Q2 2025 ASML Holding NV Earnings Call
Results Conference Call on July 16th, 2025. At this time, all participants are in a listen only mode. After the speaker's introduction, there will be a question and answer session.
To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again.
Please be advised that today's conference is being recorded.
I would now like to hand the conference call over to Mr. Jim Kavanagh. Please go ahead. Thank you, operator.
Good day, and thank you for sending by, welcome to the asml 2025 second quarter Financial results conference call on July 16th 2025. At this time, all participants are in a listen-only mode. After the speaker's introduction, there will be a question and answer session to ask a question during the session. You will need to press star 1 and 1 on your telephone. You will then hear an automated message. Advising your hand is raised to withdraw your question. Please press star 1 and 1 again, please be advised. That today's conference is being recorded, I would now like to hand the conference, call over to Mr. Jim Kavanagh, please go ahead
Welcome, everyone. This is Jim Kavanagh, Vice President of Investor Relations at ASML.
Joining me today on the call are ASML CEO Christophe Fouquet and our CFO Roger Dassen. The subject of today's call is ASML's 2025 second quarter. The length of this call will be 60 minutes and questions will be taken in the order that they are received. This call is also being broadcast live over the internet at www.asml.gov.
Thank you, operator. Welcome everyone. This is Jim Kavanagh, vice president of investor relations at asml.
Joining me today on the call are asml CEO Kristoff, fuk, and our CFO. Roger Dasa.
The subject of today's call is asml 2025 second quarter results.
The length of this call will be 60 minutes and questions will be taken in the order that they are received.
This call is also being broadcast live over the internet at www.asml.com.
The transcript of management's opening remarks and a replay of the call will be available on our website shortly following the conclusion of this meeting.
Before we begin, I would like to caution listeners that comments made by management during this conference call will include forward-looking statements within the meaning of the Federal Security These forward-looking statements involve material risk and uncertainty. For a discussion of risk factors, I encourage you to review the Safe Harbor statements contained in today's press release and presentation, found on our website at www.asml.org.
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.
Before we begin, I would like to caution listeners that comments made by management. During this conference call will include forward-looking statements within the meaning of the federal Securities laws.
These forward-looking statements involve material risk and uncertainties.
and in ASML's annual report on Form 20-F and other documents as filed with the Securities and Exchange With that, I would like to turn the call over to Christophe Fouquet for a brief introduction. Thank you, Jim. Welcome, everyone. And thank you for joining us for our second quarter 2025 Results Conference.
For discussion of risk factors. I encourage you to review the Safe. Harbor Harbor statements contained in today's press release, and presentation found on our website at www.asml.com
And in asl's, annual report on form 20f and other documents as filed with the Securities and Exchange Commission.
Speaker Change: With that, I would like to turn the call over to Kristoff fuk for a brief introduction.
Before we begin the Q&A session, Roger and I would like to provide an overview and some commentary on the second quarter results, as well as provide some additional comments on the current business environment and on our future business outlook.
Thank you, Jim welcome everyone. And thank you for joining us for our second quarter, 2025 results conference call.
Roger?
Thank you, Christophe. And welcome, everyone.
Before we begin the Q&A session Roi and I would like to provide an overview and some commentary on the second quarter reserves as well as provide some additional comments on the current business environment and on our future business hours.
Let me start with our second quarter accomplishments. In the second quarter of 2025, total net sales were 7.7 billion euros, which is at the upper end of our guidance, primarily due to revenue recognition of one INA system and additional upgrade bids. Net system sales were at 5.6 billion euros, which includes 2.7 billion euros from EUV sales and 2.9 billion euros from non-EUV sales. Net system sales was driven by logic at 69% and the remaining 31% coming from memory. Install base management sales for the quarter came in above the guidance at 2.1 billion euros. Gross margin for the quarter was above guidance at 53.7%, driven by an increase in upgrade business, one-off items resulting in lower cost, and lower than expected impact from tariffs, which was partially offset by the dilutive effect from the HIENA system revenue recognition.
Kristoff Fuk: Thank you Kristoff, and welcome everyone.
Let me start with our uh second quarter accomplishments in the second quarter of 2025 total. Net sales were a 7.7 billion euros which is at the upper end of our guidance. Primarily due to revenue recognition of 1 in a system and additional upgrade business.
Net system sales were at 5.6 billion euros which includes 2.7 billion euros from euv sales and 2.9 billion euros from non-ev sales.
Kristoff Fuk: That system sales was driven by Logic and that 69% and the remaining 31% coming from memory.
Kristoff Fuk: Came in above the guidance at 2.1 billion.
Kristoff Fuk: Gross margin for the quarter was above guidance at 53.7% driven. By an increase in upgrade business 1 of items resulting in lower cost and lower than expected, impact from tariffs which was partially offset by the dilutive effect from the high na system Revenue recognition.
Operating expenses came in as guided with R&D expenses at 1.2 billion euros and FG&A expenses at 299 million euros. The effective tax rate for Q2 was 18.1%. For the full year 2025, we still expect an annualized effective tax rate of around 17%. Net income in Q2 was €2.3 billion, representing 29.8% of total net sales and resulting in an earnings per share of €5.90.
Kristoff Fuk: Operating expenses came in as guided, with R&D expenses at 1.2 billion euros and sgna expenses at 299 million euros.
Kristoff Fuk: The effective tax rates for Q2 was 18.1%.
For the full year 2025, we still expect an annualized effective tax rate of around 17%.
Net income in Q2 was 2.3 billion euros representing 29.8% of total, net sales, and resulting in an earnings per share of 5.90 euros.
Turning to the balance sheet. We ended the second quarter with cash, cash equivalents and short-term investments at a level of 7.2 billion euros. According to the order book, Q2 net system bookings came in at €5.5 billion, which is made up of €2.3 billion of EUV and €3.2 billion of non-EUV. Net system bookings in the quarter were weighted towards logic at 84% of the bookings, while memory accounted for the remaining 16%. Regarding our backlog, we ended Q2 at around €33 billion. In addition to the regular changes from system sales and bookings, this reflects an adjustment of €1.4 billion in Q2 related to customers' response to 2024.
Returning to the balance sheets. We ended the second quarter with cash, cash equivalents and short-term Investments at a level of 7.2 billion euros.
Kristoff Fuk: Going to the order book Q2 net system. Bookings came in at 5.5 billion euros which is made up of 2.3 billion, euros of euv and 3.2 billion euros of non UV.
Kristoff Fuk: Net system. Bookings in the quarter were weighted towards logic at 84% of the bookings while memory accounted for the remaining 16%.
Kristoff Fuk: Regarding our backlog. We ended Q2 at around 33 billion euros in addition to the regular changes from system sales and bookings. This reflects, an adjustment of 1.4 billion euros in Q2 related to customers response with 2024 expert controls.
In Q2, ASML paid a final dividend of 1.84 euros per ordinary share. Together with the interim dividend paid in 2024 and 2025, this resulted in a total dividend for 2024 of 6.40 euros per ordinary The first quarterly interim dividend over 2025 will be 1.60 euros per ordinary share and will be made payable on August the 6th, 2025. In Q2 2025, we purchased shares for a total amount of around 1.4 billion euros, bringing the total share buyback of our 2022-2025 program to 5.8 billion euros at the end of Q2 2025.
Kristoff Fuk: In Q2 asml paid a final dividend of 1.84 Euros per ordinary share.
together with the interim dividend paid in 2024 and 2025 this resulted in a total dividend for 2024 of 6.40, Euros per ordinary share,
Kristoff Fuk: The first quarter of the interim dividend over 2025 will be 1.60 Euros per ordinary share and will be made payable on August the 6th 2025.
With that, I would like to turn the call back over to Christophe. Thank you, Roger. As Roger has highlighted, we finished the second quarter with good financial results. Turning to the market, as we have said in recent quarters, artificial intelligence is the key driver of growth in memory and logic at the For logic, we expect system revenue to increase in 2025 compared to 2024 as customers add capacity on leading edge nodes. In memory, we expect system revenue to remain strong in 2025, as our customers transition to their next nodes in support of the latest generation HBM and DDR5 With respect to our China business, revenue is expected to account for over 25% of total revenue this year, as it moderates to more closely represent its proportion of Turning to our EUV business, customers continue to add capacity on the leading edge to support AI demand, in which EUV plays an increased For example, our DRAM customers have recently mentioned an increase in the number of EUV layers on their latest and future nodes.
Kristoff Fuk: in Q2 2025, we purchased shares for total amount of around 1.4 billion euros, bringing in the total share buyback of our 2022, 2025 program to 5.8 billion euros at the end of Q2 2025,
Costa: With that, I would like to turn the call back over to Costa.
Speaker Change: Thank you, Roi. As Roi has a lighted. We finished the second quarter with Good Financial Reserves.
Speaker Change: Turning to the market. As we have said in recent quarters, artificial intelligence is the key driver of growth in memory and logic at this point?
Speaker Change: Our logic, we expect system Revenue to increase in 20125, compared to 2024 as customers had capacity on litigation notes.
Speaker Change: In memory, we expect system Revenue to remain strong in 2025 as our customers transition to their next nodes in support of the latest generation HPM and ddr5 products.
Speaker Change: With respect to our China, business revenue is expected to account for over 25% of total revenue. This year, as it moderates to more closely represent its proportion of the backlog.
Turning to our euv. Business customers continue to add capacity on the Leading Edge to support Aid, men in which UV plays, an increase role.
Speaker Change: For example, our DM customers have recently mentioned an increase in the number of euv layers on their latest and future notes.
In 2025, we expect our advanced customers to add about 30% more EUV capacity compared to 2024. The higher productivity of the NXE3800E means that we can address that capacity increase with about the same number of systems as in 2024, but with higher ASP and improved COSMOS. This low-ENA EUV capacity increase, together with the planned revenue from the INA system, is expected to lead to overall EUV revenue growth of around 30% in 2025 versus 2020. The combined revenue of DPV and our metrology and inspection systems in 2025 is expected to be similar to 2024. With respect to install-based management, the upgrade business has been strong in the first half of the year, as we completed most of the productivity upgrades on the NXE3800E systems in the field to bring them to full specification.
Speaker Change: in 2025, we expect our Advanced customers to add about 30% more euv capacity compared to 2024,
The higher productivity of the nxe 3800e means that we can address that capacity increase with about the same number of system as in 2024, but with higher ASP and improved gross margin.
Speaker Change: This low naev capacity increase together with the plan revenue from Ina system is expected to lead to overall euv, Revenue growth of around 30% in 2025 versus 2024
Speaker Change: The combined revenue of duv and our methodology and inspection systems in 2025 is expected to be similar to 2024.
Activity upgrades on the NXT 3800 EC stamps in the field to bring them to full specification.
We expect continued strengths in install-based management for the second half of the year, driven by increasing service revenue as our install base grows, with a growing contribution from EUV services. With this, we expect the installed-based management revenue to grow more than 20% over the last We now guide the full 2025 revenue to increase by around 15%, with gross margin of around 52%. We expect demand to be more skewed towards the second half of the year. As we look ahead to 2026, we continue to see strong demand related to AI for both logic and memory, and we see the positive impact of a growing number of EUV layers.
Speaker Change: We expect continued strength in install based management for the second half of the Year driven by increasing service Revenue. As our install base growth with a growing contribution from euv services.
Speaker Change: With this, we expect install based management Revenue to grow more than 20%.
Over last year.
Speaker Change: We Now guide the full 2025 Revenue to increase by around, 15% with gross margin of around 52%.
Speaker Change: We expect demand to be more skewed towards the second half of the year.
On the other hand, as we said before, customers are facing increasing uncertainties based on microeconomic and geopolitical developments. Further, some customers are navigating specific challenges that might affect the timing of their capital expenditure.
As we look ahead to 2026, we continue to see strong demand related to AI for both logic and memory. And we see the positive in fact of the growing number of euv layers,
On the other hands. As we said before, customer are facing. Increasing uncertainties, based on microeconomic and geopolitical developments.
Speaker Change: Further some customer are navigating specific challenges that might that might affect the timing of their capital expenditure.
Against this backdrop, while we are still praying for growth in 2026, we cannot confirm it at this state.
We will continue monitoring developments over the coming With that, I ask Roger to provide an update about how we are currently looking at tariffs and their potential effects. Thank you, Christophe. As Christophe highlighted, we are currently facing an increasing level of uncertainty surrounding macroeconomic and geopolitical developments, which may have both direct and indirect implications for our business. With regard to tariffs, the direct impact results from tariffs related to system sales to our customers in the United States, the import of materials for our U.S. manufacturing facilities, the import of parts and tools for our U.S. field operations, and the export of parts from the U.S.
Speaker Change: Against this backdrop, while we are still praying for gross in 2026. We cannot confirm it at this stage, we will continue monitoring developments over the coming months.
With that. I asked you to provide an update about how we are currently looking at tariff and their potential in effect.
Speaker Change: Thank you Christophe. Uh, as Kristoff highlighted, we are currently facing an increasing level of uncertainty surrounding macroeconomic and geopolitical developments which may have both direct and indirect implications for our business.
into other countries to the extent tariffs were to apply to those parts. We continue working with our customers and suppliers to try to achieve that any direct impact of tariffs on our results will be limited.
Speaker Change: With regard to terrorists, the direct impact result from terrorists related to system sales to our customers in the United States. The import of materials for our us manufacturing facilities, the import of parts and tools for our us field operations, and the export of parts from the US and to other countries, to the extent, terrorists were to apply to those parts.
Speaker Change: We continue working with our customers and suppliers to try to achieve that any direct impact of terrorists on our results will be limited.
Indirect impact is more complex and very difficult to determine as it is related to the potential impact of tariffs on GDP and the resulting overall market demand.
Speaker Change: The indirect impact is more complex and very difficult to determine as it is related to the potential impact of terrorists on GDP and the resulting overall market demand.
With that, I would like to turn to our expectations for the third quarter of 2025. We expect Q3 total net sales to be between 7.4 billion euros and 7.9 billion euros. We expect our Q3 install base management sales to be around 2 billion euros. Gross margin for Q3 is expected to be between 50 and 52%. The expected R&D expenses for Q3 are around 1.2 billion euros, and of G&A is expected to be around 310 million euros.
Speaker Change: with that, I would like to turn to our expectations for the third quarter of 2025
We expect Q3 total net sales to be between 7.4 billion and 7.9 billion euros.
We expect our Q3 install base management sales to be around 2 billion euros.
Speaker Change: Gross margins for Q3 is expected to be between 50 and 52%.
Speaker Change: The expected R&D expenses for Q3 are around 1.2 billion euros, and as GNA is expected to be around, 310 million euros,
The gross margin in the second half of the year is expected to be lower than the first half, primarily due to margin dilutive effect of the revenue recognition of a greater number of INA systems in the second half of the year, lower upgrade revenue, and a number of one-offs that contributed positively to the gross margin in the first half that we do not expect in the second half.
The gross margin in the second half of the year is expected to be lower than the first half primarily due to margin dilutive effect of the revenue recognition of a greater number of high systems in the second half of the Year, lower upgrade revenue and a number of 1 offset contributed positively to the gross margins. In the first half that we do not expect in the second half of this year.
For the full year, we continue to expect a gross margin of around 52%, of course with the caveat of the uncertainties around tariffs, as we With that, I would like to again turn it back over. Thank you, Roger. Turning to technology, we continue to make good progress on both our low NA and high NA EUV products, and we are building a comprehensive EUV portfolio that gives customers the flexibility to meet their advanced technology roadmap goals and optimize their cost of technology. On the NXE3800E, we made strong progress this quarter, completing a large number of field upgrades to the final 220 WPS configuration.
Speaker Change: For the full year, we continue to expect, a gross margin of around 52% of course, with the caveat of the uncertainties around terrorists as we just discussed with that, I would like to again. Turn it back over to to thank you oji. Turning to technology, we continue to make good progress on both our low and a and Ina euv products and we are building a comprehensive EU report for you. That gives customer the flexibility to meet their advanced technology on map goals and optimize their cost of
Speaker Change: Technology.
We are on track to finish holding out these upgrades across the install base for 2025. New NXE3900E systems are now all shipping at full specification. As mentioned earlier, the NXE38.E is helping customers expand their use of EUV. On the latest DRAM nodes, they can now replace more complex multi-patterning DPV steps with single-EUB exposures, which brings benefits like lower cost, faster cycle time, and better yield. On INA, we continue to work with our customer teams to mature the technology using our EXE5000. This quarter, we also shipped and commenced the install of the first EXE-5200B system, which is intended to support the INA technology insertion into high-volume manufacturing.
On the nxe 3800e we made strong progress. This quarter completing a large number of field upgrades to the final 220 were first per our configuration
Speaker Change: We are on track to finish rolling out this upgrades across the install base through 2025.
Speaker Change: New nxe. 30800. EC stems are now all shipping at full specification.
Speaker Change: As mentioned earlier, the nxe 308 e is helping customers, expand their use of euv.
Speaker Change: on the latest dram nodes, they can now replace more complex multi-patterning dpv steps with single euv, exposures, which brings benefits like lower cost faster, cycle time and better yield
Speaker Change: 5,000.
This quarter, we also shipped and commenced to install of the first exe 5200 B system, which is intended to support the Ina technology insertion into high volume Manufacturing.
As a reminder, this system is capable of achieving at least 175 wafers per hour, which is approximately a 60% productivity improvement compared to the EXE 5000. As we shared during our 2024 Capital Market Day, the INA platform will enable customer roadmap. and lower their cost of technology by moving from multi-patterning low NA EUV to single exposed INA EUV. For deep UV, the transition of customers to the advanced nodes also requires more advanced systems. This is due to the increasing critical lethal requirements driving the adoption of both the NXT 2100 and the NXT 2150 systems, as well as the latest generation KRF system, the NXT 870.
Speaker Change: As a reminder the system is capable of achieving at least 175 W per hour which is approximately a 60% productivity Improvement compared to the exe 5000.
As we share during our 2024, Capital Market Day, the Ina platform will enable customer on map.
Speaker Change: and lower their cost of Technology by moving from multi-patterning low and ow to single exposed inae
So overall, continued good momentum as our customers work closely with us to further adopt our EUV and DPV technologies.
Speaker Change: For duv the transition of customers to the advanced nodes also requires more advanced system. This is due to the increasing critical litho requirements driving the adoption of both the NXT 2100 and the NXT 21150 systems as well as the latest generation carrier system. The NXT 870
So overall continued good momentum as our customers work closely with us to further adopt our EU and dpv Technology.
As mentioned earlier, there is increasing uncertainty on the short term driven by geopolitical developments impacting microeconomic conditions. However, looking long term, we expect the semiconductor market to remain strong, with artificial intelligence continuing to drive growth. As discussed in our Capital Market Day, we expect that the end market dynamics will lead to a product mix shift more towards advanced logic and DRAM, and require a more intensive use of advanced lithography systems. The combination of the strong productivity roadmap on low NA EUV and the introduction of INA will support the cost of technology reduction and the conversion of more multi-patterning layers to single EUV exposure, increasing the number of EUV layers.
Speaker Change: As mentioned earlier, there is increasing uncertainty on the short term driven by geopolitical developments impacting microeconomic condition.
Speaker Change: However, looking long term, we expect the semiconductor Market remains strong with artificial intelligence, continuing to drive growth.
As discussed in our Capital Market day. We expect that the end market dynamics will lead to a product. Mixed shift more towards Advanced logic and dram and require a more intensive use of advanced lithography system.
In line with our 2024 Capital Market Day, we expect a 2030 revenue opportunity between €44 billion and €60 billion, with gross margin expected between 56% and 60%.
Speaker Change: The combination of the strong productivity on map on low naeu and the introduction of Ina will support the cost of Technology reduction and the conversion of more multi-patterning layers to single euv, exposure increasing the number of euv layers.
With that, we would be happy to take.
In line with our 2024 Capital Market day. We expect a 2030 Revenue opportunity between 44 million billion Euro and 60 billion euros with gross margin expected between 56% and 60%.
Speaker Change: With that, we will be happy to take your question.
Thank you, Roger. And thank you, Christophe.
The operator will instruct you momentarily on the protocol for the Q&A session. Beforehand, I would like to ask that you kindly limit yourself to one question with one short follow up as necessary. This will allow us to get through as many callers as possible.
Speaker Change: Thank you, Roger and thank you, Kristoff. The operator will instruct you momentarily on the protocol for the Q&A session.
Now, operator, can we have your final instructions and then the first question? Thank you. As a reminder to ask a question you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 and 1 again.
Beforehand. I would like to ask that. You kindly limit yourself to 1 question with 1 short follow-up as necessary. This will allow us to get through as many callers as possible. Our operator, can we have your final instructions? And then the first question, please?
We will now take the first question. And your first question comes from the line of Francois Bovigny from UBS. Please go ahead. Thank you very much. Can you hear me okay? Yes, yes, great. Thank you. So my first question would be for, you know, the mix of this year, it seems that China is a bit stronger, you know, than expected. And even though you said that, you know, EUV capacity is up 30%, and your revenues is up 30%, it seems, you know, consensus was at 49%. And flat units feel like much lower units than maybe we expected in the year when we said below 50%.
Speaker Change: Thank you as a reminder to ask a question. You will need to press star 1 and 1 on your telephone and wait for your name to be announced to enjoy your question. Please press star 1 and 1 again.
We will now take the first question.
Speaker Change: And your first question comes from the line of Francois Benny from UBS. Please go ahead.
Thank you very much. Can you hear me? Okay.
Yes, yes, great. Thank you. So, uh, my first question would be for, uh, you know, the mix of this year. It seems that China is a bit.
So we thought it would be closer to 50% rather than 40%. So I was just wondering if you had any change, you know, EUV underlying, although still strong, but is there any change? Why is it coming a bit lower than maybe people expected?
Speaker Change: A stronger, you know than expected. And even though you said that, you know, euv capacity is up 30% and your revenues is up 30%. Um, it seems, you know, consensus was at 49%, um, and the flat unit, you need to see like a much lower units than maybe we ex expected in the beginning of of the year, when we said below 50. So we thought it would be closer to 50 rather than 40. So I was just just wondering if you had any
That's my first question.
Speaker Change: Change, you know, euv, underlying although still strong but is there any change? Um, why is it come a bit lower than maybe people expected? That's my first question.
Thank you, Francois.
So let's start with EUV, and then I'll go to DPV. But in the EUV mix, I think what you see, indeed, is that we expect growth on EUV this year to be about 30%. At the beginning of the year, that percentage was a little bit higher. I think there was a bit of confusion, maybe, on our side. So I apologize for that.
Speaker Change: So let's start with, let's start and the with euv and then I'll go to to dpv. But in the euv mix, um,
But the big delta is actually with install-based business. And what you have there is, as you probably know, we shipped quite some tools last year, but also this year, to customers at a lower configuration. So they did not have the full 220 wafers per hour configuration. And the revenue that is associated with bringing those tools to the 220 wafers per hour level is not in system sales, but it's in the upgrade business, and therefore, it's in the install-based business. So the delta that you would see, so there's 10% delta, if you like, so 30% growth rather than 40%, the delta of that number sits in the install-based business.
So the install-based business is actually growing faster than we anticipated and you might have in your models at the beginning of the year. So it's a wash. It's a wash between the EUV business and the upgrade business associated with bringing the 3800s up to the 220 level. So that's really what it is. So as a result of that, the capacity need that our customers have can be fulfilled with a lower number of tools. Revenue-wise, it doesn't matter because of the higher ASP of the 3800s. And gross margin-wise, it's actually, you know, a positive, I would argue.
Speaker Change: Bringing those tools to the 220 Wafers per hour level is not in system sales, but is in the upgrade business and therefore in the install based business. So the Delta that you would see. So if 10% Delta, if you like so 30% growth rather than 40% growth, the Delta of that number sits in the installed based business. So the installed based business is actually growing faster than, you know, we anticipated and you might have in your models at the beginning of the year. So it's it's a it's a, it's a wash. It's it's a wash between the UV business and the upgrade business associated with bringing the 3800 up to 2201. So that that's really what it, that's really what it is. In terms of unit numbers for euv, this is just by virtue of the configuration that customers have chosen. As you would have seen this year, is particularly rich in terms of the ratio between 3,800 and 3600. You we, you also would have seen that in the very high, ASP for euv that you see this this year,
But they can get the same capacity that they were looking for at a lower number of units.
And that is because, you know, the Lion Share of the tools uh, this year and actually, all of the tools in the second half of this year, all the lower Nate tools are 3,800. So as a result of that, the capacity needs that our customers have can be fulfilled with a lower number of of tools Revenue wise. It doesn't matter because of the higher ASP of the 3800, uh, and and gross margin Wise. It's actually, you know, a positive I would argue, but they can get the same capacity as they were looking for, at a
So finally on DPV. So DPV in our current model ends where we expect it to be at the beginning of this year. But you are right, there is a bit of a shift there, where actually China is a bit higher than we expected. You might recall that last year we said we expect it to be, you know, a little over 20%. Right now we're looking at over 25%. So there is a bit of a shift in the DPV business from the non-China business to the China business. That's the only moving part, I would say, that is there in DPV.
Speaker Change: At a lower number of of units.
Makes sense.
So finally, on dpv, so dpv in our current model and where we expected these to be to be at the beginning of this of this year. But you are right, there is a bit of a shift there. We're actually China is a bit higher than we expected. You might recall that last year. We said we expected to be, you know, a little over 20% right now we're looking at over 25%. So there is a bit of a shift in the zpv business uh from the non-china business student to the to the China business. That's that's the only moving part. I would say that that is there in dpv.
Thank you very much, Roger.
And the second question is, I believe you said in the past that you price your tools, you know, in terms of value to the customer. So the little spend increase as the value to the customer is increasing. So for example, this year, the throughput is increasing. So ISP is increasing for the 3800. And I guess it's the same dynamic, if you think about the overlay or metal pitch improvement, if you manage to improve that you can price higher, I would imagine. Now there is an argument that if a customer doesn't adopt, does not adopt high NA, it's neutral for you because you have multi-patterning low NA.
But I was thinking that the value to your customer would be much higher with high NA versus a multi-patterning low NA. I mean, especially on the metal pitch side, they can be much more aggressive with high NA, I would imagine, and obviously saving a lot of non-little spend. So the value to the customer is much higher that therefore, you know, you can price higher. So is it really neutral for ISML, you know, the multi-patterning low NA versus single high NA? I've been talking a lot to investors on that and I wanted to ask you.
Speaker Change: Makes sense. Thank you very much Roi. Um, and the second question is, I believe you said in the past that you price your tools, you know, in terms of value to the customer. So the latest spend increase as the value to the customer is increasing. So, for example, this year, the throughput is increasing. So IP is increasing for the 3800 and I guess it's the same Dynamic. If you think about the overlay or metal pitch Improvement, if you manage to improve that you can price higher, I would imagine. Now there is an argument that if a customer doesn't, adopt does not adopt high in them. It's neutral for you because you have multiple turning low in a
Speaker Change: But I was thinking that the value to your customer would be much higher with high-end, a versus a multi-patterning low na. I mean, especially on the metal pitch size, they can be much more aggressive with Ina. I would imagine, and obviously saving a lot of non little spin. So the value to the customer is much higher that therefore, the
you know, you can price higher so is it truly neutral for isml you know, the multi patterning low end, single high na just uh you know, I've been talking a lot to investors on that and
Speaker Change: I wanted to ask you.
Well, first of all, this is Christophe. So you have a lot of questions in your question. But on the first part, I think you summarized what we're doing very well. So I'd just like to confirm what you said about the ability we have to increase the value, therefore the price of our product if we get more productivity, if we get more overlay and imaging performance. So that's still correct. That's also correct, of course, for INA. And I think what you have to add with INA when you simplify basically the process of the customer, reduce the lead time, I think what you see then is the ability also for our customer to keep going to the next node.
Speaker Change: Well, I think first of all, this is Kristoff, so you have a lot of question in your question, but on the first part. So I think you you summarize what we're doing very well. So I just like to, to confirm what you said about the ability, we have to increase the the value, therefore, the price of our product. If we get more productivity, if we get uh, more overlay and imaging performance, so that's still uh, still correct.
And I think one of the reasons we've been driving those two historically is because as customer goes to the next node. then practically they will shrink further and the litho intensity will increase. And INA fits exactly that, I would say, strategy like UV did in the past or immersion did in the past. So the benefit of a tool like INA is also being captured by an increase in litho intensity, basically moving to the next node. And I think we have seen that happening strongly with UV in the And as INA mature, as the customer validates the value you have described, I think we will see the exact same dynamic.
Speaker Change: Um, that's also correct, of course, for Ina. And I think what you have to add with Ina when you simplify it, basically, uh the the process of the customer reduce the the lead time, I think what you see, then is the ability also for our customer to, to keep going to the to the next node. And I think 1 of the, the reason we have been driving those tool historically is because
Speaker Change: Was as customer goes to the next node.
Speaker Change: Then practically, they will shrink further and the lethal intensity will increase and INF fits exactly that. Um, I would say, uh, strategy like UV did in the past or immersion did in the past. So the benefit of a tool like Ina is also being captured by uh, an increase in Lethal intensity basically, uh, moving to the next note and I think we have seen that happening uh strongly with you in the past.
Speaker Change: I think we will see the exact same dynamic.
Thank you, Christophe. You're welcome.
Makes sense. Thank you Christophe.
Christophe: You're welcome.
Thank you.
Your next question comes from the line of Didier Scemama from Bank of America, please go ahead. Afternoon, thank you for taking my question. Just have a couple of quick ones.
Your next question.
Comes from the line of. Did you see Mama from Bank of America? Please go ahead.
Maybe the question for Roger from the press conference this morning. I was a bit surprised to hear or read that you would see the removal of the export ban on AI chips to China as a positive. Maybe can you elaborate a little bit on that? I would have thought that the lethal revenues associated with You know, those AI chips in China would not be that material, or are you suggesting or hoping that there would be some form of relaxation of restrictions on immersion for China as well? Well, I think it is a positive, because I think it is a positive for the entire ecosystem.
Speaker Change: Good afternoon. Thank you for taking my question. Um just have a a couple of quick ones, maybe it's a question for Roi from I think the press conference this morning I was a bit surprised to hear or read that. You would see the removal of the export ban on AI chips to China as a positive. Maybe, can you elaborate a little bit on that? I would have thought that the lethal revenues associated with
H you know, those AI chips in China would not be that material or are you suggesting you're hoping that there would be some form of relaxation of restrictions on immersion for China as well? Thank you.
Now, are we going to sell 20 more tools as a result of that? Probably not. But I think it is still a positive development that, you know, the wider ecosystem is being deployed and that restrictions are being lifted, I think, by itself is a positive. You know, this is not the only lifting of restrictions that have happened in the past couple of weeks. As you also know, there was a lifting of restrictions when it comes to chip design software. And by itself, I think that happening, I think, you know, strengthens the global reach of the ecosystem, which I think is a positive.
Speaker Change: Well, I think it is a positive because I think it is a positive for the entire ecosystem. Now, are we going to sell 20 more tools as a result of that? Probably not, but but I think it is a, it is still a positive development that, you know, the wider ecosystem, uh, is, is being is being deployed and that, that that restrictions are being lifted. I think, in by itself is, is a positive. You know, this is not the only lifting of restrictions that has happened in the past, in the past, in the past couple of weeks. As, as you also know, there was a lifting of restrictions when it comes to chip chip design, software in, and by itself, I think that happening, I think.
So it is based on that, that I think this is a positive development for the entire ecosystem and, you know, hopefully also for us. Okay, got it.
Speaker Change: You know, strengthens the, the the, you know, the the global reach of the ecosystem, which I think is a positive. So it's based on that that I think this is a, this is a positive and positive development for the entire ecosystem. And, you know, hopefully also for us
Second question is on just going back to the the DUV sort of outlook for the second half. I know you had said at the time of Q1 that China group revenues would be a bit better than 25% versus 20% prior, but it does feel like it's further strengthened. How much of that do you think is potentially related to pulling ahead of further restrictions on certain of your foundry logic or memory customers into next?
Speaker Change: Okay, got it. Uh, the second question is on, just going back to the, the duv, um, about look for the second half. Um, I I know you had said at the time of T1, that China group revenues would give it better than 25% versus 20% prior, but it does feel like it's, it's further strengthened, um, how much of that do you think is potentially related to a pool in a head of further restrictions on certain of your, you know, Foundry logic, or memory customers uh, into next year?
I don't think that dynamic has materially changed, right? So the 25% that we have been talking about now for the second quarter in a row is what we expect for the year. And I think that's still the way the over 25% is still what we expect for the year. I don't think that dynamic has necessarily changed in the past quarters. That's still there.
And, you know, exactly what is what is driven by, you know, considerations by customers, it's very hard to tell. I think there is a there is a customer need that customer needs continues to be strong as we see it.
I mean, there have been discussions in the past is China falling off the cliff? Well, it is not. And it's also not what we see. We still see China demand strong, and China demand more and more being brought in line with the percentage that it represents at our backlog, which is, you know, again, at the level that we were just talking about this slightly around 25%.
Speaker Change: Yeah, I don't think that Dynamic has materially changed, right? So, um, um, the, the 25%, that we have been talking about now for, for, for, for, for the second quarter in a row, is is what we expect for the year. And, uh, I think that's still the way the over 25% is, is, you know, still what we expect for the year. I don't think that Dynamic has necessarily changed in the past, in the past, in the past quarters, that's still there and you know, exactly what is what is driven by you know, considerations by customers. That's very hard to tell. I think there is a there is a a customer need that customer needs continues to be strong as as we see it. I mean there have been discussions in the past is kind of falling off the cliff. Well it is not and
It's also not what we see. Um we we still see China, demand strong and China demand more and more being brought in line with the percentage that it that it represents at our backlog. Which is, you know, again at the level that we were just talking about this. This slightly around 25%.
Thank you.
I have a quick follow-up, a tiny one, just on HiNA.
I'm surprised you don't talk so much about the booking you had in the quarter. So just wondering, maybe, Christophe, whether that strengthened your view that HiNA could be inserted at the 1.4 nanometer level? Well, you know, our view, I think, has been very consistent. And, you know, the question comes back every time, and I always give the same answer, which is, you know, the phase we are in today is a phase where the customer are just qualifying the tool. and they qualified a tool, having in mind to insert it in high-volume manufacturing in 2026-27, and the exact format they will use for the insertion is depending, basically, on the progress we are making with them in the next few months, but the progress has been good.
Speaker Change: Thank you. Can I have a quick follow up and tell you 1 just on high and a um, I'm surprised you don't talk so much about the booking you had in the quarter. Um so just wondering maybe Kristoff, whether that strengthen your, your view, that Ina could be uh, inserted at the 1.4 and the meter note.
Well, you know our our viewers think has been very consistent and you know, the the question come back every time and I always give the same answer, which is, you know, the phase we are in today is the phase where the customer are just qualifying the tool.
I think, you know, we talked a lot about the initial data back at the end of last year, early this year. The data are still good. The more customers use the tool, the more they like it, and this means also that the opportunity for insertion is, of course, growing over time because there's more and more data confirming that, but there, at the same time, we still need a few more months. As I mentioned in my introduction, there's still a lot of work happening with our customers, with the 5,000. The shipment of the 5,200 is an important milestone because that's the tool for high-volume manufacturing, so this also means that this tool will be available on time, but there also we need to qualify it.
And the qualified the tool having in mind to insert it in a high volume manufacturing, you know, in 2026 27 and the exact format they will use for the insertion. It is, depending basically on on the progress, we are making with them in the, in the next few months. But the progress have been good. I think, you know, we talked a lot about the initial data back at the end of last year, early this year, the data are still good. Um, the more customer use the tool, I would say, the more they like it and this means also that, you know, the opportunity for in session is is, of course, going over time because there's more and more data.
So I think the progress is good. We feel good about, you know, the way the customer look at the system. And I think we'll continue to share with you the progress in the coming months. But we are happy with the progress and I think so are our customers. DJ, indeed confirming that the EUV order intake was a mix of low NA and high NA, but we also mentioned before that customers have asked us to not be specific about the high NA order intake. That's the reason why, you know, we might not make as much music around that as some people might like.
So I think the progress is good. Uh, we feel good about, uh, you know, the way the customer look at the system and and I think we'll continue to share with you the progress in the, in the coming months, but we are happy with the progress and I think so, our our customer DJ in this confirming that indeed confirming that the, uh, the euv order intake, um, was a mix of low and a, and Ina. But, we also mentioned before that, customers have asked us to not be specific about the high in a order intake, that's the reason why, you know, we might not make as much music around that as some people might might like
Understood.
Thank you so much.
Speaker Change: Understood, thank you so much.
Speaker Change: Thank you.
Speaker Change: Your next question.
This question comes from the line of Joe Kachaki from Wells Fargo, please go ahead. Yeah, thanks for taking the questions. I wanted to ask one on 2026, your commentary, I guess I wanted to try to better understand what has changed over the last 90 days, just in your customer conversations. It sounds like you kind of mentioned, you know, customers or customer navigating specific challenges that might impact their CapEx. But can you just help us understand what's changed since 90 days ago?
Comes from the line of Joe ketaki from Wells Fargo. Please go ahead.
Yeah, thanks for taking the questions. I I wanted to ask 1 on 2026, your commentary, I guess I wanted to try to better understand what has changed over the last 90 days, just in your customer conversations. It sounds like you kind of mentioned, uh, you know, a customers or customer navigating specific, uh, challenges that might impact their capex. But can you just help us understand what's changed since 90 days ago?
I will start and I think Roger can add. But I think, you know, when we talked 90 days ago, I think this was a couple of weeks after. Other than that, I think we started, both liberation day, but also the announcement that, you know, the tariff we're put on hold for 90 days and I think we said back then that, you know, we were not at the end of the discussion. We were most probably at the beginning of it. And I think today we're still not at the end of it, three months have passed. And I think those discussions are in all our customer minds and they are trying basically to understand what it means for them, you know, in the short term.
Speaker Change: uh, I would start and I think because you can ahead, but I think, you know, when we talked to 90 days ago, I think this was a couple of weeks after
false Liberation day, but also the announcement that, you know, the Tariff we have put on the hall for for 90 days
And I think we said back then that, you know, we were not at the end of discussion, we are mostly at the beginning of it. And I think today we are still not at the end of it, a few months have passed.
So I think what has happened in the last 90 days is the, I would say, the impact of the announcement is there. There's a lot of discussion. No one knows, even today, what's the end state. Some people are getting more optimistic. Some people are getting more pessimistic. And I think when we talk about uncertainties, we mean both, basically. So I think our visibility, because of discussion, has a bit reduced and therefore we are being more cautious.
And I think those discussions are in all our customer minds and they're trying basically, to, to understand what it means for them, uh, you know, in the short term. So I, I think what has happened on the last 90 days is the
I think Roger was mentioning the H20 chips. In the course of the last three months, they were both restricted and then allowed again yesterday. So a lot of this is still happening. And as you know, this type of uncertainty usually invites people who make investment to be more cautious. And I think what we report is the results of the discussion we are having basically with those people.
Speaker Change: We said the, the impact of the announcement is there, there's a lot of discussion, No 1 know, even today. What's the end State? Uh, some people are getting more optimistic, some people are getting more pessimistic. And I think when we talk about uncertainties, we we we mean both basically. So I think our visibility because of discussion as as a bit reduced and therefore we are being more cautious. I think Rojay was mentioning the uh H20 chips in the course of the last uh 3 months. They were both restricted and then allowed again yesterday. So a lot of this is still happening and as you know uh this type of uncertainty usually invite
People who make investment to be more cautious. And I think what uh we report is the resource of the discussion. We are having basically with with those people.
Yeah, I think, Christophe, that's the story, right? So there is the direct impact, if you're considering expanding in the United States, you know, you still don't know today exactly what tariffs are going to apply to you. Because on the one hand, you have the tariff, the generic tariff. But on the other hand, there is always there is also the 232 review. At this stage, we don't know what the outcome of that is going to be. So if you have investment plans in the United States, and obviously, you know, this, this, the uncertainty around the tariff discussion is a pretty significant component in your business case.
And, you know, how much are you going to, how much are you going to invest in the United States? And in what timeframe? So that's the direct implication. And then to Christophe's point, there is the indirect impact, you know, we still don't know today, the noise levels are pretty high on tariffs, the potential implications that could have for GDP growth are pretty significant. So therefore, customers are cautious, and are waiting with their investment decisions, you know, up until the point, you know, they're maximizing the waiting time they have for their investment decision. And that's what's what Christophe is signaling, you know, the clarity from the customers, the uncertainty that they have to navigate is quite substantial.
Speaker Change: Yeah, I think first off. That's the, that's the, that's the story, right? So there is the direct impact if you're considering, uh, expanding in the United States, you know, you you still don't know today exactly what terrorists are going to apply to you. Because on the 1 hand, you have the, the terrorists, the generic terrorists. But on the other hand, there is always, there is also the 232 review that at this stage. We don't know what the outcome of that is going to be. So if you have investment plans in the United States, and obviously, you know, this this the uncertainty around the terror of discussion is, is a pretty significant component in your business case, uh, and you know, how much are you going to? Uh, how much are you going to invest in the United States and in, in what time frame. So that's the direct implication. And then, to Kristoff's point there is the indirect impact, you know, we still don't know today. The noise levels are pretty high on, on on terrorists. The potential implications that could have for GDP growth are pretty significant, so therefore customers are cautious, um, and are waiting with
And that leads to them holding the cards a little bit closer to the they typically would do in this in this timeframe. And that could be a positive. Christophe just gave you one example. But there is also risk involved there. As a result of that, you know, we have become we have made the we have made the statement that we made.
Speaker Change: Their investment decisions, you know, up up until the point, you know, they're maximizing the waiting time. They have for their investment decision and that's what's what Kristoff is signaling. Um, you know, the clarity from the customer is the uncertainty that they have to navigate is is, is quite substantial and that leads to them holding the cards a little bit closer to the chest. And they typically would do in this in this time frame and that could be a positive.
Rest of just gave you 1 example. But there is also risk involved there. As a result of that, you know, we have become, uh, we we have made the uh, we have made the statement that we made.
Speaker Change: Buying, you know, maybe 3, high, in a tools being rev wrecked in that quarter, is that the right way to think about it, is there anything else we should be thinking about?
Yeah, Joe, that is an important one, right? So the high NA one is an important one. So that will have an impact, because the second half, you know, we will have more high NA tools rev-racked than in the first half. So that's a driver. The second driver is that we, as I mentioned before, we had quite some upgrade business in the first half. I would expect that upgrade business to be a little lower in the first half. And so that's a driver. And then we also had some one-off cost benefits in the first half that we cannot count on in the second half.
So it's a bit of a mix of those, as a result of which we do believe that the second half is going to be slightly weaker.
Speaker Change: Yeah, Joe that. That is an important 1, right? So the, uh, the high na, uh, 1 is an, is an important 1. So that that will have, that will have an impact because the the second half, uh, you know, we will have more high-end tools rather than the first half. So that's the driver. The second driver is that we, uh, as we, as I mentioned before, we had quite some, uh, upgrade business in the first in the first half. Uh, I would expect that upgrade business to be a little, uh, little lower in the time. And so that's that's that's a driver. And then we also had some, some 1-off cost benefits in the in the first half that we cannot count on in the second half. So it's a bit of a, it's a bit of a mix of those, as a result of which we we do believe that the second half is going to be is going to be slightly weaker.
Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Your next question comes from the line of Krish Sankar from TD Cowan. Please go ahead. Hi, thanks for taking my question. I have two of them.
Our next question.
From the line of Chris Sanka from TD Cowen, please go ahead.
Roji, first one on calendar 26, I understand that, you know, it's hard for you to confirm at this stage, but I'm just curious when you look at the bookings you had in Q2, what kind of a bookings run rate should we assume you need to get in Q3 to get some conviction on calendar 26, is it growth year or not? Sachin, no worries.
Chris Sanka: Yeah, hi, thanks for taking my question. I had 2 of them Roi, uh, first 1 on call the 26th, I understand that, uh, you know, it's hard for you to confirm at this stage, but I'm just curious. When you look at the bookings, you had in Q2, what kind of a bookings run? They should be assumed, you need to get in, Q3 to get some conviction on calendar, 26 of the growth year or not.
Speaker Change: Decoration, very nice try. I think for some tried this before, we're not going there, right? So we we we've made a comment that we've made on bookings. We Believe. Bookings are lumpy because we believe bookings are not necessarily a good, a good reflection of the business momentum. So I don't think it would be wise to, uh, to, uh, to entertain that. So we we we, we move away from giving guidance on 26, and I don't think it would be appropriate to indirectly give guidance on 26. So I'm going to I'm going to pass on this 1.
I have a two-part question again on bookings, so sorry to be annoying. On the Q2 bookings, you know, can you tell us a little bit of how much of the $2.3 billion in EUV, how was it split between logic and DRAM for EUV bookings? And on the $3 billion or so in DeepUV bookings, how much will ship this year versus next year on DeepUV? On the first question on EUV, it's multiple customers, and it's both logic and memory, although I would say it is skewed towards logic. So logic is the better half of the number.
Speaker Change: Is I have a 2-part question again, on booking. So, sorry to be annoying, um, on the Q2 bookings. Uh, you know, can you tell us a little bit of how much of the 2.3 billion in euv? How was it? Split between logic and DM for euv booking and on the 3 billion or so in deep UV bookings. Will how much will ship this year versus next year on dpv?
On DPV, it's a bit of a mixed bag. All I would say is, last time we told you that that we were getting closer and closer to being fully booked for this year, also on DPV. I think by now we can say that we're virtually covered for the full year. And that means that some of the orders that came in on DPV outbridged the gap that we still needed to be fully covered or virtually covered for this year. And then the balance is there for 26. Thanks a lot, Roger. You're welcome.
Speaker Change: Oh, on the, on the first question on euv, it's multiple customers. Uh, and it's, it's also, uh, it's both logic and, uh, and and memory, although, I would say it is due to Works logic. So, so logic, is, is the, is the, the, the, the, the better half of the, of the, uh, of the, uh, of the number, um, on on dpv. It's, it's a bit of a, it's a bit of a mixed bag. Um, all I would say, is, last time, we told you that, um, uh, that, uh, you know, we were getting closer and closer to being fully booked for this year, uh, also on dpv.
Speaker Change: I think by now, we can say that we're virtually covered for for the full year and that means that, you know, some of the orders that came in on dpv, help bridge the gap that we still needed to be fully covered to, or virtually if we recovered for this for this year. And, uh, and and then the balance is, is there to, uh, you know, for for 26.
Speaker Change: You're welcome.
Your next question comes from the line of CJ Muse from Cantor Fitzgerald. Please go ahead. Yeah, good morning, good afternoon. I wanted to revisit the first question, Roger, where you guys have kind of reduced your outlook for EUV revenues from 50% to 30%. That's roughly 1.7 billion euros. I don't think you're suggesting that your service business grew by that much. So curious what changed on the tool front. And was it simply further de-risking of logic to much more kind of de minimis type unit levels? Or is there something else going on there?
Thank you.
Speaker Change: Your next question comes from the line of CJ muse from Kansas jerrold, please go ahead.
CJ Muse: Yeah, good morning, good afternoon. Um, I wanted to revisit the first question, Roger, um, where you guys have kind of reduced your outlook for euv, revenues from 50% to 30%. That's roughly 1.7 billion euros. I, I don't think you're suggesting that your service business grew by that much. So curious what changed on the tool front. Uh, and was it simply further de-risking of of logic, um, to much more kind of diminish type unit levels, or is there something else going on there?
I'm a bit confused, CJ, where you got the 50% from, because I think what we've been talking about was 40% at the start of the year. That's the number that we've given. And if you add it all up, right, at the midpoint, you know, at the current levels of install-based business and keeping the DPV slash application business constant, then we were looking at 40% increase at the beginning of the year. And this delta from 40% growth to 30% growth, that delta is explained by what I just gave you in terms of a shift from the system business to the upgrade business that's included in the install-based.
I'm a bit confused. CJ, where you got the 50% from? Because I think what we've been talking about was 40% at the at the start of the year. That's, that's the number that we've, we've given, and if you add it all up, right at the, at the, at the midpoint, uh, you know, at the current levels of of install based business and keeping the DP, or the the dpv slash application business constant, then we were looking at 40% in.
So the 50% is a number that I honestly don't recognize. It's tied to roughly 50 tools. Okay, now we're to the 50 tools. So 50 tools, well, an important explanation of the 50 tools versus the lower number of tools, the low 40-ish tools that we were just talking about. That is explained by the mix of tools in this year. So this year is, you know, completely dominated by the 3800s, only a handful of 3600 tools. And that's the reason why the tool number is lower, simply because people get a much higher productivity on a per tool basis.
Please at the beginning of the year. So and this Delta from 40% growth to 30% growth that Delta is, is explained by what I just gave you in terms of a shift from the system business to the upgrade business as included in the install base. So the 50% is the number that I honestly don't recognize
CJ Muse: The 56% growth. Well, you know it it tied to roughly 50 tools.
And that still gives them the 30% capacity increase that they were looking for, albeit with a lower number of tools. So it's the tool mix that has led to a lower number of unit numbers.
CJ Muse: 50 tools versus the lower number of tools that that, that the low 40s tools that we were just talking about that is explained by by the mix of tools in this year. So, so this year is, you know, completely dominated by the, by the 30800. Only a handful of 3600 tools. Um, and that's the, that's the reason why, uh, why the tool number is lower. We simply because people get a high, a much higher productivity on a per tool basis, and that still gives them the 30% capacity increase that they were looking for will be with a lower number of tools. So it's the tool next, uh, that that that has led to a lower number of unit numbers.
Perfect.
And then to follow up on your 26 outlook, where, you know, 90 days ago, you talked about growth, and now, you know, greater uncertainty, I would think on the tariff front, there would be more certainty. And so curious, you know, why that has gotten worse, I guess, in your minds. And then, from a bottoms up perspective, has anything changed in terms of the build plans that you're seeing from your customers, whether it's domestic China, emerging, high in a ramp, or low in a demand that is causing you to kind of, you know, retract that outlook?
Or is it simply just a top down kind of macro view that's driving that? Thank you.
Speaker Change: Perfect. Uh, and then to follow up on your 26, Outlook. Where, you know, 90 days ago, you talked about growth and now, you know, greater runs certainty. I would think on the Tariff front there would be more certainty. Um, and so curious, you know, why why that has gotten worse, I guess in your minds, and then, uh, from a Bottoms Up perspective has anything changed in terms of the build plans that you're seeing from your customers, whether it's domestic China emerging high in a ramp or low in a demand that is causing you um to kind of you know retract that that Outlook. Or is it simply just a top down. Um kind of macro uh view that's that's driving that thank you.
I would say on your first question, CJ, it's interesting that we have such a different perspective on what the world looked like three months ago versus today. I would say three months ago, I think, you know, versus today, I can tell you that our customers are more concerned about the terrorist discussion today than they were three months ago. Three months ago, you know, there was the indication of a pause in the terrorist. Right now, I think we're, you know, it seems like the countries are in full battle mode again when it comes to terrorists. Every single day, there is a new percentage.
The 232 review, which of course is very meaningful in our industry, there is no line of sight there. So when we have conversations with our customers, we do sense that they're, you know, that they're uncertain as to what the terrorist discussion work might land and what the implications are for GDP growth and as a result of that, what that means for the demand of their customers. So we send, in our conversations with customers, a higher level of uncertainty than three months ago. And that's the reason why, you know, as I mentioned before, they keep the cards closer to the chest and wait with, you know, confirming their demands, you know, up to the point in time that they can do that.
Speaker Change: I would say on your first question, uh, CJ. Yeah, it's interesting that we have such a different perspective on on what the world looked like 3 months ago versus today I, I would say 3 months ago. Um, I think, you know, versus today, I can tell you that our customers are more concerned about the terrorists discussion today than they were 3 months ago. 3 months ago. I, you know, there were, there was the indication of a pause in the in, in the terrorists. Um, right now I think we're, you know, we're in in it seems like the countries are in full battle mode. Again, when it comes to, when it comes to terrorists, uh, every single day, there is a new percentage, uh, the 232 review, which of course, is very meaningful in our industry. There is no line of sight there. So when we have conversations with our customers, we do sense that there are, you know, that they're uncertain as to what the what the terror of discussion work might land and what the implications are for GDP growth. And as a result of that, what that means for the demand of their customers. So,
That's what we observe.
Christophe, anything on customer dynamics as you see it? Yeah, no, I think you summarized it well again. And as I said before, we also appreciate that there is different view and different level of optimism or pessimism. I think, you know, what we try to do is to reflect basically the nature of the discussion we are having. And of course, you know, to your question, is it top-down, bottom-up? It's first top-down. But, you know, the interrogation on the business is, of course, also a more detailed discussion we're having. So that's a bit where we are. Well, we'll continue to have those discussions, by the way, because, you know, every day brings new news.
Speaker Change: We send in all conversations with customers are higher level of uncertainty than 3 months ago and that's the reason why, you know, as I mentioned before they keep the cards closer to, the closer to the chest and wait with the, you know, with confirming their demands, you know, up up to the point in time that they that they, that they can do that. That's what we observe, the stuff. Anything on customer Dynamics as you see it. Yeah, I know, I think I think you summarized it well again.
Speaker Change: And as I said before, we also appreciate that. There's different View and different level of optimism or pessimism.
Yesterday was good news, as we discussed, and we'll see what's happening in the next few months. But that's really where our customers are today. Thank you.
I think, you know what, we try to do is to reflect basically, uh, the nature of the discussion, we are having. Uh, and of course, you know, to your question, is it top down? Bottoms up its first top down. But you know, the, the interrogation on, on, on the business is, is, of course. Also, a more detailed discussion. We're having so, that's a bit where we are, um, well, we will continue to to have those discussion by the way because, uh, you know, everyday bring, uh, new news yesterday was a good news as we discussed and, uh, we'll see what's happening in next few months. But that's really where our customer are today.
Speaker Change: You're welcome.
Your next question comes from the line of Tammy Qiu from Berenberg. Please go ahead. Hi, thank you for taking my question. So the first one is regarding your comment on that 30% efficiency helped addressing customers requirement of expanding capacity by 30%.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Tammy cue from barenberg please. Go ahead.
So is it right to say going forward, you need customer to expand capacity aggressively for you to sell more tools to your customers, versus previously that the demand for litho2 is actually a function of how much capacity the customer will be willing to Well, I think we usually define the EUV capacity need by the total need for wafer output. So I think this is the number we we monitor. I think you've seen that in the capital market deal. So where we look at the total wafer start per month, and how these evolve over time. So I think this this define our market.
Tammy: Hi. Thank you for taking my question. Um, for the first 1 is regarding your comment on that 30%, efficiency helped addressing customers requirements of expanding capacity by 30%. So, is it right to say going forward? You need customer to expand capacity aggressively if we could sell more tools to your customers versus previously that the demand for refer to is actually a function of how much capacity the customer will be willing to add.
And we try always to serve that market by shipping the most effective tool, the most productive tool. The reason for that is that, you know, a tool with higher productivity will allow us to deliver the highest value to our customer with a lower cost on our side and therefore a better gross margin. So I think we are more sensitive to the total capacity need of our customer than to how many tools we're going to need to fulfill it. And I would say the less number of tools we need to fulfill it, usually the better our margin and profitability will be.
Speaker Change: Well, I think we usually Define the UV capacity need by the total, uh, need for were output. So, I think this is the number. We we, we monitor, I think you have seen that in the Capital Market. They also where we look at the total were start per months and now this evolved over time. So, I think this this Define our Market,
And for our customer, also the value is better because they have more space basically to run more capacity.
So to give you an idea, when we shipped the first EUV system, the 3400B, we were at about half the productivity of the tool we are shipping today. So of course, this has an effect on the total number of tools. So if we are still shipping the 3400B today, the number of units will be at least twice as much.
But, you know, what we look at, what's really important, what you should look at is really the total capacity added by our customer on EUV year on year. Okay, thank you, Richard.
Tool. Uh, the reason for that is that you know, 2 is higher productivity will allow us to deliver the highest value to our customer, uh, with a lower cost on our side and therefore, a better gross margin. So I think we are uh, more sensitive to the total capacity need of our customer than to how many tool we're going to need to fulfill it. And I will say, uh, the last number of tool, we need to fulfill it usually the better of, uh, margin and profitability will be. And for our customer also the value is is is better because they have more space basically to run more capacity. So if you, you know, to give you an idea, when we ship the first, uh, euv system, and the 3400, B, we were at about 5, the productivity of the tool. We are shipping today. So, of course, this has an effect on the total number of tools. So if we are still shipping, the 3400 would be today. The number of units will be at least twice as much. Uh, but
Uh, you know what we look at, what's really important, what you should look at is really the total capacity added by our customer on UV year on year.
And the follow up will be on 2026. So you mentioned that you can't really confirm 2026 to be a growth year, but also at the same time, you're preparing for a growth year for 2026, I guess, from your capacity perspective. So is it right to say that it's just uncertainty for the time being, but based on your conversation with They are still leaning towards adding, just that they're not sure about what is the discussion of tariffs. So we're probably still leaning towards positive side instead of a cloudy picture that we may actually see the whole industry pulling back.
Speaker Change: Okay, thank you. Richie. And a follow up, will be on 2026. So, you mentioned, man. You can't really confirm 2026 to be a course. Yeah. But also, at the same time you are preparing for a growth year for 2026. I guess from your capacity perspective. So uh is it like to say that it just uncertainty for the time being but basically
Speaker Change: On your conversation with your customers. They are still leaning towards adding just that they're not sure about what is the discussion of terrorists. So we probably still leaning towards positive side. Instead of a, uh, cloudy picture that we may actually see the whole industry pulling back from investment.
Well, I think we also say that today, I think that the fundamentals of our customers are still strong. I think AI is still very strong. I think you also get sign of that in many news in the last few months. So the fundamentals are strong. And I think that the discussion around tariff, around geopolitics, is just inviting sometimes, you know, customers to be a bit more careful. So if this discussion was not there, I think, you know, the fundamentals are out there and we would be pretty much on the line we had a few months ago.
Well, I I think we also say that uh today I think the fundamentals of our customers are still strong. I think AI is still very strong. I think you also get sine of that in many news in the last few months. So the the phone numbers are are strong. And I think that the discussion around uh Terry from geopolitics
So I think the way this will. It's all in the next few months is very, very important to bring back both stability, confidence, etc, etc, to our customers. So hopefully this is a short term discussion. Is it right to say potentially it's the delay of decision instead of a change of decision? Of course, I don't know if depending on what's the result of I think we're looking more at, I would say, some question on the decision. So it doesn't have to be either a delay or a change, but there's more interrogation about the decisions that have to be made.
Speaker Change: Is just inviting some time uh, you know, customer to to be a bit more careful. So if this discussion was not there, I think, uh, you know, the fundamentals are out there and we will be, uh, pretty much on the line. We, we had a few months ago, so I think the way this will
Speaker Change: Get solved in the next few months is very, very important to bring back both, uh, stability, confidence, uh, etc, etc, to to our customers. So hopefully, this is a short-term discussion.
Speaker Change: Just a constant. Is it? Alright to say, potentially, if the is the delay of decision, instead of a change of decision? Of course, I know, if depending on what the result of the terrorist discussion,
Speaker Change: I think we're looking more at. I would say some question on the decision, so it, it doesn't have to be either a delay or a change, but there's more interrogation about the decision to have to be made.
Okay, thank you.
Speaker Change: Okay, thank you.
Thank you.
Speaker Change: Thank you.
Your next question comes from the line of Alexander Duval from Goldman Sachs. Please go ahead. Thanks for the question. You talked about how lithography intensity can benefit from leading edge memory specifically. I wondered if you could elaborate this and how that's helping litho intensity and to what extent you see that as a sustainable trend into next year.
Speaker Change: Your next question comes from the line of Alexander. Duval from Goldman Sachs, please go ahead.
And then as a quick follow up, you talked in the past about the focus at ASML on moving towards leveraging common platforms. I wondered if you could give the latest update on progress and how you're thinking about the timeline to that helping customers and helping ASML. Yeah, so on the first question, I think we talked quite a bit about, you know, a little intensity of the capital market today. I think what is very positive about the last few months is we see basically this increased adoption of UV happening, I think, especially with DRAM customers. The trend, I think, will be sustained.
Alexander Duval: Yes, may thanks for the question. Um, you talked about how lithography intensity can benefit from Leading Edge, memory, specifically, I wondered if you could elaborate this, um, and how that, uh, helping litho intensity and to what extent you see that as a sustainable Trend, uh, into next year. Uh, and then as a quick follow-up, uh, you talked in the past about the focus at asml on moving towards uh, leveraging common platforms. Uh, I wondered if you could give the latest update on progress there and how you're thinking about the timeline to that helping customers and helping asml, many thanks.
Yeah, so on the first question, I think uh we talked quite a bit about uh you know little intensity of the Capital Market day I think.
What, uh, is, uh, very positive about the last few months is we see basically this increased adoption of UV happening. I think, especially with DM customer,
That's what our customers tell us. So we see on the latest node, quite a jump on UV layer for some of the customers. And the DRAM roadmap, the technology roadmap is so complex that UV more and more is seen basically as a way to simplify a bit the process flow and to get to the performance needed faster. So if we look at, I would say, the next three, four, five nodes, and that includes for F-square, by the way, we see a very positive trend with our DRAM customer. And I think we're forcing that last year, and we now have many confirmation part of that.
um,
The trend, I think will be sustained. That's what our customers, tell us. So we see on the latest node, uh, quite a jump on UV layer for some of the customer.
So that's a bit where we are on this. On the next platform, so I think what we explained last year is that we want to continue to improve the performance of UV. We want to continue to scale productivity. We're going to do that as far as we can on this platform, most probably all the way to the end of this decade. We can continue to improve the performance of the tool on the current platform, basically, in terms of productivity and overlay. And when we see that this becomes more difficult, then the Next platform, which is pretty much the same as the INA platform, will also become available for low NA so that we can continue this journey for another 10-15 years.
Alexander Duval: And uh, we now have, uh, many confirmation part of that. So that's uh, uh, that's a bit where we are on on this.
On the next platform. So I think what we explained last year is that we want to continue to improve the performance of UV. We want to continue to scale productivity. We are going to do that as far as we can on this platform. Most probably all the way to the end of this decade. We can continue to improve the performance of the tool on the current platform basically in term of productivity and overlay
Alexander Duval: and when we see that this become more difficult, then the
So this will happen most probably, I would say, at the beginning of the next decade. That's at least our current estimation.
Thank you very much. Thank you.
Next platform, which is pretty much the same as the Ina platform will also become available for a low na so that we can continue this uh this journey for another 1015 years. So this will happen. Most probably I would say at the beginning of the next decade. That's that's at least our current estimation.
Alexander Duval: Thank you very much.
Alexander Duval: Thank you.
Your next question. This question comes from the line of Chris Caso from Wolfe Research. Please go ahead. Yes, thank you. Good afternoon. I guess the first question is with regard to memory. And, you know, it looks like the revenue and bookings were down a bit in the quarter. Could you talk a little bit about the trends that you're seeing in memory?
Alexander Duval: Your next question.
Speaker Change: Comes from the line of quiz Cafe. From Wolfe research, please go ahead.
And then, you know, earlier in the call, you talked about, you know, some of the trends with regard to HBM driven by AI, you know, what, what and when do you expect to, you know, see some of those benefits coming into the order book for memory? Well, you know, I think what we said today, if we look at the memory revenue, so this is still strong in 2025. So basically about same level as 24. So the demand on advanced memory is still strong. That's driven, as you mentioned it, by HBM. So what really happened this year is, I would say, logic has increased again.
Speaker Change: Yes, thank you, good afternoon. Um, I I guess the first question is with regard to memory. Uh, and you know, looks like the revenue and bookings were were, were down a bit in in the quarter. Uh, could you talk a little bit about the trends that you're seeing in memory and then, you know, earlier in the call you talked about, you know, some of the trends with regard to hbm,
Driven by AI, you know what what and when do you expect to uh you know see some of those benefits coming into the the the order book for memory.
So this is, I would say, the biggest change. But if we look forward, you know, AI is both about logic and HBM. So capacity has to be built on both. I talked about AI fundamentals before. That covers both logic and memory. So I think logic was behind last year because the investments were not happening. That's now happening. And I think if we look at the, you know, the next mostly couple of years, we should still see strong demand on both. And I guess what you saw in the material was that the bookings for memory were rather low in the quarter, I think at 16%, but to be honest, that was on the back of a few quarters where actually the order intake for memory was very high.
Speaker Change: Uh, you know, I, I think, uh, what we said today is if we look at the, the, the memory Revenue, so this is still, uh, strong in 2025. So, basically about 7 levels 24. So the demand on Advanced memory is still strong. That's driven as you mentioned it by, uh, hbm. So what really happened this year is uh I would say logic as increased again so this is I would say the the biggest change. Uh but if we look forward,
Speaker Change: You know, AI is both about logic and hbm. So capacity has to be built on both, uh, I talked about AI fundamentals before, uh, that cover both logic and memory. So ethics logic was behind last year because the investment were not happening. That's now happening. And I think if we look at the, you know, the next mostly couple of years, we should still see strong Demand on the on both basically.
So last quarter, so in Q1, it was 40%. So there, I think for a number of quarters, memory order intake was very, very strong. This quarter, it was lower, but you know what we say about order intake, and I think that also pertains to the composition of the order intake for memory versus logic. It's lumpy. Understood.
Speaker Change: And I guess what? What you saw in the material was that the the bookings for memory were rather low in the, in the quarter. I think it's 16%, but to be honest, that was on the back of a few quarters were, actually the order intake for for memory was very high. So last quarter, so in q1, it was 40%.
So there I think for a number of quarters memory order intake was very very strong uh this this quarter. It was it was it was lower. But you know what we say about order intake and I think that also pertains to the composition of the order of the order intake for memory versus logic. It's Lumpy
As a follow up question with regard to China, you know, given that China, it does seem to be above what you had expected at the start of the year. Do you feel that has any implications for China revenue as you're going into next year? You know, there's always concerns about pull forwards with regard to China, obviously, the restrictions there are, you know, changing. What, because of the upside you're seeing to China this year, does it have any effect on your expectations for China going forward? Of course, not going to give any projection on 2026, and that would include China.
Speaker Change: Understood um, as a follow-up.
Speaker Change: On that China, it it does seem to be above what you had expected at the start of the year. Uh, do you feel that has any implications for China Revenue a as you're going into next year? Uh, you know, with the
Always concerns about pull forwards with regard to China. Obviously, the restrictions there are, are, are, you know, changing, uh, uh, uh, what because of of The Upside, you're seeing to China this year. Does it have any effect on your expectations? For China, going into next year?
But, you know, frankly, for quite a while now, we're saying there is healthy demand in China, the demand is not falling off a cliff. And I think we see that confirmed year after year, right, that the demand in China remains quite strong. So we don't see a pattern of extreme pulling in. And as a result of that demand falling off a cliff, that's not a dynamic that we see. We believe there is a healthy business in China, in mainstream logic and in memory, and we're ready to serve that continued development of that market. Thank you.
Speaker Change: Of course, not going to give any projection on the on, on on 2026 2026 and that would include that would include China but you know, frankly for quite a while now we're we're saying there is healthy demand in in China. The demand is not falling off a cliff and I think we see that confirmed year after year, right? That that the demand in China remains, quite quite strong. So we don't see a pattern of extreme pulling in. And as a result of that, demand falling off a cliff that that's not a dynamic that we see. We, we believe there is a, a healthy business in, in China, in, in, in mainstream logic and in memory and, uh, we're ready to serve that, that, that continue to development of that of that market.
Yeah, thank you.
Thank you.
Your next question comes from the line of Adithya Metuku from HSBC. Please go ahead. Good afternoon, guys. Hopefully, can you hear me?
Your next question comes from the line of editia metuku from haters BC. Please go ahead.
Speaker Change: Yeah, good. Good afternoon guys. Hopefully can you hear me?
Roger, just a clarification first, I think you said at the beginning of the call that you had order adjustments in the backlog, can you explain a bit around what proportion of this order adjustment was EUV related and what proportion was DUV and whether this was across multiple customers or whether this was just one or two customers, any color around that adjustment would be helpful and I've got a follow up. So the adjustment I specifically talked about was related to China. So there was a 1.4 adjustment in the backlog that you need to understand, and that is related to customers now, in light of the export restrictions of last year, customers have now made up their mind what they want to do.
Editia Metuku: Yes, can I hear your phone? Yeah, yeah, yeah, yeah. Um, so Roger, I just clarification first. I think you said at the beginning of the call that you had order adjustments in the backlog. Um, can you explain a bit around What proportion of this order adjustment was auv related and What proportion was the UV and whether this was across multiple customers or whether this was just, uh, you know, 1 or 2 customers and any color around that adjustment would be helpful and and I've got to follow up.
And that has led to the debooking or the cancellation of orders for about 1.4 billion. And that's the comment that I made. And that's a data point you need to understand the 33 billion backlog that we ended the quarter with.
So this is all different. did all DPV and a bit of application business, but in essence, most of this is DPV.
No, the adjustment like specifically talked about was related to China. Uh, so, uh, there is a 1.4, uh, adjustment in the, in the backlog that you need, uh, to understand. Uh, and that, that is related to customers. Now in light of the Expo restrictions of last year, customers have now made up their mind, what they want to do. Uh, and uh, that has led to, uh, to the Deb booking or the cancellation of, uh, of orders for about 1.4 billion. That's that's the comment that I that I made and that's a data point. You need in order to understand the 33 billion backlog that we ended the quarter with
so, this is all
Editia Metuku: This all dpv and a bit of application, uh, business. But in us, most of this is, is dpv.
Understood. And just following on from that, look, I get the uncertainty around tariffs, but putting that aside, my calculation suggests that if you get another $6 billion in orders in the second half of this year, that should be enough for you to give, you know, to deliver a flattish growth in 2026. And anything on top of this will drive revenue growth in 2026. Now, when I look at this $6 billion number, it doesn't seem demanding given, you know, you've had almost $5 billion in average quarterly order intake over the last four quarters. So if tariffs were to turn out to be benign, would you agree with my maths that roughly $6 billion in order intake cumulatively over the next two quarters will set you up for flattish growth and anything on top of this will help drive revenue growth in 2026?
Understood and just following on from that um look I get the uncertainty around tariffs but putting that aside my calculations suggested. If you get another 6 billion in orders in the second half of this year, that should be enough for you to give, you know, to deliver a flattish growth in 2026 and anything. On top of this will will drive Revenue growth in 2026. Now, when I look at this 6 billion number, it doesn't seem demanding given, you know, you've had almost 5 billion in average quarterly order intake over the last 4 quarters. So if if tariffs were to turn out to be benign, would you agree with my maths that roughly 6 billion in order to intake, cumulatively over the next 2 quarters, uh, will set you up for flattish growth. And anything on top of this will help Drive Revenue growth in 26,
I'm not going to give you a grade on your math, Aditya, so I'm not going to do that. I'm not going to do that for obvious reasons as I just shared with Krish. We're not going to go into that. There are heavy assumptions in your math on executive decomposition of the order book, what pertains to which year, and in light of what we said at the beginning, we're not going to.
I'm not going to give you a grade on your master, I do. So I'm not going to do that. I'm not going to do that for obvious reasons that I just share with dickish. We're we're not going to we're not going to go into that. There are there are heavy assumptions in your math. On exactly the composition of the order book, what pertains to to which year and in light of what we said at the beginning, we're not going.
Okay, no worries.
Can I just ask another question then, if that's okay? Your interpretation is if I get a lousy answer, I'm entitled to another question. That's okay. Go ahead. Okay, thank you.
Speaker Change: Okay, no worries. Can I just ask another question then if that's okay.
Speaker Change: I got. Yeah. So so in your your interpretation is, if I get a lousy answer, I'm entitled to to another question. That's okay. Go ahead.
Just a slightly different topic. But recently, there's been this thesis going around that within the logic end market, there won't be a rise in litter intensity now until 2030, when your largest customer is expected to adopt high NAEUV. This seems a bit pessimistic to me, but I just wondered how you see, you know, if you would agree with the statement, or do you think, you know, there will be logic node transitions before 2030 that will lead to a rise in litter intensity, potentially the 14 angstrom node, any color you can give around this would be helpful.
Speaker Change: Okay, thank you. Just just just to um just a slightly different uh topic. But uh recently there's been this thesis going around that within the logic and Market. There won't be a rise in litter intensity now until 2030 when your largest customers expected to drop high in auv. Um, I just this seems a bit pessimistic to me, but, uh, I just wondered, um, how you see, you know, if you would agree with the statement or do you think, you know, there will be Logic, No transitions before 2030, that will lead to a rise in litter intensity potentially at the 14th. Uh, any color you can give around, this would be helpful.
I think, you know, this statement should start with the fact that the two nanometer we discussed that many times is a node basically, where we don't see an increase of UV layers. Now, of course, what's happened after that, is that gate all around is the new architecture and customers are going to go back to drive more dense Many ways to do that. One way is to use, of course, more litho intensity. So I think that, you know, after the 1.4 nanometer node, we will see again some litho intensity increase, some more UV layers. You know, if you look at the long term also there, the Logic customers are extremely bullish about the need for more UV layers.
Speaker Change: Well I I think uh you know, these statements usually start with the fact that 2 nanometer. We discussed that many times is a node basically where we don't see an increase of um,
Speaker Change: Um, UV layers. Now, of course, what's happened after that, uh, is that gate all around? Is the new architecture and customer are going to go back to drive more density.
So yes, there is one node, as it happened before with where there's a bit of a pause. But I always explain the only reason for that pause is to enable more shrink moving forward. So for every node where you pause basically to change your transistor architecture, usually you will see three, four, five nodes where you continue basically to shrink and they'll drive more litho intensity. Timing detail, you know, this is still a very competitive market. AI is driving innovation. So our customers are not standing still. And I think we will see more opportunity in the next few years for sure.
Speaker Change: Many ways to do that. 1 ways is to to use, of course, more, uh, little intensity. So, um, I I think that, you know, after uh, the 1.4 nanometer node, we will see again some uh, uh, little intensity increase some more in layers. Um, you know, if you look at the the long-term also there, the logic customer are extremely bullish about the need for more UV layer. So, yes, there is 1 node as it happened before we seen fate where there's a bit of a pose. Uh, but I always explained the only reason for that pause is to enable more shrink moving forward. So for every node where you pose, basically, to change your transistor architecture. Usually, you will see 3 4 5 nodes, where, uh, you continue basically to shrink and, and and their drive more so intensity.
Speaker Change: Timing uh detail. You know, this is still a very competitive market uh AI is driving Innovation, so our customer are not standing still. Uh and uh I think we will see more opportunity in the next few years for sure.
Understood. Thank you.
Understood, thank you.
Okay, we have time for one very last, very quick question. So if you were unable to get through on this call and still have questions, please feel free to contact ASML Investor Relations with your questions. Now, operator, can we have that last quick question, please? Thank you.
Speaker Change: Last very quick question. So if you were unable to get through on this call and still have questions, please feel free to contact. Asml, investor relations with your question. Now, operator, can we have that last quick question please?
Your last quick question comes from the line of Timm Schulze-Melanda from Rothschild & Co Redburn today. Hey there, thanks so much for taking my questions.
Speaker Change: Thank you.
Tim Clutter: Your last quick question comes from the line of Tim clutter Melinda from rooftops and Co Redbarn today.
Maybe I'll ask them both right at the get-go. So the first one was just some clarification, please, from Roger about installed base management. If I look at the 3Q guide, the full-year guide, it looks like there's about a 400 million euro decline sequentially in the fourth quarter. Is that the scale of the 3800E contribution to installed base management? Because I was thinking we'd have quite a lot of argon fluoride shipments from 2023 and 2024 starting to contribute. So just maybe some color about sequentially what's happening in the fourth quarter in your guide.
And then a question for Christophe, just on high NA adoption, 175 wafers an hour, an impressive achievement. Clearly, you're shipping qualifying a lot.
Maybe just in sort of layman's terms, could you share what are the milestones that are still needed for your customers to cross before we can be more confident about when volume manufacturing begins? And just the dilution on high NA, is the program already above break-even? Thank you so much. On the first one, very quickly, what I gave, the 20% obviously is a rounded number, right? And then if 20 were 23 or 24%, I think you would already have made up for the big delta that you have there. I think the install base, particularly the upgrade business, as we mentioned before, was particularly high in the first half.
Tim Clutter: Hey there. Thanks so much for taking my questions. Um, I do want, maybe I'll ask them both, uh, right at the get-go. Um, so the first 1 was just some clarification. Please from Roger, um, about install base management. If I look at the 3Q, guides a full year guide, looks like there's a about a 400 million euro, decline sequentially in the fourth quarter is that the scale of the sort of A3 the 3800 e, uh, contribution to, to install base management because I I was thinking we'd have quite a lot of argon fluoride shipments from 23 and 24, starting to contribute. So, just maybe some color about sequentially, what's happening in the fourth quarter in your guide and then a question for Kristoff just on high na adoption 175 Wafers, an hour, uh, an impressive achievement, um, clearly your shipping qualifying a lot. Maybe just some sort of layman's terms. Could you share? Um, you know, what are the milestones?
Tim Clutter: That are still needed for your customers to, to cross before. We can be more confident about when volume manufacturing begins. And just the dilution on high na, is it, um, is the program already above break? Even, thank you so much.
So we do expect that to decline a little bit. But we also do expect a continued increase in the service revenue, not necessarily from RFI, but definitely from EUV, right? So on EUV, you know, you see more and more tools getting out of warranty. So that contributes to an increase in the service business. So upgrade business going down a bit, service business continuing to grow up. And I don't think you should expect a draconian movement between the third quarter and the fourth quarter. There's a bit of rounding there, and that might confuse the analysis.
Tim Clutter: On on the first 1 very quickly. Uh, what I, what I gave the 20% obviously is around the number, right? And and and then if, if if 20 were 23 or 24%, I think you would already have made up for the big Delta that you have there. I think the the install base is particularly the upgrade business, as we mentioned before, was particularly high in the first in the first half. So we do expect that to decline a little bit, but we also do expect a continued increase in the service Revenue. Not necessarily from from our V but definitely from euv, right? So on on euv, you know, you see more and more tools getting out of warranty so that contributes to an increase in in, in the service business. So, upgrade business going down a bit, uh, service business continuing to grow up. And I, I don't think you should expect a Draconian, uh, movement between the third quarter and the, and the fourth quarter. There's a bit of rounding there and that, that might
Tim Clutter: Use the, the analysis.
Yeah, on INA, so I think, you know, we talked about the three phases in the past. So I think we're still in what I call phase one, which is basically R&D, customer really qualifying the technology with the 5000. There, I think the good news is the imaging is doing great, overlay is good. So performance of INA has been validated. So some of the data shared a few months ago. The shipment of the first 5200 means that we are heading towards phase two, which will be the qualification of the tool for high-volume manufacturing insertion. And there the key word is maturity, right?
Yeah on any. So I think um you know we talked about the the free phases uh uh in the past. So I think we we're still in in what I call Phase 1, which is basically R&D customer really qualifying, the the technology with the 5,000. Uh, they are saying, the good news is, the Imaging is doing great over.
Tim Clutter: Is good. So performance of Ina have been validated. So, so some of data shared a few months ago,
Tim Clutter: The shipment of the first 5200 means that we are heading towards Phase 2, which will be the qualification of the tool for high volume manufacturing insertion.
Can the tool run without major interruptions so that the customer not only likes the performance, but can trust the performance to basically be repeatable in high-volume manufacturing. So I think the next key milestone is about the maturity of the tool. And this will be a lot of work this year, next year. And when this is validated, this is where customers start to really count on the system to do some good work in manufacturing.
So that's a bit the sequence of the milestone. Great, many thanks. All right.
Tim Clutter: And there, the key word is is maturity, right? It's kind of the tool run without major interruptions so that the customer are not only like, uh, you know, the performance. But can trust the performance to basically be repeatable in Ivory manufacturing. So, I think the next key Milestone is is about, uh, the maturity of the pool. Uh, and this will be a lot of work this year next year. And when this is validated, this is where customer, you know, start to really can't on the system to, to do some, uh, some some good work in in manufacturing. So that that's a bit, the sequence of the, of the, my store.
Tim Clutter: Great. Many thanks.
So now on behalf of ASML, I'd like to thank you all for joining us today. And I'll ask the operator if you could formally conclude the call. I would really appreciate it. Thank you. This concludes the ASML 2025 second quarter financial results conference call. Thank you for participating. You may now disconnect.
Speaker Change: All right. Uh so now now now on behalf of asml I'd like to thank you all for joining us today and I'll ask the operator if you could formally conclude the call I would really appreciate it. Thank you.
Speaker Change: Thank you. This concludes the asml 2025 second quarter Financial results conference call. Thank you for participating. You may now. Disconnect