ASML ---골드만삭스 화상회의(2022.06.14)

2022.06.14

ASML Holding N.V. (ASML) Management presents at Goldman Sachs Global Semiconductor Virtual Conference (Transcript) | Seeking Alpha

 

ASML Holding N.V. (NASDAQ:ASML) Goldman Sachs Global Semiconductor Virtual Conference June 14, 2022 11:00 AM ET

 

Company Participants 회사 참가자

Christophe Fouquet - Executive Vice President of EUV and Member of Management Board

Christoph Fouquet - EUV 수석 부사장 겸 관리 이사

 

Conference Call Participants 회의 통화 진행자

Alex Duval - Goldman Sachs 알렉스 듀발 - 골드만 삭스

 

Alex Duval

Hi, everyone. I'm Alex Duval. I lead the European Tech Hardware, SMEs and Gaming Research team here at Goldman Sachs in London. Delighted to be joined today by Christophe Fouquet, Head of EUV; Extreme Ultraviolet Lithography at ASML.

저는 알렉스 듀발입니다. 저는 여기 런던의 Goldman Sachs에서 유럽 기술 하드웨어, 중소기업 및 게임 연구 팀을

이끌고 있습니다. 오늘 EUV 책임자인 Christoph Fouquet가 합류하게 되어 기쁩니다.

 

Before, we get started, I'd like to state some disclosures. I'd like to state that this conversation is not intended for the media and is off the record. We are required to make certain disclosures and public appearances about Goldman Sachs' relationships with companies that we discuss. The disclosures related to investment banking relationships, compensation received a 1% or more ownership. We are prepared to read aloud disclosures for any issue upon request. However, these disclosures are available in our most recent reports available to you as clients on our firm portals.

 

 

Question-and-Answer Session

 

Alex Duval

Great. So with that completed, thank you so much again, Christophe for joining us. And I'd like to just kick-off with a high level question really to sort of set the scene for EUV. For those who maybe are more on the general side, could you give a quick description for two or three minutes? Summarizing to investors who might be new to your business? What role -- what your role at ASML is? And frame the importance of EUV to the evolution of the semiconductor and global electronic industries? Appreciate it’s a big question. But glad, if we could get some perspectives to kick off.

 

Christophe Fouquet

Okay, so I'd try to be short. So I'm Christophe Fouquet, indeed, I've been in ASML for the last 15 years. And today, I'm a member of the Board of Management of ASML. And responsible for EUV. And the fact that EUV responsibility reside in the Board of Management of ASML was just a sign on how important this product was for us and for the industry.

 

저는 Christoph Fouquet입니다. 실제로 저는 지난 15년 동안 ASML에 있었습니다. 그리고 오늘 저는 ASML 이사회의 일원입니다. 그리고 EUV를 담당합니다. 그리고 EUV 책임이 ASML 이사회에 있다는 사실은 이 제품이 우리와 업계에 얼마나 중요한지를 보여주는 신호였습니다.

 

A few words about EUV. I think that ASML for many years has been focusing on delivering very advanced lithography scanners to the industry in order to allow our customer to deliver basically the most advanced chips. And EUV was a very important step in this mission.

 

EUV에 대해 얘기하겠습니다.

ASML은 고객이 기본적으로 가장 진보된 칩을 제공할 수 있도록 하기 위해 업계에 매우 진보된 리소그래피 스캐너를

제공하는 데 수년 동안 초점을 맞춰왔다고 생각합니다. 그리고 EUV는 이 임무에서 매우 중요한 단계였습니다.

 

Very important because it took us quite a bit after immersion to come with a new wavelength, which was basically capable to provide customer with smaller resolution. So EUV, what does EUV do, just offer smaller capability to our customer, ability to shrink, ability to basically print smaller features.

 

기본적으로 고객에게 더 작은 해상도를 제공할 수 있는 새로운 파장을 제공하는 데 침지 후 상당한 시간이 걸렸기 때문에 매우 중요합니다. 따라서 EUV가 하는 일은 고객에게 더 작은 기능, 축소 기능, 기본적으로 더 작은 기능을 인쇄할 수 있는 기능을 제공하는 것입니다.

 

This is very important, EUV, it's in the name, this is about the wavelength of the tool, going to EUV, we went from 193 nanometer wavelength to 13.5, which basically allowed us to make a very significant step in resolution. You have seen most probably that customer have been adopted as a result EUV very aggressively in the last two, three years.

It took us many years to develop the product, of course, because of the challenging technology, especially in relation to the source. But once we were successful in the industry as the product, we have seen the major, major pull forward by our customer for EUV.

 

이것은 매우 중요합니다. EUV는 이름에 있습니다. 이것은 EUV로 가는 장비의 파장에 관한 것입니다.

우리는 193 나노미터 파장에서 13.5 나노미터로 이동했습니다. 기본적으로 해상도에서 매우 중요한 단계를 만들 수 있었습니다. 지난 2, 3년 동안 고객이 그 결과 EUV를 매우 적극적으로 채택한 것을 보셨을 것입니다.

물론, 특히 소스와 관련하여 어려운 기술 때문에 제품을 개발하는 데 수년이 걸렸습니다.

그러나 일단 우리가 제품으로서 업계에서 성공을 거두자, 우리는 EUV에 대한 고객의 주요 성과를 보았습니다.

 

Alex Duval

Great, well, thank you so much for setting the scene, Christophe. And I'd like to kick-off by talking about sort of EUV and its applications and as a digital enabler. You recently announced that ASML is examining the feasibility to expand EUV production capacity to about 90 units, which is obviously up from the 70 units you talked about before. And that's a 2025. And I think as part of that ASML is referenced strong structural trends related to digitalization.

So what do you think of the sort of secular drivers here that underpin your confidence in that sort of robust multiyear demand picture for EUV?

And how does digitalization related to some of these applications like 5G, AI high performance compute

translate into demand for your tools?

 

그리고 저는 일종의 EUV와 그 응용에 대해 이야기하고 디지털 인에이블러로서 시작하고 싶습니다.

당신은 최근 ASML이 EUV 생산 능력을 약 90대로 확장하는 타당성을 검토하고 있다고 발표했는데,

이는 이전에 이야기한 70대에서 분명히 증가한 수치입니다. 그리고 그것은 2025년입니다.

그리고 그 ASML의 일부로 디지털화와 관련된 강력한 구조적 경향이 언급되었다고 생각합니다.

그렇다면 EUV에 대한 견고한 다년간 수요 그림에 대한 확신을 뒷받침하는 지속적인 드라이버에 대해

어떻게 생각하십니까?

그리고 5G, AI 고성능 컴퓨팅과 같은 일부 애플리케이션과 관련된 디지털화가 장비에 대한 수요로 어떻게 변환됩니까?

 

 

Christophe Fouquet

Well, I think, some of the application you just mentioned are requiring basically the most advanced chips I was talking about. And any company who is engaged in AI, in 5G is really driving the very best possible product because the competition there is also pretty high. So EUV is by default, serving those advanced application. We have seen a major growth in the demand for those application. And we expect this to last. We've been a bit surprised, to be honest, in the last, I would say 12-18 months on how strongly the demand was increasing. I think there's been a bit of a COVID-19 effect some kind of acceleration of the appetite for all this technology. So those application, the one that you see in the news every day are really at the core of EUV demand.

On top of this, there's a few more things. One thing that you may also be aware of is that most chip makers are trying to improve energy performance for their devices. This is to basically extend battery life, reduce power consumption, ESG is becoming a big topic for also those company and in order to reduce basically power consumption, you typically need to use less transistor of the chips you're going to make and this leads for the demand for larger chips. And if you look basically at some of the latest chips created by some of our customer, customer we see also there that they are becoming bigger and bigger chips means for us more demand for silicon and therefore more demand for tool. So the combination of those two is driving what we believe is a structural increase on the demand for EUV. The number of 90, by the way, is already validated by what we call bottoms up demand by our customer. We even anticipate more demand moving forward. So we already see sign that this may not be the last step. This is happening despite the fact that we also increased productivity, that we have made several steps on EUV. So our tools are becoming faster. But this has not been sufficient, basically, to meet all the demands. So our customers are already looking at, indeed, 90 system per years, maybe even more in the future. So that's something we believe to be structural.

Alex Duval

That's super interesting that 90 may not be the limit there. And I guess, you reference sort of bottom up modeling. And we've obviously seen announcements of a large amount of spend on a multi-year basis, from some of your sort of biggest customers in Taiwan, Korea, US, et cetera. I think you referenced some of the structural drivers there, but what do you see as the kind of drivers for their capital investment? And how do you see that kind of underpinned that large amount of investment there? And secondly, you referenced sort of COVID, and the pandemic and the spending there. And to what degree is there a kind of spend, that's happening that's actually been structurally accelerated versus to what extent should we be thinking that there's been a pull forward that could unwind in the next couple of years?

Christophe Fouquet

Yes, so I think what you're asking, Alex, is a bit what do we see as a structural growth, which I think is what I tried to explain. And there I think we are convinced that over time, we will see an increased demand. So we don't look at the peak. We look really at the growth that will continue over time. This is a feeling that our customers share. And of course, around that, we also believe that you may have some cycle, one of it indeed, could be related to the fact that today, we see very fierce competition between our customers, so everyone is investing very heavily, especially in foundries. But there if you have more foundries customer, you, by default, create a need for more capacity. And this doesn't go away, because you cannot be in the foundry business, and not have capacity. So it could be that the utilization of a whole is not as high as it used to be when there is only one foundry customer, for example. But everyone needs to have some capacity in order to be able to compete. So mostly, the competition we see could be having about 10%, 15% on the demand on the short term. And this demand, you could in theory think will go away, but it will only go away, if one of those customer goes away, as long as the customer are there, they will all want to continue to build their whole capacity, and that resource creates a bit of an efficiency.

On the COVID-19, so I told you, I think it did accelerate the demand for application. I think there we don't really see that going away. The only question, of course, is related to the macro economy we're all looking at. And you can never, of course, know exactly what the overall consumer demand will be depends on a lot of also some of the external factor, we see inflation, et cetera, et cetera. So we could have some bumps in the road. And a lot of people try to already forecast or speculate when this may happen. This may happen, but still on the long term, we truly believe that the demand will continue to be there.

Alex Duval

Understood, that makes sense sort of macro backdrop, but with those sort of secular overlays. And I guess coming back to this question about what your sort of key customers will do. Can you talk a bit about what you're hearing from those key partners in terms of future technology roadmaps and willingness to use EUV at smaller nodes? Maybe you could elaborate a bit on some of the sort of comments from key partners, and sort of -- their sort of longer-term plans in order to ensure that they get the capacity. Obviously, it looks like there have been some developments on the memory side and the logic side. So it would be great to get an overview there.

Christophe Fouquet

Yes. So I think on the logic, I talked already a bit about it. So very competitive market right now between, I would say three main players. And I think one of their biggest concern today is indeed to maybe not get all the capacity they need. So that's one element on EUV. So we don't see them slowing down, I think we see them continuing to apply a lot of pressure on us to deliver system. When it comes to their road map, I think if you look at the logic road map, there is a pretty good view of what can happen for the next 10-15 years. So the transistor structure I think is a very clear on map. And this also includes scanning, which means that when we look at the future, we are also in very advanced discussion about how to improve the current 0.33-NA EUV machine. But as you're aware, as well, we are also in very advanced discussion on how to introduce and ramp the next platform, which is the high NA tool. So pretty good visibility on the road map, I would say, alignment, their commitment to the long term. And major again, concern focused on capacity. When it comes to memory, I think the EUV adoption in memory has been stronger than we initially sought. And the reason for that is that EUV is being used more than just for scanning.

When we think lithographically, we typically think about scanning, right? I did it myself, in the introduction, I talked about the resolution improvement. But what we have seen with DRAM customers, that EUV can be used to simplify dramatically the process and therefore create some more yield. I think our customer, Samsung, for example, have been very, very public about it. So increased demand more than we expected. And they also on the long term road map, there's been many discussion about 3D DRAM versus 2D scanning. We believe today that the 3D DRAM will come most pretty at some point, but to this getting most probably at least 5 to 10 years of very, very stronger, I will say an aggressive road map from our customer. And as a result, we also very much engaged with DRAM customer on both the extension of the current EUV platform, but also high NA, as you may have also read in some of our quarterly publication. So EUV, when we talk with our customer, EUV is really a very important component of their road map. And I will say if I compare what we know today versus what we sought four or five years ago, the reliance on EUV and futurization is most probably quite higher than we expected.

Alex Duval

That's great. I really appreciate that Christophe, for sort of taking us through the latest on the logic side and memory side. And in particular, highlighting the high and expected demand on the DRAM side. And looking back at the last period, maybe if we can come on to your sort of pricing model and the sort of economic side of things. We've obviously seen over the years ASML has been able progressively to increase the EUV ASPs, as you've improved productivity, but also a number of other factors, which you mentioned. Could you sort of perhaps explain a bit your value based pricing model? And perhaps related to that, to what extent are you seeing an increased or reduced willingness from customers to pay higher ASPs, as you're able to deliver better productivity and better features.

Christophe Fouquet

Yes. So I don't know if you've ever made this exercise. But if you look at our ASP over time, and you compare it to our productivity road map, there is almost a one to one correlation, which means that for many, many years, the appetite for productivity is extremely high. And the reason for that is, of course, productivity is measure efficiency gain for our customer, right, you get a lot more output with only a fraction of the tools you need. So I think we don't see the appetite going down. In fact, our customer are driving us to continue to increase our productivity. We have a very strong road map when it comes to the source power of EUV, which is at the core of course of productivity, the more photon we can get, the faster we can move and for us, we also see as a result, you mentioned it profitability increase because the same happened for us, we can basically ship more value, while spending less money on parts on manufacturing and service, et cetera, et cetera. So this is also why our profitability on the EUV, this has been true in the past, another platform I've been following quite a bit our productivity improvement. So this is something we expect to continue to be honest. And I think, as long as the appetite of our customer is strong on productivity, we will improve our system. And I will say we do expect to continue to see similar benefit out of it. Maybe one more thing on productivity, because we talked about the demand, right. And I told you, we have to do 90 machine, despite the fact for example, that our next generation of EUV 0.33, the NXT3800E would be 20%, 25% faster than the previous one. And so productivity at this point of time is also helping us with capacity enormously. And I think this also helps our customer will get again, a lot more output in the same square feet area. So I would say productivity is a value is almost at the all-time high, because not only we bring, of course more out of the same tool, but in the recent months, this really can help us with capacity.

Alex Duval

Really appreciate that and giving us a sort of historical recap, but also pointing to the 3800E. And I guess the other one we've had questions about is if I remember, rightly, the 4000F. So if we move to the sort of F model, can you talk a little bit as to your expectations there? Clearly, that should be an improvement, again, in terms of productivity overlay, and then presumably sort of trending into ASP as well. So what do you expect to see there? And if we think kind of longer term, you've obviously talked about hiring high NA and a big ASP there. But should we expect that low NA will continue to have these sort of increasing ASPs as well?

Christophe Fouquet

Yes, so I think the 4000F, we call it F, because we also expect to make indeed a productivity step. So it's, we currently plan to ship the first one around 2025. So it's a bit far away. We do expect to improve the throughput because we expect to make a step on the power. We don't know exactly how much yet most probably, again, somewhere between 10% and 20%. So we're still doing some work on this. But this is something we'll do for the 4000 and to your other question, yes, I think we will continue to do that on the 0.33-NA platform as long as we have ideas to get more better output for system. And right now, we do have again, ideas for quite a few years. So you should expect a few more system that will provide more productivity better overlay, you mentioned that as well, on point 0.33 moving forward. High NA, so high NA, we will follow a bit the same logic. So when you introduce a new platform, you're a bit careful so that the 5000 system is a system, which we shipped basically, in order to get the learning on high NA as quickly as possible, then the EXE: 5200 will come with much higher productivity. And this is the tool that we think most customer will use in high volume manufacturing. And then moving forward, if we look at the high NA platform, if we look at the 0.33 platform, the source is common. And whatever gain in power, and therefore productivity we can get on one platform, we will also get on the other one. So we will have those two products running in parallel. And on both of them because we have developed them with a very high level of commonality we will continue to improve both overlay and productivity. So this is a bit the motto of our road map most likely for at least the next 10 years and we have a pretty good idea of what we could do there. We still have to validate all of that but we're not lacking ideas.

Alex Duval

Great and again maybe looking backwards and looking forwards you made steady improvement on EUV gross margin. And that means now seems to be not too far off the group average. What should we be expecting in future in terms of your gross margin progression for the sort of upcoming EUV tools? You obviously reference to the productivity could get better. So one would think ASP better therefore gross margin should be better. And then how should we be thinking about the sort of key improvements you can make as far as cost reduction goes? Because there's always been this story about sort of scaling up and getting cost down effectively per unit?

Christophe Fouquet

Yes, so this good point. So I think the cost down continues, it comes with the learning. I think we've made major cost down, of course on EUV in the first couple of years of the rent, because we rationalize our manufacturing activity, rationalized service, and this continue to improve. But at the same time, over time, of course, the improvement on costs you see year-over-year become more difficult. See that's something we have seen on the EUV platform. So this means also that the biggest contribution to potential margin improvement will remain the value we continue to bring to our customer. And there it's very difficult to give you a number. I know you're looking for the exact number. But I will stick to the principle I gave you, which is if we continue to be able to improve productivity by 10%, 15%, every generation, we do expect some margin improvement as a result of that, of course, as long as the cost of the technology makes sense for our customer. But I think there also we, most when you look at for EUV quite a few years, where we should be able to continue to improve the margin of the tool.