LIVE FROM WASHINGTON, D.C. JOE: TUESDAY EDITION, AS HOUSE REPUBLICANS LOOK ACROSS THE DIVIDE TO THE UPPER CHAMBER DEFINED PRESIDENT TRUMP'S BIG BEAUTIFUL BILL. I'M JOE MATHIEU ALONGSIDE KAILEY LEINZ IN WASHINGTON. IMPORTANT DAY IN THE NATION'S CAPITAL. WE ARE ABOUT TO LEARN A LOT ABOUT WHAT STAYS AND WHAT MIGHT COME OUT OF THE BILL WITH ACTION ON BOTH SIDES OF THE CAPITAL. KAILEY: SOME OF THAT BEING DRIVEN BY SENATORS WHO WANT CHANGE IN SOME DRIVEN BY PROCEDURE AND THE SENATE PARLIAMENTARIAN WHO IS GOING TO ...

[Music] expect it to be a short meeting with a big strong handshake and uh we'll see but that's what we're expecting. Our expectation is that after the handshake uh then immediately after the handshake any export controls from the US will be eased and the rare earths will be released uh in volume and then we can go back to negotiating smaller matters. [Music] [Music] This was a very significant uh sticking point because uh China controls as you know something like 90% of the rare earths and the magnets and ...

We are [Music] doing well with China. China is not easy. Just like just like your your home country is not easy there. Uh I think we're doing very well. They're over there now. I'm only getting good reports. It's a little early, but they'll be calling in soon. In fact, probably when I get back, I'll have my first call from them. We want to open up China. And if we don't open up China, maybe we won't do anything. But we want to open up China. It'll be a great thing for China, great thing for the rest of the ...

National Security Concerns & Trade Negotiations - Dependence on critical minerals and permanent magnets from China poses national security risks, especially regarding dual-use items like air chips and aerospace engine technologies [1] - The US faces a dilemma where import vulnerabilities from China's supply chains could force concessions on national security concerns [2][4] - China seeks tariff reductions, relaxation of export controls, and potentially concessions related to Taiwan [3] - The US administration may consider loosening export controls on semiconductors to maintain revenue for American companies heavily reliant on the Chinese market [12] - Technology transfer to China is a significant concern, as it can lead to China's long-term technological advancement and potential disruption of supply chains for critical goods like magnets and pharmaceuticals [6][15] Supply Chain & Manufacturing - China has a strong hold on the supply chain for rare earths and permanent magnets, impacting the defense and commercial sectors [4] - The US has domestic magnet supply chains growing, including light rare earths in California and heavy rare earths in Canada, and can reuse magnets from existing products [9][10] - Building domestic supply chains takes time, but the ability to reuse magnets provides leverage in negotiations with China [10] Trade War & Tariffs - The Trump administration aimed to maintain tariffs to pressure China, but this also adversely impacted American industries [2][21] - Reducing export controls on certain technologies like chips and commercial aircraft engines may be part of a potential deal with China [18] - China may offer increased access to its magnet market but restrict supply to the US military sector [18] - The likelihood of a lasting, reliable deal with China is questionable, given China's history of not adhering to agreements [18] - High tariffs had a significant negative impact on the Chinese economy [21]

Let's give you an update on trade talks over in London, The US and China in the same room right now for another round of talks, this time in London, last time around in Geneva on the ground. Bloomberg's Amiri Amiri We've got the officials in the right place. What's next.Well, Jonathan, this really does just feel like a continuation of the negotiations we saw just a month ago in Geneva. And the contours of what we expect is that the US is expecting more access to those rare earths and magnets, something we h ...

Financial Data and Key Metrics Changes - Net sales for Q3 2023 were €6.7 billion, aligning with guidance [6] - Gross margin for the quarter was 51.9%, exceeding guidance due to product mix and one-off cost effects [7] - Net income for Q3 was €1.9 billion, representing 28.4% of net sales, resulting in an EPS of €4.81 [8] - Cash, cash equivalents, and short-term investments at the end of Q3 totaled €5 billion [8] - Q3 net system bookings were €2.6 billion, with a backlog exceeding €35 billion at the end of Q3 [10] Business Line Data and Key Metrics Changes - Revenue from EUV systems was €1.9 billion from 10 systems shipped, while net system sales totaled €5.3 billion, driven primarily by logic at 76% [7] - Installed base management sales for the quarter were €1.4 billion, as guided [7] - The installed base business is expected to decline by around 5% year-over-year, a revision from previous flat growth expectations [18] Market Data and Key Metrics Changes - Q3 bookings were primarily driven by logic at 80%, with memory accounting for 20% [8] - The company noted a moderation in orders as customers manage cash flows and delay purchases due to industry cycles [9] - China demand for DPV systems remains strong, with a significant portion of orders booked in 2022 [16] Company Strategy and Development Direction - The company expects significant growth in 2025, driven by new fab projects and increased capacity from existing fabs [15][22] - The company is preparing for a strong recovery in 2025, with expectations of a transition year in 2024 [24] - The geopolitical environment, particularly export controls, may impact regional shipment splits but not global demand [21] Management's Comments on Operating Environment and Future Outlook - Management highlighted ongoing macroeconomic uncertainties, including inflation and geopolitical tensions, affecting customer behavior [13] - There are signs of improvement in end-market inventory levels, particularly in logic, while memory remains weak [14][60] - Management expects a recovery in memory to follow the logic recovery, although timing remains uncertain [60] Other Important Information - An interim dividend of €1.45 per ordinary share is scheduled for payment on November 10, 2023 [11] - The company plans to manage cash flows prudently due to ongoing pressure on free cash flow [11] Q&A Session Summary Question: How to think about gross margin expectations for 2024? - Management indicated that while they cannot provide specific guidance, factors such as ASP increases and service improvements will positively impact gross margin, while capacity expansion and high NA tool preparations may present headwinds [26][30] Question: Expectations for revenue not recognized by year-end? - Management confirmed expectations for revenue not recognized to be around €2.3 billion by year-end, with some catch-up anticipated in 2024 [31][33] Question: Unit expectations for EUV and DUV in 2024? - Management expects a reduction in DUV units due to previous high volumes in China and new export controls, while EUV units may also decline but with higher sales prices [38][40] Question: Sustainability of spending levels in China? - Management believes that spending levels in China will remain strong due to significant investments in renewable energy and industrial IoT, despite geopolitical tensions [44][46] Question: Percentage of shipments to China under new restrictions? - Management indicated that 10% to 15% of shipments this year may fall under the new restrictions, primarily affecting advanced semiconductor manufacturing [51] Question: Utilization levels and trends across memory versus logic? - Management noted that logic utilization is showing signs of improvement, while memory utilization remains low, with expectations that memory will follow logic's recovery [58][60] Question: Impact of 2025 guidance in light of current macro environment? - Management emphasized that despite current uncertainties, the cyclical nature of the industry suggests a strong recovery in 2025, supported by underlying demand trends [67][72]