ASML Conference Call Summary - May 31, 2023 Industry Overview - The semiconductor industry is experiencing a mixed demand landscape, with a noted weakness in the memory market while logic segments, particularly automotive and industrial, remain strong [4][5] - ASML anticipates a 25% growth in top-line revenue for the year, driven by a 40% increase in EUV sales and a 30% increase in non-EUV sales [4][5] Key Insights on EUV and DUV - EUV bookings have decreased to $3.8 billion from a peak of $8 billion, attributed to the high average selling prices (ASP) of tools [7][8] - ASML has a backlog of $39 billion, which is approximately double the expected shipments for the year, indicating strong future demand despite current booking fluctuations [8][9] - The supply chain is expected to improve, which will help reduce lead times and potentially increase bookings in the upcoming quarters [10][11] Demand Dynamics - There is strong demand for mature logic nodes, driven by applications in distributed computing and electric vehicles, which are expected to sustain growth for years [15][16] - AI is seen as a long-term growth driver for leading-edge logic tools, although customers are currently in a cautious phase regarding capital spending [20][21] Supply-Demand Imbalances - The company reported a 20% undersupply in DUV systems, down from 30-50% in previous years, indicating an improvement in capacity and demand alignment [25][26] - Approximately 20% of ASML's backlog is attributed to China, with real demand noted for various semiconductor applications [28][30] Regulatory Impact - Recent U.S. export restrictions have had a limited indirect impact on ASML's backlog, estimated at around 5% [32][33] - The company remains optimistic about its ability to navigate these restrictions, particularly for mature immersion tools [36] Pricing and Margins - ASML is successfully negotiating higher ASPs to offset inflationary pressures, with expectations for continued improvement in gross margins [37][38] - The company has transitioned to an output-based service model for EUV tools, which is expected to enhance revenue predictability and margins [66][68] Future Outlook - ASML is preparing for the introduction of high-NA EUV tools, with initial shipments expected late this year and more significant production ramping up in 2025 [44][46] - The company anticipates that high-NA tools will complement rather than cannibalize low-NA tools, as they will be used for more critical layers in semiconductor manufacturing [50][51] Conclusion - ASML is positioned for growth in a dynamic semiconductor market, with strong demand across various segments and a robust backlog. The company is actively managing supply chain challenges and regulatory impacts while focusing on long-term trends such as AI and electric vehicles to drive future growth.