ASML had their 2022 investor day on November 11, I summarized some of the most important points from the day.


Global trends continue to fuel semiconductor growth, this translates to semiconductor end market annual growth rate of around 9% and a doubling of semiconductor revenue (2020-2030). This drives the increased demand for wafers to about 6.5%. The reason it’s not 9% is because wafers will become more valuable.

ASML plans to increase their capacity to 90 Low-NA EUV and 600 DUV systems
(2025-2026), while also ramping High-NA EUV capacity to 20 systems (2027-2028)

The biggest projected growth will be in the automotive sector (14%) then servers, datacenters and storage (13%) and finally in industrial electronics (12%). Smartphones, personal computers and wired/wireless infrastructure are projected to grow single digits.

Automotive will be one of the most advanced users of semiconductors in this decade:

  • By 2030, 70% of cars will be somehow related to an electrical vehicle. It could be hybrid, it could be high hybrids or low hybrids, it could be full electric. 70% of 100 million cars is 70 million cars, and it’s more than $1,500 per vehicle in this decade.
  • ADAS (advanced driver-assisted systems) use massive amounts of semiconductors.

Business model and capital allocation:

Since 2010 ASML has made substantial investments through its R&D expenditures, CapEx and a number of acquisitions.

These investments generated EPS CAGR growth of 18% from 2010 and revenue growth from EUR 4.5 billion in 2010 to around EUR 21 billion expected for this year. Gross margin also improved from 43% in 2010 to 50% this year.

They announced a share buyback program that is a 3-year program of EUR 12 billion, of which 2 million shares would be for employees and the rest would be repurchased and canceled.

Historical buyback & dividends

The installed base business:

Revenue from the installed base came in at EUR 3.7 billion in 2020. This year, they’re already approaching EUR 5.7 billion and expect to grow to EUR 7.5 billion by 2025 at a CAGR of 15% for the 5 year period.

Revenue CAGR, for the installed base business, is expected to grow at around 10% till 2030.

Financial model:

ASML updated financial model

“In terms of 2030, we talked about the top line. We do believe in 2030 that there is potential to further increase the value of our tools to customers. And as a result of that, also further increase our gross margin. And we believe the bandwidth there to look at would be in the 56% to 60% range. And why is that? It’s because at that stage, we believe we’ve taken High-NA to such maturity that it will generate the gross margin that we think High-NA has potentially there. And as we also mentioned, also for EUV in particular, we do believe there is the potential to further drive the value of those tools for the customers. So that’s why we think a 56% to 60% potential for gross margin would be there in that time frame.

R&D midpoint, around 12%. SG&A at a certain point in time, you will get some leverage from there. So we think we can take that to 3% by 2030 away from the 4% that we had in 2021.”

“What are the risks? Well, look at the forward statement that gives you all the risks that are out there. I advise you to take a good bottle of wine with you before you read it. But if you digest that, then you see all the risks. But in essence, if you think about it, of course, it’s geopolitics. Of course, it’s the global economy. And of course, there’s a number of things that are under our control. How effective are we in getting to the ramp? How effective are we in pushing our road map in keeping our cost control, et cetera, et cetera? Those will ultimately be the things that determine our success in the marketplace and ultimately also the level of sales that we’re going to have.”

* ASML assumes in their long-term financial plan that inflation plays a neutral role.

On financial flexibility:

  • 1/4 of R&D expense is flexible.
  • 82% of cost of goods is materials that are sourced from outside.

Disclaimer: This article does not represent investment advice and is solely the author’s opinion. The author is not a financial advisor. Readers are expected to perform their own due diligence before making investment decisions.

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