ASML Holding N.V. (ASML)

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ASML Holding N.V. (ASML)

UBS European Technology Conference Call

March 8, 2012 03:00 am ET


Franki D'Hoore - Director, IR


Gareth Jenkins - UBS


Gareth Jenkins - UBS

Well thanks for joining Day 2 and it’s my great pleasure to introduce Franki from ASML. Most of you probably know Franki already and I just will say that this is the smartest that you'll ever see me. I'm Gareth Jenkins from the European Hardware Analysts and Franki, over to you, thanks for coming.

Franki D'Hoore

Thank you and good morning to all. Safe Harbor statement, in the first two points of the presentation, just a quick where are we statement. Business summary, you've seen these with the results. Actually we had the several quarters, last quarter of 2010 and the first quarters of 2011where we were running close to or over €1.5 million.

In Q4, we went to about €1.2 billion and we guided and you will see in the outlook, the first half of this year at €2.4 billion and that means also a runrate that averages €1.2 billion. You could summarize that as revenues did come off 20% if you compare it with the €1.5 billion.

And that is for ASML, but it’s probably also indicative for what our industry does. Margins around these levels are still quite nice in terms of operating margin close to 24% et cetera. Backlog we have shown of course it came down a bit, but we also have guided going forward or just the cash, we returned a lot of cash to shareholders.

So if you, we announced another one for this year that has increased a bit over what was still outstanding and in combination with dividends this year, it will close to €700 million and last year it was about €900 million that we returned and it all results in us having returned over €3 billion in the meantime and we have since 2006 actually the buyback of the shares represents about 30%.

The financial policy of the company is to continue doing these two things, that is dividend and share buybacks. And as you may realize relative to this kind of P&L and cash generation, the breakeven level of the company is around €2 billion. So as a company and in the past, we used to operate in peaks and troughs, around breakeven, we are now so far with that range, above breakeven that it no longer seems to be a big concern if no disasters like 2009 happen, is what you have to add now.

But in the normal cyclicality of semiconductors where big troughs, significant troughs would be 40% in terms of overcapacity correction and where mild troughs would be 20%, it’s not a concern. So this being said what I really wanted and yeah outlook, this is what we said on Q1 and the booking is expected to be a bit above Q4 and then margins are fine, R&D we took down a bit, $5 million and SG&A is about stable.

What I really wanted to talk about today has to do with the fact that there is EUV coming and we’ve started to mention that several quarters ago and now that the EUV is coming, it becomes a bit of, everybody is very focused on EUV as if in the world only EUV exists.

So from an ASML point of view, we perceive it a bit like you know, it is -- the conversation is pretty unbalanced and I think we are eager enough to bring a bit more balance back in the conversation because every time you see somebody and it could be two weeks ago, they ask you how is EUV going, what is the program since last two weeks on the source? Is the power up a bit and et cetera, et cetera? So we think that is not necessarily a very meaningful conversation and I would like to have a bit of a more meaningful conversation.

So reality is that we have a dual product development strategy, that says it is very much focused on an evolution of NXT which is the body that does immersion, the machine that does immersion and then also on EUV, that is the technology for the next 10 to 12, 15 years.

It is very important to have both. On immersion, last year we did a bit over 100 machines. We’ve done a lot of improvements on NXT and we have several NXT machines that are highly, highly productive in the space of customers that do over 4000 wafers a day, that’s a large number. Probably, it doesn’t tell you a lot, but that is a large number. These are machines that do over a million wafers a year.

If you will compare that to numbers that customers would give you on our competitor, they would not get close by any meaningful amount. So NXT is there and it’s there for a long time. EUV is there and it’s there in the sense that we shipped last year, the 3100. It is used with every customer to do recipe development, so it’s not for testing the machine. The machine has been tested. It is for really developing processes and process layers on an EUV ecosystem.

Yes, it is true that a lot of work still needs to be done on productivity for that technology to become economically viable, very true. Now this is a picture that shows you that indicates a bit on high abstraction level, but with a bit of detail, on how the customer roadmaps go in Logic, DRAM and in Flash. And you have the timelines and underneath the timelines, you have the geometries, going down to below 10 nanometers and you also have a bit of an indication on the device architectures that are being investigated and built to get there.

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