Tammy Qiu

Tammy Qiu from Berenberg asked about ASML's logic roadmap, specifically if EUV layer insertion would continue for each generation (A16, A14, A14T, A10) or if customers are trying to minimize incremental EUV layers. She also questioned if ASML's current EUV capacity addition plan is more cautious than the previously stated 90-tool target from 2021, and if this cautious approach is a result of the market conditions in 2022.

Answer

CFO Roger Dassen confirmed that EUV layers are expected to increase at A14 (10-20%) and even more for A10 due to structural changes, indicating continued EUV insertion. Roger Dassen explained that ASML made structural investments for a 90-unit capacity (long lead-time items) but is now gradually ramping its "move rate" (hiring and training people) quarter-on-quarter, rather than an immediate jump, after the 2022-2023 period. He and CEO Christophe Fouquet emphasized that ASML has the flexibility to meet customer demand for 2026 and beyond, and is not a bottleneck.

Tammy Qiu asked for confirmation on the logic roadmap, specifically if every future generation (A16, A14, A10) will see incremental EUV layer insertion or if customers are trying to minimize it. She also questioned if ASML's current capacity addition plan is more cautious than previous targets (e.g., 90 EUV tools) due to lessons learned from 2022.

Answer

Christophe Fouquet, CEO, confirmed that EUV layers are expected to increase at A14 (10-20%) and even more for A10 due to structural changes, based on discussions with foundry customers. Roger Dassen, CFO, explained that ASML's current approach is not more cautious but a dynamic ramp-up. They invested in long lead-time items (factories, equipment) earlier and are now gradually increasing personnel and move rates quarter-on-quarter, ensuring they can meet customer demand without being a bottleneck.

Tammy Qiu inquired about the High NA order pattern, noting a lack of new orders for two-plus quarters, and whether this implies a lumpy revenue ramp-up with potential quarters of zero High NA revenue in 2027 or 2028. She also asked for the specific reasons behind the expected significant decline in China revenue for 2026, questioning if it's due to demand uncertainty, weak end markets, or conservatism.

Answer

CEO Christophe Fouquet confirmed ASML is working through a healthy High NA backlog, with the next wave of orders expected in the second half of next year after qualification data confirms tool maturity, leading to shipments in 2028 and beyond. CFO Roger Dassen explained the China revenue decline is based on ASML's assessment that past sales were exceptionally high due to eating into backlog, and 2026 represents a return to a more normalized level for the mainstream market, based on market understanding and customer dialogues.

Tammy Qiu from Berenberg asked if higher tool productivity implies that ASML now requires customers to expand capacity more aggressively to drive unit sales. She also sought to clarify if the uncertainty around 2026 reflects a potential delay in customer decisions or a fundamental change in their plans.

Answer

President & CEO Christophe Fouquet clarified that ASML's market is defined by total wafer capacity needed, not tool units, and that higher productivity tools deliver more value to customers and better margins for ASML. Regarding 2026, he characterized the situation as customers having more 'interrogation' about their decisions due to geopolitical uncertainty, rather than a confirmed delay or change at this stage, noting that underlying fundamentals like AI remain strong.

Tammy Qiu inquired about the potential for customers to accelerate High-NA adoption due to performance benefits and asked if Chinese customers were pulling in orders ahead of new restrictions, potentially leading to a faster decline in sales.

Answer

CEO Christophe Fouquet explained that while High-NA performance is attractive, adoption also depends on platform maturity, a process that typically takes 12-18 months. CFO Roger Dassen clarified that the normalization of China sales to a low 20% range in 2025 is primarily due to working through a large, previously built-up backlog, not a new pull-in dynamic. He described Q4 order intake from China as 'healthy' but not dramatic.

Tammy Qiu inquired about the potential for customers to accelerate High-NA adoption due to its cost-saving benefits and asked about the dynamics of China sales, including potential order pull-ins ahead of restrictions and the outlook for 2025.

Answer

CEO Christophe Fouquet explained that while High-NA performance is attractive, adoption speed depends on demonstrating platform maturity, a process that typically takes 12-18 months. CFO Roger Dassen stated that the view on China is unchanged, with the high sales in 2023-2024 driven by clearing a large backlog. He expects China to return to a more normalized low-20% share of sales in 2025.