Three key takeaways from ASML’s Investor Day 2018

By Sander Hofman

On Thursday November 8, 2018, investors and financial analysts from around the world gathered at our headquarters in the Netherlands to get an update from our executives about ASML’s product portfolio, technology roadmaps and business opportunities — all the way to 2025. With lithography being at the very heart of the semiconductor industry, we have the advantage of longer-term visibility that others in the industry don’t have. Here are three key takeaways from the event.

1. Big trends fuel the semiconductor industry’s fast growth

Technology is changing fast. The age of the PC is behind us and likewise, the decade-old smartphone market is maturing. The next level of computing is dawning. It’s all about immersive computing and the idea that we all have many, many devices connected to us. The immersive era will blur the lines between the physical and digital world through augmented and virtual reality. It will set a new standard in connectivity and ultra-low latency with 5G. It will mimic the human brain with artificial neural networks. And it will both create and process incredible amounts of data. Last year’s IDC report ‘Data Age 2025’ estimated that the amount of data created in the world annually would be 44 zetabytes in 2020 (that’s 44 trillion gigabytes) and 160 zetabytes by 2025, up from less than 10 zetabytes in 2015.

IDC’s ‘Data Age 2025’ notes the strong growth in data creation towards 2020-2025

What’s making it all possible is the relentless drive by the semiconductor industry to improve chips’ performance and reduce their cost. While the world’s most advanced logic and memory chips are powering high-end trends in Artificial Intelligence, big data, and automotive technology, the simpler, low cost chips are integrating sensing capabilities in everyday technology around us to create a vast Internet of Things. If you add it all up, the global semiconductor market eclipsed the $400 billion mark in 2017 and will continue to grow for the coming years.

2. EUV lithography will keep shrink going

Visions of the future are nice, but the industry also needs the tools to cost-effectively mass produce all that chip technology, while chip features continue to shrink. The era of chip manufacturing with Deep Ultraviolet (DUV) light of 193 nanometers has been pushed further than many would have thought possible. The industry has had to reach deep into a bag of costly tricks to continue shrinking chip features, leading to very complex manufacturing processes. The transition from DUV to Extreme Ultraviolet (EUV) light of 13.5 nanometers brings some much-needed relief: the chip manufacturing process can once again become simpler — and cheaper.

ASMLs’ TWINSCAN NXE:3400B uses extreme ultraviolet light to print chip patterns on silicon wafers (©ASML)

Think of it like this: if you were to write your name using a marker with increasingly smaller handwriting, you’d have to switch to a finer kind of marker at some point, right? With EUV lithography, we are offering the industry a fineliner pen. Thanks to the higher resolution, EUV can print in one step what DUV would do in three, enabling chipmakers to produce smaller, faster and more powerful chips while keeping costs in check.

3. ASML is positioned well for significant revenue growth

Back in October 2016, ASML was on track to set a record year with more than 6.7 billion euro in net sales. And at our Investor Day in New York that month, we noted how we expected to grow our net sales to approximately 10 billion euro by 2020, a milestone we upped to 11 billion euro after our acquisition of e-beam company Hermes Microvision. Flash forward just two years to November 2018. Taking into account the emerging drivers in the semiconductor market and the appetite for advanced lithography to fuel those tech trends, we currently expect our net sales to grow to around 13 billion euro by 2020 (in a scenario of moderate market growth). And when we model different market scenarios beyond that, we see an opportunity to grow our annual revenue for 2025 to between 15 billion euro (in a low market) and 24 billion euro (in a high market).

All of the Investor Day 2018 presentations and the full audio stream are available on ASML’s website.

Sander Hofman is a Corporate Communications Manager at ASML