ASML Holding N.V. (NASDAQ:ASML) Q4 2024 Earnings Call Transcript

ASML Holding N.V. (NASDAQ:ASML) Q4 2024 Earnings Call Transcript January 29, 2025

ASML Holding N.V. misses on earnings expectations. Reported EPS is $7.3 EPS, expectations were $7.58.

Operator: Good day, and thank you for standing by. Welcome to the ASML 2024 Fourth Quarter and Full Year Financial Results Conference Call on January 29, 2025. At this time, all participants are in a listen-only mode. After the speaker’s introduction, there’ll be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference call over to Mr. Jim Kavanagh. Please go ahead.

Jim Kavanagh: Thank you, operator. Welcome, everyone. This is Jim Kavanagh, Vice President of Investor Relations at ASML. Joining me today on the call are ASML’s CEO, Christophe Fouquet; and our CFO, Roger Dassen. The subject of today’s call is ASML’s fourth quarter and full year results 2024. The length of this call will be 60 minutes and questions will take in the order that they are received. This call is also being broadcast live over 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’d 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 statement contained in today’s press release and presentation found on our website at www.asml.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 Fouquet for a brief introduction.

Christophe Fouquet: Thank you, Jim. Welcome everyone and thank you for joining us for our fourth quarter and full year 2024 results conference call. Before we begin the Q&A session, Roger and I would like to provide an overview and some commentary on the fourth quarter and full year 2024 results as well as provide some additional comments on the current business environment and on our future business outlook. Roger?

Roger Dassen: Thank you, Christophe. And welcome everyone. I will first review the fourth quarter and full year 2024 financial accomplishments and then provide guidance on the first quarter of 2025. Let me start with our fourth quarter accomplishments. In the fourth quarter of 2024, total net sales were €9.3 billion which is above the high end of our guidance primarily due to installed base revenue. As expected, it also includes revenue recognition on two High NA EUV systems. Net system sales were at €7.1 billion which includes €2.9 billion from EUV sales and €4.2 billion from non-EUV sales. Net system sales was driven by Logic at 61% with the remaining 39% coming from Memory. Installed Base management sales for the quarter were above guidance at €2.1 billion primarily driven by additional upgrade business.

Gross margin for the quarter was above guidance at 51.7% due to a combination of additional upgrade business and lower than planned costs associated with the new product introduction of High NA systems in the field. On operating expenses, R&D expenses came at €1.116 billion in line with guidance while SG&A expenses came in above guidance at €318 million due to year-end payroll adjustments and a pull in of IT costs. The effective tax rates Q4 was 21.5% as a result of a one-off tax expense related to a historic tax position bringing the full year ETR to 18.6%. 2025 we expect an annualized effective tax rate of around 17%. Net income in Q4 was €2.7 billion representing 29.1% of total net sales and resulting in an EPS of €6.85. Turning to the balance sheet, we ended the fourth quarter with cash, cash equivalents and short term investments at a level of €12.7 billion.

We ended Q4 with a free cash flow of €8.839 billion which is significantly higher relative to last quarter’s 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 €7.1 billion which is made up of €3 billion of EUV and €4.1 billion 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 reporting of our bookings going forward. As we have said in the past, our 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 — 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 €28.3 billion with a gross margin of 51.3%. EUV system sales realized from 44 systems including High NA were €8.3 billion, 9% lower compared to 2023. DUV system sales grew 4% to €12.8 billion. Metrology & Inspection systems sales increased 20% to €646 million. Looking at the market segments for 2024, Logic system revenue was €13.2 billion, 17% lower than 2023. Memory system revenue was €8.6 billion, 44% higher than 2023 and Installed Base Management sales were €6.5 billion, 16% higher than 2023.

We concluded 2024 with a net systems backlog of around €36 billion. In 2024, we continue to invest in innovation across our full product portfolio, increasing R&D spending to €4.3billion in 2024, or about 15% of sales. SG&A increased to €1.2 billion in 2024, which was about 4% of sales. Net income for the full year was €7.6 billion, 26.8% of net sales, resulting in an earnings per share of €19.25. In 2024 we generated free cash flow of €9.1 billion. We returned €3 billion to shareholders through a combination of dividends and share buybacks in 2024. With that, I would like to turn to our expectations for the first quarter of 2025. We expect Q1 total net sales to be between €7.5 billion and €8 billion. We expect our Q1 installed base management sales to be around €2.1 billion.

Gross margin for Q1 is expected to be between 52% and 53%. This is primarily driven by a positive effect from no High NA revenue recognition in the quarter, partly offset by lower immersion volume. The expected R&D expenses for Q1 are around €1.14 billion and SG&A is expected to be around €290 million. In Q4, ASML paid the second quarterly interim dividend over 2024 of €1.52 per ordinary share. ASML intends to declare a total dividend for the year 2024 of €6.4 per ordinary share. The third interim dividend of €1.52 per ordinary share will be made payable on February 19, 2025. Recognizing this third interim dividend and the two interim dividends of €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.

Christophe Fouquet: Thank you, Roger. As Roger has highlighted, we finished 2024 with a strong quarter. We are extremely thankful to the whole ASML team that worked very hard to realize these results. In 2024 we have also successfully achieved a number of technology milestones, including the release of a number of new products critical for our customer’s technology roadmaps. On our Low NA EUV technology, the NXE:3800E, we demonstrated the full system specification in our factory with 220 wafers per hour throughput at a new record overlay. We are on track to deliver new systems at full specification and start upgrades for the systems already at our customers during the first half of 2025. We continue to work with our customers to drive the maturation of the system to support their ramp to high volume manufacturing.

On High NA EUV, we completed the installation and customer acceptance on two systems in Q4. Customers have now run over ten thousand wafers on High NA systems and their feedback has been very positive. They are seeing major performance benefits in imaging, overlay and contrast which also provide significant cost reduction opportunities for both Logic and DRAM processes. We continue to work with our customers to define the exact insertion point for High NA in their processes. We also shipped a third system in Q4 that is now undergoing install and qualification. On DUV, we shipped the first NXT:870B, the latest generation KrF system capable of throughput of over 400 wafers per hour and the NXT:2150i, the latest generation immersion DUV system capable of achieving throughput over 310 wafers per hour and overlay performance of equal or less than 1 nanometer.

And finally, in Applications, after close collaboration with multiple customers we have successfully completed the evaluations and recognized first revenue from a number of eScan 1100 Multi-beam Inspection systems. All-in-all, our product pipeline remains strong, supporting the roadmap requirements of our customers and driving our overall competitiveness. We will share more performance data at the SPIE Lithography conference in February. Looking to 2025, we see full year revenue between €30 billion and €35 billion and gross margin between 51% and 53%. 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 customers equally in the short term.

If AI demand continues to be strong and customers are successful in bringing on additional capacity online to support that demand, there is 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 install base, to which EUV’s contribution is continuing to grow. Our China business in 2023 and 2024 was relatively high because of our ability to execute on a 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 dynamics as I highlighted earlier. These 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 ASML, we anticipate that an increased number of critical lithography exposures for these advanced Logic and Memory processes will drive increasing demand for ASML products and services. As a result, we see a 2030 revenue opportunity between €44 billion and €60 billion with gross margins expected between 56% and 66%, as we presented in Investor Day 2024.

With that we would be happy to take your questions.

Jim Kavanagh: Thank you, Roger and Christophe. The operator will now instruct you all momentarily on the protocol for the Q&A session. Before I would like to ask you to kindly limit yourself to one question with one short follow up if necessary. This will allow us to get through as many callers as possible. Now, operator, could we have your final instructions and then the first question please?

Q&A Session

Operator: Thank you. [Operator Instructions] We will now go to the first question. One moment please. And the first question comes from the line of Joe Quatrochi from Wells Fargo. Please go ahead.

Joe Quatrochi: Yes, thanks for taking the question. I had a question on your 2025 outlook. You mentioned that if customers are able to build capacity for AI, then you think you can 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 the first half of this year if that high end of the target guide is possible?

Christophe Fouquet: 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. So we are preparing for that and I think 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.

Joe Quatrochi: 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 in the second half and you talked about gross margin maybe a little bit higher in the first half. How 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 kind of update there?

Roger Dassen: 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 53% guidance. 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 High NA is to be skewed towards the second half.

Joe Quatrochi: Thank you.

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

Tammy Qiu: Hi, thank you for taking my question. So firstly our High NA 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 within the timeframe, 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.

Christophe Fouquet: Well Tammy, this is Christophe. So I think that there’s a few conditions for customers to use a new tool like High NA. The first one is the one you repeated which is, the performance have to be attractive, have to be good. I think that’s 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 we typically try to ship a few early tools. These are over 5,000 so that we can start to work aggressively on maturity. We are going to start shipping the 5200 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 maturity research is such that customers are comfortable to use it in production.

So that process typically takes 12 months, 18 months. It depends a bit on where we start with the tool. And the discussion is a discussion we have I would say on a regular basis because again depending on the progress of course the appetite to move faster or slower is going to be adjusted.

Tammy Qiu: Okay. Okay, thank you. I guess I will circle back in 12 months’ time. And also just in terms of China, so China, I noticed that 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 the new wave. Do you actually see your customer pulling in their order 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 prerecord video that China was China expectation on U.S. and has been falling 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 three months ago?

Roger Dassen: I think 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 for a number of years we have been building up a very significant backlog because all the fill rate 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. And that also means that we believe that the sales to China will be a more normalized percentage. And as we said, as we said we think that is a low 20% number that China will represent in 2025 in our total sales numbers.

But that is what is going on. The order intake that we received from China in the fourth quarter I would call is healthy. But it’s not, an order intake 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.

Tammy Qiu: Thank you.

Roger Dassen: You’re welcome.

Operator: Thank you. Your next question comes from the line of Sara Russo from Bernstein. Please go ahead.

Sara Russo: Thank you very much for taking my questions. 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 you annually. Can you talk us through the decision to do that? And I guess what are you expecting to be the reaction from investors? And is this a response to the increased focus you’ve been seeing on bookings that seems to have been taking place over the last 12 months to 18 months?

Roger Dassen: 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 customers. We have ongoing dialogues with our customers. And based on 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 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 total size of the orders per customers are pretty significant given the tool prices for High NA tools, for Low NA tools, which, are pretty substantive. 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 one quarter, they typically wouldn’t do it in one quarter and then get another mass order intake in the quarter thereafter. So as a result of that, you see sometimes very high order intake in one quarter and 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 robustly underpinned guidance that we provide at 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 the 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, 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 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 gave the confidence to Christophe, myself and the full team that the decision that we just took is the right decision for the company, for its stakeholders.

Sara Russo: 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 set of 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 quarter of bookings now, €3 billion 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?

Roger Dassen: Yes, what we said last time is indeed that we needed about €2 billion of EUV orders to get, to get covered for EUV on the midpoint of 2025. So with the €3 billion that we have in there, we’ve reached that point. So it’s clear that we’re either starting to build on, on 2026, or we’re starting to build, into the higher end of the guidance. But that really is, the timing — is really that timing question that is dependent on it. But you are right, we said we need to get to €2 billion order intake for EUV and the fact that we have been recording three gives us, I would say, good confidence on the order, at least for the EUV part on the midpoint. On DEEP UV 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 there are always timing issues and customers always have the ability during a year to either pull in or push out from the last quarter.

Sara Russo: Great, thank you very much.

Roger Dassen: Welcome.

Operator: Thank you. Your next question comes from the line of Francois Bouvignies from UBS. Please go ahead.

Francois-Xavier Bouvignies: Thank you very much. My first question is you see a strong demand for EUV Logic driven by AI. Christophe, you mentioned in your video, presumably mainly from one large customer. How 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 2025 will be a big build to prepare for 2026? So in other words, I mean, how do you think about phasing of this strong node as first year could be bigger and then you add on a bit less in 2027? Or is it going to be really a granular buildup?

Roger Dassen: Well, I think, Francois we don’t have the details of our customer ramp fully. I think 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 2026, 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 another discussion we’re having with the advanced logic customer. But I think we don’t see any kind of pattern that you described.

Christophe Fouquet: And Francois, this was actually also confirmed by CCVA on the call that they had. So he made specific comments on the ramp profile of N2 [ph]. So you might want to refer to that as well.

Roger Dassen: Yes, what Christophe just said.

Francois-Xavier Bouvignies: Thank you. I was wondering what on the litho maybe given the lead times, but I mean that’s pretty fair. Thank you for that. 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 DeepSeek on the demand for AI but you describe some upside on the AI potential if we get the capacity in the second half or, if the demand is still remain strong. But similarly, I mean if you look at the iPhone, which, or Apple or iPhone, which 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 describe at your CMD that it’s neutralizing. But I was more wondering in the short term. So 2025, 2026, the dynamic of high AI and slower smartphones.

Christophe Fouquet: Well, I think in the short term, I think that we tried to explain also with the upside. So I think that the demand is strong to really drive, I would say, the utilization of whatever capacity will be built initially on advanced logic. I think, by the way, this will not be fully or so most dedicated to AI. So I think, yes, the rest of the market is not doing spectacular, but it’s still there. I think that I will also refer to the TSMC call, where they were pointing also for the first time to some recovery on mobile. So I think nothing is spectacular there. But as you go through 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 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.

Francois-Xavier Bouvignies: Great, thank you very much.

Christophe Fouquet: You’re welcome.

Operator: Thank you. Our next question comes from the line of Krish Sankar from TDCowen. Please go ahead.

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

Roger Dassen: Yes. I think, Krish, we were already signaling in Q3, I think that this trend might 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 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 reason for the normalization of the demand is what I have said earlier, which is that the eating into the backlog that was built up all the way through 2022 is now coming to an end. And now we’re really seeing a normalized pattern.

Krish Sankar: Got it, Got it. Another 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, and you keep hearing about HBM capacity increase. But it seems like you’re not seeing better DRAM dynamics this year. Can you just tell us a little bit about what you’re seeing in the Memory ecosystem?

Christophe Fouquet: Well, I think you almost summarize it 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 photology before. I think there also nothing spectacular, but there is some recovery, which also called for more capacity. So that’s why we still ran pretty strong in 2025.

Krish Sankar: Thanks.

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

Chris Caso: Yes, thank you. Good morning. I guess and as I listen to you this morning, it sounds like a situation perhaps similar to how you started out last 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 that backlog middle year. So I understand your prudence I guess, one, is that accurate depiction 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 there perhaps some of the concerns about AI? What are some of the scenarios which would sort of point you to the lower end?

Roger Dassen: 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 today where we were a year ago. And also, I would say now 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 on 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 2023. I think this year we started the year with a 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 a strong backlog. Yes we had a strong order intake in the 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.

Christophe Fouquet: Yes. And I think on the low end, I think even Roger mentioned it already, I mean, we have seen last year, this was one of the highlight of Q3. We’ve seen major push out of some of the capacity for some of the customers. I think through our guidance this year, we see that this risk is a lot lower in terms of volume. But I think Roger said it, 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 pushout may not be completely excluded, that’s what the final range. So I think that’s not more than that, I would say. Geopolitics, we also mentioned that. There, it’s even more difficult, of course, to quantify because we just had new export control being released.

So there’s no expectation of anything on our side, but this is also 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.

Chris Caso: Sure, very helpful context. Thank you. The inevitable, kind of follow on to that is, how that affects the view for 2026 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 2026 to be a growth year and what are the variables that you’re thinking about with regard to 2026?

Roger Dassen: Yes, Chris, that’s as much as we said. We are looking at 2026 as a potential growth year for ASML. That’s how we look at it. But it is exactly as you said. It’s way too early to provide any direction or magnitude on that.

Chris Caso: That’s great. Thank you.

Roger Dassen: You’re welcome.

Operator: Thank you. Your next question comes from the line of Didier Scemama from Bank of America. Please go ahead.

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

Roger Dassen: Yes, we typically don’t disclose that Didier. No, we don’t break down between customers or between regions. But a significant part of the DEEP UV order intake for the quarter was indeed related to larger customers and for larger customers for the non-critical layers as you mentioned it, but we’re not putting a percentage on that.

Didier Scemama: Perfect. That’s good to hear that it’s confirmed. On the EUV order intake obviously largely driven by foundry logic. Well, I think you said 50:50 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 three major customers. On the DRAM side you’ve got three major customers. Can you just – obviously, you can’t discuss the various customers sort of health, but is there any change with regards to the trajectory of the various buckets? For example, 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, maybe foundry not changing very much but would be much more interested in hearing your views.

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

Didier Scemama: Okay, well I’ll allow myself to follow-up then.

Christophe Fouquet: Fair enough.

Roger Dassen: Cannot blame you for trying, right?

Didier Scemama: French people. No. On High NA, just maybe give us a little bit of insight into that third shipment. Is that for a North American customer or is that also for maybe a Taiwanese or Korean customer? That would be helpful.

Roger Dassen: I think we said it’s not for the North American customer, but we have not said and will not say we’re [Indiscernible]

Didier Scemama: Okay. I’ll go back in the queue. Thank you. I’ve tried.

Roger Dassen: You did.

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

C.J. Muse: Yeah. 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 other markets. So can you touch on the level of derisking embedded in your assumptions for those customers where you’ve seen pushouts to 2026? And for the high end, is there sufficient clean room space at those foundry and HBM comers to actually take tools by the Q4 time frame?

Christophe Fouquet: Yes. I think — on the first part, I think Roger indicated when it comes to booking, 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 pushout. I think 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 probably, today, we’re looking at opportunity to get more clean room space. I think that’s what we mean by building up additional capacity. And if this is possible and if this happened, then we can most probably put some of our tools there. But that’s exactly what we’re looking at with our customers.

C.J. Muse: Very helpful. And I guess as a follow-up, you talked about the ongoing shift led by AI across HPC and HBM. I’m 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 HBM3, HBM4, etcetera? I would love to hear kind of your thoughts on the trajectory there.

Christophe Fouquet: Well, I think we tried to explain that in November. So the need for a high power computer, 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 products mostly calling for a bit of an acceleration of Moore’s Law 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. And I think we also said in November that historically this has always driven more demand for advanced litho. That’s of course part of discussion we are having as we speak with our customers.

So part of the shift we see, I think 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 well, you’re asking very detailed question on, future node. We don’t have the detailed answer yet, but the trend is definitely there.

C.J. Muse: Thanks so much.

Christophe Fouquet: You’re welcome.

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

Andrew Gardiner: 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, you’ve 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. But as I look to 2026, assuming growth, as you’ve described, loosely, Roger, it’s 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 20-nanometer migration and in particular, the high-volume ramp in the first 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?

Roger Dassen: Yes, 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 and also manufacturing capability. So it’s not like at a certain point in time, that’s where the music stops. But definitely, we should continue to see good order intake in the first two quarters. I think that’s a fair assumption.

Andrew Gardiner: Thanks. I mean, related to your answer there, Roger, the strategy of pre building, is that continuing, have you changed that at all given the shift in customer dynamics we’ve seen over the last six to nine months?

Roger Dassen: So really we’re doing this also, Andrew, to make sure that we have a level loading of our over 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 appeals, 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, 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 a factory.

Andrew Gardiner: Thank you very much.

Operator: Thank you. Your next question comes from the line of Mehdi Hosseini from SIG. Please go ahead.

Mehdi Hosseini: Yes, thanks for taking my question. Two follow-ups. Roger, can you give me an update where we are with 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’re planning internal capacity, especially looking beyond the 2025. When we had a strong cycle a couple of years ago, your backlog was in the $40 billion range. Do you see 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’s more concentration of customers for EUV.

Roger Dassen: Yes, Mehdi. So on the throughput, the systems that we shipped in last year were all on a — were on a better throughput than the throughput of the 3600 but not yet at the 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 at higher expectations. 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 get those higher throughputs achieved with customers and also get recognized for that.

So that’s the status. So the 220 [ph] has been demonstrated now in the process of rolling that out for the new tools and also exporting that to the 3800s that are 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 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 2030, 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 that then with supply chain and with our head count, we can respond once we get the very clear signals from our customers that demand is covering.

That’s the way we approach it.

Mehdi Hosseini: So does that mean that the backlog would be kind of in the 18 month range or are we going to go back to like 22, 23 when backlog was extended due to supply constraints?

Roger Dassen: 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 and they 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 as 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.

Mehdi Hosseini: Got it. Thank you for details.

Roger Dassen: You’re welcome.

Operator: Thank you. Your next question comes from the line of Stephane Houri from ODDO BHF. Please go ahead.

Stephane Houri: 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. One was on the non-EUV, non-China that was supposed to grow largely by the 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 Installed Base Management revenue that you said could be at about €7.2 billion. But if you take the first quarter where you guide for €2.1 billion, it gives a run rate if you multiply it by 4 of much bigger than €7.5 billion, €8.4 billion, €8.5 billion, so €1 billion above. So is there any seasonality we should have in mind about Installed Base Management? Thank you.

Roger Dassen: So let’s take the last one first. So the €7.5 billion, 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 one quarter to the other. I would also say that our visibility into the upgrade is, of course, less than the service business. But I think for now, I would encourage you to still use the €7.5 billion as the right number. When it comes to the non-China, non-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.

Stephane Houri: And this is a change, right?

Roger Dassen: What was that? No, it’s not a change. It has not changed.

Stephane Houri: Okay.

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

Stephane Houri: Thank you very much.

Roger Dassen: You’re welcome.

Operator: Thank you. Your next question comes from the line of Michael Roeg from DeGroof Petercam. Please go ahead.

Michael Roeg: Yes, good afternoon. Can I ask a question about one of your slides from the Investor Day 2024?

Christophe Fouquet: We’ll do our best.

Michael Roeg: Okay, well, now you’re still laughing. It’s the presentation by Mr. Harchandani [ph], Slide number 13. 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?

Roger Dassen: I have it in mind. Yes, yes.

Michael Roeg: 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 trillion in sales in 2030?

Roger Dassen: It’s not our customers, right? When you talk about the semiconductor industry, there’s for customers.

Michael Roeg: 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.

Roger Dassen: Yes.

Michael Roeg: However if I look at the 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 the difference is biggest for smartphone and data center because that’s where the IDNs have the smallest positions. So you’ve changed all your scenarios with data center scenarios going up, most other markets scenarios going down, which obviously looks great. But from a manufacturer perspective, I don’t know if anything has changed, actually.

Roger Dassen: 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 topic.

Michael Roeg: 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.

Roger Dassen: Yes. I appreciate it, but I think we have the right follow-up actually.

Michael Roeg: Let’s take it offline. Then two — one tiny follow-up then, a whole different topic, that’s on the — you will no longer show the quarterly bookings is perhaps a 12-month rolling booking figure something that would be smoothing out all those lumpy intakes.

Roger Dassen: To be honest, I think a backlog per annum gets you awfully close to that, right? Because if you have the backlog and you have the SIG numbers for the quarter, I think it doesn’t take you too much to kind of recalculate that. So I think by [indiscernible].

Michael Roeg: We will only see it once a year, don’t we?

Roger Dassen: Yes, you do. Yes, yes. And I think as I explained before, we believe that’s an important data point for you, and it’s good enough.

Michael Roeg: We’ll take it offline, and the more questions about these slides will be in the next quarter and the one after because I’ve got many questions.

Jim Kavanagh: 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 to contact ASML Investor Relations with your questions. Now operator, can we have the last caller, please?

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

Sandeep Deshpande: 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 months to 18 months the timing of the insertion of High NA. But in terms of your backlog, I believe you already do have High NA tools in your backlog for shipment in 2026. So how do you put the 2 and 2 together that you will know whether the customer is going to use these tools in high-volume manufacturing only later in the year or next year, but you’re already possibly building these tools for the customer? So is there a risk to the customer first at the end of the year that, well, actually, we’re not going to implement the tools into production next year, and then that these orders don’t happen in 2026, which are there in the backlog today?

Christophe Fouquet: Well, I think — so you mentioned the backlog, and that indeed in our backlog, we have quite a few tools that are not NXE:5000, which was a tool basically plan for R&D. So indeed, our customers have upfront already ordered some 5200, which are tools intended to be used in high-volume manufacturing. So it means that the logic of insertion has been there for quite a while. You start with R&D, then you plan for, I would say, a reasonable insertion. So those tools 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 new booking on High NA, we’ll be most probably looking at the bigger insertion in the node after that, which is a bit later.

But the logic you describe is the logic customer put in place together with us already, in fact, a couple of years ago, and I think they are sticking to that logic today.

Sandeep Deshpande: Okay, since you’ve run out of time, I will leave it at that. Thank you so much.

Christophe Fouquet: Thank you, Sandeep.

Jim Kavanagh: All right. 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.

Operator: Thank you. This concludes the ASML 2024 Fourth Quarter and Full Year Financial Results Conference Call. Thank you for participating. You may now disconnect.