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ASML Holding NV - New York Shares (ASML)

Participants
Skip Miller VP, IR
Peter Wennink CEO
Roger Dassen CFO
Joe Quatrochi Wells Fargo
Mehdi Hosseini SIG
Francois Bouvignies UBS
Alexander Duval Goldman Sachs
Aleksander Peterc Societe Generale
Didier Scemama Bank of America
Krish Sankar Cowen and Co.
Adithya Metuku Credit Suisse
C.J. Muse Evercore ISI
Call transcript
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Operator

Thank you for standing by. Welcome to the ASML 2022 Second Quarter Financial Results Conference Call on July 20, 20222. Throughout today’s introduction, all participants will be in listen-only mode. After ASML’s introduction, there will be an opportunity to ask questions. [Operator Instructions] I’d now like to turn over the call to Mr. Miller. Skip sir. ahead, go Please

Skip Miller

Thank you, Vice is Miller, everyone. operator. of Investor Welcome, President This Relations Skip Yes. at ASML.

is on CFO, be the subject will be of also Joining Wennink; at taken results. The ASML’s in today the order opening minutes, being this conclusion live shortly This that they replay internet ASML’s quarter transcript are following are call. me over will on a call of asml.com. and CEO, XXXX and call second A our today’s and call be Roger of The management’s XX received. remarks length the the the Dassen. our this call broadcast of of is call available Peter questions will website

I’d forward-looking that management listeners risks begin, involve we the comments will forward-looking caution These to this and during of statements like laws. statements by meaning securities include within call conference material uncertainties. federal made the Before

of Commission. asml.com encourage press Peter release factors, discussion brief Report like Wennink Securities as today’s found our on filed other For I presentation to and turn in over I’d Exchange in with review at ASML’s XX-F call website you the Harbor and on Annual contained and With a documents risk that, and introduction. Safe statement Form to the to the a for

Peter Wennink

commentary business would comments a thank and second second of provide the joining as healthy start I Roger on current environment for overview before provide the us our still quarter like quarters. I on And of and for begin And our XXXX you business families Welcome will the some future of some outlook. added performance Roger? complete our all an comments introduction Q&A hope quarter our XXXX outlook. call. we review everyone, you coming I results safe. additional to with session will and the our some quarter Thank conference you, and and with on financial on as short-term Skip. well views Roger and the are second XXXX with your

Roger Dassen

at as for quarter Gross at XX.X%, billion, the came the at million, is guided. shipped to due in EPS On at you, expenses of €X.X at the XX SG&A driven €XXX guidance. increasing and EUV second Thank income €X.X came quarter expenses, EUV representing operating billion guidance. €X.X and net end QX sales then system inflationary costs. quarter in of primarily recognized was million €X.X first and quarter came XXXX. third Installed provide will financial of billion, Management and on sales Net systems revenue billion at quarter. Memory. systems our expenses €XXX above We I was by R&D XX and margin guidance Net and came slightly XX%, from the billion, above of resulting Logic in an the lower sales everyone. this at €X.XX. XX% of from which Peter, Base in accomplishments guidance, which for XX.X% remaining Net in sales in €X.X our review welcome,

the a to at billion. level cash, investments of second and equivalents Turning short-term ended with sheet. the balance cash quarter €X.X We

expectations XXXX. XX% turn by quarter of and and to that bookings X.XX Logic Memory for bookings the accounting I system strong X.XX EUV and EUV order system Moving at the bookings €X.X of with customer was third mature intake to book, continued would reflecting the billion billion, Strong record driven systems non-EUV for €X.X order net the for net for nodes. for of demand billion to systems. QX came in With advanced a €X.X NA both, remaining our the and Total NA XX%. like

constraints, which to quarters. system systems us chain increase delayed supply in our production starts supply increase and quarter, order in shipments number customers are resulted increasing to in planned the fast revenue quickly amount QX will to of the it as in of We requires in fast more possible. With shipments with the delayed experiencing as subsequent

expect We the billion of shipments more sales QX. between net a of and the €X.X end than for net end total revenue delayed QX excludes €X.X This result around to of billion. billion as €X.X be at QX fast of QX at

€XXX billion. QX around and is around to €X.X for to We similar be expect expenses is million. SG&A sales to and expected Base expected are be come our Installed for XX%, expected to between R&D QX QX Management prior Gross at €XXX XX% million around margin The quarter. in

a XXXX estimated In dividend be total QX, to dividend ASML Together €X.XX and between paid expected XXXX, with tax interim XX%. effective dividend per for final a Our ordinary XX% annualized this the paid share. rate resulted of of a is €X.XX in in XXXX from balance dividend per a return and across the this This We and quarterly provide cash dividend investors to QX our our in starting cash biannual ordinary will more share. timely year. plan evenly payout more of will year. our to move to grow

million shares dividend will over like program amount €X.X XXXX-XXXX €X.X around will back end shares around billion. of ordinary share XX.X around for of per interim call that €X.XX XXXX be total turn With over is to to made In a XX, XXXX million payable total billion. Peter. repurchased Total around amount a August the I under and we quarterly for be until QX shares XXXX. of X.X bought QX the on First would

Peter Wennink

you, Thank Roger.

came within revenue Roger quarter highlighted, As and the profitability for basically guidance.

a QX increasing and delay in fast more quarters. shipments in constraints as drive as subsequent revenue sales recognition to range be expect supply We similar QX to guided

more couple Looking of at market mixed we a near-term see dynamics, messages. the

for in PCs consumer-driven and automotive while significantly still this Some of also still to Litho segments change exceeds picture. we no are levels. customers towards levels seeing very our chip The systems are demand. trending high utilization supply at seeing we performance signs levels at see year still high is smartphones. are like computing demand primarily inventory seeing they customers indicating are slowing demand this and demand pre-COVID Other segments, market tool strong our market certain and

place are planning of record number these systems we continue today, to systems supply a which, the to we of increasing are until This quickly In get skips customers fast possible. leads of customer And it capacity. shipments to final formal those an the earlier customer testing our the as the and delays, output takes customers as recognition faced but reminder, but factory. for are We provide constraints, likely testing acceptance to year. to our process of some a to of seems then from in shipment formal throughout at site. to number acceptance as an with deferral revenue does number as ship recover effort shipments increasing fast access a with are And a wafer

shipments around more in subsequent to are XXXX €X.X around XXXX to into seeing as leads we €X to XX%. XXXX is billion billion, The increase fast revenue year. €X.X expect shipments next fast revenue billion, year-on-year recognition growth from will revenue in quarters, that of As delayed This move around recognition expected leading recognition of revenue revenue delay €X.X value of now to lower previously an we therefore and in billion. communicated, also then to increase

end year. value around a or XX%, the this of and growth we at expecting billion the shipments approximately began As €X €XX.X fast of reminder, year revenue of billion, a

We XX%, fast and are approximately revenue €X.X is of now which €XX.X billion growth of a the at expecting of end around value billion, year. shipments the

total XXXX essentially unchanged. is business volume for the So,

ship expect systems still For XX our to business, we EUV year. this

systems, with value systems, both revenue As business, immersion year demand will a last XX%. in be XXXX fast shipments to this of EUV significant fast higher recognized dry systems number a now has around €X.X or as on sales revenue billion. deep still systems. expect as continued deep of shipments, growth of UV around of we be on and of and of well XX recognized inspection a similar by XX systems for to and result a €X.X Compared as around in billion, UV of systems that Due a to Applications view, higher billion is €X.X In now to last our of XXXX quarter's metrology increase an now expect to increased revenue over the total strong the fast X expect we which EUV number year. number shipments revenue in we

of For the by of continue their base fabs We XX% upgrades. Installed be service their grow Management revenue Customers systems. around look performance but which to dictate revenue installed still will to for in will business, to expect growing limited the year-on-year. high utilization XXXX to base Base ability the will scale improve install installed continue upgrade opportunities will with to systems levels

change in no Regarding there the demand. segments, been has market customer

and around As the margin the up started now to on are that €X.X the expected adjusted Memory gross On this year-on-year There due to is billion segment, be XXXX Logic developments for around further increased and a majority system be margin, expectation year. year-on-year. a therefore and have of last delayed to margin gross to costs. the XX% XX% year gross XX% for of an revenue impact quarter Logic we our we revenue the with relates expect a of to of inflationary we around X% additional up system few revenue EUV

margin increase an immersion to EUV higher higher of systems. delayed revenue, relates the First, billion, €X.X and our

delayed ramp due of impact system therefore be material to continue freight And result an in for also what in quarter. growth in starts Combination inflationary finally, to increased cost lower year we costs XXXX preparation coverage starts margin plans lower to cost sales. will to capacity gross between Fixed to of compared effects and year faster had what the fixed expected labor strong our and this number seems chain XX% XX%. and Secondly, effects to issues still supply good system and XXXX. of these planned a relating on last lead our have costs to a we

transition if customers drivers, emphasize our short-term partners. are result It margin in gross Investor our We in our can ecosystems Day collaboration year and part secular that for Therefore, still in the The term, and the indicating increasing of to with place scales are of for our is look automation share advanced secular as XXXX, as long-term energy demand. time and with growth XX% Longer IC's build Customers still fair green smart valid. trends semiconductors very at also the be are is with megatrends for increases. nodes lower are is automotive to in both The Things reasons during the suppliers semiconductor communicated XX% industry electrification. to fueling cost over the expanding important mature and growth space very are content seeing longer actuators. and demand the strong inflationary currently fueling structural term way these computing shocks application ambition and ecosystem more market for The driving margin in driving in mature as and global of are due applications. demand the driven our to nodes. find for strong in discussions a the guidance increasing demand a sensors, is we technology semiconductors adjusted Customers of last and furthermore of the demand demand out high to from performance by grid. power Internet for

the As growth applications sizes. die the require driving energy at see larger we a power, transistor for to efficient performance path need higher lower

next order being investments in Finally, fabs intensity progress demand past are of there €X.X end the billion in lithography and evident of increased and billion is This planned foundry to our this intake five already quarter. sovereignty technological competition. primarily flow quarters Growth quarterly in markets pushing semiconductor services. are increasing over of for and and order driven or number schemes record products a by €X subsidy the a past our

and continued has next There Our advanced in planned could supply. clear demand. of the quarter. this Demand and continues high market and over recessionary billion for grown regarding concern this exceed year intake immersion to Almost for backlog on this €XX impact which for and to have is nodes. is the XX% fears expect EUV this we backlog is products order our

impacted. go are we cut covered. CapEx and significant for would be were backlog believe expect this litho a despite not to also will market that immune be conditions keep that our our Customers And stressing don't into we we Of to we for given they not XXXX to but uncertainties. well current XXXX, course, we if recession, business

supply systems as XXXX have year, XX and And into we to more the addressed should of by we chain of be that or the the for ASML. shipment issues able High XXX EUV engaging the UV in capacity still in actively NA than that chain systems. a capacity EUV so more around positive also EUV So, partners April, around shipment year with the systems term. in XXXX for and healthy add next a our to are deep supply will our with assuming supply we of early we to systems year, NA We're deep of mentioned turn XX UV XX capacity that systems capacity have X.XX chain are around growth than be X.XX to end secure envisaged another we discussing able medium XXX

as updates scenarios later our will year. at to Our this term XXXX capacity our be as Investor longer targets well addressed Day

fast this currently means in working are currently maximize summary, supply And we are in demand for supply strong meet We strong ongoing the of still challenges, demand of concerns support year the by next. we expect still macro-economic to output we to exceed there to expect clear obvious So, although and even experiencing semiconductors transformation. shipments. chain digital are though continued demand customer

are our increase our XXXX there. Investor confident opportunity this for which year in provides plan growth We our your XXth. you by you We November future would next With working we to be further to communicated to that happy quarter. hope to to update the with last questions. remain as we a increase plan this take on Day see Really during capacity

Skip Miller

Thank the session. The will you, operator instruct Roger on for you the and Q&A momentarily protocol Peter.

follow-up ask question if one This to you possible. to as many us one limit with Beforehand, yourself allow will short I get would necessary. callers as to to like kindly

could operator, we please? question, have instructions the your first Now final and

Operator

Fargo. Thank the question Wells you. [Operator comes line Quatrochi first Instructions] And the from of of Joe

Joe Quatrochi

that your moderate You indicating in recession customer even still a tools. talked about running they're conversations your

And don't the delays we do guess, maybe about But, you think XXXX see in how so is for guess, well about obviously backlog, cancellations. I times? I point? that relative this at and how And potential you delays your think covering do delivery to

Peter Wennink

Yes.

actually delays the think -- doing. I we're in times, to we're trying, trying we're delivery not

factory shipments, are means so growing. of it's production It with at I our helping if system actually, not the is the out value fast as of planned, as our We with customers coming as shipments, our actually said, value, you ramping. definitely and the fast which that's look that we fast but without

delivering. those production out recognition. why delaying is please this in EUV getting you because just under to working shipment systems." is the and first we we mean this at factory. still ship demand. delay higher we in is there. is we I times include as coming because -- say, our That half are we factory, And why "Whatever on the is the the delivery undershipping the pointed So, are exactly the -- backlog than go why ship systems the us XX year deep is over really and And out, the And also production fast over revenue a to helps are of next are out do, our we half. This UV the value XXX systems customers as second you shipments. can capacity point looking we

So, It's as not we like to. we shipping. unfortunately fast are would as

to to the So, executing But is that accounting according ramp backlog but factory of customer out delay, been the and thing. And see. supply revenue are we And could our higher. currently to this That's according that's then, where output the issue constraints plan because an that we recognition coming chain are of have and today. we according of demand.

Roger Dassen

is just Joe, And what Peter to saying. underscore

request at the on to is are supply chain. constraints that constraints, therefore, the purely customers very So, shipments. the right? delay the that the through -- customers having through right, And quite much pushing still on to not has mode. And turning all. Peter we The changed not the -- based for have as at said, turning we're fast-ship of It's contrary, in we're been

we later? the happened. have just on saying, tools So, our customers That knocking not has have we door could don't

Peter Wennink

Absolutely not.

Joe Quatrochi

to then, follow-up, backlog? XXXXE it. is you do when for as shipping year how Got you a And start I covered to remind there think fast next about you ability think establish isn't going for the And period then, before a we already do baseline to ship? a your where tool that fast have year, next shipments? can can by the you're the capacity EUV us

Roger Dassen

Yes.

the stage. So, over EUV backlog of well is this XXX at

year over So, of -- about and next for EUV we capacity talked XX.

go. But the well, the still second answer year. is Of to half well have for course, covered yes, next we

will the the shipped tools XXXX. lion's XXXX number, a those the will be the small of terms will half will But XXXX, be next the XXXX. versus in will of of share fairly of ship the share and lion's year all half. second second XXXX those and also will I think The be be that In the --

Peter Wennink

Yes, by we Joe. as been XXXX, correct. expected And -- we out that I would the have be of and think the until covered of end QX, also last we end turned said, quarter, we to that

Operator

you. Thank

question next the Our comes Mehdi Hosseini line of of SIG. from

Mehdi Hosseini

shipped And from 'XX systems, be catch in quick mean systems that that and revenue are potentially system XX systems out for into a revenue you does 'XX at XXX your to about 'XX, follow-up. expected pushed XX that in and recognizing a have that are EUV some there was XX backlog. to are Peter, that recognition will follow-up it point, are would to Just that I XX up systems 'XX? be if that slipping

Peter Wennink

Right. Roger, do you want to...

Roger Dassen

back itself. way And how reverse shipment some we've out And slow how way the than somehow can course, itself. the shipment of and shipment there reverse of are down could revenue would it quarter. start fast more then previous quarter One itself at fast shipments get ways effect going it the the are that would simply going multiple reverse we way, take it. you fast done push I next what -- could stage, get to expect you recognition you Yes. fast -- to that in is that is of to revenue before. indeed Mehdi, into

So, that's way. one

Another way, And becomes installation out currently quite issues. any shipment as experiencing turns if that we're customer is tests frankly, see there the the frankly, certain is of is standard problems the even that's time, what that at in it a point experiencing and Right indeed, at not at field. exporting see we're not that the by we're we doing into seeing now. the factory, we right number we're fast now, a not though -- that

So to that to value extent means might in not do value that have in at has corroborated, that that tests do not essence, any the that we the all. of factory a lot those used have or

eliminated. So, it when we're a of question, of upon these might then the And actually tests also the than acceptance to then factory go to having back going even as turn could to installation. revenue rather standard, shipment a then upon with model recognition we the becomes get that, we result few of

we done Of have to So to fact there. back there's still pattern be that work right? to course, need up, a

result of get But right? lost, go those are expect when So, two we point some that to a anything you you fast project, rather the push when shipments we'll next reversed I some be quarter. reversal. difficult quarters these at that year logical and the stage, at the and it's previous think Timing as potential exactly see And into might not is from would out deliver. of than able outcomes. that, certain is to effectively see it to is benefit Because a of it that

Peter Wennink

simple terms if yes. XXXX it's in the top, on XX Yes. anything we've And into is, it or math, all year, can number mean those next pushed XX then is XXXX everything number. course, we I come whatever it's And of out your or or recognize EUV we that XX shipments, ship to of a will whether will math, of

Mehdi Hosseini

Peter, Roger. from That there for case And trying just weaker PCs to in mitigate effectively how then both you, risk? I'm and the more to Okay. and accounts are of And you of you're the highlighted half risk, understand smartphone. question the you Peter how industry. is planning demand for follow-up semiconductor end-market a planning.

seasonally about are half. are talked all-time at that You And your to strong doing was factors. there customer hyperscalers uncertain customers' high. are be expected that well, but in second Yes, have the inventories

year, delivery of risk I thinking half doing half now given into unknown there is for if, ASML some equipment as the first scheduled what So, look the the factors, downside first to all in pushout mitigate next is XXXX? or in of fact, the

Peter Wennink

what in doing, our to why. is Then, if would you explain we happen, we later is think cost XX% I'll don't that to supply XX% happen, of Well, from goods chain. we -- going know as of of which cost goods, our are the

pressure, would in like So actually, we spread past. did we the downcycle it means that to have any in that other

in that now chain. spread will larger supply We a

EUV in the to have I'm has do. couple TSMC's innovation if So a we where strong ask fabs days and the are refer could our sure per which fabs, tools. the output. X, And need when reason at needs what? still And all not immersion of are in and the EUV only X EUV over Those that shipments, and customers, year, going growth stop. advanced the you but being Till of which look comments pretty that are just XXX,XXX that's all we And capacity. they they for -- to? refer which belief -- them tools, so dry customers. why They that ago. an XX,XXX I our nodes, yes? the will fabs will to ship a be you wafer And least won't our That's may is there next be starts are leading on be we yes, with built end slowdown, year going those a you what needs yes, EUV So, to to actually are EUV shipping edge month average adjust say, new fabs the month need to of would largely, is fabs And way fact do we digital we XXXX per to capacity tools the normally good just think tools, at a transformation.

So, digital cycle fabs have EUV with our transformation, that's that customers any why they X next are the have you and need immersion building long-term to fabs. till end tools, in the and need the dry. the on and short-term shocks and -- of demand need compare view year whole they they

And big so, is a this why have we backlog.

you to which that to a time, conviction by longest supplier the that take capacity, the over tools. far with a yes, has going going customers are the what to to demand. view, today. our their last some environment and respect going they’re make That's the adjust longer-term But recessionary of to have is to yes, going at CapEx in So, least -- or honest, clearly, traumatized their a choices is slowdown two when lead in them there with mind there's or they're forward, a be years when bearing needed dealing has, strong

Roger Dassen

least And on EUV bear tools, and on mind, significant payments. we of quite a in also tools at get down Mehdi, the immersion that -- number

mean cancel the much order. decides a to you put push money up out, to before customer I So, that realize already so illogical, if or they get either that's

are the So, that And We're flexibility. Peter in I think, we particularly quite a yes, combination organized, the of likelihood, think the low. points people. have way we I still bit hiring many, with is many made,

chain. supply our in have We flexibility

a strong sheet. balance We have

at I just stage the in from points But point, just given this prepared. think Peter. kicking vantage is likelihood I is well think I Company that with the the mentioned So, data

Peter Wennink

to pushouts, I've type tool said with so. orders there's can tool is you And -- the this getting, past. was as -- Yes. type is be. been lot a different a the my what lot need gets it cancellations, And Mehdi, I I I’d said question, in that of wanted back on in what a customer we or it's the recession talk in than those really actually actually that are in recessionary a introductory it, fears. remember a answer yes? talk and There's earlier give to of we've that, problems seen to new because recession deep your were said all a kind to a they with can have I and how cancellation ship have recession, When of my comments. we're Having cancellations good not about we everybody deep, foresight to going customer nobody the would it's I When And moderate the machines, Company, it. deep into think know, that refer I then canceled time they think replace insights only because yes,

Operator

Francois the comes And from question UBS. line of next our from of Bouvignies

Francois Bouvignies

I have maybe It's UV one clarification. on deep the for XXXX.

a if UV in Peter, versus of think, at reach, I 'XX expected demand look last I quarter, to XXX. deep XXX you So, the full capacity

aggressive the Now, experienced since a last quarter, which quarter. on maybe especially you we more last a bit is slowdown since that Memory side, flagged as well and

represents this light in expect do revenues, part to year? of and still UV the reach of a that change XXX tools So, deep next maybe Memory meaningful you

Peter Wennink

Yes.

-- also like not introductory in comments, think, my see I not said of course, -- yes, I we don't are there. we

few customers actually said this. thing, a reasons think gave ago. our to give don't because machines have want of to and the question in just especially as answer minutes what read to We a see slowdown, other But that you those PCs Mehdi one said consumer segment Memory specific just the on For we customers an machines." the that and asked on to So, smartphones. and people I we phone we listen, also and can pick "I especially up they listen hastened the

machines." and machines want those it, listen to projects, China, what they that what we aren't So strategic investment customers plan. customers the but in we or we it, yes, are also have or memory we getting see say, there these they Korea whether I still And in in hear U.S. they mean need matter, "We for those because

demand ask could us. what down? we out, go Now, make as could go that Yes, what significant there's between can a you for it still gap, down. and pointed they But

it these we this before anybody's a doing that in it to but hits -- have come slowdown. that XXX in are at we Now investment down, guess all time. and hits moment real need the strategic And that's fabs, that and before has real

Francois Bouvignies

maybe your going maybe, it forward? be How inflation, EUV follow-up. in the tools? should the what I But about tools and 'XX? pricing update my And mean, pricing will something quick may you deep strategy of of negotiate more UV by we driven pricing, about which the think is the is given that innovation the

Peter Wennink

tool both Well, types. I to it think applies

an I and purchase over very short-term think, had when agreement last with to couple a never deal inflation. the you buyer look a with at sharp rising decades, seller. this the order orders, purchase And of the we

So, in allow agreement in don't would that the price. have just any jack fact, we contracts to up formal us

discussions pressures that's cover So, to are and adjust understand "Yes, we with customers However, we they will already, customers inflationary what's going fair. customer that say, wherever for predicaments and then non-deal some the that's those will indications your see our we discussion we're issues." go. and your have that everything just in we pricing But clearly, in with forward, clear

short-term customers actually clear. I are there -- a with and But discussions effect. our we this we think -- is say, "Listen, also is to a that's need in to

deal it?" And So, to as how with happening are speak. that's we we going

Operator

Duval Our comes line next Sachs. at of Alexander from question the Goldman

Alexander Duval

quick on one A gross margins.

much understand next that moving next If systems of not negative to have related And and this be would is recognition perhaps, year translate parts which certain this profitability the that expect a of margin quantify DUV a some a for you should boost how year, very that year, recognized going impact gross into being that we are the large help will this amount could until could appreciated. us on obviously and year? be? revenue bit EUV Given a has that fixed costs

Roger Dassen

get the that the by Alexander, course, that. extent Yes. and starts of So, up that get is year, means that coverage to cost principal to course, that, you less in extent coverage. cost correct, right? of fixed on catch fixed on have bit that you itself you a this And more the we less

million €X €X that there you're true. in at fixed is the approximately on an terms system, for couple or system coverage. amount So, that's look that the at -- of of that EUV That's a cost looking you million of million a

it. of part is that So,

Of course, it itself, right? is do to the and But what at effect to that's is an we that to. had, a of have is on the it amount little that of an you travel related goes So then, direction fast going expect question earlier of state all. what back of you reverse which the shipment bit indication

Operator

line next Aleksander Societe question of the comes Our of Generale. Peterc from

Aleksander Peterc

have that seems to and quick either variable recognition we that then I will will your would you ship one revenue imply that be a think just quick estimate out, that required there final naturally be, So, no see a buffer in fast years say, by no should So, Roger, that, away and is to when lot? quite we or this to proven follow-up. revenue will revenue I so the longer change a test The first is of have that clarification redundant? me of have longer a revenue you longer it think it changes And a largely to follow-up. hard then we'll recognition couple that no that as listen prospects comments, because clarification be XXXX, delayed going you as

Roger Dassen

field. also And in don't be we the done said, certain are fast before. as honest, in the I we persuade customer be point practice, then able that a think wait do position that as I -- going But get we here becomes that be to longer all long there. to works at revenue factory we that. go it I tests also customers either I is, should and factory. this to also problems we've not I for don't that we're standard time, And we're this the then, hope to think able we're get to the have from did no And that then To to becomes standard sign-off practice. shipments it and a in back should to been what going recognition when Or into exporting we determine

left no that's through position that all that, assumption adjustments going because at that will to around years we're determine see likely one be be that's we're shipment. enhanced year, I either with I I three least that go To time, you the will of to I we shipment will whether And two honest, go And longer right. a another certain you And fast think a think reverse therefore, going next it's or have effects the point significantly hope it have. be those going a don't itself. fast the at if realistic be would last somewhere to hope in in pretty I guys to to communication outcomes.

Peter Wennink

shipment Yes. the And it until reduce got the get the Roger shipment only "Ship side. months that we exactly this doing me to explained have between because time That's have the goal. And goal, time this that the the cycle moment and the installation that you is a and that at customers we a customer we're accepted for because to X now one only system only same. start non-fast from the earlier, fast we has a reason say, is fast now, is why as tool." evidence shipment realize

the something we've to effectively is year reduced that we the approved if to and the also to make mean start the we would quarters just basically what but the this that installation about our need building time is month. customers or the cycle both ASML then perhaps side go the I then by the a in Well, customer should effectively can or factory the time, conclusion of and that's we practice a at hey, acceptance And the could outcome, data, the think that So, and have that a of from just system less standard another change doing to term so benefit done, cycle reduction we and come with predictable the say, of couple we customer. of we're test. to

have of lot not accounting view, sense. it's Unfortunately, to But a a what an of it business with. accounting makes point is we deal from So, just thing.

Aleksander Peterc

clear. And Very you. Thank a quick follow-up.

Just selling prices. on what's going on in terms of average EUV

What for for million. to to guidance ASP just a half? million lower the Is features think, will year €XXX system the land €XXX of per in year it the imply second mix is higher, and as was question Your else here? seems approximately significantly driving the play this around or I HX anything at

Roger Dassen

No.

anomaly really the I was an in first it think, quarter.

in see second the you is ASP that the would So, quarter, €XXX million.

So, that's around advise we we you take. the -- €XXX to that say that million

quarter, ASP one-off there that up revenue effect of very had but which first a As high, in know, quarter. had last a very limited And was effect we in the explained was tools you recognition. that very, a we drove we that number one-off the

remainder The million back use to €XXX way second to quarter year the right expectation probably is for normal. therefore, is of to the the the And go.

Operator

from of Bank Didier the Our of comes next America. question line of

Didier Scemama

from Bank this just to wanted of fast shipment. one related I double Scemama check America. Didier to thing

understand for if time. that means because month So, shipments And and And way point no a got the follow-up. revenues? do test to don't I correctly, site. But become the that lower does cycle I've of Is on at if norm, shipments you, effectively about a is to mean it? a have from it's are there fast shaving that difference right you that off obviously, the think that you obviously cost

Peter Wennink

then would With something this accept That's mean go agree, to "Fine. when the the factory the not time, condition is be is in something need of Under because the proof this will period need where of data all least ownership where Netherlands. also in at economic accounts currently our customers then that require. machine that here we customers that ownership the standard. over that have gathered and documentation. customers Yes. this Because will we to But our through." that the the it is probably say, the I the

Roger Dassen

accepted. point. be that we is we're it been point, not But at clear, Yes. be at haven’t standard, are at established yet. determine also order get would on track to certain there if to be the the there a right? completely to time standard to for hoping would go-forward the right be a this there this accepted outcome, a just it that the point including what accounting-wise, whole in everyone, we're in in So think we But we be if is basis. But and we get this point we if, yet fast -- shipment then time, not is yet, certain not customers, it has going But working clear, see to record becomes indeed that by towards to

Didier Scemama

on a follow-up. DUV. Understood. got I've It's

count sort talking effectively DUV run are XXX uptake And of to higher sense about from of the you market. available So, for no is a investors that drivers capital I that intensity we part is capital Can through your a NAND? capacity, the limited is historical secondhand structural than lagging you of on because about longer suspect us us could XD shift and of bankrupt for on DUV lot fabs like capacity can also buy they target layer XXX that in or in much by even for how about that questions $X.XX their of equipment driven of in intensity the up? double more much and demand. higher that driven in at are talking you If got I've demand? the going dollar, see of How So, by no Texas edge give Instruments levels, because part there XXXX. is others

Peter Wennink

Yes. because this wish I machine talk November had of bringing warp time where so. I something us to a about, to like XX we're exactly going it's year

XX, think, -- deep in our is give But we're X.XX three actually we've are significantly customers years number that on for. that or So, the of micron whether here data evidence the these the and deep running underestimated We I UV, demand are won't we -- actually XX-nanometer, nodes, foundry what have actually two our at looking used on ago. something than nodes UV-type using the models. higher our you working is have is that application XX, generally, it's XX, I data for own space because the products significantly we being

or company it's has growing for is at as see the of a find that's that what to to over nodes that's the XX-nanometer with that not whether it's I the we not you yes, number sensors, driven how in significantly said, that's And in we whether of end my -- inventories. that even we are IC, you, that seeing with but today. we Internet That projects Mehdi grown the and fact are going driven high nodes and that working way But anything higher, whether And matter space. we run automotive data, need used a because share it's -- non-optical or the this yes, for the this yes, exactly talked inventories X.XX just And show and you especially two higher at mentioned, Yes, by those I everything, are a of power I space I'm products, a that need and we moderate introductory the which going remarks, that So Well, about in this, And November that by sensors, number is think to yes, to are the significantly to that pace. microcontrollers. not in of products are yes, is everywhere micron, they're for in Things, think And want XX. years. markets. record of the three number growing, I up down. last gave and applications.

the anecdotal. that's I are Chinese we are there planning, we in they’re Logic for?" customers in fab. said, DRAM yes? right. those fab them use a to cannot going out fabs, want for out their going are of fabs used are the XX-nanometer we it's And And automotive, energy that fabs. XX-inch, we to memory take "What the to Everything transition, all and the do sale They're systems the demand do Those yes? you -- anymore. not it the -- customer build as our I what use that's also And it's and market it to But get And anymore. for and gone. XX-inch are I It's to And nine-zero. where all from systems XX-inch mean because wafer you for says, So for XX-nanometer, comes. products. a Well, seeing. that's do tools not that's XX, a

that are products detail yes, will It's leading all used more of of applications, discuss have also out the at these us, many nodes for edge, There Everything. coming are these clear. for is you'll buy ever. So, applications and not are many, trend trends These Internet to new. which which But everywhere. we more but are the in basically

Operator

of next comes Krish Sankar from Our question Cowen Co. and

Krish Sankar

Thanks them. I have Hi. of Yes. for my taking two questions.

on today, absolutely shipments China some domestic no a color -- Peter. be And if Thank quick to Roger. no be. were to press for find I want also, there UV about then what going supply would speculation that's -- follow-up much supply XX%. constraints to you on you. shipments banning year? How there deep hypothetically China? is if anymore? one can fast quarter, U.S. And for you grow any give First how think constraints to growth Last this See, is said speaking, going to

Peter Wennink

growth answer let China me question. the Well,

think I quarter. said it we last

region we XX% I with XX%, to the percentage the grow all grows which with the say, like every let's And China. all, growth geographical world. rest or includes think as the in we of of China -- world. yes, with grow which grow XX%, They ship means, just same rest

it's China that it markets. of UV, say they're more immersion, mature mean semiconductor table the the with. significant and important media is that been And we think that having of U.S. deep speculation to up pops time come to in especially XX-nanometer an is has the with ranges industry We I and that, coverage It's there the a but -- And player have semiconductors. need the the it up politicians wait not nodes political global not to in all what said just dry. also a very just more, but I which on I supplier XX, in realize to lot mainstream to up XX, do think on a let's is But position. better, things, is from It time. everything It's which new. from on XX. the yes?

doing. we just there been has that the we publicly UV, saying That's we have also that we've manufacturing ignore just capacity fact what are on to out needs. which deep the cannot So, China careful a be -- world

Roger Dassen

the so your And constraints, I there it. think started to might in however, this there The Krish, mean, were stop you Peter hypothetically, I factory shipments, do shipments, been supply we therefore, any problem product the have we made. if time that the can installation. gives doing actually ship, no us that omit a much of to of gives lead fast erosion it hasn't constraints, we the wouldn't more number like out fast think, not, on probably problem, question goes on us indeed, point because quality of that testing lead to that might any and supply way, steps the do we doesn't We find actually we earlier it would capacity. like reality. well, more ultimately if in is I in

why hard that's hypothetical that So, it's answer question. to

it, Now time, at like in certain done point a we've that we might might actually And actually, make we standard. a it. it

Operator

line the question from Suisse. Metuku Credit of next Our comes of Adithya

Adithya Metuku

I had two questions.

gross ago. months the bps talked saw year, the three about roughly beginning we headwinds of of the downgrade so XXX since you inflation-related including margin Firstly,

gross should for for And back for on how when then, a fast much follow-up shipments. I a I'm margins of get on my got sense repricing for this tool you headwind? when some when pricing offset trying at to to renegotiation the -- when think XXXX. that to So, headwind I contracts look and the to us time can color margin you lines, your you I've give expect margin numbers my just XXXX

Peter Wennink

Yes.

agreement say, negotiation especially where, hey, we've That's freight the for we power planned. are be said labor, you that with Hey, it. just you XXX I the fix, service pick yes? go which to make When the extraordinary, main talked and mean, you normally and shocks up course, -- being and quick customer. fist any of to also why cost to And I another don't But over close we're because sense, through Korea that there's to we a the relates formal the does gone something to the really this supplier to losing reason year. labor when basis which, not do a the -- seen think look want. let's so about of for have which in and this -- it's not we case. the in don't -- space. short-term us I points to the, got contract. could in give need instance, have cost supplies just we inflation because not It's this say, is is which XXX relatively would is just is if go the this hand you short-term for points we basis Taiwan, it's you Asia XX% cost level And it's it cost people up Now, to raised at we the any don't before, Freight year, significant of which -- one. roof, it's that

the are shocks course, will be these that, of yes, So also the in short-term service corrected, contracts.

course, So, having can shocks largely here. really with And already longer the EUV fixes customers. been our those are material over think of the and is for material that said we The the inflation short-term through sourced. short-term inflation has our the that things systems term. are, for It's that, I bigger because get

year. next we So, see that might it's the inflationary pressure

So, and why next are with customers year the beyond. about the negotiations year the this is

into that, we on consideration. negotiations as we we is get with X% where we're looking at unavoidable percentage always this above where anything I think of pressures fairness are to inflation compensated the middle customers. a the take the So, above And I have what our a has to X%, to normal this call that in come it issue. right would of And just

between short-term So, you fixes. to fixes, longer-term have split short-term effects, really longer-term effects,

Adithya Metuku

done just shipments, a fast sign tools. the Got at milestone say customers testing you you've on the When just give will the understand on flows on they to of these you I tool the when better these top follow-up want to your just look repayments, we it. off payments they side? customer Understood. as after just cash do or And Roger. at

Roger Dassen

for down the impact happens lion's Adi, shipments essence is of shipment. share shipments with cash there because is you fast essence, no a flow and from Yes. of know, number payments the get in -- in tools, in we remainder, as is our what

upon So said. get we shipment,

influenced not the to by is happen later fact going on. installation that is So that

say, would I the on cash profile the impact, no So of flow.

Adithya Metuku

milestone Got there essentially, this then fast it. are And no on then payments shipment?

Roger Dassen

No. not. are No, there

Peter Wennink

a fast upon invoice And goes goes at -- shipment a same at the shipment. same shipment, it's it's effectively, invoice out the the not out whether fast point, the or

So cash no there point is view, flow difference. from a of

Operator

next our question the And of Muse comes C.J. Evercore from line of ISI.

C.J. Muse

I provided, you you guess in 'XX. video I the intrigued fact end question, remarks the corrected by first was headwinds the by thought of supply that chain could that your Peter, be

some key you So, the to kind around issues as that your thoughts Carl energy Zeiss? are Germany? in with well can of your as Any you please supplier, and discuss gas how implications dealing of

Peter Wennink

Yes.

look which, there coming escalations early I supplier the the chain, tier We're be on you end saw we're in at think is material it assumption, first last becomes the the But but And still the further, just based Having to but beyond And a said it, and guarantees -- because down that just it's difficult. third comes the there the at and then those when that suppliers, is extrapolate are we pretty peak look base goes graph. if bit. yes? but second, that transparency be in the we that tier. trend, is even issue tier I that of in month, then are through possibility dangerous is it's that, I assumption the could not fact transparent, if the trend, that, year, down you trying control because it we more materials, at by is of mean, limited. year, -- think, if supply an supply to often supply constraints. tier, there a first and follow in look think a could look first a it situation are I next the the the the second of chain just where we more headwind really the -- delaying And course, to they you really output, fourth the

on trends relief. transparency doing of next currently But like we that trend. So, might a give said, we're just -- so it's that more following us bit extrapolation we're year, And it's I the limited end based have. that year, beginning the of

and Zeiss, in energy Germany are Now, situation on have taking on measures they I Carl the course, especially and measures. mean, of taken

to are government know that there of some every think is that think will also their supplier have resource. securing They third- of is strategic going I I risk also our Zeiss know. the the we going be How price, for energy comes is it companies insight or think the is in gas our matter risk transparent or in transparency, energy different probably suppliers chain. and actually energy Germany? to supply this dependence status true it chain our of be getting fourth- I But we We an reference. very either. mean supply gas issue. But is they're the on also into that, I I own or insight and some a potential on don't gas, is could mean what here into of sources, working on down switching on And And user big far gas gas are inflation true are said claiming -- mentioned Having oil. a limited. which what from for be suppliers. with fifth-layer a top I Carl not be of to issue. is whether in

in So overall, process. work

months was give to doing than confident have it that our the transparency, of the think I think thing. more But yet I definite suppliers full right I'm are a don't a we you ago couple answer.

C.J. Muse

That's helpful.

As follow-up, a interesting I high that for amidst ASML, my actually and Hynix Memory we've heard that obviously terms orders in Micron. from new record trends CapEx sequentially, XX-plus think, percent that's weakness accelerated to of and

buys, both strength of technology adds. to thoughts and overall the benefiting perhaps have at focus look capacity you EUV complex, on technology would new from build plans so kind as much. what but weakness there, your guess memory obviously, you're your love hear I So, in around you Thanks

Peter Wennink

understand are in weakness in see build you don't The correctly, own C.J. asking any capacity? Yes. we -- Because you own I see if what capacity, our we in our... our weakness this also build

C.J. Muse

how No, no, no. This you're is your trend just -- yes. thinking in Memory about record --

Peter Wennink

that basically EUV the an off of fabs roadmaps, going inventories not are up, EUV these backing which They're Well, and are goes it's is billion-plus I Yes, they this what also you customers essential and they yes, mean, €XX those technology, their their especially, customers is deep they're capacity, us. part I of dry we talking the is build essential And them about competitiveness. memory the didn't that backing without The future that need significant it fill EUV are in is new cannot greatest not UV. with for about they plays in our weakness. which EUV are what the talk make are to to told weakness big to immersion Yes, back in do fabs, off, Memory, role. earlier. -- and course, without said is essential. but device of a transition When happening X So, which latest our And either. are also fabs, building you sense. the roadmap this some is EUV past EUV-driven. acknowledging of about transition. innovation fabs, and which But concerned critical

this to. have to. is tell but So and up to where holding we pattern we to is order So, the us?" us, shipment is this your to they if what talk "Listen, That change backlog, guys know this big why they why don't weakness, on just dare pick and say, you phone I'm they about we ship

different of -- ship to term longer So, correlation things. those yes, our shorter course, But and structural ASML and ability to weakness longer-term there is term customers. are term or the between currently longer two a of

Skip Miller

All right. Thank you.

you the If still with this get to to question. are on please contact Relations unable your Investor have feel ASML call questions, free and department through

currently like you'll Investor this we Day held XXth planned in our remind sign to that November be to off, of hope us. join on year. you I'd is able We to Veldhoven Before be

conclude today. of like thank could to Now, it. I'd for you. formally behalf call, on Thank Operator, I'd all you appreciate us joining you ASML, the if

Operator

Thank you for Thank the XXXX now financial participating. ASML you. concludes QX This results.

disconnect. now may You