ASML Market dynamics Dave Chavoustie EVP Sales Analyst Day, September 30, 2004
Agenda! Market Overview! Growth Opportunities! 300mm Market! Asia Overview / Slide 2
ASML Unit Market Share Trend 60% 12 & ArF ASML Unit Market Share 50% 40% 30% 20% 6 & early I-line 8 & I-line KrF & Step & Scan Immersion 10% 0% 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 Source: ASML / Slide 3
Regional Equipment Markets 60% 50% Regional share (%) 40% 30% 20% North America Japan Europe Asia/Pacific 10% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Gartner Dataquest, April 04 / Slide 4
Importance Targeted Markets 100% 90% 80% Litho share (%) 70% 60% 50% 40% 30% 20% 10% Targeted Markets Others (ex. Targeted Markets) ASML (ex. Targeted Markets) 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: Gartner Dataquest/ASML / Slide 5
Importance of Targeted Markets 6,000 5,000 Litho sales (M$) 4,000 3,000 2,000 Targeted Markets Others (ex. Targeted Markets) ASML (ex. Targeted Markets) 1,000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: Gartner Dataquest/ASML / Slide 6
ASML Market Share (Excluding Targeted Markets) 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% ASML revenue share ex. Targeted Markets 0.0% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Source: Gartner Dataquest/ASML / Slide 7
Market Share Growth ($) p 80% 70% 60% 50% 40% 30% ASML $ market share ex Targeted Markets ASML $ market share World Wide 20% 10% 0% 2001 2002 2003 Source: ASML / Slide 8
300mm System sales 100% 90% Unit share of market (%) 80% 70% 60% 50% 40% 30% 20% 10% Targeted Markets Others (ex. Targeted Markets) ASML (ex. Targeted Markets) 0% 2001 2002 2003 Source: ASML / Slide 9
WW 300mm installs per region at known fabs 100% 90% 80% 70% 60% 50% 40% Japan ASIA USA EUR 30% 20% 10% 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Actual Forecast Source: ASML / Slide 10
TWINSCAN XT:1400 EXtending TWINSCAN & ArF towards the 45 nm Node ArF >120 Shipments PAS 5500/900 Q1-1999 PAS 5500/1100 Q2-2001 PAS 5500/1150 Q2-2003 TWINSCAN XT:1400 NEW Q4-2004 TWINSCAN AT:1100B Q4-2001 TWINSCAN AT:1200B Q2-2003 TWINSCAN AT:850 Q4-2001 TWINSCAN XT:1250D Q2-2004 TWINSCAN AT:750S Q3-2000 TWINSCAN AT:750 Q3-2001 TWINSCAN AT:400 Q4-2001 TWINSCAN >180 Shipments / Slide 11
TWINSCAN TM Value of Innovation Productivity Yield Imaging Overlay Maximum Good Die per Day / Slide 12
Value of Productivity at Fab Build Out Fewer Tools Required=More Fab Capacity, Higher Revenue ASML= 18 Competition=28 ArF KrF KrF I-Line ArF KrF KrF I-Line ArF KrF KrF I-Line ArF KrF KrF I-Line ArF KrF KrF I-Line KrF ArF KrF KrF I-Line ArF KrF KrF I-Line ArF KrF KrF I-Line ArF KrF ArF KrF KrF I-Line Reduced Building Footprint >500 m2 Reduced Building + Install Costs > $10M ArF ArF KrF KrF KrF KrF I-Line I-Line Additional Potential Capacity 1,000 wpm Additional Annual Revenue > $30M / Slide 13
Value of Overlay Tighter overlay provides higher yield = more good die per wafer!1nm overlay improvement = 1% Yield Improvement!1nm overlay improvement = >$1 million revenue / month! 40k wafers / month x 650 die x 0.01 x $5 Overlay Distribution Spec Limit Overlay Distribution Spec Limit Overlay (nm) Rework & Yield Loss Overlay (nm) Higher Yield & Reduced Rework / Slide 14
Value of Imaging Improved imaging provides higher yield = more good die per wafer!1 nm CDU improvement = > 1% Yield Improvement!1 nm CDU improvement = > $3 million revenue / month 30k wafers / month x 600 die x 0.01 x $16.50 CD Distribution CD Distribution Spec Limit Spec Limit Spec Limit Spec Limit CD (nm) Rework & Yield Loss CD (nm) Increased Yield & Reduced Rework / Slide 15
Lithography value on die performance yield Critical Dimension Targeting & Uniformity Determine Device Performance. Lithography is the Prime Driver for Critical Dimension Control. IC Speed Distribution Improved CD Control IC Speed Distribution + Speed (MHz) - + Speed (MHz) - More die at higher speed ($) / Slide 16
Top 20 CapEx Spenders 1 Samsung 4,453 2 Intel 4,000 3 TSMC 2,375 4 STMicroelectronics 2,200 5 UMC 2,000 6 Infineon 1,685 7 Micron 1,500 8 AMD 1,500 9 SMIC 1,500 10 NEC 1,452 11 IBM 1,400 12 TI 1,300 13 Sony 1,191 14 Toshiba 1,182 15 Chartered 1,005 16 Hynix 900 17 Inotera 882 18 Elpida 869 19 Philips 825 20 Powerchip 800 Top20 CapEx 33,019 Total Worldwide CapEx 44,763 Source: Gartner Dataquest, August 2004 / Slide 17
Asia Review Don Crabtree Vice President, ASML Asia Sales Analyst Day, September 30, 2004
ASML Asia Review Agenda! A Brief History of ASML in Asia! A Look At the Regions in Asia! The Future / Slide 19
A Brief History of ASML Asia / Slide 20
First System to Asia 1989 - Tsinghua University, China (PAS 2000) / Slide 21
First New Systems to Countries 1990 - Winbond, Taiwan PAS 2500 Evaluation 1991 - AWA, Australia (PAS 2500) 1994 - Samsung, Korea (PAS 5500) 1995 - Chartered, Singapore (PAS 5500) 1996 - ITI, India (PAS 2500) 1999 - Siltera, Malaysia (PAS 5500) 2001 - Seiko Epson, Japan (PAS 5500) / Slide 22
How ASML Built Its Business in Asia! ASML started by using local companies (agencies) to grow the business in each country:! Successful in Taiwan working with Hermes Epitek! ASML copied that formula elsewhere in the continent! Taiwan/SE Asia - Hermes Epitek: Sales & Service! China - Silicon International: Sales & Service! India - SIMCO: Sales & Service! Japan - Nissei Sangyo (later Hitachi High-Tech): Sales & Service! Korea - Bowoo Corp. (later Hantech): Sales & Service! As the business has changed and grown, the ASML business model has also changed so that now:! Taiwan/SE Asia - ASML Direct! China - ASML Direct! India - SIMCO: Sales & Service! Japan - Hitachi High-Tech: Sales & Contracted Service! Korea - Hantech and Haedong: Sales / Slide 23
How ASML Built Its Business in Asia! In 1998 ASML Established an Asia Headquarters Operation in Hong Kong! Began to establish infrastructure to support business operations including:! Sales Management! Service Management! Finance/Control! Contracts! Marketing and Marketing Communications! Established infrastructure in each country for! Sales! Customer Support! Finance! Marketing / Slide 24
Why Hong Kong?! ASML is one of the few semiconductor equipment companies to establish headquarters in Hong Kong! Central location! Easy flow of people, money and materials! Tax beneficial environment! Customer Neutral! Entrance visa access to China / Slide 25
Asia Business Continues to be a Large Share of ASML Total Business % 70 60 50 40 30 20 10 0 1997 1998 1999 2000 2001 2002 2003 Q1 2004 Source: ASML Annual and Quarterly Reports Asia USA Europe / Slide 26
ASML Asia Installed Base of Systems Continues to Grow - nearly the same as USA Asia Installed Base:! Korea - 29%! Taiwan - 49%! China - 9%! SE Asia - 11%! Japan - 2% / Slide 27
A Look at the Regions / Slide 28
ASML in Taiwan, Republic Of China / Slide 29
ASML History in Taiwan! ASML s big break came in 1991 when it became the sole supplier of litho tools to TSMC fab 2B! ASML s success with TSMC allowed ASML to grow business with other customers in Taiwan and became recognized as a leader in the foundry market! By late 90 s, ASML s market share was consistently higher (~50%) than that of ASML market share world wide! Through its strength in Taiwan foundries, ASML became a strong presence in foundry fabs outside Taiwan / Slide 30
Foundry s Underlined Expectations on Exposure Tools! Time To Market is EVERYTHING -- very aggressive push for response when production is impacted! User-friendly software is needed for flexible manufacturing in a complex product mix! Intensive material handling with small batches and frequent reticle changes! Backward compatibility of new functionality ensures flexibility in production! Superior Value of Ownership in flexible manufacturing operation / Slide 31
Taiwan Market Outlook for the Next 5 Years! Taiwan market will remain one of the engines of revenue generation for ASML! Taiwan IC industry has healthy growth plans in both Foundry and Memory sectors! Most of the growth will be in the new 300mm fabs: Foundry is seeing the cost/technology benefit of 300mm Multiple 300mm fabs up and running by Taiwanese companies by 2006 / Slide 32
Potential for Growth in Taiwan - 2005 forward 300mm Fabs: 8 fabs - 370 litho cells / Slide 33
ASML in Southeast Asia / Slide 34
ASML History in S.E. Asia! 1995: ASML established its presence when it was selected as the sole litho supplier to Chartered Fab 2! 1999-2000: ASML enjoyed tremendous growth by becoming sole supplier to 3 new 8 foundries! 2000-2001: Presence in Malaysia and also Australia was established! 2003: ASML won substantial orders from 2 new 300mm fabs! 2004: ASML began business with first non-foundry customer in S.E. Asia! ASML has maintained 50% market share over the years through its strength in the foundry market / Slide 35
Potential for Growth in S.E. Asia 2005 forward 200mm Fabs: 6 fabs - 50 litho cells 300mm Fabs: 6 fabs - 125 litho cells / Slide 36
ASML in Korea / Slide 37
Lithography Market in Korea is Unique! Very few high volume users! Leading edge technology! More steady capital investments! Small non-memory market / Slide 38
ASML Presence in DRAM Companies in Korea! ASML has largest market share (value) in both companies dominating KrF and ArF systems! Success has been driven by VOO and technology (cost is EVERYTHING in DRAM)! ASML has close cooperation with both companies on new technology programs! Both companies are constantly evaluating all litho suppliers capabilities / Slide 39
Potential for Growth in Korea 2005 forward 200mm Fabs: 6 fabs - 40 litho cells 300mm Fabs: 7 fabs - 240 litho cells / Slide 40
ASML in China / Slide 41
ASML China History! Throughout 1990s ASML was able to supply limited numbers to small, non-leading edge customers! Shanghai Belling was first major manufacturer to purchase ASML systems! Climate changed with start-up of SMIC and GSMC projects in Shanghai! New trailing edge projects will be the short-term future in China providing for significant growth! TSMC! UMC! Hynix/ST! Others / Slide 42
SMIC Changed the Market! Currently operating:! Fab 1-3 in Shanghai! Fab 7 recently acquired! Fab 4 300mm! Aggressive plans for future! ASML strong at all wavelengths / Slide 43
Potential for Growth in China 2005 forward 200mm (and below) Fabs: 20 fabs - 289 litho cells 300mm Fabs: 2 fabs - 48 litho cells / Slide 44
And the Final Frontier JAPAN / Slide 45
History of ASML in Japan! ASML together with Hitachi High-Tech have been actively marketing ASML products in Japan since 1991! First real break-through came with Seiko-Epson taking ASML for new manufacturing line in 2001! Decision to change due to VOO concepts and rapid delivery of product! Since then ASML has built upon this initial success and developed three new customers in Japan shipping:! 200mm! 300mm! KrF! ArF! I-Line! CCD systems / Slide 46
A New Strategy! The typical sales cycle for lithography systems in Japan is at least two years to accomplish! Consensus building throughout organization! Multiple demonstrations of ASML system capabilities! Heavy data analysis! On-site, and often head-to-head evaluations! The strategy of ASML/HHT was to win business one customer at a time and build upon this success! However, due to the sales cycle time this strategy is slow in developing! ASML recently decided to take a more aggressive sales approach in Japan by:! Significantly increasing sales and marketing staff! Cover all new accounts aggressively in parallel! Addition of support resources proactively / Slide 47
Office Locations 2004-2005 = Office now (6) = Office committed (3) / Slide 48
New Strategy Represents a Significant Investment to Grow ASML in Japan! Investment will be in personnel growth both with ASML and HHT! New capabilities will be developed in Japan! Marketing! Technical Expertise! Infrastructure! Management! Investments will continue with local Japan suppliers! Investments will continue with evaluation systems needed to win new business / Slide 49
The Future / Slide 50
ASML Positioned For Growth in Asia! Over the last 15 years ASML has grown in market share and regional capabilities to become the leading litho supplier in Asia! Each region has room for continued growth in market! Sustaining market share in Korea! Growing new customers in Taiwan and SE Asia! Major growth will be in China and Japan! ASML will continue to add necessary management and infrastructure in Asia to support the continued growth of the semiconductor industry! ASML is willing to make the right major investments to support the growth of this business / Slide 51
Commitment