ASML Holding N.V. (NASDAQ:ASML) Q1 2024 Earnings Call Transcript

And five divided by three gets you to 1.7, right? So that’s it. So then there would be 1.7 needed more in order to get to the high end of the — of that bandwidth at the beginning of the year.

Peter Wennink: Yes, 2036.

Roger Dassen: Exactly, yes.

C.J. Muse: Thank you.

Roger Dassen: Welcome.

Operator: Thank you. We’ll now go to the next question. And your next question comes from the line of Alexander Duval from Goldman Sachs. Please go ahead.

Alexander Duval: Hi, everyone. Many thanks, Peter, for everything over the years. I have one quick question and then a follow up. The first is on China services. We’ve seen a number of news articles talking about US government asking the Dutch government to prevent servicing of certain aspects of the installed base in China. I had a lot of investor questions on this and just wondered if you could provide any perspective on potential implications. Given especially that tools don’t work without services, is it fair to assume any ban would likely not encompass all China services revenues? And secondly, on electrification, you mentioned that electrification could be a potential driver of litho demand. We’ve seen a number of news articles talking about the need for technology to help deal with strong EUV driven power needs in the grid, as well as AI server driven demand.

So wondered if you could provide some context on what this means for longer term litho demand? Many thanks.

Peter Wennink: Yes, I think on the China services. Yes, we’re probably reading the same articles. So, yes, that has been a discussion between the two governments and let it be a discussion between the two governments. I mean, of course, we’re providing input. We’re providing input of the size of the — and the type of services and I think it’s all being taken into consideration to determine in the end what the real problem is. And I think that is something which governments will need to discuss, because probably it’s all going to be in their discussion on what they call the national security interest. So we just provided with the information and I think currently we have — there’s nothing that stops us servicing the installed base in China today.

On the electrification, I think we’ve said this many times when we talked about the growth of the industry and it also refers back to the question that C.J. asked. Yes, the grid electrification, the build of the grid, the investments in renewable energy and the investment in a smart grid will be a significant driver — is a significant driver for mainstream semiconductors. So that is indeed true. Electrification, you think about the vehicle is also about mainstream semiconductors and advanced semiconductors. So yes, I mean, this is not a requirement or a request of one part of an industry. It’s all connected. So you are indeed correct. I think this is what people now start to realize that if we want to invest in renewable energy. Take the Netherlands for — as a particular example, there’s a significant investment in solar panels and in wind, which actually means that we need to upgrade the grid.

And the grid needs to be smart because there’s not going to be a constant supply of those electrons, so that needs to be managed. So, it’s a complete overhaul of the electric grid needed. Yes, that’s absolutely true and this is why we need more mainstream semiconductors. And we need a lot — more of them. And Roger pointed out, we said at the capital market at 2022, 380,000 wafer starts per year need to be added. Well, we didn’t do that last year. We were lower than that. So we’re running behind our own model So I’m happy that around the world investments in mainstream semiconductors take place because we need them.

Christophe Fouquet: And Alexander, it’s everywhere. So it’s in the generation of power, as Peter just said, solar panels, windmills, it’s in the distribution, the net — it’s in the storage because that’s another one, right. You need the electricity at a point in time where it’s not being generated and it’s in the usage, like the EUV. So it’s everywhere. And therefore, this was a very significant part, as Peter just said, of the 380 that we talked about. Of course, we’ll review this again when November comes, but I think the world is clearly appreciating a little bit better by now, how significant the electrification is and what it does for the demand for mature chips.

Alexander Duval: Fascinating. Thank you very much.

Operator: Thank you. We will now go to the next question and your next question comes from the line of Chris Caso from Wolfe Research. Please go ahead.

Chris Caso: Yes, thank you. Good morning. First question is regarding the guidance implied for the second-half of this year, obviously expecting an acceleration in revenue. Can you give some detail on what you expect to lead that revenue growth in the second-half? And specifically on China, you characterize that as strong right now. Do you expect that to remain strong as you go into the second-half?

Roger Dassen: Yes. So the second-half, I think this is very much in line with the orders that we have today, because we’re fully booked for the year, so the shipment plans that we have. And this is across the board. So this is for some of the fab openings and some of the ramps that I think all of you are aware that have been scheduled for 2024, both in logic and in memory. So this really is across the board. As you know, there is – we’re fairly conservative, I would say, on the Installed Base business, right? So the Installed Base business in the second-half is only a little bit more than what we have in the first-half. And I think that’s still potential that I think there is for the year that we see an uptick in that number, particularly as it relates to the potential for upgrades in the second-half of the year. But it really is very much, I would say, across the board.

Chris Caso: And in terms of China?

Roger Dassen: In terms of China, I think we already said that we expect China to continue to be quite strong. Of course, it depends a little bit on the sales role to the rest of the world. There are still some tools where we are supply constraints, so there the demand composition could be such that there are some limitations to what we can ship to China. But normally, as we said, the demand for China is very strong, so all the reasons to expect the strong sales into China to continue for the rest of the year as well.