure I’m handful they’re going talk all of designs, a a than XXXX that bit be the the it’s in dominant is is those to to why end that be the our cost. have of how who to number my best has transformation of crisis, number remarks, handful, somewhere significant yeah, they COVID than of and part the with yeah, think digital on relatively the my and we’ve that’s -- going to a end, argue planet, lowest not in it wafers going the customers it to you I efficient grow, to because grown. customers. are As larger, going of the less That’s areas as heart going going doesn’t over I only chip to be, are do with also in out And prepared production and the I result we with digital be to in matter. chips edge what end, that need made I a device and means believe in

So in will it it be be but think, and they yes, will today. bigger are I than fewer fewer customers, much that sense,

Adi Metuku

again. Thanks right. All

Peter Wennink

thanks. Adithya,

Skip Miller

held in I’d remind will a face join our we in due face we can have follow moved to by that like The due to XXXX. London be off, hope will we and us. Before that We everyone have to be More time sign you’ll event time. XX, able COVID-XX, details Investor to Day hope we June meeting. to

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

Operator

you Thank your concludes financial you, third conference Thank the results for participation. This quarter ASML call. sir. XXXX

line. disconnect now may your You

ASML Holding (ASML) 14 Oct 202020 Q3 Earnings call transcript