ASML Holding(ASML) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Net sales for Q2 2021 were €4.0 billion, within guidance, with a gross margin of 50.9%, above guidance due to additional software upgrade business [8][9] - Net income for Q2 was €1.0 billion, representing 25.8% of net sales, resulting in an EPS of €2.52 [9] - Cash, cash equivalents, and short-term investments at the end of Q2 were €5.4 billion [10] Business Line Data and Key Metrics Changes - Net system sales were €2.9 billion, with 72% from Logic and 28% from Memory [9] - Installed Base Management sales were €1.1 billion, above guidance due to increased upgrade business [9] - Q2 net system bookings reached a record €8.3 billion, with €4.9 billion for EUV systems [10] Market Data and Key Metrics Changes - Logic revenue is now expected to grow around 35% year-on-year, up from the previous estimate of 30% [13][14] - Memory revenue is expected to grow around 60% year-on-year, an increase from the previous estimate of 50% [14] - Installed Base revenue is now expected to grow around 15% year-on-year, up from the previous estimate of 10% [14] Company Strategy and Development Direction - The company plans to increase factory output to meet growing customer demand, expecting overall sales growth of about 35% for the year [13][16] - The company is focusing on increasing capacity for both EUV and deep UV systems, with plans for 55 EUV systems in 2022 and over 60 in 2023 [22] - The company anticipates long-term demand growth driven by digital transformation, 5G, AI, and the push for technological sovereignty [17][18] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand across all market segments, with a significant increase in order intake reflecting a healthy market environment [10][19] - The company expects continued strong demand for semiconductors, driven by chip shortages and the digital transformation [16][18] - Management expressed confidence in long-term growth outlook, citing structural underestimations of industry growth over the past 15 years [27] Other Important Information - The company announced a new share buyback program of up to €9 billion, replacing the previous €6 billion program [12] - A final dividend of €1.55 per ordinary share was paid, totaling €639 million, marking a 15% increase compared to the previous year [11] Q&A Session Summary Question: How is the demand for dry DUV systems split between leading-edge and trailing-edge applications? - Management indicated strong demand from both leading-edge and trailing-edge customers, particularly in microcontrollers and power applications [25][26] Question: How does the company assess the risk of overcapacity in light of strong demand? - Management believes the underlying growth trend is real and plans to build capacity accordingly, citing historical underestimations of industry growth [27][28] Question: Will the catch-up effect in DUV orders extend into the second half of 2022? - Management noted that the catch-up effect could extend into the second half of 2022, depending on supply chain confirmations [30][32] Question: What is the outlook for EUV revenue and its mix? - Management confirmed that the increase in EUV revenue outlook is due to stronger manufacturing capabilities and richer configurations [33][34] Question: Will the company provide details on DUV capacity additions? - Management intends to provide more insights on DUV capacity once confirmations from key suppliers are received [36][37] Question: How does the company view the potential for gross margin improvement in EUV services? - Management expects EUV service gross margins to reach corporate levels in about four years, driven by cost reductions and efficiency improvements [52][53] Question: What is the outlook for DRAM EUV business in 2022 and 2023? - Management anticipates continued growth in EUV shipments for DRAM, driven by capacity build-outs, despite potential changes in order lead times [56][57] Question: How much of this year's revenue is driven by inventory drawdown? - Management indicated that this year's revenue includes a significant contribution from inventory depletion, particularly in immersion sales [67][68]