ASML Holding N.V. Conference Call Summary Company Overview - **Company**: ASML Holding N.V. (NASDAQ: ASML) - **Event**: JPMorgan Virtual European TMT Conference - **Date**: May 27, 2021 Key Points Industry and Market Dynamics - **Customer Behavior**: Customer behavior has remained consistent and optimistic since the last results in April, with a focus on increasing capacity to meet demand [2][6] - **EUV Capacity**: ASML is targeting a capacity of 55 EUV tools for 2022, with discussions ongoing to potentially exceed this number based on customer demand [4][6] - **Supply Chain Challenges**: The main focus is on supply chain components, particularly optical columns and drive lasers, to increase EUV capacity [4][6] Demand Forecast - **2023 Demand Outlook**: There is an expectation that demand for EUV tools in 2023 will exceed 55 units, based on customer conversations and market trends [6][9] - **Deep UV Demand**: The demand for Deep UV tools is expected to remain strong, driven by sales in China and the growth of mature nodes, particularly in IoT applications [20][25] Product Development and Pricing - **Tool Pricing**: The pricing strategy is based on the incremental value provided to customers, with a projected low-10% uplift in average selling price (ASP) for the new D tool compared to the C tool [11][12] - **Throughput Improvement**: The new D tool is expected to improve throughput from 135 to 160 wafers per hour, representing a 19% increase [13] Installed Base Management - **Growth in Installed Base**: The installed base management business is expected to grow, with a focus on quick upgrades that enhance productivity without significant downtime [40][42] - **Service Revenue**: Regular service revenue is anticipated to increase as the installed base of EUV tools grows, contributing to overall revenue [40][41] Strategic Focus - **R&D Investment**: ASML is committed to significant R&D investments to maintain its competitive edge in EUV and Deep UV technologies [59][60] - **M&A Strategy**: The company is not currently focused on large acquisitions but may consider opportunities in adjacent businesses in the future [61][62] Financial Performance - **Revenue Growth**: Memory segment revenue is expected to grow by 50%, from €2.9 billion to €4.3 billion, driven by a recovery in the DRAM market and increased sales in China [31][32] - **Shareholder Returns**: ASML is actively returning cash to shareholders through share buybacks and dividends, with a focus on maintaining strong financial health [58][62] Regulatory Environment - **China Shipments**: ASML can still ship Deep UV systems to China, but EUV shipments are restricted due to export regulations. Future regulatory changes could impact the ability to ship advanced technologies [52][54] Future Outlook - **EUV and Deep UV Margins**: The gross margins for EUV systems are expected to improve with the introduction of the D model, and a crossover point between EUV and Deep UV margins is anticipated with the E model introduction in 2023 [55][57] Conclusion ASML is positioned for growth in the semiconductor industry, with strong demand for both EUV and Deep UV technologies. The company is focused on increasing capacity, enhancing product offerings, and maintaining robust financial performance while navigating regulatory challenges.

Financial Data and Key Metrics Changes - Net sales for Q1 2021 were €4.4 billion, exceeding guidance due to higher installed base business from upgrades [9] - Net income for Q1 was €1.3 billion, representing 30.5% of net sales, resulting in an EPS of €3.21 [10] - Gross margin for Q1 was 53.9%, above guidance primarily due to additional software upgrade business [10] - Cash, cash equivalents, and short-term investments at the end of Q1 were €4.7 billion [11] Business Line Data and Key Metrics Changes - Net system sales were €3.1 billion, with 78% from Logic and 22% from Memory [10] - Installed Base Management sales for Q1 were €1.2 billion, above guidance due to increased upgrade business [10] - Q1 net system bookings were €4.7 billion, with €2.3 billion for EUV systems and 76% driven by Logic [11] Market Data and Key Metrics Changes - Logic revenue is now expected to grow around 30% year-on-year, up from the previous estimate of 10% [16] - Memory revenue is expected to increase around 50% year-on-year, up from the previous estimate of 20% [17] - Installed Base business is expected to grow around 10% this year [18] Company Strategy and Development Direction - The company plans to transition to the NXE:3600D system in the second half of the year, which will provide a 15% to 20% productivity increase compared to the NXE:3400C systems [20] - The company is increasing R&D investments, primarily in EUV, to support aggressive product roadmaps [12] - The company is ramping up capacity to support customer demand, with a focus on both DUV and EUV systems [21] Management's Comments on Operating Environment and Future Outlook - Management noted a significant increase in demand across all market segments due to a steeper than expected recovery in semiconductor demand [15] - The company expects continued strong demand for both Logic and Memory, driven by digital transformation and technological sovereignty trends [22][23] - Management expressed confidence in future growth, with expectations for sales growth towards 30% this year [24] Other Important Information - The company plans to declare a total dividend of €2.75 per ordinary share for 2020, a 15% increase compared to 2019 [14] - The company purchased 3.5 million shares for over €1.6 billion under the share buyback program [14] Q&A Session Questions and Answers Question: Follow-up on EUV revenue target for this year - Management indicated that while the EUV revenue target remains at 30%, supply chain constraints limit potential upside for 2021 [28] Question: Could key customers share development costs for High-NA? - Management believes it is unlikely as the current financial situation does not necessitate such arrangements [30] Question: Is the upside from domestic China included in the updated guidance? - Management confirmed that the previously anticipated €600 million upside from China is now included in the revised guidance [39] Question: How is EUV bookings trending for the current quarter? - The current backlog for EUV is €7.4 billion, indicating strong demand and healthy order intake expected for the next quarter [64]

Financial Data and Key Metrics Changes - Net sales for Q4 2020 were €4.3 billion, exceeding guidance, driven by additional DUV system revenue and upgrades [9] - Full-year net sales grew 18% to €14 billion, with net income for the year at €3.6 billion, resulting in an EPS of €8.49 [11][12] - Gross margin for Q4 was 52%, above guidance, while the expected gross margin for Q1 2021 is between 50% and 51% [10][13] Business Line Data and Key Metrics Changes - In Q4, net system sales were €3.2 billion, with 72% from Logic and 28% from Memory [9] - Installed Base Management sales for Q4 were €1.1 billion, showing continued strength in service and upgrade business [10] - Full-year Installed Base Management sales increased by 30% to €3.7 billion [11] Market Data and Key Metrics Changes - Q4 net system bookings were €4.2 billion, with 78% driven by Logic and 22% by Memory [10] - The company expects Memory revenue to increase by around 20% in 2021, driven by demand in data centers and consumer electronics [18] - Logic revenue is expected to grow at least 10% from €7.4 billion in 2020 [17] Company Strategy and Development Direction - The company plans to continue investing in R&D, with spending increasing to €2.2 billion in 2020, primarily for the EUV roadmap [12] - The strategy includes a focus on expanding DUV and EUV product offerings to meet growing demand across various markets [24][25] - The company anticipates a significant share buyback in Q1 2021, reflecting a strong cash position and positive outlook [15] Management Comments on Operating Environment and Future Outlook - Management expressed optimism for 2021, expecting another year of good growth in revenue and profitability despite ongoing challenges from the pandemic [16] - The company highlighted strong demand across the industry, particularly in Logic and recovering Memory segments [20] - Management remains cautious about geopolitical uncertainties and export control regulations impacting future growth [20][39] Other Important Information - The company intends to declare a total dividend of €2.75 per ordinary share for 2020, a 15% increase compared to the previous year [14] - The company shipped 9 EUV systems in Q4, with a total of 31 systems shipped in 2020, reflecting a 60% growth in EUV systems revenue [21] Q&A Session Summary Question: Memory business demand and growth expectations - Management indicated that the missed 30% growth in Memory was due to reallocating tools to Logic, with continued momentum expected in 2021 [30][32] Question: Supply chain limitations affecting EUV production - Management confirmed that while internal capacity exists to build 50 systems, supply chain constraints on modules may impact production numbers [34][36] Question: CapEx spending and guidance - Management noted that TSMC's CapEx guidance does not directly correlate to ASML's revenue guidance, but there is potential upside depending on market conditions [38][39] Question: Long-term outlook for 3nm transition and High-NA impact - Management believes that architectural changes will not significantly impact lithographic capabilities, and High-NA systems will not affect 3nm node shipments [43][45] Question: Growth in China and overall revenue mix - Management expects continued growth in China, particularly in Memory, with potential upside in Logic depending on regulatory conditions [46][47] Question: Gross margins and future expectations - Management anticipates gross margins to trend towards the upper limit of the previously stated bandwidth due to strong sales composition [50] Question: EUV service gross margins outlook - Management expects EUV service gross margins to improve as more tools come out of warranty and throughput increases [78]

Financial Data and Key Metrics Changes - Net sales for Q3 2020 were €4 billion, exceeding guidance primarily due to additional EUV system revenue [8] - Net system sales amounted to €3.1 billion, with 79% from Logic and 21% from Memory [9] - Gross margin for the quarter was 47.5%, aligning with guidance [9] - Net income reached €1.061 billion, representing 26.8% of net sales, resulting in an NPS of €2.54 [9] - Cash, cash equivalents, and short-term investments remained at €4.4 billion [10] Business Line Data and Key Metrics Changes - EUV system revenue constituted 66% of total system revenue, marking the first time EUV surpassed DPV system revenue [8] - Installed base management sales were €862 million, indicating strong service and field option business [9] - Q3 system bookings totaled €2.9 billion, with €595 million for EUV systems, primarily driven by Logic [10] Market Data and Key Metrics Changes - Sales to China accounted for 21% of system revenue, with expectations to exceed €1 billion for the year [15] - Logic customers are experiencing strong demand for advanced nodes, driven by 5G, AI, and high-performance computing [14] - Memory customers are seeing healthy demand in data centers and consumer electronics, with a recovery in lithography demand for DRAM expected [15] Company Strategy and Development Direction - The company aims to continue driving profitability in EUV systems and service business, targeting at least 40% system gross margin [19] - Plans to manufacture 35 EUV systems in 2020, with a revenue target of approximately €4.5 billion for EUV systems [18] - The company is focused on capital allocation and improving free cash flow generation through new customer contracts [11] Management's Comments on Operating Environment and Future Outlook - Despite macro uncertainties from COVID-19, the growth outlook remains largely unchanged, reflecting customer investment in future technology nodes [14] - The company expects low double-digit growth in 2021, driven by anticipated EUV system revenue growth of around 20% [21] - Management acknowledges uncertainties due to the macro environment and geopolitical factors, particularly U.S.-China dynamics [22] Other Important Information - The company plans to resume share buybacks, targeting €6 billion over three years [13] - Interim dividends for 2020 will be €1.20 per ordinary share, with specific dates for ex-dividend and payment [11] Q&A Session Summary Question: EUV growth for next year - Management indicated that the 20% EUV revenue growth for next year is based on current demand and configurations, not specific unit numbers [27][29] Question: DRAM makers' CapEx concerns - Management believes that any potential drop in Huawei's sales will not significantly impact DRAM demand, as other customers will fill the gap [30][32] Question: EUV growth assumptions - The 20% growth includes shipments that may slip from 2020 to 2021, with potential upside drivers not included in the current forecast [35][36] Question: OpEx growth expectations - SG&A is expected to remain stable, while R&D expenses are anticipated to increase due to ongoing projects [40][41] Question: EUV layer count and technological readiness - Management confirmed that customers are increasingly confident in EUV technology, with layer counts expected to rise in both Logic and DRAM [54][56] Question: Shipping to Chinese customers amid sanctions - The company can still ship to certain Chinese customers under current regulations, emphasizing the critical need for lithography tools [64][65]

Financial Data and Key Metrics Changes - Net sales for Q2 2020 reached €3.3 billion, reflecting a growth of over 35% compared to Q1 2020 [11] - Gross margin improved to 48.2%, a significant increase from Q1, primarily due to a favorable Deep UV mix and improved EUV installed base gross margin [13] - Net income for Q2 was €751 million, representing 22.6% of net sales, resulting in an EPS of €1.79 [14] Business Line Data and Key Metrics Changes - Net system sales amounted to €2.4 billion, with Logic accounting for 62% and Memory for 38% of sales [12] - Installed Base Management sales were €887 million, contributing to a total of approximately €1.7 billion in the first half of 2020 [13] - EUV systems shipped in Q2 totaled nine, with revenue recognized on seven systems [11][12] Market Data and Key Metrics Changes - Q2 system bookings were €1.1 billion, with a balanced order intake between Logic and Memory at 50% each [15] - Sales to China accounted for 23% of system revenue in Q2, driven by demand from both Logic and Memory customers [21] - The company expects continued growth in the China region for the year [21] Company Strategy and Development Direction - The company anticipates a year of double-digit growth in sales and profitability for 2020, despite COVID-19 disruptions [20] - Focus on advancing technology nodes in Logic and supporting digital infrastructure applications such as 5G and AI [20] - Plans to maintain a capital allocation policy that includes growing dividends and share buybacks, with a target of €6 billion over three years [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the COVID-19 environment, with operations largely back to normal [10] - The company expects significant growth in the installed base business, with a similar revenue level in the second half of the year as in the first half [22] - Management remains cautious about the macroeconomic environment but sees stable demand and a strong second half for 2020 [27] Other Important Information - The company plans to resume share buybacks once free cash flow generation becomes healthy and risks are under control [18] - The effective tax rate for Q2 was 18.5%, influenced by a one-off tax assessment [14] - The company is working through a transition period regarding working capital, expecting significant improvements in the second half of the year [40] Q&A Session Summary Question: Can both DUV and EUV units see growth in 2021? - Management indicated that if Memory demand continues to rise, both DUV and EUV could see growth, but typically, increased EUV layers may cannibalize DUV layers [34] Question: What is the trajectory for gross margins in Q3 and Q4? - Management expects a slight deterioration in gross margin for Q3 due to a mix shift but anticipates reaching 50% gross margin in Q4 driven by improved immersion margins and EUV service revenue [36] Question: What is the outlook for working capital and share buybacks? - Management expects significant recovery in free cash flow generation in the second half of the year, with potential for share buybacks to resume in Q4 [42] Question: How is the Memory strength categorized between China, DRAM, and NAND? - Management noted that the Memory strength is driven by a mix of Chinese customers and traditional DRAM customers, with an emphasis on DRAM in the second half [64] Question: What is the expected mix of shipments between Logic and Memory for EUV systems? - Management confirmed that the majority of EUV shipments in 2021 will be for Logic, with limited shipments for DRAM expected [67]