Semiconductor Equipment - Berenberg Bank

ASML Holding NV
Technology Hardware
Key catalysts
In our view, the following events could be catalysts for the share price.
1. Further progress on EUV light source: EUV light source power is the
bottleneck making it difficult for ASML to achieve the desired throughput
level for it to be commercially viable. Cymer achieved 55 watts (43wph) in
March 2013, and it is aiming to deliver 105 watts (69wph) by mid-2014. If
Cymer announces any major progress on light source development towards
that target, or even reaches 105 watts before mid-2014, then the stock price
would react positively.
In our opinion, the Cymer acquisition increased the likelihood of ASML being
able to achieve its 105-watt target before mid-2014. ASML has announced
decent progress in recent quarters, and management is confident that the
company can reach 105-watt light source power by mid-2014.
2. DRAM and NAND order growth: Memory orders have recovered from
their trough in Q1 2013, and accounted for 35% of total orders in Q2. We
believe that further improvement in memory orders would benefit ASML’s
revenue and share price.
In our opinion, we believe memory spending is increasing. 28% of KLA’s
order were memory orders last quarter, up 60% from its December 2012
quarter orders (17% of which were memory), and it expects memory to
contribute 33% of orders in the June quarter. LAM has also indicated a
strengthening in memory orders in H1; its memory shipment portion
increased from a low 20% in December to 31% in the March quarter. We
therefore believe it to be very likely that ASML’s memory order level will
increase in the coming quarters, driven by customers such as Samsung and
Toshiba.
3. More aggressive shrinkage: Aggressive shrinkage plans will ultimately lead
to a higher level of demand for EUV tools and ArFi tools, versus current
modelled expectations.
The chip-makers’ roadmaps are already aggressive, in our view, and so the
opportunity for further acceleration in shrinkage terms would appear to be
low. However, as competition intensifies in the consumer electronic market,
Intel, TSMC and Samsung may bring their roadmaps forward in a bid to
secure a technology leadership position.
4. A delay in Nikon’s EUV development, or its exit from the EUV market:
Nikon, ASML’s only competitor in this segment, is looking to introduce EUV
after 2015/16. If Nikon delays this plan, or exits the EUV market altogether
due to technical issues, we believe this would have a beneficial effect on
ASML’s share price.
We do not believe that Nikon will make an announcement on its EUV plans
soon. It has stated that it is focusing on the ArFi market and that it expects its
ArFi tool to extend to 20nm chip designs, while EUV is only required for
printing 16nm/11nm chips. Therefore, we believe the timeframe for Nikon to
announce any possible delay or EUV plan would be end-2014 at the earliest or
2015, when it starts to focus on EUV production.
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