Release Date: July 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ASML Holding NV (ASML, Financial) reported total net sales of EUR6.2 billion for Q2 2024, slightly above guidance.
- Gross margin for the quarter was 51.5%, exceeding expectations due to higher immersion system sales.
- Net system bookings for Q2 2024 were EUR5.6 billion, indicating strong demand, particularly in the logic segment.
- The company ended Q2 with a backlog of around EUR39 billion, providing a solid foundation for future revenue.
- ASML Holding NV (ASML) expects Q3 2024 total net sales to be between EUR6.7 billion and EUR7.3 billion, showing confidence in continued growth.
Negative Points
- R&D expenses for Q2 2024 were slightly above guidance at EUR1.1 billion, driven by higher costs in metrology and inspection.
- Free cash flow for Q2 2024 was EUR386 million, which, although improved, still faces pressure due to customer support and higher inventory levels.
- Gross margin for the full year 2024 is expected to be slightly lower compared to 2023, impacted by increased High NA costs.
- The company faces macroeconomic uncertainties, which could affect future performance and demand.
- ASML Holding NV (ASML) anticipates lower revenue from logic customers in 2024 compared to the previous year due to significant capacity additions.
Q & A Highlights
Q: In the booking for EUV in the EUR2.5 billion, were there any two-nanometer orders from foundry customers? Any High-NA in the mix? And based on the bookings momentum and backlog, how do you think about calendar '25 revenues?
A: On the bookings, 73% was related to Logic, indicating foundry business at two nanometers is in the books. High-NA is not included. For 2025, we confirm our expectation of EUR30 billion to EUR40 billion, not at the low point of that range. More specifics will be provided at our Capital Markets Day in November 2024. (Roger Dassen, CFO)
Q: What do you think about the potential implications for ASML from the US administration's potential severe trade restrictions on China shipments?
A: We don't comment on rumors. The opportunity in the mature semiconductor market remains significant. While China has been a large part of this market in recent years, we believe the capacity will be needed globally. (Christophe Fouquet, CEO)
Q: You confirmed today that a Logic customer ordered on 2-nanometer this quarter. Should we expect more EUV orders from them in the coming quarters? And how is AI driving most of the industry's recovery and growth?
A: It's a healthy start for the N2 foundry business, and additional orders will come as the customer ramps up. AI is driving the biggest part of the recovery, impacting both logic and memory. High bandwidth memory products drive more wafer demand, and we expect this to continue into 2026. (Roger Dassen, CFO; Christophe Fouquet, CEO)
Q: Are leading-edge 2-nanometer ramp-up phases on track, or are there any changes? And how do you see the DRAM adoption of more EUV layers and High NA EUV?
A: The foundry customer is consistent with their public statements about starting N2 in the second half of 2025. For DRAM, we see a gradual increase in EUV use on every node and expect High NA insertion around '25-'26. (Roger Dassen, CFO; Christophe Fouquet, CEO)
Q: Could you make deep EUV tools without US IP at all? Are all your deep EUV tools using US IP?
A: There is significant US technology in our tools, and speculating about producing without it is not productive. Preserving the ecosystem is beneficial for the industry. (Roger Dassen, CFO; Christophe Fouquet, CEO)
Q: Can you clarify your capacity expansion plans and the ASP for High NA tools?
A: We are increasing capacity across the board, including High NA, aiming for 600 deep EUV tools and 90 EUV tools. The ASP for High NA tools is north of EUR350 million. (Roger Dassen, CFO)
Q: Are you still servicing high-end immersion tools in China that you shipped last year but can no longer ship?
A: We follow all applicable laws and regulations. We can still operate in the fabs of our customers, though there are more stringent limitations for some fabs. (Roger Dassen, CFO; Christophe Fouquet, CEO)
Q: How much of an impact will new fabs supported by CHIPS Act money have in 2025 and beyond?
A: Most of the volume from these fabs will come after 2025, starting in 2026. We are preparing capacity to meet market demand beyond 2025. (Christophe Fouquet, CEO; Roger Dassen, CFO)
Q: What gives you confidence in the revenue acceleration for the fourth quarter?
A: We are building up momentum, and there is deferred revenue from systems shipped but not yet recognized. This includes fast shipments, 3,800 tools, and High NA tools. (Roger Dassen, CFO)
Q: Can you provide more details on the 3,800 tools' impact on gross margins and ASPs for the second half of 2024 and 2025?
A: The majority of EUV tools in the second half will be 3,800, but not all will command the higher ASP initially. The full effect will be seen in 2025. Gross margin will be slightly lower in the second half due to a higher dry component and the first revenue recognition of High NA tools. (Roger Dassen, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
