ASML Holding N.V. Price & Performance (ASML)

Thank you, operator.

Welcome, everyone. This is Jin Kavanagh, Vice President of Investor Relations at ASO. Joining me today on the call are ASML's CEO, Christophe Fouquet and our CFO, [indiscernible] Subject of today's call is ASML's Q4 and full year results 2024. The length of this call will be 60 minutes. And questions will be taken in the order that they will receive. This call is also being broadcast live with the Internet on www.asml.com. A transcript of management's opening remarks and a replay of the call will be available on our website shortly following the conclusion of this call. Before we begin, I would like to caution listeners that comments made by management during this conference call will include forward looking statements within the meaning of the federal securities laws.

These forward looking statements involve material risks and uncertainties. For a discussion of risk factors, I encourage you to review the Safe Harbor statements contained in today's press release and presentation found on our website www.asn.com and in ASML's Annual Report on Form 20 F and other documents as filed with the Securities and Exchange Commission. With that, I would like to turn the call over to Christophe Fouguei for a brief introduction. Thank you, Jim. Welcome, everyone, and thank you for joining us for our Q4 and full year 2024 reserves conference call. Before we begin the Q and A session, Roger and I would like to provide an overview and some commentary on the Q4 and full year 2024 results as well as provide some additional comments on the current business environment and on our future business outlook. Thank you, Christophe, and welcome, everyone. I will first review the Q4 and full year 'twenty four financial accomplishments. And then provide guidance on the Q1 of 2025. Let me start with our 4th quarter accomplishments. In the Q4 of 2024, total net sales were €9,300,000,000 which is above the high end of our guidance, primarily due to install base revenue.

As expected, it also includes revenue recognition on 2 Hainay systems. Net system sales were at €7,100,000,000 which includes €2,900,000,000 from EUV sales and 4 €4,200,000,000 from non EUV sales. Net system sales was driven by Logic at 61%, the remaining 39% coming from memory.

Insole base management sales for the quarter were above guidance at €2,100,000,000 primarily driven by additional upgrade business.

Gross margin for the quarter was above guidance at 51.7 percent due to a combination of additional upgrade business and lower than planned costs associated with the new product introduction of Hynay systems in the field.

Operating expenses, R and D expenses came at €1,116,000,000 in line with guidance, while SG and A expenses came in above guidance at EUR318,000,000 due to year end payroll adjustments and a pull in of IT costs.

The effective tax rate in Q4 was 21 point 5% as a result of a one off tax expense related to a historic tax position bring the full year ETR to 18.6%. 2025, we expect an annualized effective tax rate of around 17%. Net income in Q4 was €2,700,000,000 representing 29.1 percent of total net sales, resulting in an EPS of €6.85 Turning to the balance sheet.

We ended the 4th quarter with cash, cash equivalents and short term investments at a level of €12,700,000,000 We ended Q4 with a free cash flow of €8,839,000,000 which is significantly higher relative to last quarters with the majority of cash coming in at the very end of the quarter. Moving to the order book. Q4 net system bookings came in at €7,100,000,000 which is made up of €3,000,000,000 of EUV and €4,100,000,000 of non EUV.

Net system bookings in the quarter were driven by Logic, with 61% of the bookings with memory accounting for the remaining 39%. At this point, I would like to briefly comment on the As we have said in the past, order flow on a quarterly basis can be lumpy. And does not necessarily reflect our business momentum accurately.

Our sales guidance is primarily based on regulatory review with all our customers as part of our planning cycle. With this in mind, we will continue to report bookings on a quarterly basis through 2025 but will no longer report on bookings thereafter.

As of 2026, we will report the total systems backlog on an annual basis. Looking at the full year, net sales came in at €28,300,000,000 with a gross margin of 51.3 percent. UV system sales realized from 44 systems including HIN A were €8,300,000,000 9% lower compared to 2023.

CPV system sales grew 4% to 12 point €8,000,000,000 Ometrology and Inspection Systems sales increased 20% to EUR646,000,000 Looking at the market segments for 2024, Logic Systems revenue was €13,200,000,000 17% lower than 2023. Memory system revenue was €8,600,000,000 44 percent higher.

Than 2023, and then sold base management sales were €6,500,000,000 16% higher 2023. We concluded 2024 with a net systems backlog of around €36,000,000 In 2024, we continue to invest in innovation, a [indiscernible] our full product portfolio, increasing R and D spending to 4 24 or about 15% of sales.

SG and A increased to €1,200,000,000 in 2024, which was about 4% of sales. Net income for the full year was €7,600,000,000 26.8 percent of net sales, resulting in an earnings per share of €19.25 In 2024, we generated free cash flow of €9,100,000,000 We returned €3,000,000,000 to shareholders through a combination of dividends and share buybacks in 2024. With that, I would like to turn to our expectations for the Q1 of 2025.

We expect Q1 total net sales to be between €7,500,000,000 €8,000,000,000 We expect our Q1 installed base management sales to be around €2,100,000,000 Gross margin for Q1 is expected to be between 52% 50 3%.

Is primarily driven by a positive effect from no Hain A revenue [indiscernible] partly offset by lower immersion volume.

The expected R and D expenses for Q1 are around €1,140,000,000 and SG and A is expected to be around €290,000,000 In Q4, ASML paid the 2nd quarterly interim dividend over 2024 of €1.52 per ordinary share. Ismail intends to declare a total dividend for the year of 2024 of €6.4 per ordinary share.

The 3rd interim dividend of €1.52 per ordinary share will be made payable on February 19, 2025. Recognizing this 3rd interim dividend and the 2 interim dividends of 1.5 €1.52 per ordinary share paid in 2024, This leads to a final dividend proposal to the general meeting of €1.84 per ordinary share.

In Q4, 2024, no shares were purchased. With that, I would like to turn the call back over to Christophe.

Thank you, Roger. As Roger has highlighted, we finished 20 20 4 with a strong quarter. We are extremely thankful to the whole ASML team that worked very hard to realize this 2024, we have also successfully achieved a number of technology milestones. Including the release of a number of new products critical for our customer technology roadmap. On our low NA EUV technology, the LXE3800E, we demonstrated the full system specification in our factory with 220 wafers per hour throughput at the new record overlay. We are on track to deliver a new system at full specification and start upgrades for the system already at our customer during the first half of [indiscernible] We continue to work with our customer to drive the maturation of the system to support their ramp to high volume manufacturers. On RNA EUV, we completed installation and customer acceptance on 2 systems in Q4. Customers have now run over 10,000 wafers on INSC and their feedback has been very positive. They are seeing major performance benefits in imaging, [indiscernible] And contrast, which also provide significant cost reduction opportunities for both logic and DRAM processes. We continue to work with our customer to define the exact insertion point for I and A their processes.

We also shipped a 3rd system in Q4 that is now undergoing install and qualification. On DPUV, we shipped the 1st NXT [indiscernible] latest generation KREF system capable of throughput of over 400 wafer per hour. And the NXT 2 150i, the latest generation immersion DPV system capable of achieving throughput over 3 10 Wafers per hour and over the performance of equal or less than 1 nanometer. Finally, in application, after close collaboration with multiple and recognized first revenue from a number of [indiscernible] 1100 multi beam inspection system, All in whole, our product pipeline remains strong, supporting the roadmap requirements of our customer and driving our overall competitiveness. We will share more performance data at the SPAE Lithography Conference in February. Looking to 2025, we see full year revenue between €30,000,000,000 €35,000,000,000 and gross margin between 51% [indiscernible] Consistent with our view from last quarter, artificial intelligence has become the key driver for growth in our industry at this moment. As we have witnessed in 2024, AI has created a shift in the market dynamics that is not benefiting all customer equally in the short term. If AI demand continues to be strong, customers are successful in bringing on additional capacity online to support that demand there is a potential opportunity towards the upper end of our range.

On the other hand, there are also risks related to customers and geopolitics that could drive results towards the lower end of the range. Looking at market segments, we currently expect Logic to be up versus 2024 with the ramp of leading edge nodes while we expect memory to remain strong similar to 2024. With respect to our installed base business, we expect revenue to grow versus 2024 driven by both service and upgrades as part of a growing installed base. To which EUV contribution is continuing to grow. Our China business in 20 232024 was relatively high because our ability to execute on the backlog that was created after low order fill rates in previous years. For 2025 and beyond, we expect our China business to go back to a more normalized percentage of our sales. Looking longer term, overall the semiconductor market remains strong with artificial intelligence creating growth. But also a shift in market dynamic as I highlighted earlier. This dynamics will lead to a shift in the mix of end market products towards more HPC and HBM which requires more advanced logic and DRAM.

For SML we anticipate that an increased number of critical lithographic exposure for these advanced logic and memory processes will drive increasing demand for ASML products and service. As a result, we see a 2,030 revenue opportunity between €44,000,000,000 €60,000,000,000 with gross margin expected between 56% 60 6 percent as we presented in the Investor Day 2024. With that, we would be happy to take your questions.

Thank you, Rafe and Christophe. Peter will now instruct you all momentarily on the protocol for the Q and A session. Before, I would like to ask you to kindly limit yourself to one question with one short follow-up if necessary.

Now operator, could we have your final instructions and then first question please?

We'll now go to the first question. One moment please.

And the first question comes from the line of Joe Petracci from Wells Fargo. Please go ahead.

Yes. Thanks for taking the question. I had a question on your 2025 outlook.

You mentioned that if customers are able to build the capacity for AI, then you think you could hit the high end of your revenue guide How do we think about that relative to your lead times I know you've pre built some EUV tools, but shouldn't we have a pretty decent idea kind of in first half of this year If that high end is a target guide is possible?

Well, I think as we go into the year, I think that we'll have indeed more visibility on what the final expectation is going to be. I think right now we are in our supply plan taking into account some of the upside we see. We are preparing for that.

And I think you you're getting it right. As time goes and this opportunity become more concrete or less concrete, we will decide to build or not build those stores. Okay.

That's helpful. And then in terms of the gross margin dynamics, the cost of high NA installs this past quarter was a bit lower than expected. As we look into second half and you talked about gross margin maybe a little bit higher in the first half. Do we think about the expectations of just the cost of installing those tools in the first half relative to the kind of outperformance that you saw this past quarter is there any update there?

Yes, Joe. So indeed, the costs were a little bit lower in the last quarter. But in coming up with our projections for 2025, I would say that those learnings are also embedded in there. So we are recognizing in 2025 that we have lower costs. So I would still see that as a one off benefit to the quarter. I wouldn't necessarily read into that that we're going to have significant savings that were not recognized when we provided the 51% to 50 3% guidance. So but you are right, in the second half, we did say that we expect the gross margin to be a little bit lower.

Because the revenue recognition on Hain day is to be skewed towards the second half. Thank you.

Thank you. Your next question comes from the line of Tammy Ku from Berenberg. Please go ahead.

Hi.

Thank you for taking my question. So [indiscernible] since CMD, you have been mentioning that the progress at customers has been ahead of where you were expecting. So currently, of course, you are negotiating with some time frame, etcetera. But can you comment if there is any potential for them to use it quicker because that helps them saving the cost of manufacturing?

Timmy, this is Christophe. So I think that there's a few conditions for customer to use a new tool like INA. The first one is the one you repeated, which is the performance have to be attractive, have to be good. I think that most probably one requirement we check at this point of time. The second one is going to be the maturity of the platform. And there, as you know, we typically try to ship a few early tools. These are our 5,000, we can start to work aggressively on maturity We are going to start shipping the 5,200, which is a tool more fit to high volume manufacturing. And then we'll have to spend a bit of time to demonstrate that the majority of the research that customers are comfortable to use it in production. So that process typically takes 12, 18 months. Depends a bit on where we start with the tool. And the discussion is a discussion we have, I will say, on a regular basis because again depending on the progress, of course, the appetite to move fast Okay. Okay. I guess I will circle back in 12 months' time.

And also just in terms of China, so China, I noticed now they have been kind of pulling in some of the orders maybe because of the pending U. S. Restriction, which supposed to be implemented quite soon, I mean, in a new way. You actually see your customer pulling in their order? Are you as a result do you see China order decline quicker in the coming months? Because of everything has been pulled in? And also, I know that you mentioned in the in the prerecorded video that China was China's expectation on U. S. And has been fully into expectations. So do you think there is potential for China to have some downside or upside in this year as you have everything clearer to you versus 3 months ago?

To be honest, our view on China hasn't really changed in comparison to when we last spoke. Right? So when we last spoke, we said the key dynamic on China is that and why China was so very strong in 2023 and 2024 now because whereas for a number of years, we have been building up a very significant backlog because our order fill rates for China was so low. That is the reason why the China sales in 2023 and 2024 was so high. And that is also the reason now that around this point in time where we have eaten significantly into that backlog, we say that backlog is being normalized That also means that we believe that the sales to China will be a more normalized percentage. And as we said, we think that is a low 20% number that China will represent in 2025 in our in our total sales numbers. So that is what is going on. On. The order intake that we received from China in the Q4, I would call it healthy, but it's not an order intake that is that is in any way dramatic or skewed or whatever. That's not the case.

It is again a relatively normal order intake for China. And therefore, I think the expectation that we articulated last time China to be a more normalized percentage of our sales, I think that's what you will see in 2025 and frankly beyond.

Thank you.

Your next question comes from the line of Sarah Russo from Bernstein. Please go ahead.

Thank you very much for taking my question.

So we've had quite a few conversations around your decision to phase out bookings information. And as we understand, it only provide a backlog view annually. Can you talk us through the decision to do that? And I guess are you expecting to be the reaction from investors and is this a response to the increased focus you've been seeing on book that seems to have taken place over the last 12 to 18 months?

I think we explained it in the video. And just to recap where we are. The way we come up with our annual guidance is really based on the review process that we have with our We have ongoing dialogues with our customers. And based on that, that, that gives us the insight into their business and that gives us the basis to then articulate at the start of the year what we think the total sales level for the year is is going to be. As you've seen in previous quarters and as we have highlighted, multiple times, order intake can be very lumpy. And that is because the the total size of the orders per customers are pretty significant given the tool prices for high NA tools for low NA tools, which as you know are pretty substantive. If orders if customers take a number of tools, which they typically do, you get to very, very high numbers. And that means that if you have a few large customers that place an order in 1 quarter, they typically wouldn't do it in 1 quarter and then get another massive [indiscernible] spatter sometimes very high order intake in 1 quarter and then then lower order intake in other quarters.

That does not necessarily reflect the business momentum that we enjoy.

And that's why we think that the market is better off with us having a robust discussion and a robust robustly underpinned guidance that we provide the beginning of the year. We think that is more meaningful than these swings in the order pattern that you've seen before. If you look at past quarters, you do see that the market looks at these orders and sometimes the reactions both in terms of positive and in terms of negative order intake, the reactions can be quite significant. And that has been the reason that we say we have been telling the market that order intake is lumpy. We have been saying that it doesn't necessarily reflect the business momentum accurately. But we do see very significant market response to it.

And as a result of that, we have reached a conclusion that maybe the market is is better off with what I just gave you. Including an annual update of the backlog. So from that regard, we came to the conclusion that less is actually more.

This is something that we discussed with quite a few of you. When we had the Investor Day, we discussed this quite extensively. With many investors. And the conversations that we had there give the confidence to Christophe, myself and full team that the decision that we just took is the right decision for the company and for the stakeholders.

Great. Really appreciate the additional context there. And then maybe just a quick follow-up. One of the pieces of guidance that you were talking about in the last of the results was you were probably at the bottom end for EUV bookings to see the low end of guidance. And since you've had a very strong core bookings now, dollars 3,000,000,000 of EUV, Are you sort of more confident in the midpoint of guidance or are you starting to see 2026 EUV orders come through as well given the typical 18 month lead times?

What we said last time is indeed that we needed about 2 SEK2 1,000,000,000 of EUV orders to get to get covered for EUV on the midpoint of 2025. So with the SEK 3,000,000,000 that we have in there, we've reached that point. So it's clear that that we're either starting to build on 'twenty 6 or starting to build into into the higher end of the guidance, but that really is the timing is really that timing question that is dependent it. But you are right, we said we need to get 2,000,000,000 order intake for EUV. And the fact that we have been recording 3 gives us, I would say, good confidence on the or at least for the EUV part on the midpoint. On DPUV, we're not yet fully covered, but I think the coverage there is quite high for the midpoint of the guidance as well. But as also Christophe mentioned, of course, the roles are always timing issues and customers always have the ability during a year to either pull in or push out from the last quarter.

Great. Thank you very much.

Welcome.

Thank you. Your next question comes from the line of Francois Bouvigny from UBS.

Thank you very much. My first question is you see a strong demand EUV logic driven by AI. Christophe, you mentioned in your video. Presumably mainly from 1 large customer. Do you think about the capacity of 2 nano given it's going to be potentially a very significant node? Could we see a front loaded capacity build in a way that 25% will be a big build to prepare for 26? So in other words, I mean, how do you think about the phasing of this strong note as 1st year could be bigger and then you add on a bit less in 20 6, 27? Or is it going to be a really granular [indiscernible] Well, I think Francois, as you know, we don't have details of our customer ramp fully. I think we we don't see any strange pattern in the ramps. I think we shared in the past the ramp is definitely starting in 2025, will extend into 26 most probably into 2027, in fact, with potentially a mix of 2 nanometer and some node. That's what we see. So no normal pattern.

The other thing we mentioned in our commentary is we see that maybe there is an opportunity to ramp a bit faster if the demand remains strong. So I think that's that's another discussion we're having the advanced [indiscernible] I think we don't see any kind of pattern that you described.

And Francois, this was actually also confirmed by CCVA on the call. On the call that they had. So he made specific comments on the ramp profile of Antu. So you might want to refer to that as well.

Thank you, Claire. I was wondering on the Lito maybe given the lead times [indiscernible] On the second question is, I mean, AI is very strong, although I mean, the market might have some doubts in the recent days. I'm not going to ask you the impact on deep seek on the demand for AI. But you described some upside on the AI potential if we get the capacity in the second half or if the demand still remains strong. But similarly, I mean, if you look at the iPhone, which or Apple or iPhone, which has supposedly is a very significant part of your demand on the leading edge nodes Do you think it's AI is big enough to offset some downside in the if we see downside on the iPhone, at least in the short term because in the long term, you described at your CMD that it's centralizing, but I was more wondering in the short term, so 25%, 26 dynamic of high AI and slower smartphones.

Well, I think in the short term, I think that's we tried to explain also with the upside. So I think that the demand is strong to to really drive, I would say, the utilization of whatever capacity would be built initially on advanced logic I think by the way, this will not be fully or so mostly dedicated to AI. So I think yes, the rest of the market is not doing spectacular, but it's still there. I think that will also refer to the TSMC call where they were porting also for the first time to some recovery on mobile. So I think nothing is spectacular there, but as you go for the ramp and you know that the ramp will build up capacity over time, so you don't get the peak capacity before quite a bit, I think we we think this part is solid at this point of time. So we see more upside than risk, at least with all the elements we have at hand.

Right. Thank you very much.

You're welcome.

Thank you. Your next question comes from the line of Chris Sanker from TD Cowen. Please go ahead.

Thanks for taking my question. Krista, for Roger, the first question on the decline in China sales from 47% in September to 27% in December Is that on a function of digestion by Chinese customers? Since I'm assuming that the incremental export control rules did not impact your last quarter, so I'm curious when do you expect this digestion to probably like meet a steady state or like bottom out?

Yes.

I think, Chris, we were already happen. And I repeat what I just said on China. I think this is the main reason why we're looking at a normalized percentage percentage for China is the reason that I gave before. So yes, export controls are a part of that, but the lion's share of the reasons for the normalization of the demand is what I said earlier, which is that the eating into the backlog was built up all the way through 2022 is now coming to an end. And now we're really seeing a normalized pattern.

Got it.

Got it. And then a question on memory You kind of said that this year logic would be up but memory kind of flattish. On the memory front, you're more exposed to DRAM than NAND. You keep hearing about HBM capacity increase, but it seems like you're not seeing better DRAM dynamics year. Can you just tell us a little bit about what you're seeing in the memory ecosystem?

Well, I think you're more surprised in your question. I think that high bandwidth memory is driving today, I would say also an aggressive capacity addition, at least for some of the customer.

I think on the normal DRAM, I would say my comment is similar to the one on mobile morphology before. I think there also nothing spectacular, but there is some recovery. Which also call for more capacity. So that's why we still see DRAM pretty strong in 20 25. [indiscernible] Thank you.

Your next question comes from the line of Chris Caso from Wolfe Research. Please go ahead.

Yes. Thank you. Good morning. I guess and as I listened to you this morning, it sounds like a situation perhaps similar to how you start out year and correct me if I'm wrong with some pretty good backlog coverage to start the year and last year, there were some changes in that backlog in middle year. So I understand your prudence. I guess one, is that accurate depiction of of what we're seeing here? And then secondly, what are the sort of plausible things that we should be watching for and concerned about that would justify the back the lower end of guidance Is it export control restrictions? Is it China? Is it perhaps some of the concerns about AI? What are the some of the scenarios which would sort of point you to the lower end?

Let me take the first part and then Christophe can look at the second part.

I'm not entirely sure I follow your logic on that we are were a year ago. And also, I would point out that a year ago, we gave a guidance that I think we pretty much nailed during the year, right? So I think we delivered last year exactly on the guidance that we provided in the year. The reason why I think the situation is also not comparable is because last year we started the year saying we think this year will be comparable to to 2023. I think this year we started the year with with clear growth perspective. At the midpoint somewhere around 15%. So I don't think the situation is similar. Yes, we have a strong yes, we have backlog. Yes, we had a strong order intake in the last quarter last. But I think Christophe discussed it on the call and he will provide the color and context now. We see a clear path within that guidance. Maybe you can provide a follow-up. Yes. And I think on the lower NSQ, even Roger mentioned it already. I mean, we have seen last year, this was one of the the low light of Q3, we've seen major push out of some of the capacity for some of the customer.

Think through our guidance this year, we we see that this risk is a lot lower in terms of [indiscernible] [indiscernible] that's always possible. So I think we are very transparent that We share with you the fact that if we look at the total dynamic, that some of those push out may not be completely excluded. What define our range. So I think that's not more than that, I would say. Geopolitical, we also mentioned that. There. It's even more difficult, of course, to quantify because we just had new export control being released. So So there's no expectation of anything on our side, but this is also of experience this call a bit for prudence on our side. So that's a bit what we try to reflect in the lower hand of the guidance. Not more than that.

Sure.

Very helpful context. Thank you. The inevitable kind of follow on to that is how that affects the view for 'twenty six. And given the lead times and the customer forecast imagine you have some degree of visibility now, although it's very early, At this point, would you expect 26 to be a growth year and what are the variables that you're thinking about with regard to 20 6? Yes, Chris, that's as much as we've said. We are looking at 26% as a potential growth year for Ace Mel. That's how we look at it. But it is exactly as we said, it's way too early to provide any direction or magnitude on that.

That's great.

Thank you.

You're welcome.

Thank you.

Your next question comes from the line of Didier Simama from Bank of America. Please go ahead.

Yes. Good afternoon, gentlemen. Thank you for taking my question. I wanted to go back to the order intake in EUV and the EUV maybe first on EUV, can you maybe just help us understand how much of the DUV orders was related to DUV capacity build? For the non critical layers, is it non China or any color you can give us And I'll have a follow-up on the EUV order breakout. Thank you.

Yes. We typically don't disclose that DGL We don't break down between customers 20 regions. But a significant part of the DPO order intake for the foot the quarter was indeed related to larger customers. And for larger customers for the non critical layers ASML you mentioned it. But I'm not we're not putting a percentage on that.

Perfect. That's good to hear that it's confirmed. On the EUV order intake, obviously, largely driven by foundrylogic. Well, I think you said fifty-fifty perhaps earlier on. On the DRAM side and on the foundry side, maybe any color you can give? So Obviously, on the foundry side, you've got 3 major customers. On the DRAM side, you've got 3 major customers. Can you just obviously can't discuss the various customers' sort of health But is there any change with regards to the trajectory of the various buckets? E. G. Is there any bucket looking a bit better? It looks like DRAM is looking a bit better.

Given the diversity of the customers in there. The Bistondri not changing very much, but would be much more interesting hearing your views.

Well, I think we're looking at each other, but I don't know which one of us have to tell you first that these are not the type of detail we share because we would be even adding speculation on some of the market situation. So only thing I would say is, again, no major change compared to what we have discussed in the previous quarter. That will be my input to that question. Simon?

Okay.

Well, I'll allow myself to follow-up then.

Fair enough. I don't blame you No, on Haines, just maybe give us a little bit of insight in into that 3rd shipment. Is that for North American customer or is that also I think we said it's not for the North American customer, but we have not said and will not say we're at [indiscernible] Go back to the Q3.

Thank you for the first two.

I've tried You did.

Thank you. Your next question comes from the line of C. J. Muse from Cantor Fitzgerald. Please go ahead.

Yes, good afternoon, good morning. Thank you for taking the question. I guess first question in the video when you discussed your 2025 outlook, you talked about obviously AI supporting the high end, other markets low end. I would have thought you would have completely derisked the other markets So can you touch on the level of derisking embedded in your assumptions for those customers where you've seen push outs to 26? And for the high end, is there sufficient clean room space at those foundry and HBM customers to actually take tools by the Q4 timeframe?

Yes. I think on the first part, I think Roger indicated when it comes to [indiscernible] I think that mostly we have derisked the large part of EUV. So the risk, I think I'm going to repeat myself on this. One, but the risk is just on some potential push out. I think that's what it is. So we're just a bit cautious based again on some of the experience we all went through last year.

That's the first part to your question. The second part, I think that's the right question. I think most firmly today, we're looking at opportunity to get more clean rooms space. I think that's what we mean by building up additional capacity. And if this is possible, and if this happens, then we can most probably put some of our tools there. But that's exactly what we're looking at with our customer.

Very helpful. And I guess as a follow-up, you talked about the ongoing shift led by AI across HPC and HBM and curious in your discussions with your customers across both those fronts, can you comment on kind of what you're seeing in terms of EUV layer counts? Whether it's A16 or whether it's going HBM3E4 etcetera. Would love to hear kind of your thoughts on the trajectory there.

Well, I think we tried to explain that in November. So the need for high power computer, the the need for high bandwidth memory. So basically, the AI driven chips are more demanding when it comes to advanced process. I think what we said is we see those those new product, multi recording for a bit of an acceleration of more slow and therefore our customer being more aggressive when it comes to technology transition. I think in some extent you see a bit of that already with 2 nanometer and mostly what will come after that. I think we also said in November that historically, this has always driven more demand for advanced litho. That's of course a part of discussion we are having as we speak with our customers. So part of the shift we see, I think that's that's one that we describe as a positive one for us back in November. And I think when it comes to the trend, the trend is there. And you're asking very detailed question on future node. We don't have the detailed answer yet.

But the trend is definitely there.

Thanks so much.

You're welcome.

Thank you. Your next question comes from the line of Andrew Gardiner from Citi. Please go ahead.

Good afternoon. Thanks for taking the question.

I had another one on the customer visibility side of things. It's encouraging obviously to see that you finished 2024 strongly in terms of orders. But if I look at 2024 overall, had a fairly low level of orders from the Logic community lowest since 2020.

Now I understand the multiple reasons why it's been weak in recent quarters. So really I'm sort of interested in a more forward looking view. You've already explained that 2025 is essentially fully booked. As I look to 2026, assuming growth as you described loosely, Roger, is something like 30% to 40% booked for next year depending on one's assumptions. So then if I think of your lead times and the points you were making about the stated customer plans for their CapEx, the 2 nanometer migration and in particular the high volume ramp in the 1st part of next year.

Don't you need to see order commitments come in for EUV over the first half of this year in order to be able to meet those customer needs on time.

Andrew, I think that's fair. So we should be seeing order intake in the first two quarters particularly when it comes to EUV. I think that would be logical. As Christophe described, we do have flexibility, obviously, in our in the way we approach 2026. So we do have flexibility in our supply chain also our manufacturing capability. So it's not like at a certain point in time that that's that's where the music stops. But definitely we should we should continue to see good order intake in the 1st 2 quarters. I think that's a fair assumption.

Thanks. I mean related to your answer there, Roger, the strategy of prebuilding, is that continuing? Have you you changed that at all given shift in customer dynamics we've seen over the last 6 to 9 months?

So really we're doing this also Andrew to make sure that we have a level loading of our factory, right? So and that's one. And second, in order to create sufficient flexibility, for us. So we're reviewing that. We're obviously reviewing that based on the latest insights that we get from customers. I reiterate the ongoing discussions that we have with customers rather than just the POs. And based on what we get there and based on the insights that we get there for this year and for next year, that also determines what our pre built strategy is. But that is an option that we continue to have. And that we continue to use in order to better optimize the loading of our factory.

Thank you very much. Thank you.

Thank you. Your next question comes from the line of Mehdi Hosseini from SID.

Yes, thanks for taking my question. Two follow ups. Roger, can you give me an update where we are the throughput for NXE-3800E? Where is it today and how are you going to close the year? And then for the team, I want to better understand how you planning internal capacity, especially looking beyond the When we had this strong cycle a couple of years ago, you're backlog was in the $40,000,000,000 range. Do you more flexibility with your capacity to bringing the lead times down, especially with higher EUV mix and concentration of customers or would you be more prudent and try to build a longer backlog. I'm just trying to understand and balance your internal planning for the next couple of years versus your ability to get customers committed especially given there is more concentration of customers?

For EUV?

Yes, Mehdi. So on the throughput, the systems that we ship in last year were all on a better throughput than the throughput of the 3,600, but not yet at a maximum throughput. That maximum throughput has been demonstrated and we're now in the process of rolling that out. So the newer tools that we're now shipping to customers will gradually meet that specification for the tools that have been installed with the customers. We're going to make sure that in the course of this year, that those tools also meet that higher expectation. So therefore, you will continue to see also us reporting on the improvement and also the revenue that we recognize from the fact that we we get those higher throughputs achieved with customers and also get recognized for that. So that's the status. So the 220 has been demonstrated now in the process of rolling that out for the new tools and also back porting that to the 3,800 that are currently in the field. In terms of capacity beyond 2025, the key thing that we're doing is to make sure that we what we call is the long lead time items that they are in place, I. E. That we have the flexibility to respond to to higher demands and that we have the long lead time items that we have those in place.

If you look at what we're projecting in terms of growth for the second half of this decade, including what we're projecting for 2,030, And it's clear that capacity needs to be built. So the infrastructure we have already built and continue to do that so that the long that the infrastructure is in place and then to with LiveChain and with our headcount, we can respond once we get the very clear signals from our customers. That demand is accelerating. That's the way we approach it.

So does that mean that [indiscernible] backlog would be kind of in the 18 months range or would we we going to go back to like 'twenty two, 'twenty three when backlog was extended due to supply constraints?

No, that would not be I think a normal backlog is ultimately what we want to be able to offer to our customers. We want to be able to offer to our customers a normal backlog because that will also help them respond to their business. I mean, that's ultimately what you want to get. That customers have a backlog that is and a order lead time that is manageable for them and that allows them to respond in a good and flexible way to their demand fluctuations. And that's our ultimate goal and that's why we want to be a flexible as we can and that's why we put in the infrastructure such that we are able to give our customers a normal order lead time. That's the objective that we are driving.

Got it. Thank you for details.

You're welcome.

Thank you.

Your next question comes from the line of Stefan Orie from ODDO BHF.

Yes. Good afternoon. I would like to come back on the guidance for 2025 last quarter. I think you gave us some elements to rationalize how you could get to the middle of the range. And you gave notably 2 elements. 1 was on the non UV China that was supposed to grow largely by double digit, let's say, 50%. So can you maybe come back on that and confirm if that's still what you expect? And the second element was about the in [indiscernible] could be at about €7,500,000,000 But if you take the the Q1 where you guide for €2,100,000,000 it gives a run rate. If you multiply it by 4 of much much bigger than EUR 7,500,000,000, EUR 8,400,000,000, EUR 8,500,000,000 above So is there any seasonality we should have in mind about installed base management? Thank you.

So let's take the last one first. So the 7 point 5, that's the number that we still include in our guidance. And of course, over the quarters, you've also seen that last year, there can be some fluctuation To a very large extent, that's dependent on upgrades So that fluctuates from 1 quarter to the other. Would also say and you know that our visibility into the upgrades is of course less than the service business. But I think for now, I would encourage to still use the 7.5 billion as the right number. When it comes to the non China EUV business, I think you mentioned 50%. I think that's on the higher end. I think that's a little higher than what I had in my model. When we were having the conversation. So 50% is a little too high, I think. I think you probably want to I think we said it's sort of on par with what you would see in the EUV business and that would get you to approximately 40% increase. And that's sort of where I think you're going to land.

And this isn't changed, right?

What was that?

No, no, it's not a change.

That not changed.

Okay.

No, that has not changed. That is still consistent with the analysis that we provided after Q3.

Thank you very much. You're welcome.

Thank you. Your next question comes from the line of Michael Roark from Degroof Petercam. Please go ahead.

Can I ask a question about one of your slides from the Investor Day 2024?

We do all [indiscernible] Well, now you're still laughing.

Woah. It's the presentation [indiscernible] [indiscernible] And that is the slide with the 7 end markets and the total semiconductor sales.

I'm sure you'll be able to visualize that one, correct?

I have it in mind, yes. Yes.

Okay, good. Well, first of all, it's a pity that you no longer show the historical data, which you did in the past. So now my whole model is missing a few years. But now my question is the following. Do you believe that your customers will be able to generate $1,000,000,000,000 in sales in 2,003?

It's not our customers, right? When you talk about the semiconductor industry, customers And that is precisely the answer I want to hear. Because the Gartner market definition doesn't represent your customers. It represents your customers, the IDMs, and the fabless companies that are customers of your foundry customers. If I look at these 7 end markets, then my perception is that the difference between vendor sales and manufacturer sales which is a huge gap for the total market, that that difference is biggest for smartphone and data centers.

Because that's where the IDNs have the smallest positions.

So you've changed all your scenarios. Data center scenarios going up. Most other markets scenarios going down, which optically looks great.

But from a manufacturer perspective, I don't know if anything has changed actually.

To be honest, I think you're losing a bit of the audience here. And you're looking at a slide that no one else is looking at. So I would suggest that we have a follow on conversation. On this Perfect, perfect. However, you know what I'm talking about. I'm surprised that everybody keeps showing the Gartner data. Which are not a reflection of the equipment customers. [indiscernible] I appreciate it, but I think we have the right follow-up action.

Let's take it offline. Then 2 One tiny follow-up, an old different topic that's on the you will no longer show the quarterly bookings.

It's perhaps a 12 month rolling booking figure something that would be smoothing out all those lumpy intakes.

But to be honest, I think a backlog for Annem gets you awfully close to that, right? Because if you have the backlog and you you have the sales numbers, for the quarter. I think it doesn't take you too much to kind of recalculate that. So I think by We will only see it once a year, don't we? [indiscernible] think ASML explained before, we believe that that's an important data point for you and it's good enough. [indiscernible] [indiscernible] more questions about these slides will be in the next quarter and the longer after because I've got many more questions.

Thank you. Look forward.

Appreciate that. Thank you. Okay. We've got time for one last question. If you've been unable to get through on this call and still have questions, please feel free contact ASML Investor Relations with your questions. Operator, can we have the last caller, please?

Thank you. Your last question today comes from the line of Sandeep Deshpande from JPMorgan. Please go ahead.

Yes. Hi. Good afternoon and thanks for letting me on. I have a quick question as a follow-up on high NA. Christophe, you talked to a response to earlier question that you will know in 12 to 18 months the timing of the in insertion of high NA. But in terms of your backlog, I believe you already do have high and A tools in your backlog for shipment in 2026. So how do you put the 2 and do together that you will know whether the customer is going to use these tools in high value manufacturing only later in the year or next year, but you're already possibly building tools for the customer. So is there a risk that the customer first to you at the end of the year that well actually we're not going to to implement the tools into production next year and that these orders don't happen in 2026, which are there in the backlog today?

Well, I think so you mentioned the backlog and I think you know that indeed in our backlog we have quite few tools that are not EXE 5,000 which was a tool basically fitted planned for R and D. So indeed, our customer have upfront already ordered some 5,200, which are tools intended to be used in high volume manufacturing. So this means that the logic of an insertion has been there for quite a while.

You start with R and D, then you plan for, I will say, a reasonable insertion.

So those 2 in the backlog are indeed going to support that. And I think we look at a few tools per customer, which are sufficient basically to start going. And that's what we call usually the first node insertion And after that, of course, when we look at your booking on I and A, it would be most probably looking at the bigger insertion in the node after that, which is a bit later. But the logic you described is the logic customer have put in place to together with us already, in fact, a couple of years ago and I think they are sticking to that logic today.

Okay.

Since you've run out of time, I will leave it at that. Thank you so much.

And so now on behalf of ASML, I would like to thank you all for joining us today. Operator, if you could formally close the call. That would be much appreciated.

Thank Thank you. This concludes the ASML twenty 24 4th Quarter and Full Year Financial Results Conference Call. Thank you for participating. You may now disconnect.