Q1 2025 ASML Holding NV Earnings Call
Good day and thank you for standing by. Welcome to the ASML 2025 First Quarter Financial Result Conference call on April 16, 2025.
At this time, all participants are in a listen only mode. After the speakers introduction, there'll be a question and answer session. So ask a question during the session. You will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To enjoy your question, please press star one and one again.
Speaker Change: Please be advised that today's conference is being recorded. I would now like to have the conference call over to Mr Jim Kavanagh. Please go ahead.
Speaker Change: Thank you, Operator. Welcome everyone. This is Jim Kavanagh, Vice President of Industrial Relations at ASML.
Speaker Change: Joining me today on the call are ASML CEO , Christophe Fouquet, and our CFO , Roger Dassen.
Speaker Change: The subject of today's call is ASML 2025 First Quarter Results.
Speaker Change: The length of this call will be 60 minutes and questions will be taken in the order that they are received.
Speaker Change: A transcript of management's opening remarks and a replay of the call will be available on our website shortly following the conclusion of this call.
Thank you very much.
Speaker Change: Before we begin, I would like to caution listeners that comments made by management during this conference call would include forward-looking statements within the meaning of the federal securities law.
These forward-looking statements involve material risks and uncertainties.
Speaker Change: and in ASML's annual report on Form 20F and other documents as filed with the Security and Exchange Commission.
Speaker Change: With that, I would like to turn the call over to Christophe Fouquet for a brief introduction.
Christophe Fouquet: Thank you, Jim. Welcome everyone and thank you for joining us for our first quarter 2025
Speaker Change: Before we begin our Q&A session, Roger and I would like to provide an overview and some commentary on the first quarter results, as well as provide some additional comments on the current business environment and on half future business. Thank you so much.
Roger Dassen: Uji, thank you, Christophe, and welcome everyone. Let me start with our first quarter accomplishments.
Roger Dassen: In the first quarter of 2025, total net sales were at 7.7 billion euros in line with our guidance.
Roger Dassen: Net system sales were at 5.7 billion euros, which includes 3.2 billion euros from UV sales and 2.5 billion euros from non-UV sales.
Roger Dassen: Net system sales were driven by logic at 58% and remaining 42% coming from memory.
Roger Dassen: Insole Based Management Sales for the Quarter, K-Man, F-2 Billion Euros.
Roger Dassen: Gross margin foot quarter was above guidance at 54%. Driven by achieving customer productivity milestones on already installed EV systems, as well as a favorable EV product mix and a rich configuration resulting in higher ASPs.
Thank you very much.
Roger Dassen: Operating expenses were in line with guidance, with R&D expenses at 1.161 billion euros, and FDNA expenses at 281 billion euros.
The effective tax rates for Q1 was 16.7%
Roger Dassen: For 2025, we expect an annualized effective tax rate of around 17%.
Roger Dassen: Net income in Q1 was 2.4 billion euros, representing 30.4% total net sales, and resulting in an earnings
Roger Dassen: Turning to the balance sheets. We ended the first quarter with cash, cash equivalents and short-term investments at a level of 9.1 billion euros. [inaudible]
Roger Dassen: That's the very strong free Tesco generation in Q4. We had a Q1 with a free Tesco minus 475 million euros due to a combination of customer payments and down payment dynamics and continued investments in fixed assets for future capacity. [inaudible]
Roger Dassen: Moving to the order book, Q1 Net System Booking Steven at 3.9 billion euros, which is made up of 1.2 billion euros of U.U.E., and rounded 2.8 billion euros of non-U.E.E.
Roger Dassen: That system bookings and the quarter were weighted towards logic, 60% of the bookings were a number of accounts for the remaining 40%.
Roger Dassen: AQ-1, ASML TAY, De3rd Quarterly Interim Dividend, over 2024, of 1.52 euros per ordinary share.
Roger Dassen: Recognizing the three interim dividends of 1.52 Euros for ordinary share each.
Roger Dassen: Fade in 2024 and 2025, with a final dividend proposal to the annual general meeting of 1.84 euros go out in the reshare. This would result in a total dividend 40 year 2024 of 6.40 euros go out in the reshare. This would result in a total dividend 40 year 2024 of 6.40 euros go out in the reshare.
Christophe Fouquet: In Q1, 2025, we purchased shares for an total amount of around 2.7 billion euros. With that, I would like to turn Nicole back over to her stuff.
Christophe Fouquet: Thank you, Roger. Roger has highlighted. We started 2025 with good first quarter financial reasons.
Christophe Fouquet: Turning to the markets and consistent with our view from last quarter, the growth in artificial intelligence remains the key driver for growth in our industry.
Christophe Fouquet: If AI demand continues to be strong and customers are successful in bringing on additional capacity to support the demand, there is a potential opportunity towards the upper end of our range.
Christophe Fouquet: On the other hand, there is still quite some uncertainty for a number of our customers that can lead to the lower end of our bridge.
Christophe Fouquet: We continue to see revenue from logic increasing in comparison to 2024 with the ramp of Lilligan notes and we expect memory revenue to remain strong, similar to 2024.
Christophe Fouquet: Install-based management review is expected to grow in comparison to 2024.
Christophe Fouquet: This is driven by increasing service levels as our install base grows, and increasing contribution from EUV, and an increase in revenue from our great business.
Christophe Fouquet: Regarding recently announced tariffs, discussion of just starting and our very dynamic.
Christophe Fouquet: The end state will be unknown for a while, and until then the potential impact on our customers, supplier and ASML will continue to be unclear and will continue to evolve.
Christophe Fouquet: Roger would provide more details, but it is clear that uncertainty is increasing in the macro environment as reported by many experts and businesses.
Christophe Fouquet: With that caveat, we continue to expect revenue of between 30 billion euros and 35 billion euros in 2025 and continue to expect 2026 to be a gross year.
Christophe Fouquet: With that, I ask Roger to provide some insight about how we are looking at the recent growth announcement.
Roger Dassen: Thanks for our stuff, as Christophe highlighted, we are currently facing an elevated level of uncertainty, surrounding terrorists, which may have both direct and indirect implications for our business.
Roger Dassen: The total direct impact results from terrorists related to a number of areas including new system sales and upgrades to our U.S. customers, the import of materials for our U.S. manufacturing facilities, the import of parts and tools for our U.S. seal operations and finally
Roger Dassen: Import of parts from the U.S. into other countries, to the extent Terri's applied to those parts.
Roger Dassen: We are working with our customers and suppliers to try to achieve that any direct impact of terrorists on our results is limited.
Christophe Fouquet: As Christophe said, the terror discussion is still very dynamic. The potential indirect impact on end-market demand is even more complex and impossible to determine at this stage.
Christophe Fouquet: With that I would like to turn to our expectations for the second quarter of 2025.
Christophe Fouquet: We expect Q2 total net sales to be between 7.2 billion euros and 7.7 billion euros. We expect our Q2 installed base management sales to be around 2 billion euros.
Christophe Fouquet: Gross margin for Q2 is expected to be between 50 and 53%. The bandwidth for gross margin is larger than usual given the uncertainty around the school and size of the tariffs and the value chain absorption of tariffs for the quarter.
Christophe Fouquet: The expected R&D expenses for Q2 are around 1.1 billion euros, and SDNA is expected to be around 300 million euros.
Christophe Fouquet: The gross margin in the second half of the year is expected to be lower than the first half, primarily due to the expected margin dilutive effect of the revenue recognition of high NA systems in the second half of the year, lower upgrade revenue, as well as any potential impact of tariffs. [inaudible]
Christophe Fouquet: But full year, we continue to expect a gross margin between 51 and 53 percent, of course with the caveat of different certainties around tariffs that we discussed before.
Christophe Fouquet: With that, again, I turn it back over to Christophe. Thank you, Roger. Turning to technology, in EUV we have achieved some important milestones on both the low NA and the high NA platforms.
Christophe Fouquet: These are critical steps in providing a comprehensive EUV product portfolio that offers the necessary flexibility to support our customer's one-map requirements and optimize their cost of technology.
Let me first update you on our low NA and XE 3800 E.
Christophe Fouquet: We started to upgrade our systems in the field to its final 220 Wethers per hour's configuration this quarter. And we continue the rollout on the install base lit through 2025.
Christophe Fouquet: We now ship all our new NXE-130E system at full specification.
Christophe Fouquet: In addition, our ADXC 13.0's E-materity is reaching the level needed to support high-volume manufacturing and several logic and memory customers are ramping their most advanced nodes using this system. [inaudible]
Christophe Fouquet: The gain in productivity supports the execution of our cost of technology reduction on map with our customer, enabling more opportunities for EUV single export adoption. This is especially relevant to DRAM as discussed at our capital market.
Let me turn now to INA. [inaudible]
Christophe Fouquet: At the SPIA conference in February , there were a number of good reserves presented by our customers who highlighted the achievements of some key performance and maturity milestone.
Christophe Fouquet: They also sprays the benefit of the technology in terms of process simplification, cost and cycle time reduction.
Christophe Fouquet: Process simplification leading to a few process steps, shorter cycle time, lower cost and better yield, how the historical value driver of single exposed lithography versus multipatterning.
Christophe Fouquet: This benefits drove the industry transition to EUV-Louenay and we drive the transition to INA EUV over time.
Christophe Fouquet: One paper showed that the INS system materiality is far ahead of what we experience on low in the same stage of its introduction.
Christophe Fouquet: Supporting a much lower risk of insertion and adoption for customers.
Christophe Fouquet: Inter reported the exposure of more than 30,000 wetter in one quarter and a significant process improvement by reducing the number of process tape from 40 to less than 10 on a given layer.
With that comes a significant cycle time improvements.
Christophe Fouquet: Samsung reported a 60% implementing cycle time in one of their use cases as well.
Christophe Fouquet: We shipped our fifth and final EXE 5000 in a system in Q1, and now have system at three different customers.
Christophe Fouquet: With the following on INA system model, the EXE 52 Red Shipping from Q2 this year.
Christophe Fouquet: As we have described before, there are three phases of technology insertion of customer will follow with IANA.
Christophe Fouquet: We are currently in phase one. We are customer take a system into their R&D facilities and warpuses to understand the value and capability of R&A for their next nodes. We are currently in phase one. We are currently in phase one.
Christophe Fouquet: In phase two, which we expect to take place in 2026, 2027, customer will start running the system on one two layers to test its readiness for volume manufacturing.
Christophe Fouquet: and Fethree, when customer design in INA on their most critical layers in their most advanced nodes and running the volume manufacturer.
Christophe Fouquet: Looking longer term, the semiconductor market remains strong with artificial intelligence creating growth in recent quarters and we see some of the future demand for AI solidifying which is encouraging. Thank you very much.
Christophe Fouquet: Our conversation so far with our customers confirm our expectation that both 2025 and 2026 will be growth year.
Roger Dassen: At the same time, as Roger and I have already explained, there is an increase in certainty across the global economy to the ongoing discussion on tariffs.
Roger Dassen: As discussion of capital market day, we expect that the end market dynamics will lead to a product mixed shift more towards advanced logic and the realm.
Roger Dassen: The combination of our NXC 3800E for the progress of strong productivity on map on low NA and the introduction of INA will support the cost of technical reduction and the conversion of more multi-patterning layers to a single UV exposed leading to higher little intensity.
Roger Dassen: In line with our 2024 Capital Market Day, we expect 2030 revenue opportunity between 44 billion euro and 60 million euros, with gross margin expected between 56% and 60%.
Roger Dassen: Finally, as a reminder, we host our annual general meeting on Wednesday, April 23rd, and we hope to welcome our shareholders again there. With that, we will be happy to take your mission.
Roger Dassen: Thank you, Roger, and thank you, Christophe. The operator will now instruct you momentarily on the protocol for the Q&A session.
Speaker Change: Beforehand, I would like to ask that you kindly limit yourself to one question with a short follow-up is necessary.
Roger Dassen: This will allow us to get to as many callers as possible.
Speaker Change: Now operator, could you, could we have your final instructions and then your first question, please?
Speaker Change: Thank you. As a reminder to ask a question, you will need to press star one and one on your telephone, and wait for your name to be announced. To restore your question, please press star one and one again.
Speaker Change: Hand your first question, come to the line of Francois, Boving Yee from UBS, please go ahead.
Speaker Change: To facilitate adoption, I mean to help your customers decide more quick quicker, if that makes sense. So I was wondering if it's something you consider at all, at the moment, the pricing of INA to help the adoption.
Speaker Change: Well, Fransa, thank you. It's a good question, I think you...
Speaker Change: You remind everyone that indeed, in general, single-expose lithography will be better for customer than multi-patterning, mention that this typically lead to process simplification, equipment, cross-reduction. Thank you very much for your attention.
Speaker Change: So when it comes to any new lithography system, I think of course we want to drive the adoption of those tools as quickly as possible, basically to get to single exposed. [inaudible]
Speaker Change: We are still working on that as you know for low NA so that also typically takes some time and of course we are going to do the same for our NA. [inaudible]
Speaker Change: Now usually the main reason to not adopt very quickly, the new system fully for single expose is not the tool price to be honest, it's the tool maturity.
Speaker Change: And I think it's very important to get that maturity at the right level.
Speaker Change: Because if not you will set basically a cost of technology point that will be not very optimized and this is why not only I refer to maturity in my introduction but you also heard me.
Speaker Change: a customer also making the case that SVAE, that the maturity of RNA, was by far ahead of the maturity of RNA.
at the Seamere stage. So...
Speaker Change: This is still the walk we have to do. You know, I mentioned the free phase. I think it's a major part of phase two. And I think if you look at the the focus of face email today with the customer on INA is really to get this maturity in place as soon as possible so that the adoption is there.
Speaker Change: Lowering the price that low maturity will just create too much headache for our customer because the tool will not be very reliable.
To use you, you are talking about or could it be quicker? Yeah.
Speaker Change: I think those things are happening, I would say almost as we speak. So I think every new customer knows where we bring basically a tool with a better cost of technology, such as the 30800E is an opportunity for more adoption. So I think this is...
Speaker Change: I would say a permanent job that's something we have been working with our customer for a bit.
Speaker Change: I think the place we are today with low NAUV, the maturity of the tool, the step we do on productivity, remember the 38 on the road is 30% faster than the 36 on the road, I will say really give us a chance to...
Speaker Change: To be optimistic on that work with our customer in the coming years. But the work already started, Francois.
Thank you very much.
Thank you.
Speaker Change: Your next question comes the line of Krish Sankar from TD Cowan, please go ahead.
Krish Sankar: Thanks for taking my question. First of all I had for Roeg, you know, I'm just kind of curious, you talk about growth next year. What kind of bookings one day should we expect in the current and next quarter to see the growth and is calendar 25 ends up in the upper end of the range. Would calendar 26 still be a growth year. I'm going to follow up. Thank you very much.
Yeah, so ...
Speaker Change: Christopher, I'm not going to comment on the magnitudes of the growth as we already also sat on the video. We still believe 26 to be a growth year based on...
Speaker Change: Our technology based on the conversations we have with customers based on the intrinsic market demand, as we see it, with the caveat that we also talked about, which is the general macro climate.
Speaker Change: In terms of what bookings do we need to get there, I'm not going to go into any detail there. I think you can easily figure out, you know, what the backlog is today. I think you can easily figure out that there is a very significant part in the backlog that actually pertains to the period beyond 2025.
Speaker Change: I think that's what we should see in the next floor, but I'm not going to quantify it also in light of the comment that we made before on the nature of the bookings and the extent to which it does not really reflect the business momentum, always accurately over business. [inaudible]
Speaker Change: Gardiner, Gardiner, Roger, and then a quick follow-up, used to expect China to land somewhere in the mid-20% of sales, and can you give any color on the backlog composition, how much is EUV, DPV and China in that mix? [inaudible]
Speaker Change: Sorry, you broke up in the first part of the question. I couldn't understand it, Chris, maybe you can't repeat it.
Speaker Change: Yeah, sorry, Roger. I was trying to figure out if China is still going to be around 25, mid-20 percent of your seems to fear and any color on the composition of the backlog. . . .
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Speaker Change: understood so yes China we believe China will be a little bit over 25% of sales this year as you as you know in the previous call we said it's low 20s
Speaker Change: The way we look at it today, the demand within DPV is shifting a little bit, and I think the right way to look at it today would be that it's a little over 25% of our total sales this year.
Speaker Change: And in terms of the composition of the backlog, if what you're referring to is the China part of the of the backlog, I guess that's what your question is. I think that the China part and the backlog is still in this around this around the same number. So it's still in that. That's it.
in that 20 to 25% range approximately.
Thank you very much, Roger. You're welcome.
Speaker Change: Thank you. Your next question comes from the line of Joe Katraki from Wells Fargo, please go ahead.
Joe Kaczoracki: Yeah, thanks for taking the questions. One on the tariff front. Can you talk about just what your customer conversations have been like over the last couple of weeks? Is there any interest in altering delivery schedules and just kind of, how do you think about your lead times in the context of the ability to like pull shipments in to kind of elude some of the tariffs?
Speaker Change: Well, maybe I can start and I'll go ahead, but I think that the short summary of our customer conversations so far, I think that the announcement of tariff have not changed the business conversation we have with our customers, that's the first point.
Speaker Change: The second point is the level of uncertainty we shared in the introduction, which of course as a resource of the many announcements we have seen in a very short time. I think that uncertainty is also with our customer and with our suppliers. Thank you very much.
Speaker Change: So a lot of people are still trying to understand exactly what it means for them and I think in some way we start to try to do that together. That's extremely preliminary. Thank you very much.
Speaker Change: And I will say again once more that so far those discussions have not changed fundamentally the business planning or the business discussion we have been having with our customers.
Speaker Change: Because fundamentally, I mean, it's even impossible for a number of customers to do what we're suggesting here, because of course to a very large extent what is gating for customers is space.
Speaker Change: So they need to have facts to put tools into, and at least for a number of customers, that is the number one gaining items. So it would even be impossible to opportunistically just pull in the pulling system. That's not the way it works. That's not the way it works. That's not the way it works.
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Speaker Change: The 30-600s, the number of pre-builds, you will see that come down, this year, and there is no concern around the ability for us to sell the remaining 30-600s that we even build, and that we build or are in the process of building, no concern there.
Perfect. Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Didier, Simama from Bank of America, please go ahead.
Speaker Change: Good afternoon, thank you for taking my question. Just wanted to make sure I get everything right, so I think if you look at the blended ASPs of your low NAUV, I think they came in at about 230 million euros. If I do the math correctly also on your course margin, it looks like your EUV course margins were at about 55%.
Speaker Change: So my question is, is that correct? And I've got a quick follow-up, especially if you could talk about whether there are any one-off exceptional, because I think you talked about upgrades, whether that came into the ASP, the course margin, or in IBM, or in all elements. Thank you.
Speaker Change: So you're right on your calculation of the ASP, it isn't the close to 230, I think it's 227, it's the number on the ASP.
Speaker Change: As we said, it's a little on the high side given a composition of 383600, also a configuration, et cetera.
Speaker Change: When it comes to the gross margin, we don't disclose that, you know, on a product-by-product, product-by-product basis that I think we've said in the past.
Speaker Change: that the gross margin on low and a, you know, is clearly now above the corporate gross margin. So that's clearly the case, but we're not separately discussing that.
Speaker Change: Got it. And on China, it's just wanted to also get a bit of color. So you said that from the previous guide of the low 20% of group revenues.
Speaker Change: You think China is going to be a bit of both 25%, so can you talk about what's changed there? And also if you could maybe within that give us a sense of what's your. So, let's see what's changed there.
Speaker Change: Direct to no guidance would be on China IDM revenues because obviously there's been restriction on maintenance and services on the sporting fabs. So just wanted to understand what you've provisioned for that IDM revenues in 25. Thank you.
Yeah.
Speaker Change: So DJ, when it comes to a few percentage points changes, I think we should recognize that you're looking at a couple hundred million, right? So we're looking at a few shifts, we're looking at a couple hundred million shifts which I think is normal business dynamic that you have a shift like that. So I think what you notice is that...
the demand in China is still strong.
Speaker Change: And if you then look at, where is the demand strong? It is still strong, you know, particularly in the mainstream business. That's where the demand continues to be very strong. And that is on the back of, you know, the demand for mainstream chips in China, both for domestic consumption, but also for, you know, what China exports to the rest of the world. So that demand is still resilient. And in fact, a bit better than what we anticipated three months ago or six months ago.
Got it. Thank you so much. You're welcome.
Thank you.
Speaker Change: Your next question comes from the line of Alexander Duval from Goldman Sachs. Please go ahead.
Speaker Change: Okay, I'll take the easy question on the UV China. I think there's nothing really new there. I think that, you know, we expect to continue to see news here and there on some progress with regards to UV in China. And I think this is mostly driven by a strong wish. I think from China to have this tool and to display some progress. Thank you.
Speaker Change: If you look at the fundamental, even if you look at what has been shown, we've seen some picture...
Speaker Change: I think that, you know, I would consider that as a research news more than product news, and therefore, you know, of course, it's always possible to generate some UV light, may even be possible to have an UV mirror here and there.
Speaker Change: But in no way this is enough proof that there is a serious product on the way. So I think we are still on the same view that it will take many many years.
Speaker Change: Paul China, to be able to make a new machine. And again, you should expect some more news because I think that's just what you do when you want to show progress.
Speaker Change: You know strong demand there. I think the point that you make is right. I think there has been a lot of emphasis in the in the past quarters on on the training side of life. I think more and more, which I think is logical that you all see more and more emphasis.
Speaker Change: being being put on the interesting side of the equation. So I think we'll see the interesting, interesting part becoming a larger component of AI demands on a goal for it. So I think you will continue to see that develop. Thank you very much.
Thank you.
Thank you very much.
Thank you.
Speaker Change: Your next question comes from the line of Chris Caso from Wolf Research. Please go ahead. Thank you very much.
Speaker Change: Thank you. Good morning. I guess first question would be on Gross Margin. Good morning. Good morning. Good morning.
Speaker Change: And you have provided a wider range for Q2, you know, taking into consideration some of the tariff impact, but, you know, speaking for the full year, you know, what, what are the expectations there, you know, what, what, what, what sort of direct tariff impact are you expecting in the gross margins and, you know, what, what, what goes into the thinking with regards to the gross margin for the full year. [inaudible]
Speaker Change: Chris, we'll start on the video. It's very hard given the dynamics around terrorists to put any meaningful number on there, right? Because on the one hand the question is, what terrorists are we eventually going to look at?
Speaker Change: In general, from one region to the other, but then more specifically when it comes to some conductors, it's pretty clear that that is still on the review by the US government. So it's impossible to see what, as I mentioned before, what the size of the terrorist is actually. [inaudible] The US government is still on the review by the US government.
Speaker Change: And then the second question, you know, to the extent that that is clear, the question is how will that ultimately be absorbed in the entire value chain?
Speaker Change: We've made it clear also in the video that we're working very closely with everyone involved.
Speaker Change: To try and minimize the total exposure of the ecosystem to terrorists. So we try to see what we can do to minimize the overall impact. But we also believe
that, you know, ones that have been minimized.
Speaker Change: That the burden of that should not be with ASML, and that the burden of the, of the, the tariff and that the, the lion share of the tariff burden should be born by the next, by the next, you know, by the next, the element in the, in the value chain. I think that's, that's, that's the way we, that's the way we approach it.
But there is still so much uncertainty out there.
Speaker Change: That to make any judgment what impact that is going to have on the on the full year is absolutely impossible. The reason that we...
Speaker Change: You know that we put it into the quarter that we set in the quarter we have a you know a wider bandwidth.
Speaker Change: It's obviously the time frame there is a big shorter hand that allows you to try and include the impact into the quarter, but for the full year it's impossible to put a number on.
Speaker Change: Anderson, that's helpful. If I get asked is my follow up a bit of a of a bigger picture question and you know there's been a school of thought that if
Speaker Change: We need to diversify the geographic location of fabs going forward. If we're going to produce more in the US, if we produce more in China, then that's ultimately good for WFE spending. And it would seem that the current situation would at least advance that narrative. I'm just interested in your latest thinking with regard to that and geographic diversity and the effect on your business and perhaps some of the conversations you may have had with customers with that regard. Thank you.
Thank you.
Speaker Change: I think that notion on the one hand still holds, so I think the notion that having dispersed fabs across the globe.
Speaker Change: to drive the same number of wafers, so there will be a heightened level of inefficiency in there.
Speaker Change: I think you actually see that now in the entire value chain. You see it in semiconductor manufacturing. You see it in discussions on data centers being spread across multiple continents, more so than has been considered so far. So I think this whole notion. You see it in the end. You see it in the end. You see it in the end.
Speaker Change: Of having a more dispersed nature within our ecosystem, you see the multiple bases. Eventually, I think that we'll drive up the demand for, for, you know, for, for some economics and for waivers. [inaudible]
Speaker Change: And then to the extent that those wafers are made in different places, I think that will drive that up. So there is a potentially positive element in that. But as Christophe very clearly said it in the video and also in the in the in the call at the at the beginning, the uncertainty that we currently have an on terraces, you know, is a dimension that we also have to consider. So I think it's a story of puts and takes. [inaudible]
Thank you.
Thank you. Thank you. Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Mehdi Hosseini from Susquehanna, please go ahead.
Yes, thanks for taking my question.
Christophe, can you remind us whether the key milestones? Thaun,
Speaker Change: as we go from R&D, EXC 5000 to production, which is EXC 5200.
Speaker Change: And those milestones it could be in terms of the truth or any other. [inaudible]
Factors that we can share with us.
Speaker Change: Yeah, I try to do it again quickly. So, I think, you know, we usually talk about free phases and the...
Speaker Change: The first phase is the final for our customers to receive. Thank you.
Speaker Change: First tool or use the tool we have in the lab here in ASML to test the technology. It's a completely new technology, new imaging, new performance. So they use basically this time to really. [inaudible]
I think
Speaker Change: Basically sought through in order to support this R&D walk and this is a bit where our customer are today. That's also why we are usually happy when they share results because they show
Speaker Change: The next phase is basically when they will really start to test the tool in what I will call early production. So they will select a limited amount of layer, a limited amount of product, and then they will really run the tool in production. .
Speaker Change: So this is also where our EXE 5200 become important. So this is a tool with higher productivity, more maturity, basically a tool that edible customers really start this second phase. As you heard, we're starting to shift this tool now. We're starting to shift this tool now. We're starting to shift this tool now. [inaudible]
And once this is done...
Speaker Change: Typically, customer will be convinced that the tool can do the job, the tool is mature, and then they will use it fully for any future node in high volume manufacturing. Hi, Terri.
Speaker Change: And that I think we said will come most pre-27, 28. So that's a bit the sequence.
Speaker Change: And it can seem a bit long, but of course, you know, you need to do that across a couple of nodes. And so far, I think that's the progress we are witnessing with our customer.
Thank you. Thank you.
I see, and given that your earlier comment,
Sorry.
Speaker Change: Given your early comment that has to do with the key takeaways from SPI conference in February , it seems like advanced logic would be the first adopter, and then there's a debate as to what happens to Foundry versus DRAM as the second type of adopter for this high-end technology. Thank you very much.
Well, I think you know, this...
Speaker Change: It's hard to say because to be honest we said it in the past that the timing is very close.
Speaker Change: And when we refer to the free customers, when we refer in the past, the customer having access to our lab, this is really covering both logic and memory customer.
Speaker Change: And I wish the both logic and memory customer have good reason to use it.
Speaker Change: INA, as soon as the maturity of the tool, and therefore, you know, the cost of technology of the tool will be there. So...
Speaker Change: To be honest, yeah, historically we always expect logic to be first. It could be the case that it's a very close call. So I will not make a bet today, but both memory and logic customer are already working hard to qualify to it.
Got it. Thank you.
You welcome.
Speaker Change: Thank you. Your next question comes from the line of Tammy Kew from Bomber. Please go ahead.
Speaker Change: Hi, thank you for taking my question. So first one is on China, so my understanding is your customer list has been Kit expanding in China. Can you share if your percentage of China revenue from the big four-ship maker has been decreasing all the time or not really changed?
The percentage of the big floor.
Speaker Change: of the big four. Big four, OK. Over time, that has decreased. When you, what big four? You mean the, sorry, you mean the domestic ones? Sorry, sorry, sorry. Domestic ones, yes, domestic ones.
Speaker Change: The tale in China has definitely become longer, right? So the number of players has become longer, that's for sure, but still a significant part of the shipments into China go to the large layers.
Speaker Change: The tale has definitely become longer, but the number of two that a tale takes is obviously smaller. So there is still quite a big part of the China sales going to the large players.
and Jim Kavanagh. Thank you.
Speaker Change: Okay, I see. Okay, that's clear. And also, can I read your best deeper retours with China is 1970, 90, 80, I? So assuming you can only ship 1950 or below, can China still make 20 in nanometer from a technical spaceship using multi-passengers based on 1950 or 1940?
Speaker Change: Yeah, 28 nanometer for sure, I think that you know, this has been down in the past by
by other customers, so I think, yes, you know.
Speaker Change: If you go back in history, when 28 nanometer was run by some of the non-Chinese customers, these were the tools basically we were looking at. So it's definitely possible, I would say, even smaller technology can be run with those tools.
Thank you.
Okay, thank you [inaudible]
Thank you.
Speaker Change: Your next question comes from the line of Tim Schultz and Melanda from Redden Atlantic, please go ahead.
Thanks very much for taking my questions.
Speaker Change: Maybe just two quick ones. You commented on the gross margin guide for the coming quarter, just in terms of the order backlog. Could you give us some color? What proportion is price X works and maybe what proportion of the backlog is ASML responsible for customs fees, delivery to you to paid, et cetera? Thank you.
Speaker Change: In general, well, it depends from one country to the other, right exactly how it works, but in general, we are the imports into the country, but of course...
Speaker Change: That is actually a bit irrelevant, because at the end of the day, it depends on the contractual agreement agreements that we have with the customers for you pass on, for you pass on, there are increases there.
Speaker Change: And as I mentioned before, we believe that the cost burden that terrorists are going to give, we believe that we should not be the barrel that should be a fair allocation of that burden within the value chain.
Speaker Change: You talked about the EXC 5200, I think, Christophe, you just mentioned that ASML is starting to ship this tool now. Maybe just looking at 2025. Will we expect any of those tools to RevRech this year? Always the Hianne RevRech entirely 5000s. Thank you.
So we also expect 50-100 rubric in the year.
Speaker Change: Because remember, we said we're expecting five rub racks this year. We had two rub racks last year, and in total, as you know, we have...
Speaker Change: Five tools, five, five thousand that we ship to two customers, so that that that tells you that in the five that we talked about before for Rev. Rank this year, there's also 50 to 100 in there.
Thank you, Roger.
Thank you.
Speaker Change: Your next question comes from the line of CD Muse from Cantor Fitzgerald. Please go ahead.
CJ Mews: Good morning, good afternoon. Thank you for taking the question. You know, I get there's obviously greater uncertainty around geopolitics, but, you know, in Q1, Nvidia will surpass Apple as a normal customer at TSMC and it's a very important milestone for HPC surpassing mobility. So with that as the backdrop would love to hear, you know, the visibility you have today, the conversations you're having with your customers today as it pertains to 2026, 2027.
CJ Mews: Well, I think maybe I'll answer the first part on your comment, I think.
CJ Mews: He's the right one. So because you are looking at major investment, investment has been committed, investment that a lot of company believe they have to make in order to basically enter this AIRS, I think the the threshold to change this behavior is pretty high. Thank you very much.
CJ Mews: And this is why this is what our customer are telling us.
CJ Mews: Now, 27 starts to be a bit further away, so you're asking us too much. I think to be able to answer basically what AI may look like in 27, but if you look at the next couple of here.
CJ Mews: So far, the commitment to the AI investment and therefore, the commitment also to deliver the chips for AI has been very solid.
CJ Mews: Very, very helpful. I guess there's a follow-up and I guess to follow-up on a prior question.
CJ Mews: At Capital Market's Day, the theme of replacing double pattern with a single EUV. [inaudible]
Steph was a major focus, but my impression then was that...
CJ Mews: There was real work to be done in terms of the throughput on EUV to do that. But, you know, given your commentary today in the video and on this call, it certainly sounds like that progression is happening sooner. So, can you kind of speak to when you see that occurring? I believe you're talking about happening first in DRAM, but would love to hear kind of how you see that playing out this year next, and now we should be thinking about the overall implications to Lithuanian density. Thank you very much.
Thanks so much.
CJ Mews: Yes, I think I tried to explain that to François before. I think we will see that gradually. Yes, it's a lot of work, but every step we make on...
CJ Mews: Every step we make also on the maturity, the efficiency of the tool of our customer, bring basically the course of technology of low NAUV down.
CJ Mews: And, as I said a few times already today, single-exposed is so much better for our customers than multi-patterning when it comes to complexity, cycle time, etc., that the minute we are going to match, basically, the cost of multi-patterning with single-exposed, most likely the customer will move.
CJ Mews: So we'll see that gradually, that's a wild capital market that we show basically that we expect every node both for DRAM and Logique to bring more EV layers. Thank you.
I think it's a bit more, maybe...
CJ Mews: Spectacular on the Iran just because the number of multi patterning in the Iran today is still higher than it is for logic so this is where we see on the short term the maybe the fastest progress but this is something we will you know we will experience you know for the years to come. Thank you very much.
Thanks for watching.
Thank you. You're welcome.
Speaker Change: Your next question comes from the line of Stephane Houri from Odo Beaters. Please go ahead.
Stefan Ulrich: Yes, good afternoon everyone. I have a first question about the or the volatility and maybe to understand better from you if you think that the uncertainty around the tariff.
Stefan Ulrich: In Q1, I already had an impact on your orders or not at all. And the second question is about the coverage of the leader of the ranch for 2025.
Stefan Ulrich: Your meter of the rent was covered for EUV. So the further question is what about the EUV, which is supposed to grow pretty strongly, notably out of China. Thank you.
Speaker Change: So, let's start with that question. So, you're right. We said last time that for the midpoint of the range, we were fully covered with EUV. For the midpoint of the range, when it comes to DQV, we're covered approximately 90%. So, nearly there, which, you know, given all the lead times, I think is a very good place to be in.
Speaker Change: Back to your first question, all of volatility. I think we go back to what we said about that before. I think all of volatility and the lumpiness of order intake is what we've seen, not just in this environment, but what we've seen for the past couple of years. [inaudible]
Speaker Change: And that is, I think, first and foremost driven by the fact that a customer that puts in a very, very significant order in one quarter.
Speaker Change: Has to go through a lot of governance steps in order to get that order approved and is therefore unlikely to then deploy the draft or come back. So to the extent that you have major order intake, as we had at Francine Q4, that has a bearing on the order intake in the quarter draft. I think that erratic pattern I think you've seen in the past couple of years. [inaudible]
So that's why we said, [inaudible]
Speaker Change: You know, it is not necessarily a good proxy for the business momentum and so therefore I think that's what you're looking at here much rather than, you know, customers taking already a view on what Harris means for their business. I don't think you can read that from this, from this lot of book. [inaudible]
Thank you. Thank you.
Okay, on the street thank you very much.
Malcolm,
Thank you.
Speaker Change: Your next question comes from the line of Andrew Gardiner from City, please go ahead.
Andrew Gardner: Thank you very much for taking the question. Another one on tariffs. I wanted to take a conversation in a slightly different direction.
Speaker Change: On one hand, the US government is trying to encourage reshoring of semi-conductor manufacturing in the US.
Andrew Gardner: And yet, you know, in achieving some of those goals, particularly with TSMC and a quite high profile announcement earlier this year,
Andrew Gardner: They're now turning around and saying, well, yeah, we'd like you to do that, but we're also going to slap tariffs on some of the tools that you need in order to make that happen. It does strike me as at least a little bit inconsistent.
Andrew Gardner: I was wondering about your position on that in Washington, and perhaps even more importantly the position of your customers. I can imagine that they're not too pleased by it. I'm just wondering whether, you know, how can the industry sort of push back or explain that? I don't know. I don't know. I don't know. I don't know. [inaudible]
Andrew Gardner: There is no US litho industry, that ship sailed over 40 years ago, and really, you know, we need these tools and we need some relief under this. It just doesn't make sense. Those arguments being made, if it's too sensitive a topic to be made, you know, where are we on that. Thank you.
Andrew Gardner: And that might be the reason why, as you know, sends a couple of days. [inaudible]
Andrew Gardner: This industry, or a significant part of the products within this industry are now not put on, are now exempt from terrorist.
Andrew Gardner: But at the same time, you guys administration has also said we were viewing, you know, the entire ecosystem to figure out how to deal with this. I think it is this complexity that is being recognized. I think it's being recognized by players such as ourselves. I think it's being recognized by customers. Nothing is being recognized by you as administration. And that's why I think they...
Andrew Gardner: They said they need a bit more time to understand how to do this and how they can achieve the objective with more ensuring of chip manufacturing in the United States.
Andrew Gardner: And how they can reconcile that with this. I think that's the background of the DNA that we now see and of the anticipated and announced review of this of the secret system.
Christophe Fouquet: Okay, understood, thank you. Just a quick follow-up on the high NA commentary, Christophe, you've talked about the different phases. Clearly, your book, you've had sort of long-term backlog to achieve phase one.
Christophe Fouquet: Would you say that phase two is also represented in the backlog and therefore really incremental orders that come are only necessary for the phase three, you know, sort of 27 and 28 production rem.
Christophe Fouquet: I think we discussed that last quarter, I think we mentioned several times that we have double digit looking for...
Christophe Fouquet: Brian A, so that's definitely enough to cover basically both Phase One and Phase Two.
Christophe Fouquet: And, you know, the order for phase three, I would say... [inaudible]
Christophe Fouquet: Com will come when the level of confidence has achieved a place where you know the tool will be for sure used in the HVM, so you know that by the way can also happen during phase one, but you know mostly we should have a few months to go before we see that happening. Thank you very much.
Thank you very much.
You're welcome.
Christophe Fouquet: Okay, so we have time for one last question. If you were unable to get through on this call instead of questions please feel free to contact ASML Investor Relations with your question.
Now, operator, may we have the last call please.
Thank you.
Speaker Change: Your final question for today comes from the line of Sandeep Deshpande from JP Morgan, please go ahead.
Sandeep Deshpande: Yeah, hi, thanks for squeezing me in. My question is, at this time in April 2024, how was your audiobook and backlog looking for 2025, and how does the audiobook and backlog for 2026 look at this time of the year versus 2024?
Goodness me, Soundy.
Sandeep Deshpande: I'm not into the history lesson here, I think I made a comment at one of the earlier questions, I think it...
Sandeep Deshpande: It's not too difficult, I think, to figure out where all the book is for this, for this, you know, or total all the book is and I also believe it's not too difficult to figure out what the component is.
Sandeep Deshpande: at the midpoint of demand beyond 2026. I think you're able to figure that out and then you will see...
Sandeep Deshpande: But we refrain from making any further comments on what we think 2026 looks like and we also refrain from saying and therefore this is exactly the number that you need for next year. I think we've indicated, you know, how we look at how we look at bookings and therefore I think it would not be appropriate for us to give further commentary on what bookings you still need in order to get to this. Thank you very much.
Whatever midpoint is for 2026. [inaudible]
Speaker Change: Thank you, and my quick follow up to Christophe on high NA. You talked about this phase three. Do you expect to start getting these phase three high NA orders by the end of this year or the second half of this year? Yeah.
Speaker Change: Not too many, we could have a few, but I think that's still too early because remember we're still mostly in phase one, we're still installing some of the tools, so this will mostly take some more time.
Okay. Thank you.
You're welcome.
Speaker Change: Okay, on behalf of ASML, I would like to thank you all for joining us today. Operator, if you could formally conclude the call, I would much appreciate it. Thank you.
Speaker Change: Thank you. This concludes the ASML 255 Quarter Financial Result Conference call. Thank you for participating. You may now disconnect.
Speaker Change: This video is a derivative work of the Touhou Project. Any resemblance to real persons, living or dead, is coincidental and unintentional. This video is a derivative work of the Touhou Project. Any resemblance to real persons, living or dead, is coincidental and unintentional.