Driving the Technology Frontier; Implications on this Cycle Bank of America Merrill Lynch Taiwan, Technology and Beyond Conference

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1 Driving the Technology Frontier; Implications on this Cycle Bank of America Merrill Lynch Taiwan, Technology and Beyond Conference Craig De Young VP Investor Relations and Corporate Communications March 17, 2010

2 ASML - Leading supplier of lithography equipment for semiconductor manufacturing Headquarters: Veldhoven, The Netherlands Market cap ~ 10 B Employees ~ 6500 Slide 2

3 ASML market share development 7,000 70% WW M$ 6,000 60% ASML market share 5,000 50% 4,000 40% 3,000 30% 2,000 20% 1,000 10% 0 0% Sources: Gartner ( ), SEMI ( ) Market research agencies forecasts ( ) Slide 3 Slide 3 World Wide Market [M USD] ASML Revenue Market Share [%] 8,000 80%

4 ASML Total net sales M Net sales , ,465 2, , , , , ASML guidance for Q1 and Q2 Q4 Q3 Q2 Q1 Numbers have been rounded for readers convenience. Slide 4

5 ASML supports chip makers shrink roadmaps Average of multiple customers input Resolution, "Shrink" (nm) nm Technology transitions DRAM (working memory in PC s) Logic (microprocessors, the brains of PC s) 193 nm NAND Flash (special memory, used in, for example mp3 players) 20 EUV 13.5nm Year of production start* 15 *Process development 1.5 ~ 2 years in advance. Slide 5

6 R&D spend supports continued technology leadership ASML R&D investment (excl. Zeiss for lenses) Total Sales (M ) R&D Investment (M ) Total sales M R&D investment M Source: ASML Slide 6

7 ASML - #2 in European R&D spend per employee Company (market cap > 2.5 bln) R&D per employee ( ) Shire (pharma) 98,100 ASML (semiconductors) 78,000 Porsche (automotive) 74,900 UCB (pharma) 67,900 Lundbeck (pharma) 57,600 AstraZeneca (pharma) 54,800 Autonomy (software) 51,600 Sanofi-Aventis (pharma) 46,900 Nokia (telecoms equipment) 43,700 Alcatel-Lucent (telecoms equipment) 40,800 Source: European Commission: 2009 EU Industrial R&D Investment Scoreboard TW/betapublishers 2009 Slide 7

8 ASML - R&D focus on 3 major strategic programs TWINSCAN NXT Holistic Lithography EUV Slide 8

9 Holistic Litho To keep process centered in application specific window using computational lithography, cost effective metrology and feedback loops Data Scanner settings design/ mask data SMO FlexRay Tuning Scanner settings Wafer data Wafer data BaseLiner Control Scanner settings Data Scanner settings Value to Customers: Higher Product Yield Faster time to market for new chip designs Slide 9

10 Immersion and EUV Technology Leadership Immersion Lithography Leader Installed Base >160 Systems at 22 Customers, across all sectors and geographies NXT:1950i Pilot Production EUV for 22nm and beyond 6 systems shipping to all sectors thru mid 2011 NXE:3100 Source: ASML Slide 10

11 Roadmap Cost of Technology Platform stepper 5500 scanner TWINSCAN ArF dry TWINSCAN ArF wet EUV R&D 50 M 125 M 250 M 500 M 1,000 M 1,500 M Required Revenue Average Selling Price Required Number of tools 333 M 850 M 1,700 M 3,500 M 6,500 M 10,000 M 1 M 3 M 7 M 16 M 35 M 65 M Source: ASML, R&D estimates ASML only Slide 11

12 Estimated market transition timing - High Volume Manufacturing DRAM NAND Node = HP [nm ] Node = HP [nm ] MPU Node / HP [nm ] LOGIC Node / HP [nm ] YEAR / / / Spacer 22 / Spacer 32 / Double Spacer 15 / ReRAM 11 / / 35 Single expose SPT / / EUV * LELE / / EUV * Slide 12

13 Leading Edge Memory Drives Today s Backlog Total value M 1,853 NXT 17 systems or ~40% of immersion backlog End-use NAND 17% IDM 15% DRAM 56% ArF immersion 91% Foundry 13% Technology 8% ArF dry 1% Taiwan 27% USA 18% Korea 31% Region Japan 13% Singapore 7% Europe 4% Slide 13 Numbers have been rounded for readers convenience

14 Backlog: value and litho units ASPs on the rise Backlog value Systems Backlog value M ASP 11M ASP 10.3M ASP 12.5M ASP 14.8M ASP 18.75M ASP 26.8M Jan 03 Jul 03 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06 Jul 06 Jan 07 Jul 07 Jan 08 Jul 08 Jan 09 Jul 09 Jan 10 Backlog units 50 0 Value/Units at Bottom of Bookings Cycle Slide 14 Value/Units 4 Quarters after Bottom of Bookings Cycle

15 Looking Ahead Slide 15

16 2010 semiconductor revenue growth forecasts by 3rd-party analysts keeps increasing: now at +18.4% 2010 Semiconductor revenue growth forecast over time 25% 20% Future Horizons SIA Semico 15% Dataquest IC Insights 10% WSTS isuppli VLSI Research 5% AVERAGE 0% Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Date of Forecast Slide 16 YoY Semiconductor revenue growth [%]

17 In opposition to 2001/02 downturn, IC inventories appear under control mma IC unit sales, inventory and inventory days monthly IC inventory based on 3mma IC ASPs 3mma IC unit sale 3mma IC unit sales corrected for inventory Inventory days (right axis) Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 3mma IC unit sales / Inventory [Bio. Units] IC inventory [days] - Source: VLSI Research, WSTS, ASML Last data point: December 2009 Slide 17

18 WaferOutput[30mequiv.KWSM] Starts / Month [300mm equiv. KWspM] Memory factory utilizations high but due to 200 mm fab retirement, capacity is expected to be tight in Slide 18 Memory WW Wafer Output Split by Wafer Size and Node [1Q07-4Q10] Strong Capacity Add Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Source: ASML Marketing (9/09) 6x & 5x Conversion 300mm utilisation & fab closures 200mm retirement mm including(7x nm- 2x nm) 200mm (including 9xnm and 8x nm) Estimate Immersion for 5x, 4x & 3x conversion

19 DRAMdemand&suply [Mio.GB] DRAMSuficiency [%] DRAM bit sufficiency analysis: At 47% bit demand growth market is slightly under-supplied during 2010 DRAM DRAM Sufficiency Model: ASML's fcst-based Supply versus Gartner-based Demand ASML Modeled DRAM bit supply [Mio. GB] Gartner Forecast DRAM bit demand [Mio. GB] DRAM Sufficiency (ASML) 140% 120% % % % % % 0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 0% Slide 19

20 Memory prices have recovered, driven by increased demand and limited supply MAIN DRAM SPOT & CONTRACT PRICES (01/ YTD) DRAM Chip ASP [$US] Gb DDR2 667 SPOT PRICE 1Gb DDR2 667 CONTRACT PRICE 1Gb DDR SPOT PRICE 1Gb DDR CONTRACT PRICE 300 mm cash-costs for 7x nm 1 Gb DRAM between 1.4 & 1.6 USD 300 mm cash-costs for 6x nm 1 Gb DRAM between 1.0 & 1.2 USD 1,5 US$ cash profit per DDR3 IC (60% GM, if made at 5x nm) Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb mm cash-costs for 5x nm 1 Gb DRAM between 0.8 & 0.9 USD Source: DRAM Exchange (2/2/2010) Slide 20

21 as a result, customer s profitability is rapidly improving, especially for those using leading-edge lithography tools 60% Operating Margins of main DRAM Manufacturers (Q1/06 - Q4/09) DRAM Most advanced prod. node in Q4/09: Operating Margin [% of Sales] 40% 20% 0% -20% -40% -60% -80% Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 Q308 4Q08 1Q09 2Q09 3Q09 4Q09 4x nm 5x nm 5x nm 5x nm 6x nm 6x nm -100% -120% -140% Source: DRAMeXchange (2/10), ASML Marketing (Fab dbase) Slide 21

22 NANDdemand&suply [Mio.GB] NANDSuficiency [%] NAND bit sufficiency analysis: At 70% bit demand growth market is well balanced for 2010 NAND 4,000 3,500 3,000 NAND Sufficiency Model: ASML's fcst-based Supply versus Gartner-based Demand ASML Modeled NAND bit supply [Mio. GB] Gartner Forecast NAND bit demand [Mio. GB] NAND Sufficiency (ASML) 160% 140% 120% 2, % 2,000 80% 1,500 60% 1,000 40% % 0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 0% Slide 22

23 Memory Growth Summary DRAM In 2010 DRAM bit demand growth can be met by shrink towards 45 nm node requiring investments in immersion machines only Forecasted 2011 bit demand must be met with wafer capacity additions i.e. new wafer fabrication facilities requiring Immersion/ArF/ and i-line tools NAND In 2010 NAND bit demand growth can be met by shrink and fab fill out. Forecasted 2011 bit demand must be met with wafer capacity additions (new fab lines). Slide 23

24 ASML Systems: 300mm Memory Average number of systems required for new fab 3xnm NAND 4xnm DRAM ArF ArF ArF ArF ArF ArF 32 litho layers 37 litho layers 120k wafers/month 100k wafers/month Slide 24 All scenarios are based on typical process using 2009 XT system productivity levels. Customers process and wafer start requirements will vary.

25 ASML Systems: 300mm Logic Fab Average number of systems required for new fab 4xnm Logic 39 litho layers 45k wafers/month Slide 25 All scenarios are based on typical process using 2009 XT system productivity levels. Customers process and wafer start requirements will vary.

26 Summary ASML has gained required scale through market gains supporting required litho R&D investments ASML is leading in meeting the industry's shrink roadmaps Memory supply/demand close to balance in Bits growth supplied by shrink only Further memory bit supply growth in near future will come from wafer supply growth ie. new fabs Slide 26

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