Financial Data and Key Metrics Changes - Organic sales declined by 2% year over year, with reported sales decreasing by 9% due to a negative currency effect of SEK 4.2 billion [5][13] - Gross margin reached 48.1%, while EBITDA margin improved to 14.7%, reflecting operational excellence and cost reduction initiatives [5][16] - Adjusted EBITDA increased to SEK 8.2 billion, up by SEK 0.4 billion, despite a negative currency impact of SEK 1.2 billion [16] Business Line Data and Key Metrics Changes - In Networks, sales decreased by 11% year over year to SEK 35.4 billion, with an organic sales decline of 5% [16] - Cloud and Software and Services saw a 3% increase in sales year over year to SEK 15.3 billion, with organic growth of 9% [17] - Enterprise sales decreased by 20%, impacted by divestments and currency, with organic sales down by 7% [18] Market Data and Key Metrics Changes - Sales in the Americas declined by 8% year over year, while Europe, Middle East, and Africa grew by 3%, driven by strong performance in Africa [11][12] - Northeast Asia reported a 10% increase in sales, attributed to higher network investments in Japan [12] - Southeast Asia, Oceania, and India saw a 1% increase in sales year over year, with India showing quarter-over-quarter growth [11] Company Strategy and Development Direction - The company is focusing on capturing a larger share of the value created by connectivity, with strategic agreements in key markets like Japan and the UK [8][9] - Continued investment in technology innovation, particularly in AI and programmable networks, is seen as essential for future growth [4][22] - The company aims to create new monetization opportunities through network APIs and fixed wireless access [10][23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growing demand for advanced mobile connectivity driven by AI applications [3][4] - The company is preparing for a flat market in the near term while maintaining a focus on cost management and operational efficiency [6][24] - Future investments in networks are expected to be driven by the adoption of AI applications and devices [23] Other Important Information - The company ended the quarter with a strong cash position, allowing for potential increased shareholder returns through dividends or share buybacks [6] - The board is expected to propose options for shareholder returns in time for the AGM [6] Q&A Session Summary Question: Sustainable margins and regional mix impact - Management highlighted structural improvements in supply chain and service delivery that have reduced geographic mix dependency, leading to consistent gross margins [26][27][30] Question: Edge AI as a driver for network investments - Management noted that while most AI investments have been in data centers, there is a growing demand for edge computing, which is expected to increase in the coming years [32][34] Question: Cloud and Software and Services growth and 5G core implications - Management confirmed strong growth in Cloud and Software and Services, with expectations for continued development in 5G core deployments [37][41] Question: Recurring cash flow explanation - Management explained that recurring cash flow is a result of improved cost structures and a shift towards more stable revenue models [44][48] Question: Increased uncertainty in growth guidance - Management indicated that while they expect seasonal growth, there is ongoing uncertainty primarily related to tariffs and market conditions [51][52] Question: R&D spending and competitive positioning - Management reassured that despite cuts in R&D spending, they are prioritizing investments to maintain competitive technology leadership [67][71] Question: North American market and spectrum demand - Management noted that increased spectrum availability typically drives overall market CapEx, benefiting equipment demand [62][64] Question: Update on Germany's market situation - Management acknowledged slow progress in swapping out Chinese vendors, with no significant developments reported [91]

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.