Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
|---|
| Overall, a very strong growth year, especially considering the industry being in a down-cycle |
| And if we look at those building blocks -- of those three building blocks, that gives us the conviction at this moment in time that 2025 is going to be a -- is a very strong year |
| While our bookings were lower than in previous quarters, our backlog at the end of Q3 remained strong at over EUR35 billion |
| It's a very strong year |
| As Roger has highlighted, another good quarter, especially considering the current market environment |
| Now, having said that, in my introductory comments, I actually had three reasons for why we believe 2025 is going to be a very strong year |
| In the DUV, of course, we've had a great year for China because we were basically delivering out of the backlog |
| We remain confident that we are well positioned for further long-term growth, as we discussed in the market scenarios for 2025 and 2030 during our Investor Day in November 2022 |
| Not so much where they are going to add capacity for the existing fabs because that's basically that is a -- that is a -- that is a question of where the cycle is, but if you take those three things together, and then we look at the demand that we're currently discussing with our customers, then 2025 is a very strong year, and a very strong year doesn't jive with your low end of the guidance |
| So that's another -- that's another positive |
| In summary, we clearly view 2024 as a transition year as we prepare for future growth and expect strong year in 2025 and beyond |
| China demand for DUV systems continues to be strong, a trend we talked about in previous quarters |
| Now, based on discussions with our customers, we currently expect 2025 to be a strong year, driven by a number of factors |
| Turning to our business, we now expect DUV revenue to grow towards 55% year-over-year, an increase from around 50% communicated last quarter, primarily driven by an increase in immersion revenue |
| So there would be a positive effect from fast shipment in the number for next year |
| So if you then think about the psychology of the customer, and they look forward and they see these inflection points towards the end of the year changing positively that means they will grow in 2024 |
| In summary, based on our full year with higher DUV revenue offset somewhat by lower expectations on our Installed Base business relative to last quarter, we still expect net sales for the year to grow towards 30% with a slight improvement in gross margin compared to 2022 |
| I think when you think about trailing edge, I mean, we did not see pushouts from many of our trailing edge customers because many of them are in China, but even the ones that are not in China, because they are supplying the mature market, which, for instance, supplies the automotive industry and industrial IoT, they actually kept pretty -- pretty -- pretty strong |
| Looking further ahead to 2025, we expect a significant growth year since more than 50% of our EUV and DUV shipments will go to new fab projects |
| Gross margin for the quarter came in at 51.9%, which is above our guidance, primarily driven by DUV product mix as well as some one-off cost effects |
| In summary, despite going through an industry downcycle, we still expect very strong growth in our business this year, and while there are still significant uncertainties primarily driven by the macro environment, it appears that we're passing through the bottom of this specific cycle, and the shape of the recovery will ultimately determine the demand curve beyond 2023 |
| I think that has continued, yeah, so which is good |
| They better tell us |
| So I would not expect, I would even say, if you would see the HVM volume ramp, yeah, on the gate-all-around architecture, it's just a reason -- one of the reasons why I think 2025, 2026 is going to be a good year |
| The expanding application space, along with increasing lithography on future technology nodes drives demand for both advanced and mature nodes |
| They tell us, you better prepare us for 2025, but the minimum in 2024 is what we call the conservative view because you could have a more positive view and say, well, it will turn in the second half of 2024 |
| The positive impact of higher sales volume is more than offset by the dilutive impact from a change in DUV mix and one-off effects relative to last quarter |
| How do we think about the gross margin puts and takes just given there's several moving parts in terms of like mix and you guys are obviously increasing your manufacturing output for later years and then I think there's some benefits from higher EUV ASPs |
| On top of this, we expect existing fabs will be adding capacity, driven by continued recovery cycle |
| That could be -- that could be an upside, yeah, but this is where we are |
| Statement |
|---|
| As the industry is working through a cycle, customers remain cautious in the current environment, managing cash flows and delaying purchase orders |
| Uncertainty remains in the market, driven by global macro concerns around inflation, rising interest rates, lower GDP growth in certain economies and the geopolitical environment, including export controls |
| As mentioned in previous quarters, in the current environment, we expect to see ongoing pressure on our free cash flow |
| So as a result of that, I would say the number of fabs that are still involved, number of our customers and fabs that are still involved in advanced manufacturing have gone down dramatically |
| Therefore, we now expect our Installed Base business this year to be down around 5% from last year versus the flat growth previously communicated |
| That particular risk in terms of export controls being enlarged to what it is today, that's a risk that we've always had |
| So that could also be a bit of a headwind on gross margin |
| For the Installed Base business in 2023, the current utilization rates, market uncertainty, particularly as it relates to the timing of the recovery, customers continue to wait to perform productivity and performance upgrades on the litho systems |
| So that's going to have a headwind on the gross margin because those people will have to be trained in 2024 whilst primarily being productive only in 2025 |
| In the near term, it's understandable that customers remain cautious as they moderate wafer output to help lower inventory levels in the supply chain and look to build confidence around the timing and slope of the recovery next year |
| As a matter of fact, the leading edge has been trending in a half pitch, and I was hoping that by next year, there will be a bigger demand for leading edge among Foundry and your Logic customer, but what I get from you is probably EUV unit shipment is going to decline |
| So obviously that also, same story, lot of people that will be added there, and will be a drag on the gross margin for 2024 |
| You might have seen that on the hiring of people, we slowed down a little bit this year |
| That can go positively, can go negatively on the gross margin, very much dependent on how the upgrade business will come back in 2024 |
| As expected, we did see some moderation in orders this quarter |
| The demand fill rate for our Chinese customers over the last two years was significantly less than 50% |
| And that's simply because the underlying trend, the secular trend of the capacity that is needed to support all these transitions that we all talk about, and we all believe in, it has a downturn for whatever reason, could be macro, could be macroeconomic shocks |
| Our lead times are simply too long |
| So I think DUV could see some reduction, based on that now, if then sales stay the same or at the similar level then EUV grows, but there -- what Roger also said as an answer to the previous question, we do expect that fast shipments going out of 2024 will be lower |
| So we need to prepare ourselves, but you're absolutely right, because otherwise we won't be able to react and then we're in a super crisis in 2025 because we can't make the tools that our customers want |
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