Welcome to ASML's 2018 Investor Day. I am Skip Miller, Vice President of Investor Relations at ASML. And I want to thank you all first for making the trip to our headquarters here in Veldhoven. It's nice to see such a full house. Also good morning, good afternoon or good evening to all those joining us via webcast.
Before we go through the agenda, I'd like to talk to a few housekeeping items. First off, if you could all make sure you have your phone on silent, vibrate or airplane mode, we appreciate it. Also in the back of your or in front of you, there's a little kind of a holder there that has notebooks, if you want a notebook to write in if
you haven't found those.
The restrooms are outside and to the left. I think many of you probably saw those on the way in. And finally, the presentations that we will have today will posted on our website at the end of the day, so around 5 o'clock tonight. So let me first provide an overview of kind of the day. We've sent some of this out earlier, but we will spend roughly 4 hours here going through presentations.
We will have a break around 3 pm for a half hour. We will then go into a Q and A session at the end of the presentation around 4:15, allowing 45 minutes for Q and A. We will next then go to a after the event around 5 pm, we'll go in to do a fab tour. It's actually a tour of the experience center, but we'll have a few that will actually in a lucky draw go to the DUV and EUV fab. The management team will after the Q and A session rejoin us in the plaza around 6 pm.
So there will be time for additional interaction in Q and A if we don't get to your question in the Q and A session at the end of this area. Finally, we will have dinner around 6:30. Drinks will start right after the event here at 5. We will likely be done the tour before 6 p. M.
So I'll give it a little more time for mingling. And then 6:30 we'll start with the dinner. We have a guest speaker from Imech, Jota Buch, who is the current Chief Strategy Officer of Imech. He'll talk about some of the work we're doing with Imech and great opportunities out there. We should then plan to wrap up around 8:30 and the bus for those going back to hotel departs at 9 pm.
So let me first go through the presentations. First off, our CEO, Peter Wenink will give a company strategy, market trends and stakeholder value presentation. Next, our CTO, Martin Van den Brink will give an update on the industry technology roadmap as our strategy. Then we have Christophe Fouquet, who's going to talk about EUV products and business opportunity there. Jim Kuman will then talk about our application products and business opportunity.
And for some of those who joined in 2014 2016, we are calling that this section of the presentation holistic litho products, but it's the applications business that we discussed. Next, we'll break out in the foyer here, which will be roughly a half hour. We'll rejoin, have a video and then Ron Kuehl will talk about DPUB products and our business opportunity there. And then finally, we'll wrap up with our financial business model and capital allocation strategy with our CFO, Roger Dawson. Peter will close at 4:15 with those remarks and then we'll go into Q and A session as I mentioned.
Okay. With that, I think that was a good enough intro and I'd like to introduce our President and CEO, Peter Winnick.
Thank you, Skip. Thanks. Okay. Company strategy, market trends and stakeholder value. First of all, I want you to read this.
It's a forward looking statement, but it's probably well known to all of you. We're going to give you a peek into the future, And we unfortunately don't have a full swing crystal ball. But what we're going to show you is at least what we believe is going to happen in the next couple of years and how that translate into value for you all. First slide, overview. When we look at the company and talk about the future developments, I think there's one thing I would like to highlight, and that's innovation.
Innovation will continue. There's no doubt about it. And innovation will also drive, together with our customers, a very healthy semiconductor business, and it will fuel a lot of applications that we're all not only dreaming of, but we're seeing today happen. I'll talk a little bit about that later. But it also will translate then to a significant growth in wafer capacity in all segments.
But it will focus on leading edge nodes because that will provide most of the value, which actually means you saw it in the intro video, Moore's Law continues. And there's a strong growth opportunity for lithography coming out of an era where multiple patterning was the kind of the solution of not the solution of choice for our customers, but you could see, you will almost say it was the only way to move forward a solution into single patterning again into the EUV era, whereby DPW still will remain a very important part of our business. We will continue to expand our product portfolio across the three business lines, and we will drive growth opportunities, and we think we can provide a lot of value. Now I think this is an important slide, and it's an interesting slide. And it's a slide that was produced by
Lisa Su of AMD, and
it effectively shows the we go into this immersive era. It's driven by immersive technology. And what's immersive technology? It's in fact where the lines blur between the physical world and the digital simulation world in what we could call kind of a mixed reality. And a mixed reality is technology that is based on human senses, vision, hearing, smell, taste, feeling.
And it has an impact on computing because in the PC era, we had the central processing unit, the CPU. But now we have processing units, neural processing. And neural processing really is sensor driven tasks are coming to the center, which basically drives robotics, but also IoT applications. And massive amounts of data are being processed through advanced algorithms. But it's not only neural processing units, it's graphics processing units, but also basically helping us in this space, processing vast amounts of data in big data blocks with sometimes hundreds of cores using also these advanced algorithms.
DSP, digital signal processing, becomes part of it. So it's basically integrated computing complexity. That's what we're seeing. And we're not dreaming this up. I mean, it's what our customers tell us.
And when we go to our customers and we talk about the roadmaps and about the application space, this is what we hear, yes? It's this integrated complexity in the computing space that is driving our business now and over the next decade. And of course, we see this as a good example in automotive where you see this whole sensor data driven application space in the automotive where we see different types of sensors ranging from lidar, radar, optical and all needs to be combined in this integrated complexity. It's also true for artificial intelligence, whether it's robotics. We're seeing that machine to machine.
We see it in autonomous driving, product intelligence, in smart homes, in home appliances, virtual agents, call centers, decision making in credit risk, and you're probably very familiar with that, process optimization, it's all driven by artificial intelligence, and that is driven by the compute power behind it. But nothing works without if we don't have the speed, yes, and the improvement in latency to do things real time, yes? And that means 5 gs will come, yes? And if you look at areas in the world where there's a lot of push, for instance, China, yes, is all about 5 gs because these are the areas of technology that will enable what we are trying to achieve. So that creates volume.
So this is important because it also fuels the demand for storage. And if you look at storage by 2020, we believe the world will have we'll see 44 zettabytes of data storage capability, which is effective 10 up in the last 6 to 7 years. And when you look at all these developments, it's basically all circles around Moore's Law because when you look at the application space, and we talked about this artificial intelligence, autonomous decision making, the data highway and the storage capabilities, the fast algorithms, it all circles around the notion that we can only execute this if performance and cost of what we're doing is in sync. It's the cost per function. And that's Moore's Law.
As I say, Moore's Law, historically, we would have said that the definition is every 2 years, the capability of the device doubles at the same cost. So the cost per function halves. It either means that the same functionality you have the cost or at the same cost, you double or triple the functionality. And this is really what it's all about, and we are at the heart of it. And as you will show, as we will show in the presentations to come, we have the conviction that together with our customers, we can keep this going.
Now if we think about this and we think about the areas where this applies and how we like to translate that into growth, then let's look at a certain at a number of end markets. We have the maturing markets, which is the mobile and the PC, single digit growth areas. But then you have the second part is continued growth in the cloud applications. And it could be in the infrastructure, which is the telecommunication equipment, single digit growth. When you look at service and data storage, that's an area that from 2016 to 20 10, 2025 almost triples, euros 220,000,000,000 12% CAGR.
And it's also true for the connected device market, the emerging markets and automotive and industrial electronics are just two examples, yes, where also we see double digit growth. And when you translate this and you see this, how does that translate into wafer capacity? So what have we done? We basically said, let's take some industry analysis on those product groups, those areas of industry that grow fast. And we had a few examples on the previous slide like automotive and the industrial application service.
And we take the industry analysts still we had the data till 2022. We plot all of those segments, all the S maturity curve, and we say, how does that extrapolate all those individual segments to 2025? Now when we then look at that and take the customer roadmaps and look at the capabilities of our customers to execute this, and we can calculate waivers. So when we calculate waivers, we look at logic and NPU, And we see that in a 10 year period from 2015 onwards, we believe that the wafer capacity, the 1,000,000 wafer starts per month will triple in 10 years' time for 2015 to 2025 from €500,000 to about €1,600,000 Now if you then take DRAM, it goes from €1,200,000,000 to €1,700,000,000 Now DRAM, of course, you get more bits not only by making more wafers, but also by increasing the density, which is, of course, the innovation that you also see happening in DRAM and in 3 d NAND. 3 d NAND, when we do the extrapolation, we believe that from 2015 to 2025 over a 10 year period, you can see growth of 1,500,000 to 2,500,000 wafers.
Adding it all up, 2025, about 6,000,000 wafers. By 2025, where are we today? I think we're just above 3,000,000. So it's doubling over the next seven years in installed wafer capacity. Now if you then plot this on a growth map and say how does this grow from 2010 to 2025 and you can plot 2015 somewhere around the 3 €1,000,000 mark, 2025 around the €6,000,000 You will see that these new semiconductor nodes will drive the investments in wafer capacity.
But very important for us is that by that time, the new nodes, the nodes that we're currently not delivering to our customers, that we will deliver over the next 7 years, will intensify and will be about, you could say, 2 thirds of the installed wafer volume by 2025. So it's about innovation. I said it before. This is about innovation, and this is where it will show. Little intensity will go up.
Now look at little intensity, and we take those three segments, logic, performance memory and storage, and we look 10 nanometer where we litho intensity is about 25 percent. We have pretty good view on 7 nanometer these days. It will go up to 29%. And our projection is that when we move from 5% to 3%, it will go to 35% and to over 40% at 3%. And little intensity is the little CapEx fraction of total WFE, okay?
So little intensity will go up. Also true for performance memory DRAM, whereby 1x 24%, 1i at 25%, but at 1a, which will be beyond, let's say, the mid teens, it will go to 27%. And in 3 d NAND, it will decrease because of the fact that 3 d NAND will start adding layers. Now clearly, there is stacks of stacks included here. So when you're at 64 layers, we're at 19%, 96 layers at 15%, 128% at 13% because we are stacking layers and you need limited amounts of additional litho there.
However, as you listened well to some of our memory customers, whether it's Micron or Hynix and even Samsung, they talk about the next generation memory, the new memory types. If you look at storage class memory, where we again not only shrink in Z direction by adding the layers, but also in Y and X and in Z direction, then you will see a little intensity. It's significantly higher, but also with a significantly increased density. So this is something for the first half of the next decade where we see the introduction of storage class memory. Now what does that mean in terms of growth scenarios of percentage of total semi CapEx and affordability.
So let me walk through this slide. When we look at from 19, 97 to 2025, we divided that in 3 blocks, 97 to 2010, 2010, 2017, 2017, 20 25, 3. The semi customers grew in the 1st column until 2010, about 6% per year, a drop in 2010 to 2017 around 5% and we'll stay we think it will stay around that 5% area. Semi CapEx actually in the middle column from 2010 to 2017 went up quite significantly from just under 5% to over 7%. And we call that the multi patterning era.
In that time frame, multi patterning was introduced and some people said because EV was late, and I think that's true. So we saw multiple patterning coming in logic quite significantly. We now see it in DRAM, but also we have seen our stacking going up in the 3 d NAND space where there was this period where we had almost a double whammy by adding new 3 d NAND wafer capacity on top of the conversions of 2 d to 3 d. So we were in this period, a 7 year period, where we had a significant increase in semi CapEx and Littel stayed behind for a simple reason that stacking includes a lot of other process steps where you don't necessarily need little. And the thing with multi patterning is it's expensive.
So with the introduction of EUV, we see going forward from 2017 to 2025, a significant space for EUV. And if you remember the previous slide, you saw that the little intensity in logic and DRAM is going up. So while the semi end markets go at about 5%, we believe that semi CapEx as a percentage of sales will go down to just under 4%, but litho will be just above 7%. So in fact, we'll go back from the single patterning era through the multi patterning area to EUV, where we'll be single patterning again. Now the question is then, is this affordable?
When you look at the litho CapEx as a percentage of semi revenue, it actually stays around 2.3%. And it dropped a little in the intermediate period, it goes back to about 2.3%. And also the relative cost per function, which of course is Moore's Law, keeps going down over that period until 2025, which is basically, if you look at over a 20 year period, it's about a factor of 100 down in terms of cost. So litho intensity will go up, providing us a growth opportunity, which is significantly driven by EUV, and it's still affordable, which is the most important. And I think it's evidenced, and Christoph will talk about this, by the fact that our customers have engaged on the high NA EUV journey, securing them an EUV solution well into the second half of the next decade and beyond.
Now if you now look at the 2025 and we look at the division of our products and I look at litho systems only, you can see there's quite a significant shift in what we will sell and what we will ship. You can see that almost 75% of our business is currently deep UV, but over 75% will be EUV by 2025. And if you take ARF Immersion, Leading Edge Immersion, and Ron will talk about that, that will not stop. There will be significant innovations in DPV Immersion. It's more than 85%, closer to 90% of our sales will be leading edge by that time.
Now do we have challenges? Yes, we do. We have 4 strategic priorities. I wouldn't even call them challenges, just the priorities. It's we have to expand our holistic litho opportunity.
We have to remain competitive in deep UV because it's still a very good business. We will have to bring EUV to high volume manufacturing with all the parameters that signify high volume manufacturing and EUV technology beyond the next decade, which is high NA. So holistic litho extension is really focused on the building and winning position of what we call patent fidelity litho capabilities and the superior computational litho capabilities and the litho scanner capabilities and integrate that into one solution for our customers, whereby Unitho Plus leadership will be strengthened by what we call in device metrology, and Jim will talk about that. To stay competitive in deep UV, we focus on a couple of things. We continue to lead in innovation.
Deep UV is going to be a workhorse for a very long time. And innovation is on productivity, innovation is on match machine to machine overlay. It's on focus. It's on many operational parameters that our customers use in their production process. But it's also very much about driving the operational cost down and improve uptime.
So it's about operational excellence because this will be a workhorse. It already is. It will be more a workhorse. So it's about operational excellence and cost driving down and expanding our installed base business. And if you do these things, we will maintain our margin profile at a very healthy basis.
And especially Ron will also talk about the change in the mix between new systems and installed base business. On EUV industrialization, very clear. EUV works. Now how quickly can we make it operational excellent to the level of DPV? And Christian will talk about that.
We will focus on high volume manufacturing, service and financial performance. And I think we have all the ingredients, and we have the knobs to turn to make that a resounding success, and Christoph will talk about that. But it's not only what we have today. It's very important that we have a road map that we can show to our customers that performance improvement and cost down is also visualized in the next generations of 0.33 NA EUV. They will be with us.
That particular node, 0.33 NA EUV, which is a current EUV node, will be with us forever. Very important part of our business going forward. And then the last one is high NA. Beyond 3 nanometer and beyond, we need high NA, which will be second half of the next decade and beyond. Christoph will also talk about that.
Now that means that can we continue this? This is an historical graph. So it actually meant that when we look at 4 of our stakeholders, our shareholders, our customers, our people and our partners and suppliers, we have created significant value, a 46% improvement of productivity, a significant increase in our share price and total shareholder return. We've employed and are still employing an increasing number of very smart and bright people. And we have fueled our supply chain with over €30,000,000,000 of business over the last 7 years.
So we'll keep doing that. This is historical, but I think these trend lines you will see going forward will have the same kind of slope. Now on our sustainable development goals, it's very important, it becomes more and more an issue with our shareholders and with our stakeholders. There are many. The United Nations SDG goals, the sustainable development goals are many we've chosen, in fact, 6, but we brought it down to 5 areas.
We focus on people. And what we're trying to do in this highly innovative environment, we need the brightest people from all over the world. And in this field holder site, we employ 103 nationalities. We get them from all over the world. It's very important for us and to keep growing them.
Circular economy, use and reuse of the materials, think about installed base business, the stuff that you're getting back. I mean, that if we do this smart, it will have a significant impact on cost and on quality. Climate and energy, we have to reduce the carbon emissions in our operations to be more sensible with energy usage, which also has a cost element, which will benefit us. And of course, fostering the innovation system with our partners is key. We're an open innovation company.
We have this broad ecosystem that is supplying us with the latest and greatest, and we want to make sure that we promote that these levels of responsibility further in the supply chain. Now if we then summarize, I think there's a very clear value creation opportunity going forward over the next 7 years and beyond, driven by innovation. I think the that will drive significant health in the semiconductor business because the opportunities are there. The solutions are there. The customer roadmaps extend till the end of the next decade.
We have the technology to support that. So it means if we can do this together with our customers, it will translate into higher wafer count. We need more capacity. And that means that lithography as such is going to be a key element in that drive for more value. It means that we will see a strong growth in EUV market mixed with the DPV market.
We will expand our product portfolio as a result of that, and it will further drive the growth opportunities for the next 10 years. And rest assured, and Roger will talk about that, how do we translate that, I think we can translate that into significant value for our shareholders. That was my summary. I'd like to more than I'd be more than happy to transfer it to Martin for his review of the technology roadmap. Thank you.
Good afternoon. I will try to connect the story of Peter where he discuss the overall market trends to the business units and drive you the show you the synergistic approach we have here. So about roadmap and technology strategy. To start with our overview, I still we still think that Moore's Law continues at least by another 10 years. And Moore's Law has now been broadly defined as historically it was only a resolution.
And as I will show, we have now more slow going on multiple engines, which I think helps the overall industry, also helps us moving forward. We will see that all of the customer roadmaps continue to use lithography solutions and shrink. And it likely will again continue another 10 years or so. We'll get to higher volumes of wafers on the leading edge nodes moving forward. And then finally, our product portfolio is aligned with our customer roadmaps.
In fact, in that sense, lithography roadmaps keeps as simple as it ever was. We just go down resolution and we have to adjust the accuracy of the systems down and making sure we crank out as many wafers as we can. And finally, we will have to summarize this in our strategic priorities to go for also cost effective strength. Peter introduced the overall market trends going from algorithms, applications and data. And all of this is only possible by having an engine driving it, which is performance and cost.
Without an increase in performance and a decrease in cost, people could not afford the amount of data we're carrying today. You could not create the knowledge. And Moore's Law is not only on logic, where you see substantial innovation. It will also reflect in advanced memory systems and as well architectures for fast innovations. And this is still developing and progressing moving forward.
You see here how I pictorialize that, I'd like to show how it would look like. You see here Moore's Law Innovation in 4 fields. And you could, of course, arbitrarily argue there should be a few more, but I tried to say it's traditionally about dimensional scaling here on the left hand side. And I took this picture from Intel, which continue to make major jumps moving forward. This will continue.
We'll quantify it in the next couple of slides a bit better. It's about circuit scaling. And as an example there, I made a cross section or we may include a carry your Apple device. And recent Apple device has the most advanced integrated memory microprocessor unit of the planet is in these advanced phones. A number of years ago, people only talked about it.
Now you buy it in volume. And you see here integration of memory and logic. The third one is what I call device innovation. I took here the example of Samsung, who has been very vocal on them moving forward with FinFET as we speak, but also introducing aggressively EUV and also what we call so called gate all around, the sum of gate control. And on the final box, you see the architectural scaling, where in the past, even in a phone, you would find only a single CPU.
Then we moved up to a multi core CPU. You moved to G including GPUs and also have small and big CPUs, small CPUs for specific task. And recently, you get these general processes into place to deal and tensor calculations, to also include artificial intelligence, including your phone, which is part of your image recognition. And although we are putting ourselves a bit modest, we're only very active here. We believe that this continues to be an essential piece of the cost.
And as long as we're part of the total engine, we see a continuous participation of ASML in this overall Moore's Law Drive. Peter already mentioned Lisa Suess. He made a nice presentation last year, where she predicted that the past 10 years, we saw about a density or this is a log scale performance, system performance. So this is not the same as amount of transistor, the system performance per watt. Had an improvement of 2x every 2.5 years.
She predicts it will be larger than 2x. And yes, it will be consists out of many, many elements. But here, the process technology, which I choose to color a bit, where Littel includes is about 30% of Navinio innovation. If you compare it just for fun, what Moore Flord did publish in 1967, he was about the same 30% attribution to physical shrink as Lisa Suu predicted today. So many people are concerned about Moore's Law continue, but we are still think there is quite some future to go.
Yes, at some point in time, it will stop, but it is not in our side yet. So here I used some public data, how shrink did go for major products DRAM and Logic. DRAM is the performance memory. You see here that as of 2015, DRAM was about this is the vertical axis here is the bit density per square millimeter there the transistor density on the logic side. You see we were in a very steep curve until 2015, where we reached the limit of scaling not so much of the transistor on a DRAM device, but on the capacitor, which forces DRAM people to go somewhat slower.
And yes, we have visibility to our customer roadmap. A few notes further, but I choose to give a range that we will continue to see a structural slower shrink to DRAM as we've seen historically. However, if you look today to the DRAM business, it's all sky high, never been so high almost than today. And lower shrink for the same amount of volume requires more litho. So as long as the overall cost equation fits, we continue to see also a healthy business.
And also, which I was feeling a number of years ago that our delays in we may sense that EUV would not be applied for DRAM. I think this road map ensures that EUV will also be applied into DRAM and maybe even later on also high NA. Here, I include the public data from logic producers. And there, the overall trend is uncertain. The swing will certainly not go to 0.
It will be substantial, still above 20%. And where it will exactly end between 28% and 10% is currently unclear. To give you a public reference, Brian Kay before he departed was very vocal on the fact that his 10 nanometer delay was related to the fact that EUV was not there and created enormous amount of complexity in the device integration, which could have been avoided if EUV would be in time ready. So we still have to see if we would go to full implementation of EUV, how aggressive the appetite of the customers in terms of shrink and that's about to see. But the key thing also here is we don't predict the shrink will be stopped anytime soon.
This is another way of looking to why those advanced nodes continue to be important. You see here the various nodes of the logic providers. And I made here the three examples. I already showed you the iPhone processor, which initially is being developed on the, let's say, a subcritical node, not the most advanced node. But while volume had increased, cost became more important.
And today, I think your iPhone process, as I already said, is one of your most advanced processes you can buy. Now bit mining is the other one. TSMC has talked about in their financial reports. I still believe this is a bit of a hype. But even so, you see bitcoins start on legacy nodes and very quickly now starts into the most advanced nodes.
And finally, which is the one of the devices like the Tensor Processor Unit, which is an accelerator for artificial intelligence, is the next wave of devices, which have been technology been developed or will be developed on the subcritical nodes. But likely, the volume will become one of the major drivers over time. That brings me to what it means for us in resolution. So, so far, it's a bit the what our customers do. This is what we will do for our customers.
And here I plot the resolution of our capability of the various nodes requirements. You see here on top the 3 d NAND. The expectation the 3 d NAND will never well, never will unlikely scale down. And if it will be scaled down, it will be marginal and it will mainly go in a vertical direction, which today has been is driving also agafluoride immersion performances. And in particular, the 3 d integration requires some specific features dealing with high to have specific to stay on track with 3 d net.
When it comes to foundry and DRAM, you see here DRAM has been the most dense device. But as we see the VOV today. There's only a few notes will move immediately into the pipeline, which is not good for costs, But for total chip, customers will still allow a limited amount of layers over time going to EUV multi bedding. However, the need of high NA coming after that to make sure that we have our high NA tool. Now this is about resolution.
As I said, the overlay is, from a machine perspective, an equally big headache, and some may say even bigger. And you see the slowdown of DRAM and logic continues to stay in line means that in a few years around this time frame, you see likely the requirements of Logic even more aggressive on litho than it was before. And mind you, even if you have double patterning with the same resolution on every single machine you ship, you need to support the better overlay. That brings me to a summary when it comes to our scaling roadmaps. You see here the logic performance memory and storage memory.
You will see in the 3 d NAND a continuous use of immersion, no shrink. Micron, Intel are very vocal on what they call crossbar, which is one type of a storage class memory. We expect more of that to come. They will start on relaxed nodes, so they will not immediately push resolution because they will develop technology. It's very likely that those technology long term will shrink, maybe even shrink much faster than DRAM will do around the time frame.
But this is all speculation. When it comes to Logic and DRAM, they continue to be the driver of little. And you see here that logic is even a bigger driver than DRAM. So we'll see a there's a committed roadmap from customers on logic starting at 7% to 5% and moving up to 3% to high NA. On DRAM, we see a little short will follow shortly.
Christophe will elaborate on this. And in the course of the second half of the next Celineum, we'll likely see most of those revising using high NA. So that brings me to our strategy. It's we can change our internal strategy compared to last year. It's about 4 major themes.
It's about holistic little, DUV performance. And I say it once more, DUV performance means that we will not see all layers changing to EUV. We'll see a substantial use of the EUV layers, which then need to have mix and match performance on bleeding edge overlay with EUV. So we cannot let down the EUV development until everything moves to EUV, which is still a number of years to come, and it may never will never been come to the point that we'll not see emerging to be used. So, DOV is a very important point.
EUV industrialization, which is our current 0.33. And finally, Hain A, and I will talk in the next few slides on this in more detail. So before going into every one of them, I'd like to pictorialize our overall strategy technology strategy, how do we take this. So traditionally, we were mainly focusing and it's still our major focus is little equipment. In this case, we have to do innovate on all wavelengths from I line to EUV.
And this is probably, let's say, 80%, 70% of our work. However, in the last 10 years, we have been very diligent in adding what we call both a competence called computational litho, and we call today computational litho and metrology, as well a diverse set of products around metrology, allowing us to improve the overall litho performance. For instance, this computational metrology the computational lithography is able to simulate the whole image formation in the stepper. And by optimizing the knobs in an efficient manner without doing all the experiments, we can set up a setting of the stepper and largely process window. By measuring the wafer results coming out of the system and even metrology inside the system, we can control the process window, making sure the system stay aligned.
And having this computational lithography tool is possible to drive the application also in the metrology system to make sure you measure the right thing. We still believe we are advertising this approach already for a number of years. This is important. And it all is there to drive what we call EPE. Nobody may precisely guess what EPE is, so I have another Intermezzo here.
This is a result this could be a result of a double tethering process, which normally is very efficient with a space process getting and spaces. But the lines and spaces, it's impossible to create a working chip. So you have to create some structures and you do that after a double patterning process like this, you start cutting these lines in a way you can make a circuitry. That cutting is usually done with a second or third exposure by making a small image here and you cut these lines in 2. But you have to reload the wafer after having been processed these lines.
And by reload the wafers and re expose, you have to deal with certain uncertainty both on the size of the cut as the position of the cut. So we traditionally only talk about what we call CD control, the size of the knife and overlay control, the position of the knife, we're now looking to the accuracy of the edge. We call it edge placement. Now if you then look because you cannot with cutting like everything in life and you start using knives, you need to only cut there when you intend to cut and not get to the good part. And if you do that, you pictorial see, you have here the antenna cut, but you have a tolerance filter, you have to both shrink the cut as well the tolerance without the cut.
As you see in the next animation, if you shrink down, you need to drive down the whole envelope. So our holistic approach is driven to drive down the tolerance of this whole process. Because people say even we go to single layer level and we'll still continue to see double patterning will not be disappeared on certain layer types, certain process types prefer still prefer double patterning will still be used, except that the advanced nodes like EUV will reduce the explosion of the unaffordable double battery. With that, I'm going to a number of busy slides, and we argued this is the right abstraction level for this audience. Probably not.
But since you came all here, I did like to show you we have lots of stuff here. And I will walk through quick. We have on the top of the application thing, we have the scanner interface, followed by metrology, followed by inspection and stuff with APC. Then we have multiple products rolling out. Now on the top side of the scanner interface, what we're doing in the scanner interface, making sure that the knobs on the steppers becomes available and are able to get more sophisticated.
For instance, the correction mechanism are steppers as we can drive metrology density up and cost of metrology down, customers afford to get a higher density measurement, and we need to have a more sophisticated interface. So more sophistication in knobs is driver number 1. The second highlight to make is that we have optical metrology. And optical metrology is a difficult thing. We'll just skip all that detail.
But one important thing to remember is that even optical metrology is difficult. It's so simple and so cost effective, it will likely never go away. Therefore, we see a solid in the overlay. That's why we also need the computational metrology to do simulation to get the recipe and the marker optimized. But we have been able over the last couple of years develop a capability we call in device overlay where we don't have to measure on a mark, but we measure directly on the device, eliminating the need for customers to offer to give up real estate and we can really measure the overlay when needed.
The second point is that we continue to believe that shipping boxes on metrology is not the way to do. We're not shipping boxes with shipping capability, and we believe that cost reduction of metrology is essential to get the little performance up in a way customers can afford. That means aggressive multi wavelength, which drives robustness and productivity to make sure we get more points per hour measurement to allowing us to get more sophisticated feedback. Part of that productivity will be done with fast stages, and I will name those fast stages a few more times in the following slides. Then we are moving now to E Beam.
We are today have probably the fastest e beam system, which today is fast because of the field size is about 100 times field of view is about 100 times bigger than a traditional SEM. And with that, we are able to develop a patent fidelity and metrology control system, which allow us to get an integrated feedback, not just to the CD, but the whole patent performance. I did not highlight on the previous slide, but we also have a strategic cooperation with several of the processing tool vendors. Then over time, we continue to drive e beam. Some of you remember, I have been talking about e beam lithography a few times.
I said many times, we will not be able to drive e beam to the highest productivity. But for majority, it's slightly different because you don't need to have the full wafer beam measurement, so you can compromise, but you can still drive the productivity by using a multi beam. And we are with HMI, we acquired a few years ago in a major effort to drive the amount of beams, combine it with extensive computation a little and fast stages to make sure we get a as fast e beam system as possible, allowing us to use e beam continuous use e beam in production for various applications. And Jim will continue to talk about that. And then the final thing I'd like to say is that the mobile accuracy is a substantial part of the edge placement, And we have to face also an aggressive OPC accuracy calculation, which has been helped by machine learning and these fast sets.
To pictorialize it a little bit more detail, this is an example of our machine learning. This is our data driven, fast, sand metrology. This is our physical mold capability inside our brine capability. And combine that in a machine learning system, we are able to substantially drive the model accuracy up. So this is a bit of a fight between physical modeling and learning, but we have learned over the last year that combining it with the most advanced learning algorithms, we can continue to drive these OPC accuracy.
The second example, I'd like to show you the in device. I know this is a bit today the state of the art with YieldStar. And you see that the noise on YieldStar is substantially less. And the referee, in this particular case, is electrical measurement at our customers. So we don't trust either one of those measurements.
You just go to a directly electrical tester device and determine that. So this is a major achievement that some of those layers, we don't have to go to market. We just look to the device. We have the whole capability of, let's say, the computational metrology and calculating the recipes in the right settings and markets sorry, the data reduction, we can get these kind of results. So in summary, application goes around 4 major areas: computational litho, optical controls, e beam and process control, where also advanced learning, so almost what the market trend comes back here in the products.
Also deep learning becomes a major part of the advancement here. Optical metrology, you can continue to use driving productivity for multi beam SAMs and extending our process control by increasing our control knobs. That brings me to DOV. You see here, again, the various tastes of machines, non EUV machines, immersion, dry, agofluoride, cryptofluoride and hyaline. Major theme on all machines is productivity and overlay.
We'll highlight a few. The 2000, which is our newest model, has been improved up to 2.70 5 waves per 2 nanometer overlay. We will continue that with new accurate and fast stages and will drive commonality with dry by having a common dry wet tool to drive the performance, also a major improvement, which enables us to get to over 2 50 waves per hour moving forward and further improvements to come. Then on the cryptofluoride, we have a major focal point on making the system suitable or continue to make the system suitable for 3 d net by dealing with these high topologies and wafer stress. And overall, DUV, we have a major effort in driving to machine perfection, drive down downtime, drive up quality and drive down cost.
Give you an example. On 2000, we shipped a number of them, and they all, in this case, I showed you the overlay. The orange bars are the Match Machine overlay. And you see also the improvements through alignment sensor, level sensor, wafer table and a few other features. That concludes me on the summary of EUV or DOV.
I think we continue to innovate DOV. You see us also not spending less money on DOV than so far, and we don't see that coming soon. So we'll continue to lead it as. However, we need to do that for the right cost and uptime. So our perfection standards are increasing, which makes it more difficult for Christoph to follow our problem, we believe.
But we will you see here our progress on ramp up time at our customers in terms of reliability. And then finally, since we will, as slow down potentially shipments over long term on immersion and cryptofluoride, we continue to work on high installed base management that can go to the customer and upgrade the systems to higher performance. With that, I'd like to close with EUV. First of all, our Point 3T system, we have been talking EUV works for a number of years. And partly, it was a substantial amount of hope.
But I think this year, we have been able to drive these productivity numbers convincingly at customer sites, which has became a major breakthrough on our behalf with the customer. And we continue to need to drive the uptime. The uptime is not close enough to the merchant, we have to continue to do that. As a result of that achievement, we have pulled in some of the future models, which we planned into next year, where we introduced high productivity higher productivity in Nagorno for 125, 170 mb per hour, lower overlay. So this is, in fact, the reaction of our confidence achieving the basic performance in the UV.
And then long term, we are developing a common development between the high NA and the 0.33 to allow to extend the 0.33 system down to the 3 nanometer node and over 185 wafers per hour. And the reason is that we also believe that the 0.33 system will continue to be used even if customers start using Hain A because of the cost of the tool. And then finally, we have the Hain A platform, which is really needed to reduce the to limit the double patterning. Give you one result on the current shipments. This is the mix and match overlay.
So mind you, this is not just putting the wafer twice in the machine. You are matching this machine to another machine. In this case, the reference wafer has been exposed on DUV. So this is you could also look at this as an indication how could you do mix and match. So these are very promising numbers, and we have to maintain those promising numbers even when the productivity goes up.
This is a bit of a peak view on the high NA system. And I just showed you all the systems as we visit. It will be a major, major effort for ASML to pull off. And while doing so, we are trying to get major synergy between our existing EUVs program and the future to have early implementation of some of those modules, bring that technology early to customer and create value, but also reduce the risk doing so for our high NA introduction. So the bad news of high NA is almost everything is touched, but the good thing is substantial partly will also pour back on the existing system.
And now longer term, we see this pictorial for what we can see on the advantage of high and high. This is the effective productivity, taking the double patterning penalties into account. You see a continuously high productivity on high NA even to single layer patterning because of the higher contrast, But the real benefit starts when you have double patterning kicks in and even triple patterning kicks in. This particular point is the real triggering point for high NA to be implemented. We're just on the edge of single layer patterning, but you see a huge gap in terms of productivity and therefore also to cost when introducing high NA.
With that, I like to conclude to say that we have 2 accelerated programs in place, both the 0.33 and the high NA. The 0.33 is all about uptime and getting the productivity up and getting the system extended to the 3 nanometer node. Here, we have system design completed. And because of our success earlier this year with the breakthrough on the productivity, we're able to get major customer commitment. So we have in total of €1,500,000,000 customer commitments in the start of this year, have been able to lock in, in our high NA development, which is very important because this is a very complex program.
And we are continuing to work very closely with SAIS, a corporation we announced, I think, a few years back, but it's also around INA. And that concludes my talk. This is a repeat of my first one. Thank you very much.
Thanks.
Good afternoon, everyone. I'm Christophe Fouquet and I'm responsible for EUV in ASML. So I think Peter and Martin has already hinted the fact that this has been a very good year for EUV in ASML. And both our customer and ISML are very excited in fact about the progress done in the last few months. So I'm going to spend the next 25 minutes trying to summarize for you both the progress we have made, but also the opportunity moving forward.
Before I do that, I'd like to spend a few minutes maybe explaining or summarizing what's really changed in the last 12 months. The first thing, there used to be many questions, many debates on how far multi patterning can be extended. I think Martin was mentioning the very public statement by Intel by Brian K that 10 nanometer is most probably the last node that can be done without EUV because the complexity of 7 nanometer with multi patterning will just be too high. So the question about how far multi patterning can go is answer. EUV has to be used for 7 nanometer.
And we see all our logic customer moving very aggressively to EUV on those nodes. That's the first thing. The second very important thing is that customer are ramping. So for many years, we talked with you about EUV and we had the if, will EUV work? Then we had the when question and those questions has been answered as well.
Now customer are ramping. And probably the next discussion we're going to have together with you is how fast and how much. And the answer to the question those questions will be basically how successful we are in our industrialization, which is ongoing. I will talk quite a bit about that. And what does industrialization means?
It means that we now have to bring this technology to high volume manufacturing. We need to show good productivity to make it economically viable for our customer, logic first and then DRAM. We need to make sure the tool is running well, have good availability and provide good yield performance. So this is basically the work we are doing today with our customer and it's well underway. I will also explain you that in order to run EUV, you only you don't only need a scanner, you also need a whole infrastructure.
And today, we don't see any show stopper anymore. So everyone who needs to support EUV is ready to do so. So all of this means also that our own confidence in EUV, as Martin mentioned, has increased. And you can see that by the fact that we decided to accelerate our roadmap. So for many years, we struggled about power.
We struggled to achieve a certain amount of productivity. And right now, we are planning to go to 170 wafer per hours as early as next year. And this is, of course, a major improvement for our customer. This is good for Logic. But as I will explain later on, we also believe that this will open the door to DRAM even wider.
So this creates also additional opportunity on the market. On top of that, because we start to master this technology, not only we believe we can go to 170 wafer per hours, but we also believe that our technology, our 0.33 platform can be extended further. So we are already working as we did in the past on deep UV on more product, more innovation, more improvement. And we start I will say to move a little bit EUV to another ASML product with a roadmap with improvement that will come every other year to support basically our customer need for overlay and productivity improvement. On top of this, so Martin mentioned it, we work also on I and A.
And why is that? The reason for INA is the exact same reason as 0.33 UV today. We know today that multi patterning beyond free mask is not a great idea. This scheme for Logic even with 0.33 EUV will come back around 3 nanometer node. And when it comes back, there again we need to be able to make a step and this is INA.
And this is why in parallel to the 0.33 platform, we also started to aggressively work on the INA program. So all of this is good technology wise, but of course, it also gives us an opportunity on the business. Putting the technology in control means we can create more value, means we can put our costs in control and this also provides a nice gross margin opportunity for EUV. So this has been also a discussion we had with you for many years. How far could we go?
How quickly? Today, when we look at the target of EUV regarding gross margin, we plan to be at least at the DPUV level, meaning at the level of high end product in ASML. So this is a little bit the change or I would say the theme I'm going to develop in the presentation. Starting with EUV lithography. So why do we do that?
So very simple summary about the value, I would say, of EUV for our customer. We talk a lot about cost, and I'm going to show you some cost comparison between EUV and DPUV. But I would say the most important thing when it comes to EUV is the simplification. It's good that EUV is cheaper than DPUV, but what Logic customer are really looking for is the simplification. Using 4, 5, 6 masks for multi patterning is just not going to generate very high yield.
And that's again the internal statement. So first value is simplification. The second one is cost reduction, which come out of this implication. And depending on the application, the layer you look at 15% to 50%. 3rd point is the cycle time.
So for foundries, for DRAM customers, cycle time is very important. And of course, if you are going to use less mask, less process steps, you're going to be faster basically to get to the end result. So there's also a very nice cycle time improvement, 3 to 6 times on the very critical layer. And finally, as Sigmarin was showing some overlay number, this tool has to provide the very best lithography performance. This is already the case when it comes to overlay and imaging performance.
So this is the reason why if you look at 7 nanometer logic, then 6 nanometer DRAM, our customers are basically planning to introduce a tool in the coming months in high volume manufacturing. Talking a little bit about our customer. So I wanted to start by first a simple graph. What you see here is the cumulative number of exposed EUV wafer. And we started to count this number you see in 2011.
Total today is 3,200,000 wafers. So if you compare to what we exposed there with LDPE, it's of course still very small because these are still I will say R and D number. But what is very interesting is that out of those 3,200,000 wafer exposed, a third of it has been done in the last 6 months. So we see a major acceleration at our customer in R and D still basically on the number of wafer being exported. This means that those guys are getting ready for EUV in volume manufacturing.
This is confirmed. So we picked here a few quotes. TSMC was very public about starting to run EUV this year for 7 plus and then next year for 5 nanometer. Samsung very recently announced the exact same thing and also planning to extend their EUV capability for 7 nanometer. And finally Intel, so we talked already about this a few times, 10 nanometer will be the last node without EUV.
So you see the 3 key logic customer very publicly almost being in a race to implement EUV in the coming year. Now they are not only talking about it. These are basically what's happening on the ground. So this is a picture of the fab they are building, Intel, Samsung, Skenics and TSMC. And those fab will open sometime between 2019 2020.
Again, there's a bit of a race there between our customer. And this set of picture here represents a capacity of more than 200 EUV machines. So they are creating space. Basically, they are planning for EUV run-in a high volume manufacturer. Last point about our customer, the number of EUV layer they are planning to put.
So when we started to work with logic customer, they had a certain idea for 7 nanometer of how many layer will be used with EUV. Today, on the exact same node, 7 nanometer, we have seen an increase of about 30%. So the number of layer where EUV is going to be used is in fact increasing over time based on the performance this year on the initial one. And we still see additional opportunity even for 7 nanometer node because some of the year are still to be defined. If you look then at the next node, 5 nanometer, we look at least 50% more EUV layers.
So the transition to EUV at 3 nanometer would be even more dramatic at 5 nanometer, so it would be even more dramatic. So this is for Logic. Same picture for DRAM. So DRAM is a little bit behind because I would say the motivation for UV is different. It's mostly driven by cost.
There's still plan to introduce this around 16 nanometer and an opportunity to increase the number of layers at this node by a factor of 3. And again, moving forward, you look at 50% more opportunity in the next node. So now you notice that this DRAM number is a little bit lower than the Logic one. Be aware that the volume on the other hand is a lot higher. So if we look at the total number of tool, which is what we try to do with this slide, you will see that for a logic fab, for a fab capacity of about 45,000 wafer start per month, for 10 to 20 layers, you need about 10 to 20 tools.
For DRAM, for a capacity of 100 ks, 1 to 6 layers, you will also need 2 to 10 systems. So this is a little bit the range of opportunity we have basically on Logic and DRAM. Moving to the industrialization. So this is still, I will say, the major focus of our customer of ASML on EUV. Few data points I'd like to share with you.
The first thing is we talked a lot about wafer per day in the past because wafer per day is basically the ability of our customer to run the tool in high volume manufacturing. The more wafer per day, the lower the cost of the tool. And what you see here, this data from 1 logic customer is that on the 13 weeks basis, this customer has been running routinely more than 1,000 wafer per day. This has been for a very long time the magical mark if you want for EUV, astrologic customer. These are still R and D run.
If you look at the capability, it's more than 2,000. And we have been in fact capable to measure that on a very short time at some of our customer as well. So these are, I would say, very good and healthy signs. This type of data are the data that help our customer to move and move faster on EUV. The next graph is about availability.
So what do we see here? This is the system. This is our source. Both are climbing, major progress. It's still a little bit below target.
One of the reasons is that there's still a lot of work being done to improve those tools on the ground. But at this point of time, availability is not a showstopper. So we are still going to improve it. We're still going to aim to go to DPV level, because this is what our customer would like to see. But at this point of time, this is in no way a showstopper for customer to start running UV in manufacturing.
Looking at the bigger picture. Now the EUV infrastructure. So I told you before that a lot of things had to be ready for EUV to work, mask technology, inspection technology, etcetera, etcetera. We showed you this slide I think for the last few years. And we used to have a lot of red or question mark with Showstopper.
At this point of time, we don't see any and we don't see any for the next few nodes. What does it mean? It means that all the supplier that are involved basically in developing this infrastructure also plan on EUV introduction. They have stepped up their investment and they have also made major progress basically to support the EUV introduction. You see here it's a lot of different companies.
So this was a little bit of the challenge if you want to start with. But this is also one of the reasons why today this is ready. I will focus on one of them which was defect performance. Defect relates to yields. If we have too many defects, the yield is going to be bad and customer will again move away from EUV.
2 things we are doing. The first one is reducing dramatically as you see here the defect level on the scanner to the level where some of our customers believe they could run the tool without the pelicle. The pelicle is basically the thin membrane that is going to protect the reticle during high volume manufacturing. But for the customer who will want to use the pedicle, a logic customer on very critical layer, we are also ready to provide them this as of today. And those customer already in sub casings run pedicle as we speak.
Roadmap. So this is a little bit looking back. I think you've been aware some of you I guess have been following EUV for even longer than I did. So it all started Martin will tell me it started long before 2006 in fact. But it started with our customer in 2006 where we shipped basically our first demo system.
Then we had I would say a series of free system the 3,100, 3,300 and then we had even a 3,350 here too to I would say help our customer develop the technology. But none of those tools you see it here were shipped in a high volume and the reason for that was they were not capable to run production. Availability was too low. Productivity was too low. In 2017, we started to ship the 3400B and there is now several system on the ground.
By the end of the year, we'll have more than 25 of those tools at customer. And this is the 1st real production tool. This is the tool that can allow us to meet the productivity and the availability requirements. Martin already shown the roadmap, I'll come back to that as well. We also plan to extend this tool further when it comes to speed and availability.
So this is the tool we have today on the ground. Moving forward, we are going to further work on speed. So as early as next year, we are going to ship the first 3400C. And this 3400C will provide higher availability. We believe we are going to pass the 90% mark, because we have redesigned some of the element of our source in order to do that.
And it's also going to provide a very nice improvement on productivity, which when it comes to DRAM and I come back to that will be very important to again open the business opportunities there. This is not the end. We already have planned to go even above 185 wafer per hours. 3 nanometer will also see the introduction of the INA tool as Martin mentioned. And as he also mentioned, those tools will then be used in parallel by our customer to optimize the overall cost of lithography moving forward.
So one slide about INA. So why INA is important? Same reason as before process simplification. So I told you before, today all customer understand that at 7 nanometer they need EUV. And they need EUV because they don't want to use more than 3 masks in multi patterning.
Martin said it, EUV will very quickly move to double patterning and then triple patterning. And around 3 nanometer node, the logic customer will again need more than 3 masks in order to do lithography. The only way to solve that will be higher resolution and therefore INA. Here again, when we look at cost, what you see here basically is the relative cost of immersion versus 0.33 versus 0.55 in different configuration, 1 mask, 2, 3, 4. You see that the 0.33 cost wise is beneficial beyond free mask.
And what you see here is that we move when we move to I and A, the cost benefit will be even higher. So we say the switch cost between 0.33 and 0.55 will be even lower than it was for customer to switch to 0.33. So very strong cost motivation, cycle time improvement again and once again very high overlay imaging performance. So all of this and the anticipation basically of the need to avoid again complex patterning scheme have led our major customer to already commit today to INA. So this has been announced in the past.
We have 3 major customer with work with us on INA. And as we have a total of up to 12 system already committed in the next few years. So there's a very early commitment basically to this technology. Making progress on INA. So this is also not only awards.
These are a few pictures of some of the tooling. So this is a picture taken at Zeiss. This is one of the tool we are going to use to ensure the accuracy of our mirror. So you see the size and you can imagine the complexity of this technology. This is why also we start to work on it today.
And this is a picture of one of our first Proto Eye and Earls. We are starting basically if you want to build already the lens we will need for this tool. So we have a lot of attention and also investment already on this technology. And a few weeks ago, we also announced that in order to give access as early as possible to our customer to this technology, We will create together with IMEC a lab to give basically our customer access first to EUV as we have it today and around 2022 to the INA platform. So we are going to make, I will say, the platform available for test for qualification to our customer here in Veldevan as quickly as possible.
This is for the road map. I have a few words now on our profitability. So the first thing I told you that we're going to work basically to improve our productivity. We're going to have an aggressive road map there. And this is what you see here.
So we plan to do several steps. So I show you here basically the productivity in relative numbers. So we start at 100% today for Logic. Blue is Logic and green is DRAM. They have slightly different conditions, so we represented them differently.
We're going to go to 155, which I think you knew already, then 170 wafer per hours and then above 185 wafer per hours. And as you can see, this will happen in the course of the next 18 months. So it's a very fast introduction of productivity improvement. At the end of the day, if we look at Logic, in the next 18 months, we're going to provide 75% more productivity. And when it comes to DRAM, we are going to more than double the productivity.
So this you understand for customer like DRAM where cost is a very important factor to make the choice not of EUV. This will of course help dramatically to increase the opportunity of the EUV business moving forward. How do we do that? So that's also important. We do that mostly by improving our optical elements.
So this is mostly about coating improvement. So no big change also to the tool. That's why I'll show you that. It's not like we're going to redesign a whole new platform. We're going to keep the source as it is.
We're going to keep the scanner as it is. And we're just going to make some smart improvement in order to get more productivity. So the risk of this on the implementation is also very limited on our side. So what works for the tool productivity will also have benefit for service. I think Peter explained to you in the past that the service is based on the paper wafer, which means that the more wafer we are going to expose, the more
errors. So back in 2005, when ASML's products portfolio was just on target, we can deliver value and right now we're addressing about 90% of that required budget. Another way to look at it is schematically. So in the fab, you have the litho system and eventually I'll fill in here to the right etch systems and the like. Where we started after the acquisition of Bryan is we use computational lithography to be able to create the optimized masks, which could be delivered to the scanner and then also to provide best possible printing performance.
The next step in assembling the applications product portfolio was to measure after litho. So this is where we use the YieldStar optical metrology system. We make measurements after litho typically on targets or marks, so not actual device patterns, but proxies for what the device pattern looks like in order to measure things like overlay and focus. We bring those back through a control loop using algorithms and then we correct the scanner. So we measure on one lot and then we feedback a correction control loop to the next.
With the acquisition of HMI, it gives us the capability to use the resolution benefits of e beam metrology in order to make more precise measurements after litho, but it also gives us another thing, which is to measure after etch. So with HMI, we can measure after etch in the manufacturing process. And as Martin showed with YieldStar optical metrology, which is extremely cost effective, we can also measure after etch and bring those control loops back. E Beam Metrology, there's a resolution throughput trade off that you make there, very high resolution, not so fast throughput. So what we do with the computational lithography in the next buildup of the applications product portfolio is we guide the e beam only to those places on the wafer that are most interesting.
So we get the maximum amount of information in the minimal amount of time. And last but not least, there is an opportunity because patterning and what customers really care about in terms of edge placement error occurs after etch, there's an opportunity to co optimize both the scanner and the etch system together. So right now we're actually working collaboratively with an etch supplier at multiple customer sites to prove the value of co optimization of litho and etch. So this is how the applications product portfolio gets assembled. What you see here are not only point solutions and point tools, but the control loops, the algorithms, the scanner interfaces and the computational models that pull the whole thing together.
ASML is uniquely positioned to pull this strategy off And the reason is because the scanner is the one place in the fab that's uniquely able to find, measure and correct for patterning variations. So what you see in the TwinScan setup, the metrology stage measures 100% of the wafers. So it gets information on 100% of the wafers that flow through the fab. But more importantly on the exposure stage, we actually can control each and every field on every wafer that goes through the fab. So if we want to correct one wafer different from the next wafer, we're able to do that.
If we want to correct one field different from the next field within one wafer, we can also do that. And it's the litho tool that's unique that has that unique capability with all of the correction horsepower that we have that allows us to close these control loops and deliver the value and deliver the customer's requirements in terms of overlay, focus control, dose control, ultimately edge placement error control. So here's how you see the on product overlay budget building over time. So back in 2,008, in the high volume manufacturing node at the time, overlay, the requirement was about 16 nanometer, which means if I'm trying to put a pattern on the wafer somewhere, if I put it within a 16 nanometer zone of where the optimal place is, my chip will still yield. So that's a 16 nanometer sort of tolerance of the budget.
It goes all the way down to 1.7 nanometer in the 2022 timeframe. So in order to pull off this roadmap, we have a lot of work to do. Back in 2,008, the number of correction parameters per lot that ASML used to work with their customers was about 55 correction parameters per lot. And maybe on the left hand axis, you can see the scanner actuations per lot in 1,000, maybe about 500 different scanner actuations per lot. So how does this build up over time?
What you see over time is a dramatic increase in the number of correction parameters per lot and the number of scanner actuations per lot. And what that does for you, that exquisite control that we're able to affect in the litho system is it gets us the resolution we need or it gets us the overlay control and the edge placement error control, so that you get that fidelity that you see in the image in the top right. So this is how pattern fidelity gets improved as we drive down things like the on product overlay budget. Martin also made the point that there's tremendous value if you can measure after etch, right? So measuring after litho is a big part of the story, but it's not the entire story.
Measuring after etch then takes into effect what can go wrong or what gets changed in the etch process. So what you see here is the overlay map of a wafer after etch and then also a map of the number of good die in spec. So if you have overlay after etch measured at something like 5.3 nanometers, you might have 61% good dye in spec. You have a little bit of a fuzzy image and that's based on using low order corrections per wafer. So you don't have a lot of granularity in your correction capability.
But as you are able to measure more after etch using, as Martin described, using the ability to measure the actual device. So now you don't have to consume really expensive real estate in the die with targets or marks, you can actually measure the device and for memory devices, this is a fairly straightforward thing to do. You can go to higher order corrections per wafer, which improves your overlay performance, which improves your yield. Ultimately, when you go to highest order correction per wafer, you can drive your performance better and better. So cost effective metrology after etch, you can measure in dye, so you can get very deep, very, very precise high spatial frequency measurements, which then can lead into high order corrections and improved performance.
And this is what we do in the applications business. We put all of this stuff together, we prove it on Wafer with the customers, and then we help them get to the next node. Now if I do a transition to talk a little bit about e beam and what are we doing with our e beam portfolio. So multi beam e beam is what's required to support both R and D and HVM defect inspection in the 5 nanometer node and below. Here's kind of the layout.
If you look at the design space of the area throughput, how many wafers per hour you can inspect versus the sensitivity resolution of your inspection tool. Today, inspection tools are darkfield tools, brightfield tools, relatively high throughput, but sensitivity limited. So they can't see very small defects just because of the limit of optical performance. E beam gets us past this key threshold, this 10 nanometer sensitivity or resolution threshold. So e beam, single e beam can see things very well, but the throughput is not so high.
E beam is a fairly slow tool. So what multi beam is going to do is it's going to kind of change the game. It's going to keep us in the side of this graph where resolution is key, right? Some people might prefer the term signal to noise, right? You get more signal to noise at very small structures.
And multi beam is going to give you that 2 to 3 order of magnitude increase in throughput that's going to provide the cost effective way to do HVM defect inspection. And it's not only about defects, it's also about measuring patterns on the wafer. So that measurement of the pattern in terms of pattern fidelity control can in and of itself be used as the control loop. Our multi beam value proposition is based on 3 pillars. First pillar is the SEM, the optical column technology that we have in our HMI division.
HMI was, I guess you could say, the winner in the single e beam inspection market during the HMI was formed in the late '90s, had a lot of success. We're happy to have them as part of the team. We can combine their technology in with the SEM technology, with ASML's world class stage technology, coupled with the software and simulation capability that we've been building in the application space here at ASML for the past 10 years. You put all of these things together and we think we're going to have a really strong value proposition going forward in multi beam for inspection. So this is how we see the multi beam inspection roadmap developing over time.
Where we are today is over in the bottom left. So you have single e beam and it's basically used for defect discovery and in some cases guided inspection defect monitoring. So we have an active program where we have team from our Bryan division in San Jose working with the HMI team
in what
we call pattern fidelity monitoring. And what we have here is we use the computational simulation to drive the e beam to specific points on the wafer where we think we might be in a borderline sort of mode and then take the measurements there. There's no need to inspect things that you know are going to be imaged well. You should only inspect the things that are marginal. So we can get a little bit of an improvement in the effective sampling by doing that.
When we go into the multi beam generation, you'll start to see 1st multi beam for defect monitoring. So we'll start with 3 by 3 multi beam and we have a roadmap that goes from 3x3 to 5x5, 11x11, which is 121 electron beams in parallel, all the way up to greater than 400 beams. And then finally, we put the computational software with the multi beam and we get that really large improvement in effective sampling. And that's what's going to give us the ability to then close the loop and monitor pattern fidelity in the fab. So the multi beam is going to provide the volume and the quality of data after etch to enable defects control in HVM.
I'm going to go
to a little bit higher level of abstraction on this chart. You've seen this one before from Martin. So basically, the scanner interfaces and control software going forward to 2025, We want to talk about increasing scanner actuation on both the DUV and the EUV scanner. We want to talk about etch co optimization with our partners, our peers in the industry, and we want to talk about edge placement error control. These are all the things that we're going to be working on in the next 5 or so years.
For the optical metrology system, it's about faster stages, it's about multiple wavelengths, it's about computational metrology and measuring in device. Fast stages to reduce the cost of metrology. If you can reduce the cost, you can do more metrology, which then allows you to do more precise correction because you have the data that supports good control loops. Multiple wavelengths for robustness in device again for measuring after etch. For e beam defect inspection, we have our multi beam roadmap.
We're adding the fast and accurate stage technology that ASML brings to the party and also the guided inspection from our software products. In our process or in our e beam metrology, So this is inspection. In metrology, we have that single e beam with a very high resolution with a large field of view. So we can do things like measure millions and millions of structures in a reasonable amount of time to feed that back to the process development experts. And then finally computational lithography about Martin talked about the importance of improving the model, the OPC model, because that's one key element of the EPE budget.
So we'll do that, that improved accuracy. We'll use some more sophisticated techniques including machine and deep learning. The Bryan Organization in San Jose is one of the centers of expertise in ASML in machine and deep learning and applying it to this whole product portfolio. So what does it mean from a business perspective? So if we think about the 4 main parts of the applications business, you can think about scanner and process control software in blue, you can think about computational lithography, which is in that yellow color, The optical and e beam metrology is in orange and then wafer and mass inspection is in gray.
So what you see here on the left is the total addressable market, the TAM by market segment with the sum in 2017, 2020 2025. So you can see some nice growth in the total addressable market. But even given that nice growth, we expect to grow faster than the market is growing. We expect to be successful, continue to be successful, continue to grow at the 15% to 20% CAGR that we have grown at in the past few years. We expect growth across all parts of our portfolio, but the main driver of growth is going to be the metrology and the HMI inspection projects.
We also expect a very strong gross margins in the applications portfolio to continue. So this is a so helping customers stitch all of those points of the triangle together and creating that value is it provides substantial value to our customers and that's reflected in the business results of the applications part of the ASML portfolio. So in summary, we're driving the holistic lithography roadmap, we're driving edge placement error, and we're driving pattern fidelity control. And we're doing that not just around the litho system, but now we're taking it all the way to post etch. Very good year this year, we expect it to continue.
We talked about the growth drivers, so what we're trying to do in applications. And then finally, we're going to be growing at that 15% to 20% CAGR through the period 2017 to 2025. So thanks for your attention. I think without I'm going to introduce Skip back up to the podium.
We're going
to take about a 15
minutes sorry, 30 minutes break. So we're about 15.5 to the hour. We'll start moving back in here and we'll resume at 3 All right. We're going to show a video here, but maybe a little introduction on the video. Investments obviously in technology are one of our key strategic pillars.
We hold an annual technology conference and it's really one of the largest technology conferences of its kind. We have about 4,000 people I think this year that engaged and basically share their ideas on innovation and different future industry challenges. It was our 19th annual conference this year and the theme of the year, the conference was More to Explore, which not only means continuation and extension of Moore's Law with EUV, but it also means the many opportunities to explore across our full holistic litho product portfolio. So with that, I'd like to show a short clip of the from the tech conference.
Magnetic north. All three business lines has their own territory of exploration, and they're also working together to form a holistic litho solution for our customers.
With double the capacity, that means this conference seems to be attractive for a lot of people to attend.
Exciting when you're in a hall with 4,000 people and realizing that the Chairman tells us that it's the largest single meeting in the world now, then you realize you're part of a special company.
We are the biggest developer conference on this planet.
Just to
see so many people being enthusiastic about their work is, really inspirational.
I was, wow, impressed, really big.
Well, this is, well, typically like a big conference. So we have so many good presentations to share. We have to run them in parallel. So there will be an EUV session on and in parallel, we have a session on apps, on overlay, on productivity, on software. And so you have to choose the topic you're interested in or this is actually a good opportunity, go to something you have no clue about and find out.
This is your
moment.
The conference gave me opportunity to see the big picture and align my, hopefully, daily activities in future to this big picture.
Proud of what we do, we can share our challenges, we may find colleagues that actually may help us, a
unique place to
be.
Nice video. My name is Ron Kaul. I'm responsible for the DPV business line. DPV, as mentioned, workhorse of the industry, dry systems, particularly if you look at the Immersion Systems, the revenue there at this moment is about 50% of total revenue of ASML. So it has been growing quite substantial over the last 10 years.
And there is also a very important driver of the growth of ASML. Looking forward, if you look to the next 5 to 7 years, we expect that the sales of DPV is expected to remain important, be it there is a change there in terms of how it's composed. Currently, mainly systems, And if you look in this period, there will be a transition to systems, I would say, to a fifty-fifty share of installed base management sales. So we're developing, therefore, I think if you look to that, that I would say substantial amount part of the total revenue by the installed base. We're developing very much the service and upgrade portfolio to exploit that installed base.
If we're looking to that transition, challenge is there to maintain the margins. We think we're very much prepared for that. We have a good innovative technology road map, very much aligned with the customer road maps. We are adopting there, I would say, exploiting as much as possible the commonalities between DPV and EUV and in order to, I would say, to exploit a more mature state of this business line, we're also looking to the improvements of the operations, getting more lean, being more efficient and driving the quality of the systems. If you look at the roadmap, we already went into this build up.
If you look to the left in terms of the wavelength, immersion part, this is all dry. And here you see the, I would say, the product per wavelength over time. Currently, this year, introduced the 2000 ramping up. I'll come back to that, very much a drive there on the high end side, on the overlay numbers to 1.5 nanometer and to the throughput. And then you see that in particularly in order to be able to match to the EUV systems, if you look to the future, that these overlay numbers there in terms of the targets to be met are quite challenging.
So also that means quite a lot of innovation needed on the DPV systems. So if you look to the AURF system there, I can summarize it in terms of extending the overlay and focus, particularly multiple patterning is there, I would say, quite stringent in terms of having requirements on those parameters and match the overlay to match to EUV. And of course, extending the throughput there, the throughput I showed you here in terms of wafers per hour, the customers are pushing very much also for wafers per day. And there you see there are more possibilities actually to increase there. If you look to the next line, ARF, ARF dry.
So the top level is ARF with the I immersion. This is the dry. You see there the systems. The 1460, that was what was mentioned particularly for the AURF going to a common platforming common platform meant to be a common platform is the ARF Immersion, called the NXT platform. Also there, you see quite a step to be made going to that platform with respect to the throughput.
So going from, let's say, a level of about 200 to substantially above 2 50 wafers per hour and also making a step there in terms of the overlay. So there, I would say, it's also the same is applying for the, I would say, the high NA on KRF, extending the, I would say, the overlay in the sense of decreasing the overlay for shrink and extend the throughput in order to produce more cost effective. Workhorse on the KRF is the 860. You see there the M in terms of we follow the alphabet, XCCM followed by probably a next one. I think you can guess how it's being called.
And what you see there is in terms of the throughput steps still to be made also. And for the I Line, same kind of a story. Particularly there, what is driving this market is cost effective production. It's not so much a gain anymore there in terms of having very, very strong steps in terms of overlay. That game is done.
That game is effectively get your I would say, get your operational expenditures for the customer, get that in order. The 2000, and it was a little bit as a small slide shown earlier, but I think it's good to show here what the capability is that we're having. If you look to the 1970, you see here a timescale of just over a year. If you look to the reliability, let's say, to reach an acceptable reliability for the customer, which is about, let's say, 100, 150 hours MTBI in terms of between interrupts on the system, it takes it took about more than a year. The next generation, the 1980, you see already a speed up in that ramp time to about half the time, 24 weeks.
And if you look to the 2000, we did it in 15 weeks. In 15 weeks, we were able to come to that level of performance. And if you look to that productivity that we ramped up for a customer in terms of the wafers per day that he was able to produce, you see that on the left, on this graph, on the bottom graph, the system was transferred to the customer. It took about 13 days and then a throughput level output level of about 4,600 wafer per day was being reached. So that is quite a fast steep ramp up for such a very, very new generation of systems.
So if you look to DPV, the focus on the one hand side, keep on continuing innovation because still, I would say, important steps to be made. On the other hand, it says cost leadership, I would say cost to run the system for the customer leadership. So get your operational the cost of running the system at the customer side, get that very attractive. So the 2000, we've got a leadership there in the Immersion. What we're introducing have been introducing is sensors to improve the alignment, to improve the overlay and particularly also on the focus and leveling.
I would say at the heart of the system performance, laser innovation also there in terms of coming to smaller bandwidth, still steps which are very useful in order to come to better performance. If you look to the next generation, what we have on the road map, make steps on the wafer stage. Wafer stage, of course, I would say, crucial in terms of a litho system supporting the wafer in the system. We're going to introduce there a step up with respect to the lens performance, provide more manipulators to even better control parameters with respect to the imaging, but also there is enabling extensions on the portfolio of the application colleagues. Because the moment we got, I would say, new knobs to correct specific parameters, that has a lot of value to the customer.
I talked about the 1470. So on the ARF, in terms of the ARF dry, we're going to bring that also to the NXT platform. That's a common platform I just mentioned. Looking to KURF, for instance, what we see is that you can see that on this graph, still we're making substantial steps in increasing the throughput of these systems. It is mentioned here a CAGR of about 7% over the years and a performance of over 5,000 wafers is actually substantially over 5,000 wafers peak performance that we have seen.
And as said, what you see here, it's not just wafers per hour that we're focusing on. It's particularly also the wafers per day, which means that the cooperation in terms of how is the customer effectively handling the system and dealing with that in our system, having a better I would say, the better capability there is even helping to increase that number of wafers per day. Another thing is what we see is 200 millimeter is not that. And the XT platform, where in particular you see the applications there, which are for the 200 millimeter is very much able to deal with these 200 millimeter demand. 3 d NAND was mentioned.
I think this is a nice example where you see that innovation is still needed, Also on the KRF side, 3 d NAND, what you see is, of course, stacking, a lot of stacks before you get to the next LITO step, which means that 3 d NAND is having some characteristics in terms of dealing with wafers of this kind. There is far more wafer stress induced into the wafer where the resulting in warpage. So effectively, a wafer is not flat anymore. It's really like a bow or a hat. And the system has to be able to deal with it.
I mean, the first thing is, of course, the wafer has to be able to go through the system, and you have to take quite some modifications in the system in order to deal with this relatively big warpage. Higher aspect ratio, which means challenge for the alignment system. If you look at the topology, the leveling, the whole focusing, you see all these kind of, I would say, specifics for this 3 d NAND or I would say more specific than for the other applications, means modifications in the systems in order to be able to deal with this. I talked about the commonality. On the left hand side, the DUV on the right hand side, the EUV.
On the bottom, you see verbalized what the differences are. I think noteworthy, particularly EUV operating in for a big part in internally in a vacuum condition, which is if you look to the DPV atmospheric, which means that sensors we are able to develop, which are can be used in both platforms. That is the, I would say, a between platform synergy that we're able to exploit, which means that, for instance, an Orion alignment sensor has to be able to deal with those two environments. Talked about workhorse. I think this is very much illustrated in this graph that you're seeing here.
On the left hand side, you see those machines, number of machines that are producing more than 1,000,000 wafers per year. And you see that over time, effectively, that number of systems is increasing substantially. So last year, it was more than 700 systems that were able to produce more than 1,000,000 wafers per year. And if you look to the right hand side, 140 of those actually were able to do more than 1 point €5,000,000 And we are at, I would say, at a point that we're actually going to cross the €2,000,000 wafers per year boundary. And what is interesting is, if you look to the set, a lot of those in terms of 1,500,000 waivers per year effectively are NXT.
So you see that it's also for the Immersion system that we're able to come to high productivity numbers throughout the whole year. And just putting that in perspective because this is, I would say, great building achievements, If you look to it and you see here the on the y axis, you see the height of the towers. If you take a system I just mentioned in terms of a 1,500,000 wafer per year system, actually, you come to a stack there in terms of wafers, which is over 1 kilometer. So it's impressive in terms of how much is going through these machines. I talked about the revenue trend of DUV, where there will be a switch in terms of particularly system oriented, if you look to the left here in 2018, let's say about 80% coming from the system, 20% coming from installed base management.
That is going to change over time. If you look to 2025, we expect it's going to be about fifty-fifty. And this means, of course, in that sense, yes, we have to continue in terms of the I would say the system side, but more focus there, which is coming to the installed base management. It's growing. It's growing substantially.
If you see per year how many systems are going out, this is a, I would say, interesting source for generating revenue. But also in particular, they are not just the services, but also in terms of the upgrade products. I just talked about the 3 d NAND. It's not just new machines because also those machines in the field, what I just said in terms of these aspects to be dealt with, they can be provided to the customer in terms of options. So that gives also the possibility to upgrade those systems in the field.
What we also see over time, these systems get older. I'm always impressed by that. If you look to these systems, they're running for years. If you look to TwinScan, I think it's only the first TwinScan systems, which effectively only had one stage that we took back. And for the rest, they continue to run.
So there is it's also, I would say, a possibility to every time find new possibilities, particularly when the system gets older to do, I would say, refreshment on those systems, which brings you actually to this slide. It's giving a 1980 as an example. It starts on the left hand side here with the initial sales, and it gives over time, it gives aspects in terms of how to exploit, I would say, at the moment that system is in the field, how to exploit that system in terms of generating revenue and generating value for the customer. These systems are going to be relocated. That's what you see.
They don't stay in one fab. At a certain point, the customer says, no, I'm going to move it to another fab. Of course, the service contracts, but there is a lot of refurbishments. There is a lot of upgrades. And if you look to it cumulative, we're talking about that such a system after the initial sales still generates more than 50% in terms of extra revenues.
But I think this is on the conservative side because what is being, I would say, facilitated by these systems in terms of the applications revenues is not really even taken into account here. So in that sense, it's a conservative kind of a number. And this is, I think, illustrating very much the upgrade potential of these systems. So what you see here from top to bottom, you see the 1st years of shipment. You see the machine types.
You see that over time associated with the newer machine types, you see on the one hand a higher throughput number that is coupled to it. But also if you look to it in terms of MMO, which stands for the matched machine overlay, the overlay number you see that's improving there. And what these systems are giving, for instance, if I take a, well, whatever, a 1950, you see I can by means of an upgrade, I can come to a 1970. So these upgrade packages also help very much to, I would say, to facilitate the economics for the customer to come to the next node. And these are not small packages.
If you look to it, a number of those upgrades, big upgrades we're talking about, they relate to about 40% of the whole machine that's being swapped. So it's quite big. If you look to the I would say the service products, beyond standard service, I think this gives a nice impression there. In terms of systems availability and stability, yes, these systems are indeed the I would say the generators for the industry. They have to be up as much as possible.
So there is a lot of focus there on the availability, but also in terms of the stability of the systems. Output, as you just said, not just waivers per hour, particularly look to the possibilities to come to waivers per day. And therefore, particularly in the multi pattern situation, shortening the cycle times is very, very important in that situation. Data products, customers, of course, asking please give more data. I mean everybody is infected with big data.
So get data out, ensure that the, I would say, the control loops in the fabs can deal with those. Hybrid service, particularly for simple kind of service actions that customers are able to do it themselves. Relocations, I mentioned. And yes, there's quite a lot of relocations happening in the fabs. China.
What is showing here on the one hand on the right hand side of this graph, you see China. You get an indication fabs we're talking about, what customers. You see a mix of customers where, I would say, headquarters is based outside China, whereas with customers with the headquarters in China. On the left hand side, you see a graph there in terms of the system sales we're doing over time. And you see very clearly 2,008 standing out relative to the previous years.
You see also in terms of the number of employees how much we have based in China in order to support the systems. So we've got quite some offices there because that's the big thing. When is it really going to start? I think we're courageous enough to start an office there, ensure that the customer there really can start his operations. And as I said, we're currently at about 1,000 employees.
So in summary, if you
look to DUV, Immersion Systems, in particularly, I would say, still a big driver for the ASML revenue, has been very much for the growth. Yes, some things are going to change over the next years in terms of the ratio of system sales and installed base, which means that we have to focus very much to the I would say, to the service products, installed base management, what we're doing. And we think we are very much prepared to do the transition in terms of the road map, in terms of exploiting the commonalities and particularly also to, I would say, to make our operations as efficient as possible. Thank you. So I'll pass on the word to Roger.
Roger?
Thank you, Ron. Good afternoon, everyone. Let me be straight with you. I'm a little disappointed. I'm a little disappointed.
And why? I was supposed to read a nice little story for you. A nice little story, actually, the story that you all typically have been waiting for. It's because you hear all these stories about the market, about technology, about the different businesses, etcetera. But the one thing you all waiting for is give me the numbers.
What are the numbers all about? So that's what I was supposed to be telling you. And that's the story I was going to read to you. And what did you do? You straightaway went to the last page of my book and you read it and you actually wrote about it.
I'm talking about the press release, I mean. So, I mean, at least you could have had the decency not to do it and just wait until I am done with my story and then go to the press release. I know it's no regulations. We have to put out press releases, but you got to bear with me. I'm going to tell you things that, to a large extent, you've already seen.
But it's a hell of a story. So therefore, I think I'm still going to share the story with you and add a little bit of color and context to it. Headlines, what I want to share with you. First off, I want to share with you a little bit of our past performance. How have we been doing in the past couple of years?
And why are we where we are today? And why are we as successful as we are today? Number 1. Number 2, what are we looking at? In terms of growth path, what are we looking at and what are the plans that we have ahead of us and what is actually underpinning the numbers and the ranges that you've seen earlier today.
3rd, what does that mean in terms of financial opportunity? And 4th, what does that mean in terms of our commitment to you and the way we continue to deliver shareholder value? Those are the things I would like to share with you in this presentation. Shareholder value creation, this is what we've been doing and this is at heart, I think, of what we've been doing in the past couple of years. And it's a combination of really investing into our position as the technology leader in this space by investments in CapEx, which are very visible here, by investing in R and D and by investing in strategic M and A.
And as far as that the last one is concerned, because I think in terms of CapEx and R and D, I think the story is very well known and has actually been demonstrated quite clearly, I think, in some of the previous presentations. In terms of M and A, I think we need to recognize that focus is the name of the game here. The investments that have been made into M and A have been really focused. And I think it resonated with a number of you when you look at some of the presentations where you see the computational knowledge that we obtained from Brian, the stage technology that we have at ASML and the e beam technology that we have and that we bought through HMI, A lot of that really works together and really creates unique opportunities that Jim, for instance, talked about. CYR, the criticality of obtaining CYR in order to get EUV to where we are today.
And obviously, Carl Zeiss as probably the most strategic player and the most strategic supplier that we have in the entire supply chain. So very focused, very strategic acquisitions is what we've done. And I think it's paid off for us. I think in terms of what those investments have done, I think it's very clear that they have been really good for us and that they pay off. And this is what we see.
And again, some of this has already been mentioned. All in all, we're looking at a systems revenue CAGR of 10% since 2010, even more so on the installed base management where we have enjoyed a 20% CAGR since 2010, which obviously includes the installed base management that we do for deep UV, for EUV, but definitely also on the holistic lithography side. Our gross margin trends clearly reflects the strength that we have both in the applications business in DTV, the work horse that was being made reference to the work horse pays dividends for us in a very significant way. And also the uptick that we see from our journey on EUV, which really reflects, I think, the increased confidence and our increased ability to drive EUV in the company. I'll come back to that in a moment.
So it's paid off for us as a company. It's paid off for you. It's paid off for our investors in a massive way. And if you look at our track record in the past 8 years, and if you look at the total shareholder return as an index and take the CAGR on that, you're looking at a CAGR of 22%, which frankly I think is very, very impressive by all means and by any standards. And if you compare that to any of the other metrics that we have here, I think there is a very clear outperformance of those metrics, which I think is a great tribute to the way this company has been run.
Even though we have a little bit of a decline here, which is not unique to ASML as we all know, but obviously is very clearly related to what we see in the entire semi industry. And in spite of that decline in the past couple of weeksmonths, still a very significant uptick of our TSR index. Continuing growth, because we've looked at the growth in the past, but I think one of the key takeaways from what we had in the previous presentations is that, that growth is not going to stop, but in fact growth will continue at quite a significant pace. I'm not going to spend too much time on this slide, because this slide that you saw in the presentation from Peter as well, but it does tell you the model that we apply. What is the model that we go through in order to come to the projections that we have in our financial model?
And this is where it all starts. It all starts at the end markets. It all starts with expectations about the growth in the end markets to a large extent based on research by outside providers such as Gartner. So that's the basis. There is a translation of that into wafer starts per month.
What does that translate into? And then you quickly get to the numbers that you see here and that Peter actually already took you through. So that's important because that talks about capacity, but we have to recognize that for us, it's not just capacity, it's also about the node transition. Those are the 2 drivers of the litho demand. And I think in that regard, this slide is very important as well, because what this slide tells you for a typical fab, be it in logic with 45 ks wafer starts per month or DRAM 100 ks wafer starts per month for a typical fab, what are we what are the expectations in terms of the lithography spend per kilowafer start per month?
What is the expectation there? And I think we go back to the presentation that Peter gave, which gave you the underpinning for the numbers that we see here. And the underpinning is twofold. On the one hand, it is the increase of litho spend as a percentage of total CapEx And the other one is that node on node, you actually get less from technology transformation. So that all in all gives you the numbers that we have here.
And that then gets translated into an overall for the different nodes. This gives you how the composition is in terms of the lithography technology. So what gets done on high NA, what gets done on low NA EUV, what gets done on immersion, what gets done on dry. That's the way to look at it. And this is a key translation that we need in order to come up with the numbers.
Okay. And then, little uptick that you see here, which seems like a bit of an anomaly, this goes back to a comment that Peter made in his presentation, and this is the potential for Crosspoint where you could actually see also in NAND, you could actually see this uptick. An uptick by the way that we've not modeled in our model because the timing of that could be beyond 2025. So what does that lead us to in terms of our 2020 model? And in order to do that, I'm just going to very quickly run through the key assumptions that we have in our 2020 model.
And you're going to get all of this later on, And the thing here is, the thing to watch out for is the bold lettering. So anything that is bold lettered is changed. So we get a change here. This used to be 80, this suit used to be 50, and I think that is very much reflective of the position that we find ourselves in today. In terms of logic, I think the key change there is on the EUB insertion and this is now very much in line with the roadmap that Christophe has been talking about.
What we're now talking about at the low insertion level, 5 to 7 layers for small test nodes, like the 7 plus might come to mind and high EUV insertion of 10 to 14 layers where we get to larger high volume manufacturing. That's what we're looking at and those are the assumptions behind the model on logic and MPU. In terms of performance memory, again, the EUV insertion date has changed and bit growth has actually been reduced. Bit growth used to be in our 2,060 model, 2030. So that's reduced a little bit in comparison to what we have here.
And then on NAND, a couple of things to recognize again here, a slight decrease in bit growth. This used to be 40, this used to be 50. And again, this all comes from what we saw previously on the previous slide. Important to recognize, we're looking at stack of stacks and for every stack there is a little component in there. So that's why also in 3 d NAND, little remains relevant.
And EUV and storage class memory after 2025, and this is what I talked about the opportunity that might exist on cross points. It's not modeled for the 2020 numbers. It's actually even not modeled for 2025, but there is a potential upwards potential from that technology, which again is not recognized in these numbers. So these are the key assumptions. And then if you look at how this translates into the different scenarios, And what we've done here is really take the scenarios that you are familiar with.
These are the scenarios that were presented to you in 2014 2016, and this is what it tells you. This one, it ain't going to happen. Highly, highly unlikely that we're going to end up in this scenario. And why do I say that? This is just based on everything we've just been going through.
This will be inconsistent with everything we just heard. This will be inconsistent with what we see in the end markets. This is inconsistent with what we hear from our customers. It's inconsistent with what I think you hear from our customers. It's inconsistent with what we see our customers build and it's inconsistent with the orders that we're getting.
So I think this is an unlikely scenario. This is an unlikely scenario. Low insertion, give me a break. After the breakthroughs that we just had on EUV and that Christophe talked about, this is no longer a realistic scenario. And I think to me that's the huge progress that this company has made in the past 2 years.
The level of confidence and the ability to deliver on EUV has risen massively. And I think that was pretty clear and evident from the presentation that Christophe gave. So from that vantage point, we think that these two scenarios are actually unlikely. So we're happy to provide them to you. Do with it what you want to do with them.
From our vantage point based on all the data points that we have, we think these are unlikely scenarios. If you look at this one, if you look at this scenario, this is the scenario that gets you to approximately $13,000,000,000 in 2020 with 33 EUV systems. You might say, wait a minute, don't I have this 40 numbers somewhere on the back of my head? And that's right. We've always said that we have capacity to build for 40 systems in 2020.
But with the very significant uptick in the capacity and actually in the productivity that Christophe showed moving from 125% to 170%, which is a 35%, 36% uptick. We believe that 33 systems cater for the demand that exists in 2020. So we have the capability of 40, that capacity is there. But we think based on what we see today, we think in this moderate market scenario, we think that 33 EUV systems will do it. Dollars 3,700,000,000 recognized for installed base management, which is a significant number, and there's a number of things that have been driving this.
One element that has been driving this goes back to some of the comments that Jim made on HMI and all the things that we're doing there, because part of that is reflected in here. But also, as you could see in the presentation from Christophe, there are quite some updates and upgrades which are scheduled starting in 2020 and going into 2021 as well. So that is why this is a higher number than the number that we've seen in the past. And actually, I think this gets you to about 28% of total revenue coming from installed base management, more on that to come. So that's what we call the moderate scenario.
There might be more. There might be more in the pipeline. And if we continue to see some of the developments that I think we've enjoyed in the past couple of years, a high demand scenario could lead to the number that we see there of 14,700,000 euros But this for us is like a base scenario to look at this stage. Fast forward to the next chapter in our book, which is our assumptions for 2025. Again, quickly taking you through some of the main assumptions that we have in the model.
So starting with logic and MPU, we would expect EUV high NA, high volume to start in 2024. This actually is unchanged. So this expectation of node on node reduction will be either 0% in a high scenario, -10% in a moderate scenario, -20% in a low scenario. That's unchanged from what we had so far. And actually at this stage, by 2025, we're looking at 20 to 30 EUV exposures, and we will look at first EUV high NA node of 5 to 10 exposures, 5 again in the low scenario, low insertion scenario and 10 in the high insertion scenario for INA.
If we look at performance memory, and again, by the way, market share assumptions similar to what we had for 2020, but if we look at performance memory, EUV high NA model has an upside. So it's not in the model, but it could be to the extent that we're already able to demonstrate what Christophe was talking about, which is that from a cosplay perspective, it would make sense to have a number of layers already there. That would be an uptick, which is not recognized in the current model. Big growth going down a bit, which I think is consistent with what we've seen in the studies from Ghana that I just showed you. We would expect that 80% to 90% of wafer capacity actually moves to and the move from one node to the other actually goes to the more advanced technology.
And therefore, we would assume on that 1 to 5 exposures of EUV. And we just saw the numbers in terms of what it means, what one exposure of EUV, what that means in terms of number of EUV machines, 20 is the number that we saw. In terms of storage memory, so NAND, as I mentioned, again, 3 d NAND stack of stacks. EUV usage in storage would again be related to cross points. If that were to happen, that would be an uptick from what we have here because we did not model that opportunity here.
And big growth, again, a little bit down from what we saw in the 2020 model. So again, if we then translate that into numbers, what are we looking at here, starting at the lower end of SEK 15,000,000,000 and all the way to over here, so low demand, high demand, dollars 24,300,000,000 and here the moderate. So dollars 15,000,000,000 some might say that's a little disappointing, right, if you come from where you were or where you expect to be by 2020, then actually $15,000,000,000 is a little disappointing, and I would agree with that. And just remember what needs to be true for this to happen, right? That means that consistently we were looking at, for instance, minus 20% in terms of node on node transition in logic and all the other assumptions that we had in there.
So quite a bleak scenario, one might argue. But if that were to kick in, then this is what you're looking at, ending at 15,000,000,000 This is the moderate market scenario and a few things to take away from the moderate scenario. First off, the sensitivity to high NA is actually fairly low, right? So if you compare the high insertion and high insertion again should be read here as high high NA insertion. We couldn't put that on the slide, high high NA insertion because you would think it's a typo, but that's what we mean.
High high NA insertion versus low high NA insertion, you still with me? The difference there is fairly modest. So from that vantage point, I think the sensitivity to the financial model in terms of the high NA introduction, at least for 2025 is fairly moderate. Obviously, it will be significant on a go forward basis for 2025 is fairly moderate. So that's one thing to recognize.
The second thing to recognize is that there is an obvious shift from dominated by deep UV into dominated by EUV. But the workhorse that has been made reference to is still going quite nicely. So we're still having 40 systems of immersion in this model. So that's still a pretty significant number and a pretty significant contribution to our financials. And the 3rd comment to make on this on the moderate market is the installed base, which at this point in time would be 30% of our total revenue.
So it's not just going up in terms of absolute numbers, it's also a very significant number percentage wise, which I think is a good annuity for ASML to have.
Is this all? Well,
it depends on your crystal ball. This is something that Peter made reference to. It depends on your crystal ball. We don't know what your crystal ball signals you. But if your crystal ball is sparking with opportunities and gives you some of the high demand expectations that we listed, If those conditions are met, then actually you're looking at an even much brighter situation where we could end up with $24,000,000,000 of revenues.
So these are the different scenarios that we have. Significant spreads, which again, I would say 6, 7 years out is not a total surprise. Most important takeaway as far as I'm concerned from this slide, the one thing that will determine whether we are here, here or here is end markets. And that's different. I think that's different from where we were even 2 years ago.
I think 2 years ago, I think there were also question marks around the ability to deliver, the pace at which we were able to deliver, etcetera. I think we're beyond that point. And I think very clearly what we're looking at right now is the end markets are driving in which scenario we ultimately find ourselves in. So what does that mean in terms of our total financial model? So this is the model that's so there's a number here.
This is the model of 2017. This is the guidance that we gave you on the back of our Q3 numbers. This is the financial model that we gave you in our 20 16 Capital Markets Day. This is the 2020 scenario and this is done based on the moderate market scenario. So this is the $12,900,000,000 $13,000,000,000 that we have in there.
Gross margin, north of 50%. R and D as a percentage of sales, 14%. This is something that we referenced also on the Q3 call. We said we do see a bit of an uptick in R and D sales. We said that it's moving from 2013 to 2014 because of the pull in of the development of the 3400C machine and also the acceleration of high NA.
So that's reflected in here. We will assume that during 2020, it's going to level off again and then stabilize into 13% on a go forward basis. We're looking at CapEx at SG and A of 4%, CapEx of 4%, and we would drive the cash conversion cycle below 200 days and still have an effective tax rate of 14%. That's the model that, in essence, we think you need to look at. For 2025, again, here we have the scenarios and again make your crystal ball go into gear.
Gross margin definitely higher than what we're projecting here. But to a large extent, it will be dependent on which scenario we find ourselves in, because I think as we all will appreciate, the level of gross margin to a very large extent correlates also with volume and fixed cost coverage that we have there, learning cycles that we continue to deploy, etcetera. R and D, as I mentioned, will be nicely back at 13%. SG and A 4 CapEx would at that stage be at 3 and these would remain unchanged. It's very clear that there is a wide spread, right?
I mean, from 15% to 24% is a pretty wide spread. And from that vantage point, we believe flexibility, which has been one of the key cornerstones of this company for many, many years, remains an important thing to do. And just to remind you of some of the flexibilities that we have in our operating model. We have some flexibility in our workforce of 14%. We have 33% of our R and D actually outsourced,
and this
is pretty significant. 82% of our cost of goods is in materials, 18% is in labor. And I think that also Teligent has historically been the case for ASML. That I think is one of the key elements of flexibility that we have in our operating model and that remains very critical for us to sustain that. Finally, pretty clear based on everything I've shown and I think based on everything you've heard in the past couple of hours, it's pretty clear that we believe a lot of cash will be generated by the company in the next couple of years.
We continue, as you've seen in the model, we continue to invest in R and D. We continue to invest in CapEx because we believe, as Martin always says, we haven't run out of good ideas. We still have many really good ideas that at the end of the day will be accretive to the value to our customers, will be accretive to our shareholders' value. So from that vantage point, we will continue to invest in those areas. Strategic M and A, as I mentioned to you, to us it really needs to be strategic.
And if you ask me what is the number of M and A opportunities out there that is both strategic and realistically achievable, that's a really, really, really, really, really short list, short to the point of being non existent of maybe being non existent. So it's very shortlist. And from that vantage point, we do not anticipate significant M and A deals at this stage. So what are we going to do with the cash while maintaining a flexible balance sheet, because again that is something that flexibility is very critical in our business model and also in our financial model. But with the flexibility that we currently enjoy on the balance sheet, we believe a lot of cash will be generated and that will be available to our shareholders.
The way we've approached this historically as ASML, I think, is to have a combination of growing dividends, stable or growing dividends and returning cash through share buybacks to our customers to our shareholders. And that's what we will continue to do. So you will see increase in our dividends and you will see a very disciplined way of execution over share buybacks because I think that's really important for us to recognize. ASML has a tradition of in a very diligent and disciplined way executing on a share buybacks. It's not opportunistic.
It's well thought through and it's executed in a very disciplined way. And we expect to continue to do that. Is that for eternity? Of course not. And we will review where we are on the maturity curve as a company.
And once in a while, we will review whether the distribution between dividends and share buyback, whether that's still the right way to go. There are many views on that in this room. We have 150 seats, maybe 2 or 3 not filled. So let's say, we probably have 147 perspectives on that matter, and we're open to listen to that. But be assured that we continue to listen to you and that we continue to look at where we are on the maturity curve and what that means in terms of distribution over share buyback versus dividends.
Friends, that is it. I hope that in spite of the fact that you already went to the last page, you still enjoyed the nice little story. I think it's a hell of a story that this company has written in the past couple of years. But more importantly, we'll continue to write in the foreseeable future. I think it's a story of confidence.
I think it's a story of opportunity. I think it's a lot of massive learnings that have led us to where we are today. And I think it's a story of a company that will continue to create enormous value for its customers and for its shareholders. Thank you very much. And with that, handing it back to Peter.
Thank you. Yes, I think what can you say? I mean, this is a summary of what we tried to convey. We do believe, and I say it again, that innovation is what drives this company. And we just bombarded you, perhaps that's the right word, with a lot of technical explanation on how we're going to create value for our customers.
And I hope it's clear for you that, that is a result of relentless focus on innovation. And we think when we do that together with our customers, with our key customers, we act as 1 team and we drive that innovation forward, which means that it's going to be very healthy, very healthy which by the way, Jens, can you hear me?
Can you
hear me? Okay, good. Very healthy growth profile for this industry. And I think this will drive many of the applications that we talked about. A shrink, as Martin said, is still a key driver for Moore's Law, but it's more than that.
Martin talked about device architecture, about all the other things. But it's a key element. It's a cornerstone of what our customers are doing to drive innovation forward. We think and I think I showed you that the shrink that we're planning, the innovation that we are planning is affordable. It is affordable in terms of percentage CapEx.
It's affordable in terms of the cost per function.
And
it's a combination going to be of the 3 product lines that we are having. It's applications, basically tying it all together EUV, where we crossed the hurdle of high volume manufacturing and deep UV still being a workhorse in the industry. Even if you look at Roger's slides, 200 units is even in a moderate market close to 200 units is quite a significant number. So if you take that together and look at the applications group as the glue that ties us together to the solution that our customers need, then it's clear that we have a very good road map. So this all together will enable Moore's Law, yes?
And we are and again, we are a key cornerstone of this. Now and what does it mean financially? We updated the 2020 model. The people that may remember the high market scenario in 2016 was around 13,000,000,000 That's now our moderate market scenario, yes? So it also means that we have a high market scenario that is above what we showed in 2016 for the reasons that we just mentioned.
And then we look forward. And yes, there's a big range. But like Roger said, €15,000,000,000 means minus €20,000,000,000 node on node in wafer capacity, minus €20,000,000,000 minus €20,000,000,000 over a 7 year period with no growth in DRAM, very low growth in NAND, pretty bleak. So that's very bleak. And I think then that would probably be a reflection of a very severe macroeconomic problem.
Now on the moderate market, let's call it a reference scenario. I mean, we plan our own business. It's around €19,000,000,000 but a high market, around €24,000,000,000 And I would invite you to also look at some of the assumptions that we have in the high end and the low market. For instance, high market scenario DRAM, high market is 20% bit growth, High market in 3 d net is 35%. So we have to think about this range of opportunities.
And like Roger said, we don't have a crystal ball. We just want to provide you with scenarios so that you can start looking at this from your own perspective. And this is what we invite you to do. And you also might have seen that we don't provide you with an EPS because we don't know what the share count is going to be. The share count is a function of your of the share price.
We had a big debate in the company. Skip and his colleagues said, we have to give them an EPS. I said, well, then we have to give them a share price because that's what will be what is determining the share count. And I said, but wait a minute, the share price is their job, not ours. So you'll figure it out.
When we give you these numbers, you can figure it out. So when we've done that, I think when we're done and we're in 2025 and we look back, and we look back what we have done from an innovation point of view, from a customer value point of view and from a shareholder value point of view, I think we will have created a lot of value for all of those stakeholders, including our people and our partners. And a lot of that value, that cash value, given what Roger said on our model, will be returned back to the shareholders in a distribution ratio that by that time, we will have determined in close connection with you and in communication with you. With that, I would like to close this summary. And I think Skip is Q and A time.
Thank you very much.
So we'd like to bring the presenters up here. We're going to bring the chairs and open the Q and A panel session here. As they're bringing down the chairs and getting things set up, just kind of go through the process here. We'll please raise your hand to be called for the question. Name your company, obviously, and identify yourself.
Please limit your question to 1, so we get a chance to go around. Again, we can always go around again if we get others. I'm not
following like in the
And we have a microphone somewhere here. I don't see it yet, but I'll pass this one around if you don't find the we have one that we throw.
We'll pass the microphone.
Yes, okay.
Thank you.
So let's go ahead and start. Mehdi?
This is a box that
you can throw to the next thing. Let's just talk in All right. Okay.
Just one question, one follow-up. Actually, first one is for Martin. You went through the end market demand drivers. I want to learn or basically think through the 5 gs. When you think about the changes that 5 gs brings, millimeter wave and prospect of changes to the SoC, departitioning of parts of SoC.
How is that impacting your wafer capacity requirement for logic and foundry because if that were to departition then perhaps it could have a big impact. And I just want to know how you have thought through this and if that's been dialed in? And then one and then a follow-up question for the team is you guys put the 3 d XPoint in the NAND bucket, but the way I see it, it could potentially become a DRAM replacement. And in that context, how do you think about the DRAM market leader position itself, especially as Cascade Lake comes out early next year and that will be the 1st server DRAM that would include or incorporate Crosspoint in a DIM format.
Should I repeat?
Just try to answer both, and I think you should realize that those questions are better asked to memory makers and to chip makers than EMEA. But my view on the overall growth, you started 5 gs. 5 gs just provides a better way of getting more volume, data exchange and getting faster response time. That means, in particular, some of these automotive autonomous driving applications are requiring 5 gs to go because of the time delay. So I still think 5 gs overall is driving over application.
Now you talk about SoC. This SoC story is not new. It's already there for years. And I don't believe it fundamentally changed the little story because every single piece of the SoC requires little to do it. What happens here is that it's more cost effective for customers to petition the chip and drive some architectural changes rather than only going to minimize chip.
So that's what I'm saying. My positioning of more flaw is not just this only linear shrink, but also departitioning and SoC is part of the, in my view, the overall innovation. Then your last question on memory, that's a tricky one because I can tell you all of my customers, I talk in detail of the stuff. Some of them talk, some of them doesn't. So let me refer to the only one who has been very public on it, Micron.
Scott DeBoer had mentioned now for the 2nd year in the last analyst conference that they're looking for a DRAM alternative. And Crosspoint is 2 different applications in the total memory space. None of the other memory makers have confirmed that's been the case. And what's true for both memory types is architecture on the software side to deal with this, which is different if a cross point where Intel controls the shots versus the micron position, new memory, where things are not existing. So we believe so you're right, but I didn't argue with the investor team to make these 3 buckets because we talk about performance memory and storage memory.
And some of them will also be indeed I talked about the success of DRAM, which could be the Micron device. But I think all of those innovations will strongly depend on how the how you call it, food chain is able to adapt to software and architectures, which can unleash the capability of those devices. And that, to date, is determining the volume market drive of those new devices. So this may be a pretty of a fluffy answer, but this is how far I see it.
Chris.
All right. Krish Sankar from Cowen. Two quick questions, one for Roger. Clearly, you highlighted that the EPS is a function of share count, I. E.
Stock price. It looks like also the gross margin plays a pretty big factor. Can you give more color on how to think about gross margin? Should you assume that the holistic lithography business should be kind of like how process control gross margin should be? And EUV similar to DUE in the high 50s or 60?
Any color on that would be helpful. And then just as a follow-up, the mix of DUV becoming fifty-fifty units versus installed base makes a ton of sense. But DUV units have to decline as EUV gets more adopted. So is it fair to assume that the DUV revenue that you're seeing today is the assumption is going to be flat with unit sales being offset by growth in installed base? Or should the overall revenue units plus installed base actually decline as is today?
So on both, so let's start with the gross margin. As we put it into the model, we said it's going to be over 50 by 2020 and we think it's going to be over that by 2025. I can give a lot of color, but the reality is it's very contingent upon a number of conditions. First off, what's the volume going to be? Volume to a very large extent drives gross margin, as you know.
I think we have a lot of plans in place to further drive gross margin. I think the company is very, very strong on looking at ways to reduce cycle time, to reduce costs. It was very evident. I think from the presentations of both Christophe and Ron that that's embarked on. It's very clear, particularly if you look at the EUV story, the strong correlation that we have between the ASP and the performance of the machine, I mean, it's not easy to it's very easy to see how that ultimately is a major contributor to gross margin.
So we're very confident, but in terms of giving you a number, there are so many factors that play into that, that we believe at this stage, 2018 looking at 2025, we think you're well served with our ambition and perspective that it will be a lot higher than what we have by 2020. In terms of deep UV revenue, I think you can can sort of do the math based on the numbers because we do give you the numbers for the deep UV business. I think all in all, by 2025, there probably will be a small decline in terms of the number if you add it all up. But the huge uptick that we enjoy from installed base revenue will make sure that deep UV business will continue to be a very significant contributor both to our top level and the gross margin.
So I guess a follow-up, quick one on gross margins and a bigger picture one. So for gross margins, non tool, I believe you're running around 48%, so including upgrades, etcetera. How should we think about the trajectory there as that business grows at that 15%, 20% CAGR? And then I guess a bigger picture question on your 2020 target model, you kind of crossed everything I'd say with the exception of the stock buyback, obviously the share price 50% higher played a role there, but also your working capital use roughly 25% of your operating cash flow if you were to exclude working capital notionally. So is working capital today where you think it needs to be to support the level of business that you see?
And as a result of that, should we think about a larger buyback in terms of capital return in the prospective 5 plus years? Thanks.
So let's start with the latter question on working capital. I mentioned that we think there is still potential in the reduction of cycle time of the current portfolio of products. So that should lead to a reduction there and therefore less working capital being tied up. On the flip side, company is growing and is growing significantly. So that's like a counterpoint.
And then obviously, we're also ramping up for high NA. So there is a number of different dynamics, which over the course of the next 7 years will play out differently. So therefore, we said our ambition is to continue to drive it below the 200 that we've put in as the target for 2020. But that's the guidance I can give at this stage. In terms of gross margin for service, we don't guide that, we don't disclose that specifically, the gross margin on the service business.
But I can give you a few of the key drivers there because I think you kind of get the picture as to what would drive it. There's a number of elements here. First off, as I think again Christophe mentioned on EUV, what will be critical is to drive down the cost of the service of the machines because it's a value based model for EUV. It's an output driven model where again, as we saw, the service revenue is dependent on output, wafer output. So therefore, it is in our control to a certain extent to make sure that the service costs actually get contained.
And a lot of the things that Christophe and his team are currently doing and will actually already appear on the 3400C machine is a significant improvement of the serviceability of the machine, which cuts both ways, right? I mean, it would drive down the cost for us. It would also be very beneficial to the customer because it would reduce the downtime. You also saw in the presentation by Ron that there is a whole portfolio of new services upgrades being developed on the DPV business, which makes a lot of sense given the real significant size of the installed base that we have there. And again, that will continue.
And also there you saw that there will be a value based component in there. And again, to the extent that we're able to replicate the model that we're driving at EUV, I think all of that will ultimately lead to a significant improvement in the gross margin for the installed base revenue.
Wow.
Thank you. Sanit Dishman, JPMorgan. So Peter, I just have one question. I mean, you've talked about previously that you understand lithography, but you don't necessarily understand the rest of the semi cap business. But based on your revenue in Your
adds to
the integration.
Okay. Revenue in and lithography increased that happens. Or is that that your view that overall CapEx is itself going to go up very significantly and CapEx to sales in the industry is going to change? Secondly, regarding your ASPs, I just want to touch base. And you've talked about a very rapid movement in your throughput of your machines over the next 2, 3 years even, 18 months I think that was the comment.
I mean how should we be looking at your ASPs moving simply because, I mean, you've talked in the past that 50% you would take, 50% you give throughput increase to your 25 as such?
Okay. Thanks, Sandeep. Yes, it's working. First of all, I think that when the data that I showed in 2010 to 2017, we saw a specific period in which because of the introduction of multi patterning and the introduction of 3 d NAND, we saw a specific time period in which there was almost for the 3 d NAND makers, but also for the equipments kind of a double whammy. You had the transition of 2 d to 3 d and you had the greenfield fab.
So you see this is a period where you had almost a extraordinary step up in CapEx.
And I think
a part of that step up, litho did not really play because in the 2 d, 3 d conversion, they used the same litho tools. So there was no additional equipment needed. I think when you look at now at and also, you saw customers going to multiple patterning, which, of course, if you have multiple passes through the system, we benefit, but also other process steps, equipment supplies benefit. I think if you look going forward, then in terms of value of the leading edge litho, we will take a big step up because of EUV, but it's going to be one step patterning, which will follow by fewer steps for other process equipment mix, which makes the whole thing more efficient. And I think this is where we will go in.
You actually saw that in single patterning before 2010, the little part was significantly higher and then it dropped relatively. Our top line grew, but it was a relative lower percentage of the WFE, which, by the way, with the introduction of EUV with the step up in litho and then by eliminating some of those additional process steps, litho will take a bigger part. I think that's clear. I think also we believe that we do the math and we look forward on the semiconductor top line growth. And by the way, we gave you the number on the previous slides, what the litho intensity is as a percentage of WFE.
But if you look at total sales, we will go back to about 2.3%. So we will get a bigger part. The total WFE CapEx, I think, will be lower. It has to do with fewer players. I think if you clearly WFE has benefited a lot from the consolidation in the industry.
Even you have I can just only go back to 2,006 when we had more than 10, I think something like 13 purchasing organizations in DRAM. They were all trying to get to 15%, 20% market share. Well, of course, you get inefficiency and you get these big cycles. Fewer players lead to more capital efficiency in the industry, yes? And so that I think overall, the WFE as a percentage of sales might go down.
The part of litho will grow. The numbers we showed you is our assumption. But it makes sense because of the introduction of EUV. And then on ASP, we have a habit of sharing benefits with customers. And yes, Roger said it, we the value of the tool scales with the throughput.
The throughput we give to customer gives them higher opportunity to leverage their fixed cost in their fab. That's a big value, and we used to share it. Now I think at this moment in time, we're having discussions with customers. But I think this fifty-fifty that you're referring to used to be the past, but look where we are. With EUV, if you look at the operating income in EUV 2018 and you subtracted the R and D, we're still at a loss.
So we've made significant investments over the last 10, 15 years.
When you
look at the size of our company, you will also and SOPL have argued that it was almost irresponsible. Now we need to get a return on those in the discussion we're currently having. Think also we need to reflect on this on what a fair sharing at this moment in time is for the EUV tools, yes? And I think fifty-fifty used to be the past, but I think there's also some room for some permanent negotiations.
David Mahone from UBS. Two questions, changing tact a little bit. Just firstly, you've talked a little bit about the progress on e beam and getting into confidence in getting towards production usage. But can you just give us an update on where we are? There was tools shipped out as testing tools to customers not too long ago.
And what's the progress been? And how do you feel, I guess, relative to the prior 2020 target to see €1,000,000,000 of revenue from HMI?
Okay. So the question was about e beam. I assume it's about multi beam since HMI is in the market with single beam. We plan to ship prototype tools, prototype multi beam tools to the market next year will be our first deliveries. And then we'll start to see significant more significant volumes in 2020 beyond.
Second question was on Confidence on the
can you still hit the $1,000,000,000 target that
you're Yes.
So we're still on track for that. So that commitment that was made in 2016, we're still on track for that extra 1,000,000,000
dollars I
tried to squeeze this as one question. Just one quick follow-up is, we've talked a lot about availability and we've talked a lot about the throughput of the tools. But one of the issues that customers have flagged for a while was the predictability of downtime on the tools. Is that fully resolved now? It sounds like it is, but I'd just love to get your take on how customers look at that today.
Well, so if you look at EUV, I think the predictability is a good question. So I showed you a uptime number today, which is about 80%, 85%. And about half of this today is predictable. The amount of scheduled downtime we have on EUV is much higher today at least than it is on DPUV. So this part, I would say, customer usually can deal with.
The rest, which is another, let's say, 10%, that's the part we have to reduce. And I think this was mentioned by Roger, in fact, one of the things we are doing on the current platform is to improve the serviceability of the tool dramatically, so that in case of an event of downtime, which those machine happen once a while, the time we spend to repair is a lot shorter. So we are improving the system so that this predictability that you mentioned and indeed you're right customer wants to have this predictability. We want also to provide them that at least with the 3400 C, so sometime next year.
It's Adi Matyukka from Bank of America. Two questions, if I could. Firstly, as you look out to the next 7 years, obviously, you talked about consolidation and that increasing efficiency. Now we've recently seen GlobalFoundries drop out of the race, but we're seeing more Chinese players coming in. So could you provide your thoughts on how you see the your customer base developing?
Do you expect to see more consolidation? And I have a follow-up.
Yes. I think that's a good and very current question. I mean, it is also clear that the geopolitical tensions are rising. So yes, we see an opportunity. We actually showed Ron did show the increase in sales in China.
So the Chinese semiconductor industry is clearly stepping up. I mean, it's quite a significant growth pattern. And it's not so much that there's so much capacity put in place. It's really the number of initiatives are very large, which all have relatively small wafer capacity installations because they just knew that they're greenfield fabs, not only greenfield fabs, greenfield companies, yes? And they're just qualifying processes that are lagging in their respective segment, but they have to get started.
So this is why the market is quite significantly growing. It's a number of initiatives that is actually driving the top line, not so much the individual fab sizes and the speed of ramping that fab up, which also begs the question, how many of those initiatives are going to be successful? Yes, so if you wrap your first 10 ks waivers because you need to qualify a product to a local customer, will that product work? Will it have the economics? Because and actually, people also in China, when I talk to customers, they look at economics.
So it all has to work. It all has to fit. And some of those initiatives might be later or might fail and some might be successful. So it is a bit premature to say what will it do to capital efficiency in the industry and how many new players will step up. But when you look, for instance, at the Chinese landscape, yes, we have 2 existing foundry players, which is Huawei and SMIC, and you have 3 new memory players, 2 DRAM and 1 to D NAND.
And the latter 3 are really at their initial stages. So that question mark remains to be seen how quickly they will ramp and whether they will be able to disturb the supply demand balance. Now under the assumption, under the assumption, everything is successful and they execute on their ramp up plans, which is not only the current fab but also the new fabs, then in a period of 7 to 10 years, there's going to be a significant number of wafer starts added to the industry. Now you could add, it's also needed, but that will create to it's personal view, yes, will create to some more capital inefficiency because that's quite significant if you look at what they're talking about. And also, it is in sync with the statements of the Chinese government to say we need the level of self sufficiency in semiconductors of quite a high percentage.
It cannot be anything else but impacting the supply demand balance and the capital efficiency. However, like I said, many of them are just at the starting point. And whether they can be successful, either by themselves or through, let's say, certain measures that on the geopolitical front are being executed as we speak, that could also hamper some of those developments. A little bit early.
Okay. But do you think any of the existing players will drop any of the future nodes? Or do you think they're all pretty confident that they'll carry on with these nodes going forward? And my follow-up was sorry to sneak 1 in, sneak, skip. My follow-up was on for Roger on the gross cash balance.
So previously, you said anything over €2,500,000,000 in gross cash will be returned back to shareholders. So do you have any thoughts around that?
Thank you. I'll answer that first one. I think the existing players, except the ones that have publicly said, we're not going to go there, they're all going fast. I mean, if you would ask those players, Do you see there is a potential risk of new entrants? They would say, Yes.
Yes? And if you ask the question, what are you going to do about it? The answer is very clear and it's consistent for all of the existing places. We're going to out innovate them. We'll go faster.
So $2,500,000,000 is still the number that we're looking at. Of course, you cannot measure that at one point in time, because obviously you need to look at that in the grand scheme of what you expect working capital to develop and cash to develop in the period thereafter. But roughly speaking and over a longer period of time, that's still the number that we're looking at.
It's Peter Olofsen of Kepler Cheuvreux. I think it was in the Martin's presentation there was this slide on the industry readiness for EUV insertion at 7, 5 and 3, where you showed some green and some blue blocks. You basically said, well, there's no showstoppers as we see it. Could you maybe shed some light on 2 potential issues, stochastics and 3 d mask effects, where we go to 3 nanometer? Do you what's your confidence level that resists will be good enough for 3 nanometer?
Or might your customers need some workarounds like post processing steps? And on the masks, will your customers need to develop new masks when they go to down to 3 nanometer?
Well, so it was not my slide. It was Christoph's slide. It's a bit of a I'll take a few statements. And if Christoph liked it, please do so. But I do feel that in wavelength transitions, as we have seen in the last 30 years, it's not the first wavelength position we see that are from Ireland to 248, 248 to 193, 193 to immersion.
And the pattern is always the same is that the machine needs to be first before real volume and infrastructure in mask and resistance happening. So that is a first aspect you need to realize to the dynamics of wave and transition. Customers shared with us that the current status of mask resist is good enough committing them to 7 and to 5. For free, I think we don't have many specific decisions. We're first having this machine out there.
For today, as Christoph shown and for 5, I think we don't need innovations. I think the infrastructure is more or less developed, and we just have to mature it. And some of the market may still make some more buy on equipment. Our Pelleco program is also progressing. Long term, I think where there is a challenge a little over long term free now and beyond is that the line net roughness could become a challenge.
But there are multiple measures for that, including improvements on masks, and those will not be dramatic improvements. We talk about a potential optimization of the layer stack. We talk about resist improvement by supply, which by then the revenues is sufficiently to also drive this through. From a monotography point of view, we could still increase dose, which slows down the machine, but that puts future challenges for opportunities for us also to drive the productivity back up. So I don't think we'll have a showstopper at 3 nanometer on infrastructure, Although it's true that today, we still have to do some work to make it work.
Okay. Maybe follow-up for Roger on the gross margin outlook for 2025. I understand that because you're funding part of the R and D and CapEx of Carl Zeiss that you will get the discounts on the optics for high NA. How would it affect your gross margin by 2025 and beyond?
That's right. And it will be a positive it will have a positive impact obviously because but we have to recognize, as you saw, it's starting in 2024. So the number of high NA machines in 2024, 2025 is still limited. Beyond that, it definitely will have a good impact.
A bit too early to quantify.
Too early to quantify in the grand scheme of things and also given the very directional guidance that we've given on gross margin for 2025.
To be specific, we agreed with Zeiss to have an equal IRR on the business plan of high NA. So it is also a function of how much money are we going to put in there between now and then. And that means what is then the equal IRR, how much will they put in, how much will we put in, which will drive the absolute number, and that will drive the discount. So it's a bit difficult to say, because it's a function of what we put in there and what the IRR is. So that's why it's not possible.
But you can do you can the intellectual understand that it's going to have an impact on the gross margin, which is a positive one.
Jean Marmel, Exane BNP Paribas. First question, Peter, number of wafer start for Logic moving from 500,000 to 1,600,000 euros behind how much is unit and how much is diversified growth? And maybe there's no data size growth in your assumption, but just to understand. 2nd question, just to make sure I understood correctly the conversation I had with Martin and Christoph. For the sake of modeling, moving forward for the next node, if I look at the EUV dose exposure of 20 millijoule per square centimeter and 30 for DRAM, Should I keep that number fixed?
Or will it increase in the coming months?
Thank you. I will give the answer to the last question to Christophe. On the die size, I think I can refer to what Martin said. Martin looked at SoC and basically looked at different chip sizes and die sizes that are needed for a system solution. So it's difficult to say like we used to have very simple, you had a PC and you had a CPU in there, had a certain size and that went with the node.
It's much more complex today. Generally, what you are seeing in the lead that in certain areas, die size actually grow quite significantly. And I think Jim can probably respond to that also. But it's going to be the combination of the SoC of a combination of smaller and larger die that are going to determine how much wafers we actually need. And that's in our model.
We have a certain assumption there. We don't have the detail here. But perhaps, Jim, you have an answer to that?
Not the detail here.
Not the detail here. No, that's it. I think it's going to be a mix, yes?
Yes. I'm just wondering how much time I should spend answering the second question. But if you look at the 20 the 30 millijoule we mentioned on the slide. So I think these are the assumptions today for, let's 7 nanometer logic and 60 nanometer DRAM. This is what we see our customer driving.
Now if you look at the next node, as you shrink your pitch, in theory, the amount of those you're going to need goes up. But at the same time, I think Martin already mentioned that, there's a major effort done by our customer, the resist supplier to also improve the resist. So you have a little bit of a parallel activity, which is also very aggressive at this point of time because that's also an opportunity for those company to improve their resist to lower back if you want the dose. I think we also talked about cost model. We talked about the number of UV layer that we will see over time.
And of course, one of the parameter to decide if a layer is going to be done with UV or not is the dose. If you need a dose that is too high because of stochastic, for example, as we discussed, then most probably this layer will not move to UV. So you have this optimization, which I think is done by our customer, by our resist suppliers colleagues and also by SML. And everyone is working together to I would say to make sure that the dose which theoretically should increase because you shrink is not going to increase too much. So I think that's a very healthy dynamic we see today.
Yes. But to make sure being consistent with the answer, I think which I'll give you in the break. The line instruments have many, many contributors, and those is one of them, photons, also resist material and granularity resist the other one. Regardless, we'll have it moving forward. We will drive the productivity to a level that the cost of EUV, regardless of dose, makes it work.
So I think everybody is very at least also our customers, it's a sensitive subject because we always quote productivity, and it's only with a certain dose. And then he ends up with a process that needs a higher dose. We may not follow the requirements by the day, but we will, over time, drive the productivity up, which partly shown already in the road map and continue to drive up. And long term, the doses need to be substantially different than today, which is also an opportunity for this company to provide value on the long term.
Which by the way, I just said to us, there's nothing new. We had this in DPV also. These are the development curves that we have to go through.
Yes, Peter, in your summary, you mentioned you wanted to work closely with customers as one team. The easiest way to do that is by a cross shareholding and you're doing that with ZEISS. You gave the example of having an IRR. Is there some frustration that with your co investment program or partners, past partners that they've sold their shares or at least drastically reduced their shareholding?
No, there's no frustration. It's only congratulating them with a good choice at the time. So they made the money. But no, I think at that time when we did that, you have to put it into the time perspective. At that time, they actually knew that the only way to move forward, these were the logic customers, Samsung, Intel and TSMC, That EUV was the only way forward.
And they actually came to us and said, Guys, 1, you need to buy CYMA. 2, you need to double your R and D and because EUV needs to work. And at that time, we were a company with not even €5,000,000,000 in sales and we had €600,000,000 of R and D and said, you need to double your R and D. And then we said, listen, you can do that, but we cannot afford it because that means our shareholders will pick up the bill. So you guys need to chip in.
And they said, fine, we'll chip in, but then you need to lower the price of the tools. Well, the shareholders are still going to pay the bill. So that doesn't make sense. So why did you become a shareholder? This is how it came, yes?
And they did that because it was not only a I don't think it was from a strategic point of view that they wanted to be long term shareholder in ASML. They wanted to see EUV work, yes? And once they saw that happening and they saw our execution profile after the Xyrem acquisition also and basically doing what we're doing today, they said, yes, we don't need to be a 3% or 5% strategic shareholder. We just get it basically a hedge for the R and D money that they gave us plus some extra, yes? So it was just a business deal.
And I don't think that, that affected at all the strategic cooperation with the customer. On the contrary, I think in the beginning, it did because the importance of EUV to them and to us created this cooperative model, this cooperation model that we're now extending without the shareholding model because there is a mutual dependency now that is so obvious that, that drives the strategic cooperation and not so much the shareholding. Now with ZEISS, it's a bit different. We almost we are 2 companies and 1 business. That's so much integrated.
It's a little bit different. But the logic is the same because when we invested in ZEISS, they actually said, hey, the investments that you're asking from us are too big for us to really carry. So why don't you chip in? And then we say, Yes, why don't we become a shareholder? But that relationship is much longer term.
It's much more symbiotic. It's like Siamese Twin. We're joined today. Yes?
Peter, just on the back of that, just in terms of you mentioned being maybe a bit more sort of robust with customers now around negotiations. And in the context of them having made a good turnout of being investors in ASML, how are you seeing the response or the like to negotiations and around how they expect what they expect of you from a negotiation perspective?
Yes. I think it's all about the value sharing. We have to deliver. I mean, if we agree on a certain value, a certain price, then we have a liability also. I mean, we need to deliver on the productivity, and we need to deliver on uptime.
We need to deliver on certain waivers per day, and we're building guarantees. I'm basically saying, we know your shipment profile. If we do not execute full time, we'll pre ship you a machine. So I mean, these are the kind of things that you can think of. So it's not there is no liabilities from our side.
The only thing is, what I said is, I think where we currently are, we need to also look at how we recuperate some of the value and the returns that we have put into this, yes? And this is where we have the discussion with customers. But it's not that we don't have any liability or any obligation towards the customer because we will guarantee a certain performance and we'll put our balance sheet to work. If we don't make it, then we'll pre ship a few tools, which we don't expect that we will, but it's there.
All right. With that, I'd like to formally close the presentation and QA portion for those on webcast.