ASML Holding NV · EURONEXT:ASML
ASML Holding NV — Merrill Lynch Taiwan, Technology and Beyond Conference 2008
45 slides from ASML Holding NV's conference presentation, Mar 19, 2008
Slide 1: Merrill Lynch Taiwan, Technology and Beyond Conference
Merrill Lynch Taiwan, Technology and Beyond Conference Craig DeYoung VP Investor Relations and Corporate Communications Taipei, Taiwan March 19, 2008 / Slide 1
Slide 2: Safe Harbor
Safe Harbor “Safe Harbor” Statement under the U.S. Private Securities Litigation Reform Act of 1995: the matters discussed in this document may include forward-looking statements that are subject to risks and uncertainties including, but not limited to: economic conditions, product demand and semico
Slide 3: Agenda
Agenda z ASML overview z Market z Financial summary z Outlook / Slide 3
Slide 4: ASML: The world's largest supplier of lithography equipment
ASML The world’s largest supplier of Lithography equipment Ranked in the top 3 for Revenue evolution customer satisfaction for 5 years for the 5th consecutive year Year Revenues 2003 1,543 € M 2004 2,465 € M 2005 2,529 € M Employees: ~ 6500 (Q4‘07) 2006 3,597 € M Sales: # 3 Semi Cap 2007 3,809 € M M
Slide 5: ASML business model
ASML business model z Pure focus on lithography justified by high market growth potential z Market share expected to rise to “natural level” above 70% z Sustainability of business model by ever growing barriers to entry: z Ever growing R&D critical mass affordable only by the leader z Ever growing i
Slide 6: ASML Strategy
ASML Strategy z Maximum R&D investment for undisputed leadership z Lowest cost of execution & Highest value generation z Shortest cycle times for customer value, maximum share acquisition and optimum working capital z Highest capital efficiency by appropriate balance sheet leveraging and regular sha
Slide 7: Pure focus on lithography justified by high market growth potential
Pure focus on Lithography justified by high market growth potential z Lithography market Engines of Growth z Driver 1: IC unit growth z Driver 2: Customer mix generated growth z Driver 3: Litho processing content growth z Driver 4: Technology transition ASP generated growth z (Driver 5: Litho enhanc
Slide 8: Driver 1: IC unit growth
Driver 1: IC unit Growth IC unit history and forecast 250 250 IC Revenue ($B) IC Units Bln 200 200 10% 150 150 Growth Trend 100 100 50 50 27% -21% 15% 15% 17% 11% 18% 9% 14% 0 - 2000 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E IC units IC revenue A track record of continuous unit grow
Slide 9: Driver 2: Customer mix effect
Driver 2: Customer mix effect Logic and analog major sectors in size 180 160 140 120 IC Units Bln 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007E 2008E DRAM NAND NOR MPU LOGIC+MCU+DSP ANALOG OTHER Source: IC Insights / Slide 9
Slide 10: Customer mix effect: IC exposed area
Driver 2 (cont): Customer mix effect IC exposed area – Strongest growth in memory 250000 IC Exposed Area (M Sq Inch) 200000 150000 100000 50000 0 2000 2001 2002 2003 2004 2005 2006 2007E 2008E DRAM NAND NOR MPU LOGIC+MCU+DSP ANALOG OTHER Source: ASML / Slide 10
Slide 11: Customer mix generates growth: adoption cycle of new technology
Driver 2 (cont.): Customer mix generates growth Adoption cycle of new technology in various sectors 200 DRAM Logic Resolution 100 NAND 80 60 40 0 01 02 03 04 05 06 07 08 09 10 11 12 Year Source: Semiconductor Industry Association • Flash running at 55nm node in 2007 • Flash introducing 45nm node in
Slide 12: Driver 3: Technology node transitions
Driver 3: Technology node transitions – Impact on litho tool mix and layer #s - DRAM example 100% 90% % of Litho Layers 80% 70% 60% 50% 40% 30% 20% 10% 0% 65 nm 55 nm 45 nm DRAM i-line KrF ArF ArFi # of Layers: 35 39 41 Source: ASML / Slide 12
Slide 13: Driver 4: Technology transition ASP generated growth
Driver 4: Technology Transition ASP generated growth 100M 150mm 200mm Wafer Wafer Size Size 300mm 0.25 Dual Stage 1.2 Price [€] 0.93 Step & Scan 10M Platform Platform 0.8 0.7 Stepper 0.5 0.6 Aperture Aperture Wavelength Wavelength 0.4 i-line KrF ArF ArFi EUV 1M 1985 1990 1995 2000 2005 2010 Year Sou
Slide 14: ASML Systems: 300mm Memory-DRAM Fab
ASML Systems: 300mm Memory-DRAM Fab 6xnm DRAM 5xnm DRAM ArF KrF KrF I-Line ArFi ArF KrF KrF I-Line ArF KrF KrF I-Line ArFi ArF KrF KrF I-Line ArF KrF KrF I-Line ArFi ArF KrF KrF I-Line ArF KrF KrF I-Line ArFi ArF KrF KrF I-Line ArF KrF KrF I-Line ArFi ArF KrF KrF I-Line ArF KrF KrF I-Line ArFi ArF K
Slide 15: Sum of growth drivers: market expected to grow for at least 5 years
Sum of growth drivers: market expected to grow for at least the next 5 years WW Lithography Demand Simulation (2006 ‐ 12): Base Case Scenario "193i extension" Revenue Split by Wavelength [Mio. €] 11,000 iline 10,000 KrF .0 % = 13 6-12 9,000 ArF 00 Lithography System Revenue [Mio. €] 8,000 ArFi GR2 C
Slide 16: Lithography market growth threats
Lithography market growth threats z Market consolidation z Memory market slow down z Moore’s Law slowdown z Disruptive Technologies / Slide 16
Slide 17: ASML market share heading toward a natural level above 70%
ASML market share heading toward a “natural level” above 70% Market share almost tripled in 10 years 60% ASML Market Share (revenue) 50% 40% 30% 20% 10% 0% 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Source: ASML, SEMI / Slide 17
Slide 18: ASML market share growth expected to continue in 2008
ASML market share growth expected to continue in 2008 Worldwide litho shipments by region 3,500 3,000 Million Euro 2,500 2,000 Others 1,500 ASML 1,000 500 0 2007(e) 2007(e) 2007(e) 2007(e) 2005 2006 2005 2006 2005 2006 2005 2006 Asia non Japan US Europe Japan Source: ASML and Gartner Dataquest / Sli
Slide 19: Market share growth opportunities
Market share growth opportunities z Strategy to grow share: z Confirm the Low Risk approach with customers: z Fundamental technology leadership reduces risk z High cost of switch or high cost of maintaining 2 litho vendors z Pricing to achieve cost per function scaling per historical trend z Perform
Slide 20: Market
Market GY / Slide 20 ys ASML
Slide 21: Market in general
Market in general z US (Global?) economic weakness z Slowdown of overall 2008 semiconductor capex forecast by analysts and customers z Our immersion products enable technology transfers down to the 45nm node which are executed urgently by customers to reach appropriate integration and cost targets n
Slide 22: High factory utilization + improved demand triggers equipment buys
High factory utilization + improved demand triggers equipment buys Factory utilization Leading Edge 2008 100% 90% 80% 70% 60% 50% 40% 8 4 6 6 7 7 8 9 5 4 5 9 1Q0 1Q0 1Q0 3Q0 1Q0 3Q0 3Q0 1Q0 1Q0 3Q0 3Q0 3Q0 Note: Leading edge is defined as 90 nm and below. Source: Gartner (Dec 2007) / Slide 22
Slide 23: DQ Semiconductor Inventory Index: Back in the Caution Zone
DQ Semiconductor Inventory Index: Back in the Caution Zone 1.7 1.6 Slowing production in first half Severe Excess 1.5 Inventory consumed inventory 1.4 Declines in 2Q07 and 3Q07 1.3 brought index into healthy range 1.2 Caution 1.1 Zone Outlook: 1.0 Index rose in 4Q 07 0.9 0.8 Expect index t
Slide 24: NAND Flash: fast transition to advanced nodes
NAND Flash : Fast transition to advanced nodes to enable higher capacity and lower cost devices 2006/ 2007 NAND Flash Process Ratio 100% 80% 60% 40% 20% 0% Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 4X nm 0.00% 0.00% 0.00% 0.00% 0.00% 0.59% 5.18% 13.31% 5X nm 0.00% 2.89% 14.63% 32.75% 57.13% 70.23% 77.
Slide 25: DRAM content per computer expected to rise in 2008
DRAM content per computer is expected to rise from 1.69GB to 2.31 GB in 2008 z PC shipment is expected to grow 13% in 2008 z Low DRAM price drove BOM cost ratio below 5% (historically <10%) z This will drive memory content to grow regardless of Vista adoption z DRAM bit demand growth is expected to
Slide 26: DRAM manufacturers accelerate advanced node introduction
DRAM manufacturers accelerate advanced node introduction to remain competitive DRAM Segment: Expected IC Unit Node Distribution by Year 80% 28 nm 32 nm 38 nm 45 nm 55 nm 65 nm 80 nm 90 nm 0.11 µm 0.13 µm 0.15 µm 0.18 µm 70% >2 <2 years years 60% IC distribution by node [% of units] 90nm to 65nm to 6
Slide 27: Litho demand analysis - Units: Top-Down vs. Bottom-Up
Litho demand analysis - Units: Top-Down vs. Bottom-Up Relationship between IC-unit-YoY-growth (i.e. 2008 vs. 2007) and Litho unit demand for all main segments DRAM NAND Logic incl MPU 400 350 Litho unit demand Bottom-Up– Approx 390 units Top-Down – Approx 490 units 300 250 200 150 100 50 0 -20% -10%
Slide 28: Litho demand analysis: Top-Down vs. Bottom-Up
Litho demand analysis: Top-Down vs. Bottom-Up Bottom-Up Top-Down Customer IC segment Forecasted Corresponding Average Simulated Year (main) Units IC# growth Analysts Units 2008 NAND 127 33% 34% 133 DRAM 142 7% 14% 184 LOGIC + MPU 121 7% 12% 172 TOTAL 391 10% 12% Avg 489 Source: ASML March 2008 / Sli
Slide 29: 2007 Memory Unit Growth Forecast Evolution / Accuracy
2007 Memory Unit Growth Forecast Evolution / Accuracy DRAM Unit Growth NAND Unit Growth 60% 60% 50% 50% Unit Growth 40% 40% 30% 30% 20% 20% Gartner Gartner IC Insights IC Insights 10% 10% VLSIR VLSIR WSTS WSTS * * 0% 0% 1Q07 2Q07 3Q07 4Q07 1Q07 2Q07 3Q07 4Q07 * “actual” Time of Forecast Time of Fore
Slide 30: 2008 Memory Unit Growth Forecast Evolution / Accuracy
2008 Memory Unit Growth Forecast Evolution / Accuracy DRAM Unit Growth NAND Unit Growth 35% 60% Gartner 30% IC Insights 50% VLSIR WSTS Unit Growth 25% 40% 20% 30% 15% 20% 10% Gartner IC Insights 10% 5% VLSIR WSTS 0% 0% 1Q07 2Q07 3Q07 4Q07 1Q08 1Q07 2Q07 3Q07 4Q07 1Q08 Time of Forecast Time of Foreca
Slide 31: Demand view vs order predictability
Demand view vs order predictability z In current “technology driven” environment z lithography system demand view is relatively good z order predictability is low / Slide 31
Slide 32: Significance of the immersion market in 2008
Significance of the immersion market in 2008 z ASML immersion net sales expected to almost double in 2008 z Volume of immersion systems will lead to significant system ASP growth z 34 systems with 29.7M euro ASP in end Q4 backlog z Further market gains in Japan expected / Slide 32
Slide 33: ASML: In the sweet spot of semiconductor equipment supply
ASML: In the “sweet spot” of semiconductor equipment supply z Lithography: the enabler of shrink for lower cost per chip z Lithography benefits from multiple growth drivers z Industry segment growth z Process complexity driving more litho layers z Higher ASP tools z ASML reaping the reward of immers
Slide 34: Total CapEx/Litho CapEx
Total CapEx/Litho CapEx NAND FLASH Litho CapEx versus total – 2006 to 2008 NAND FLASH Litho NAND FLASH Year Total CapEx CapEx (units) CapEx/Litho Ratio 2006 $15,350 $1,315 (111) 9% 2007 $18,300 $1,725 (128) 9% 2008 $15,200 $2,099 (125) 14% DRAM Litho CapEx versus total – 2006 to 2008 DRAM Litho CapE
Slide 35: Financial summary
Financial summary GY / Slide 35 ys ASML
Slide 36: Total net sales
Total net sales M€ 3,809 4000 3,597 3500 973 3000 1068 2,529 2,465 2500 Q4 Net sales 548 940 785 958 Q3 2000 1,543 533 Q2 1500 611 935 Q1 526 763 942 1000 370 616 500 329 685 960 629 318 453 0 2003 2004 2005 2006 2007 / Slide 36
Slide 37: Key financial trends 2006 - 2007
Key financial trends 2006 - 2007 Consolidated statement of operations M€ Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Units 72 77 69 59 55 Net Sales 1068 960 935 940 973 Gross profit 439 393 385 387 396 Gross margin % 41.1% 40.9% 41.1% 41.2% 40.7% R&D 107 116 120 120 129 Amortization in process R&D 23 SG&A 52 56 5
Slide 38: 8 Quarters of robust Operating Margin performance
8 Quarters of robust Operating Margin performance ASML Operating Margin 30% 26% 22% 18% 14% 10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 2006 2006 2006 2007 2007 2007 2007 / Slide 38
Slide 39: Backlog as of Dec 31, 2007
Backlog as of Dec 31, 2007 New Systems Used Systems Total Systems Backlog Backlog Backlog Units 79 10 89 Value M€ 1,650 M€ 47 M€ 1,697 ASP M€ 20.9 M€ 4.7 M€ 19.1 • 78% of backlog or € 1,328 million system sales carry Q1 ‘08 + Q2 ‘08 shipment dates • Q4 net bookings of 54 systems with a value of € 80
Slide 40: Backlog lithography in value per Dec 31, 2007
Backlog lithography in value per Dec 31, 2007 Total value € 1,697 million Technology i-Line 2% ArF immersion 60% KrF 10% ArF dry 28 % Region End-use Korea 33% Taiwan 9% IDM Memory 26% Other 4% Europe 11% 66% Japan 10% Foundry USA 21% China 12% 8% Numbers have been rounded for readers’ convenience /
Slide 41: Solid order book supports robust H1 revenue
Solid order book supports robust H1 revenue Backlog is 89 systems valued at € 1,697 Million Backlog by end-use 78% of backlog is shippable in the next 6 months IDM 26% Solid IDM exposure underpins non memory Memory orders with € 440 million in value 66% Foundry 8% Minimum exposure to low-end and mid
Slide 42: Outlook
Outlook GY / Slide 42 ys ASML
Slide 43: Q1 2008 outlook
Q1 2008 outlook z ASML expects to ship 50 systems z ASP for new + refurbished systems expected to be € 16.3 million z Gross margin between 40 - 41% z R&D is expected at € 127 million net of credit z SG&A is expected at € 58 million / Slide 43
Slide 44: 2008 Outlook
2008 Outlook z Although independent market researchers still expect a double digit increase in demand for integrated circuit units in 2008, which could translate into lithography market expansion in 2008, we are awaiting confirmation of this potential growth through the exact level of Q1 and Q2 book
Slide 45: Commitment
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