Didier Scemama

Didier Scemama from Bank of America asked about the implications of 4F² DRAM on EUV layer count, specifically addressing the market's concern about a potential "cliff" in EUV demand from DRAM customers around 2028 due to tool reuse. He questioned if this risk is diminishing given the need for more advanced litho and expanding wafer capacity driven by AGI. He also inquired about the gross margin outlook for 2026, considering the mix of Low-NA EUV, potential decline in immersion due to China, and the impact of upgrades, and whether the 2027 EUV mix would revert to a majority of 3800E.

Answer

CFO Roger Dassen explained that 4F² structures require more advanced lithography, increasing both immersion and EUV layers. CEO Christophe Fouquet added that customers dislike "cliffs" and optimize technology over several nodes, finding EUV beneficial for simplifying processes, reducing cycle time, and increasing capacity. He expressed confidence that litho intensity will grow with 4F² for both DUV and EUV. Roger Dassen detailed gross margin factors for 2026: headwinds include more 3600s in EUV mix, immersion sales below 2025 (due to supply constraints, not demand), more dry sales (lower GM), and High NA's initial depressing effect. Tailwinds include higher EUV unit numbers, with installed base upgrades being a significant swing factor. He confirmed the 2027 EUV mix should be substantially better, with more 3800E and next-generation tools.

Didier Scemama asked about the impact of 4F² architecture on DRAM, specifically if the risk of a 'cliff' in EUV demand due to tool reuse is diminishing, given increased litho intensity and expanding wafer capacity for AI. He also inquired about the gross margin outlook for 2027, particularly the mix of Low-NA EUV tools and the impact of immersion sales.

Answer

Christophe Fouquet, CEO, explained that 4F² structures require more advanced lithography, increasing both immersion and EUV intensity, and customers avoid 'cliffs' by optimizing technology over several nodes. He noted that EUV simplifies processes, reduces cycle time, and increases fab space. Roger Dassen, CFO, stated that the 2027 EUV mix should be substantially better than 2026, with new generations of Low-NA EUV being critical for long-term gross margin targets. He also mentioned immersion sales constraints in 2026 as a drag on gross margin.

Didier Scemama questioned ASML's perspective on recent HBM capacity announcements from SK Hynix and Samsung, which imply a significant increase in EUV tool demand for HBM, and whether ASML has sufficient EUV low NA capacity by 2030 to meet such potential demand. He also asked about the portion of ASML's current backlog that extends beyond 2026, potentially explaining hesitation for strong 2026 growth.

Answer

CEO Christophe Fouquet expressed caution regarding translating large announcements into concrete capacity needs but highlighted the importance of a broadening customer base to avoid supply limitations. He confirmed ASML has been preparing for growth and has no concerns about meeting demand. CFO Roger Dassen stated that a 'reasonable number' of the current backlog pertains to beyond 2026, including a 'pretty strong' High NA contingent, which makes precise 2026 projections difficult.

Didier Scemama of Bank of America inquired why the potential removal of an AI chip export ban to China would be a positive for ASML and asked if the strength in DUV demand from China was driven by customers pulling in orders ahead of further restrictions. He also asked for color on High-NA bookings.

Answer

EVP & CFO Roger Dassen explained that lifting restrictions is a positive for the entire semiconductor ecosystem's global reach, which benefits ASML indirectly. He stated that China's DUV demand remains strong and is aligning with its share of the backlog, not necessarily indicating a new pull-in dynamic. He also confirmed the quarter's EUV bookings included High-NA orders but could not provide specifics at the customers' request.

Sought confirmation on calculated Low-NA EUV ASPs and gross margins, and asked for reasons behind the increased 2025 revenue forecast for China and the outlook for China's Installed Base Management (IBM) revenue.

Answer

The calculated ASP of ~€227M is correct but high; a blended rate of ~€220M is better for modeling. Low-NA gross margin is above the corporate average, but specifics are not disclosed. The China revenue forecast was raised to over 25% due to resilient and stronger-than-expected demand for mainstream DUV systems.

Didier Scemama requested color on the DUV order intake, specifically for non-critical layers outside of China, and asked for a breakdown of EUV orders between foundry and DRAM. He also followed up on the destination of the third High-NA shipment.

Answer

CFO Roger Dassen confirmed a 'significant part' of the DUV order intake was for non-critical layers from larger customers but declined to provide a percentage. CEO Christophe Fouquet stated there were no major changes in the EUV order dynamics compared to the previous quarter and declined to provide a detailed customer breakdown. Roger Dassen confirmed the third High-NA system was not for the North American customer but did not specify its destination.

Didier Scemama sought more detail on the composition of DUV and EUV orders, specifically regarding non-China DUV for non-critical layers and the foundry versus DRAM split for EUV. He also asked about the destination of the third High-NA system shipment.

Answer

CFO Roger Dassen confirmed a significant portion of DUV orders was for larger customers' non-critical layers but declined to provide a percentage. CEO Christophe Fouquet stated that ASML would not break down EUV orders by customer type. Management only revealed that the third High-NA system was not for its North American customer.

Didier Scemama followed up on memory and cost inflation, asking about inventory levels, supply agreements, and assumed cost inflation in gross margins for 2026. He also inquired about the current size and investment needs for Ericsson's defense business.

Answer

Lars Sandström, SVP and CFO, stated inventory levels are well-positioned for the year, but cost increases exist, and Ericsson works with customers to share the impact. Börje Ekholm, CEO, stated Ericsson doesn't disclose defense business details but sees a 'sizable' revenue opportunity. Investments will increase but won't materially impact overall R&D spend or the company's outlook, potentially offset by efficiency gains. Lars confirmed very limited CapEx needs for defense.

Didier Scemama of Bank of America asked for a normalized gross margin range given structural improvements but a favorable Q3 mix. He also questioned the right OpEx base for 2025 and the revenue of the divested iconectiv business.

Answer

CEO Börje Ekholm acknowledged a structurally higher gross margin due to technology and software but deferred giving a new target. CFO Lars Sandstrom indicated 2025 OpEx would face inflation but be managed with cost actions. He did not disclose iconectiv's revenue, citing the sale agreement, but suggested IR could provide indications.

Didier Scemama of Bank of America asked if Ericsson is prepared to sacrifice market share to protect margins amid Chinese competition and if it would offer vendor financing. He also inquired about Ericsson's future role in the data center market.

Answer

CEO Börje Ekholm emphasized that while decisions are case-by-case, the priority is maintaining healthy gross profit to fund technology leadership, and they will not take contracts unless paid for their technology. On data centers, he stated it is unlikely Ericsson will sell directly to them, viewing its role as serving that market through its access technology.

Didier Scemama from Bank of America inquired about Logitech's marketing spend strategy for the holiday season, considering FX tailwinds, the challenging U.S. consumer environment, and lean channel inventory. He also asked for more details on the 'China for China' strategy, including specific product introductions, price points, and areas of greatest success.

Answer

CEO Hanneke Faber stated that inventories are healthy. She highlighted continued OpEx discipline focused on G&A, with R&D unchanged and marketing spend close to last year, but with improved effectiveness and capabilities, particularly in China. CFO Matteo Anversa added that Q3 OpEx as a percentage of net sales tends to be lower due to it being the biggest quarter, implying sequential increases in R&D and sales & marketing. Faber further explained that the 'China for China' strategy is driving strong Asia-Pacific numbers, with PWS share growing and gaming share trends improving, supported by global innovations and specific China-for-China products like the G316 gaming keyboard, which targets the lower-medium price range.

Didier Scemama asked about Logitech's marketing spend strategy for the holiday season, considering FX tailwinds and the U.S. consumer environment, and sought more details on the 'China for China' strategy, including product introductions and competitive positioning.

Answer

CEO Hanneke Faber stated that inventory levels are healthy for the holidays. She highlighted that marketing spend in Q2 was close to last year, with improved effectiveness due to shifting from non-working to working spend and strengthening capabilities, particularly in China. CFO Matteo Anversa added that Q3 OpEx as a percentage of net sales would be lower due to it being the biggest quarter, with sequential increases in R&D and sales/marketing. Hanneke Faber further explained that the 'China for China' strategy is driving strong APAC numbers, with PWS share growth and improving gaming share, supported by global innovations and China-specific products like the G316 gaming keyboard.

Didier Scemama from Bank of America inquired about the consumer reaction to recent price increases and the sustainability of the strong growth observed in the Video Collaboration (VC) business.

Answer

CEO Hanneke Faber explained it was too early to gauge consumer reaction to pricing, as increases were only fully implemented at the end of the quarter. She noted the price negotiations temporarily affected Americas' net sales but are now complete. Regarding VC, she acknowledged the 13% growth was strong but may have been slightly inflated by some customer pull-in ahead of tariffs and inventory replenishment in the EU, though underlying demand remains robust.

Didier Scemama asked if the positive inventory effect on Q1 gross margins would extend into Q2, questioned the margin phasing for the rest of the year, and sought confirmation that the 90-day tariff pause includes PC peripherals.

Answer

CFO Matteo Anversa confirmed the positive inventory benefit on gross margins will be depleted after Q1. Both he and CEO Hanneke Faber stated it was too premature to comment on the margin outlook for subsequent quarters. Hanneke Faber also confirmed their Q1 guidance already incorporates the current tariff landscape, including the 90-day pause.

Didier Scemama of Bank of America inquired about the mechanics behind the revised full-year margin guidance, the assumptions for the tariff-related revenue haircut, and the outlook for AI-related revenues.

Answer

CFO Sven Schneider detailed the margin impact, citing volume reduction, higher underutilization charges, and a significant currency headwind of nearly €400M in revenue and €150-170M in segment result for H2. He clarified the €400M tariff haircut is a "guesstimate" for prudence and not based on current order book changes. CMO Andreas Urschitz and CFO Sven Schneider both confirmed the AI revenue targets of €600M for the current year and €1B for the next, citing Infineon's strong position from "grid to core" in AI power solutions.

Didier Scemama asked about the mechanics of the revised full-year margin guidance, the assumptions behind the tariff-induced revenue reduction, and the outlook for the AI business.

Answer

CFO Sven Schneider explained the margin revision was due to volume reduction from the tariff guesstimate, higher underutilization charges, a significant negative currency effect translating to a €150-170 million segment result headwind, and some pricing pressure in industrial components. He clarified the tariff impact is a ~€400 million "guesstimate" and not based on order book changes. CMO Andreas Urschitz confirmed the €600 million AI revenue target for the current year and €1 billion for the next.

Didier Scemama asked for an update on the manufacturing footprint transformation and the expected timing for COGS reductions. He followed up by questioning the company's market share in general-purpose microcontrollers, particularly in China, and whether the current downturn is cyclical or structural.

Answer

Lorenzo Grandi, President and CFO, stated that the manufacturing transformation to 300mm silicon and 200mm SiC will yield significant COGS savings mainly in 2026 and 2027. Jean-Marc Chery, President and CEO, confirmed market share was lost in China but believes ST began regaining share in Q4. He reiterated ST's competitive strengths and its 'China-for-China' strategy to compete effectively.

Didier Scemama questioned the company's long-term strategy, asking if CapEx plans were prudent, about the need for US-based manufacturing due to geopolitics, and for an update on potential M&A activity.

Answer

Jean-Marc Chery, CEO, defended the strategic importance of converting fabs to 300mm and 200mm (SiC) but acknowledged they are adjusting operating plans and CapEx levels to the current environment. He stated that while ST is building an ecosystem in China, the company has no plans to build a new fab in the US, believing its European footprint is adequate. Regarding M&A, he confirmed they are 'actively working on the right target.'