Public - Corporate Venturing Network

1 Ron Kool March-2015 | Veldhoven Introduction to ASML SVP Corporate Strategy and Marketing Public January 2015 Slide 2 Public More than 200 billion ICs are made every year Data: WSTS In 2014, 219 billion ICs were produced 30 for every man, woman and child on the planet. Global semiconductor industry sales were $ billion. 0501001502002501991199219931994199519961 9971998199920002001200220032004200520062 0072008200920102011201220132014IC units, in billions January 2015 Slide 3 Public ASML makes machines for making those chips Lithography is the critical tool/process step for producing chips From shed to world March 2015 Slide 4 Introducing ASML Headquarter in Veldhoven Netherlands Original name ASM Lithography Founded in 1984 as JV between the Dutch companies Advanced Semiconductor Materials International (ASMI) and Philips.

2 1988 ASMI withdraws, 1994 Philips decides to pull out IPO in 1995 Amsterdam/NASDAQ Market capitalization ~40 BEuro Business: Lithography for semi-conductors; main product: wafer stepper Customers: Intel, Samsung, tsmc, SK Over 70 sales and service offices worldwide March 2015 Slide 5 Driving the semiconductor industry: Moore s Law Gordon Moore (1965 April 19th): Number of transistors per chip doubles every year. Prediction later was elevated to law Later adjusted to two years, the trend has held for five decades. Key to maintaining the law is making smaller transistors The first integrated circuit on silicon, on a wafer the size of a fingernail (Fairchild Semiconductor, 1959) Today.

3 More than a billion transistors on the same area (Intel, 2012) Transistor length has shrunk by a million March 2015 Slide 6 7 Company secret Our success is based on providing superior products that enable Moore s law Our focused strategy enabled us to deliver superior products to the market resulting in a steady increase of our market share ASML Litho market share % 02550751002013 85% 10 08 06 04 02 2000 98 96 94 92 90 88 86 1984 Twinscan Immersion EUV Stepper Scanner Source: Gartner, S&P Capital IQ, ASML 8 Confidential Slide 8 10 March 2015 Moore s law value creation Market Value: - The market value driven by Moore s Law amounted to $13 Trillion in 2014.

4 - This is equal to three-quarters of the entire economy of the United States. VLSI Research Inc 9 Company secret We expect Moore s law to continue due to end-user demand Further penetration of current applications through new features and cost down New applications are enabled by higher performance and lower cost +15% +10% Smartphones, B units Tablets, B units Servers, M units Source: Euromonitor, Gartner, Yankee group, Profound Market intelligence, Machina Research's M2M forecasts Wearables, B units Connected devices, B units 121211111014 2013 2017 16 15 +4% +28% N/A 2013 14 15 2017 16 +25% # cores/server will also grow 10 Company secret.

5 In an ecosystem that has considerable financial means and strong incentives to drive innovation .. Top technology companies in our ecosystem (EBIT 2013, B$) ASML Semi Peers Other Toshiba (3) Dell (3) Ericsson (4) (13) (8) (12) (7) (35) (8) (5) eBay (4) Facebook (3) (27) EMC Tencent (3) (14) (49) (20) Yahoo (1) Hitachi (4) TI (3) (7) (14) ASML (2) AMAT (1) TEL (1) Software and services Hardware manufacturers Semi manufacturers Semi design Semi equipment (4) ~250 B$ Total EBIT 2013 = PAS 2000 ASML s first stepper, 1984 TWINSCAN NXT.

6 1970Ci The most advanced immersion scanner, 2013 Keeping up with Moore s Law January 2015 Public Slide 11 Resolution: 1200 nanometers Overlay: 300 nanometers 40 wafers per hour (100mm wafers) Resolution: 19 nanometers after double patterning Overlay: As little as 1 nanometer 250 wafers per hour (300 mm wafers) January 2015 Slide 12 Public The next step: EUV Large vacuum chamber Mirror optics New light source Resolution: <10 nanometers after double patterning January 2015 Slide 13 Public Innovation at ASML Innovation in existing product markets Product/process innovation Eco-system innovation Business model innovation Incubation of new businesses External Venturing How to make an Integrated Circuit mask resist expose Track (put resist on) Ion implant deposition process diagnostics Track (develop)

7 Lithography Etch March 2015 Slide 14 Academia Customers Technology partners Ecosystem Suppliers Advanced Research Center for Nanolithography January 2015 Public Slide 15 Open Innovation from design to manufacturing The industry moved immersion from initial feasibility studies into production in less than four years. Early immersion versions of ASML TWINSCAN systems gave chipmakers the opportunity to test and develop immersion technology in preparation for volume-manufacturing. October 2003: Redirection from 157nm to immersion (193nm based) August of 2004 ASML ships a 1st version to Albany NanoTech at the University of Albany SUNY (State University of New York).

8 At that time more than 16 chipmakers had already used the machine to run 10,000 test wafers. End 2004 - ASML ships the 2nd version of its immersion tool, the TWINSCAN XT:1250i, to TSMC, IMEC and Applied Materials, Inc. In 2005, introduction of a 3rd version - convertible scanner for dry or wet lithography, the TWINSCAN XT:1400. This tool gave customers the flexibility to include immersion in their technology road maps while protecting their investments in dry 193-nm technology. In 2006 ASML shipped the 4th generation of its immersion exposure tool, the ASML TWINSCAN XT:1700i, included new lens technology (catadioptric), used in High Volume Manufacturing In 2006, ASML announces the XT.

9 1900i, NA of Introduction of immersion technology March 2015 Slide 16 Product/process innovation Ship and 10 March 2015 Confidential Slide 17 Product/process innovation - virtual integration with suppliers Leveraging ASML s and suppliers individual competencies To optimize performance, flexibility, and risk exposure Through seamless, open, and trusted collaboration, Ultimately working as if it were one enterprise PGP Customer Intimacy Operational Excellence Technology leadership Serviceability, testability and manufacturability Roadmap alignment and performance Cost, productivity and uptime Timely delivery Open innovation in our operating model ~ 600 Suppliers, of which 40 partners represent 80% of purchasing value ~ buys (modules & parts)

10 In one platform, where the number of parts in a platform is larger than >85% of system costs from supply base Assembly & Test Order & Delivery Module assembly Customer Final assembly Components, Assy & Module assembly Suppliers 10 March 2015 Public Slide 18 Making optimal use of open innovation: Deciding on what to in- and outsource Slide 19 Non-unique Unique Litho Non-unique ASML OEM Whitebox Contract Manufacturer Unique Litho Development competence Manufacturing competence ASML Contract Manufacturer OEM Competencies unique for lithography should be at ASML Competencies non-unique for lithography should be outside ASML Public 10 March 2015 Confidential 2 September 2013 21 Stages Supplier : ASML Location : Netherlands Business Model.