Derek Wallace

9 December 2015

Hanenhof, Geleen

The integrated supply chain

Public

Vice President Sourcing

9 December 2015

Public

ASML makes the machines for making those chips

• Lithography is the critical tool

for producing chips

• All of the world’s top chip

makers are our customers

• 2014 sales: €5.9 bln

• More than 14,000 employees

(FTE) worldwide

0

25

50

75

100

Our mutual success is based on providing superior

products that enable Moore’s law

Our market is

growing as

Moore’s law

drives innovation

and investments

Our focused

strategy enabled

us to deliver

superior

products to the

market resulting

in a steady

increase of our

market share AS

ML

Lit

ho

mark

et

sh

are

%L

ith

om

ark

et

B$

0

3

6

9

2013

85%

’10’08’06’04’022000’98’96’94’92’90’88’861984

Twinscan

EUVStepper

Scanner

Source: Gartner, S&P Capital IQ, ASML

9 December 2015

Public

Immersion

9 December 2015

Public

Driving the semiconductor industry: Moore’s Law

Gordon Moore (1965):

Number of transistors per

chip doubles every year.

Later adjusted to two years,

the trend has held for more

than four decades.

0,1

1

10

100

1000

2004Total

2005Total

2006Total

2007Total

2008Total

2009Total

2010Total

2011Total

2012Total

2013Total

2014 Est.Total

NAND Flash price 1 GB [$]

Moore’s Law makes chips cheaper…9 December 2015

Public

Fla

sh

pri

ce

pe

r G

B (

in d

oll

ars

)

$110 for 1 GB

$0.46 for 1 GB

… and more energy-efficient

Source: Jonathan Koomey, Lawrence Berkeley National Laboratory and Stanford University, 2009

Dell Optiplex GXI

486/25 and 486/33 Desktops

IBM PC-ATIBM PC-XT

Commodore 64

DEC PDP-11/20

Cray 1 supercomputer

IBM PC

SDS 920

Univac I

EniacEDVAC

Univac II

Univac III (transistors)

Regression results:N = 76Adjusted R-squared = 0.983Comps/kWh = exp(0.440243 x year – 849.259)Average doubling time (1946 to 2009) = 1.57 years

IBM PS/2E + Sun SS1000

Gateway P3. 733 MHz

Dell Dimension 2400

SiCortex SC5832

2008 + 2009 laptops1.E+16

1.E+15

1.E+14

1.E+13

1.E+12

1.E+11

1.E+10

1.E+09

1.E+08

1.E+07

1.E+06

1.E+05

1.E+04

1.E+03

1.E+02

1.E+01

1.E+00

Com

puta

tions p

er

kW

h

1940 1950 1960 1970 1980 1990 2000 2010

Computations per Kilowatt hour double every 1.5 years9 December 2015

Public

Company 2015 semi capex (est., $M)

Samsung 13,000

TSMC Group 9,000

Intel 7,200

SK Hynix 4,700

Globalfoundries 4,000

Micron Technology 3,800

Toshiba (incl. SanDisk) 3,095

Sony 1,991

Inotera Memories 1,836

United Microelectronics Group 1,800

SMIC Group 1,500

Infineon Technologies 896

9 December 2015

Public

Top three with record 9.0 mark in VLSI’s “BEST Chip Making Equipment” suppliers

2015 ‘Best In Value’ Award

2014

Preferred

Quality Supplier Award

2014

Technology

Partnership Award

2014

Source: Gartner, Q3 2015

ASML has very large customers around the world…They rely on ASML to execute their strategy

Delivering chip machines for all performance segmentsP

erf

orm

ance

Power

Internet of

Things devices

mobile,

consumer,

automotive,

industrial

data centers,

networking

• High performance multi-core multi-processor

• Thermal limited in performance

• High speed on and off chip interfaces

• Large embedded memories

• Energy efficient SoC

• Multiple modes of operation

• Blend of power and performance

• RF integration

• Ultra-low power SoC

• ULV Digital (o.6V)

• ULV RF (<0.6V)

Source: Suresh Venkatesan, GF, Frontiers of Characterization and Metrology for Nanoelectronics (FCMN), April 14-16, 2015

9 December 2015

Public

Technology Innovation

Device scaling solutions Lithography shrink solutions

Economics

Continuing reduction in Cost per FunctionReturn on investment to cover investments

Market

Innovative new productsDemand for increased IC functionality

Continuation of Moore’s Law depends on 3 key factors

9 December 2015

Public

This is where

ASML and its

supply chain need

to make a

difference

together

We have invested significantly into technology leadershipCustomers are co-investing €1.4 billion in 2012-2017 R&D

9 December 2015

Public

ASML invested more than €11B In Technology Leadership over the last

10 years!

0,40,5

0,7

0,8

0,6

0,7

0,9

0,8

1,1

1,4

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Eu

ros i

n b

illio

ns

Factories andFacilities

R&DPlus Brion

acquisition (0.2B€)

Plus Cymer

acquisition (3B€)

ASML’s responsibility is to provide value for customers,

shareholders, employees and supply chain partners

We have realized >100% productivity improvement

for our customers in 10 years

Since 2010 we have commissioned >10 B€

to our supply chain

We have outperformed industry peers

and AEX in return to shareholders

Cumulative revenue generated

for supply chain partners, B€

We have created ample career opportunities

for highly educated professionals

ASML total employees, ‘000 FTE

0

100

200

300

400

500

600

201413121110090807062005

ASML

Global index

Semicon index

AEX index

0

15

10

5

08 09 12 201413111007062005

8

12

10

0

2010 20132012

4

2011 2014

2

6

Total return to shareholders, index; 2005=100Average wafers per day (best day of week), k

Source: Datastream, Gartner, S&P Capital IQ, ASML

5

6

0

201413

4

12

1

3

11

2

10090807062005

Financial crisis

9 December 2015

Public

+112%

+160%

How do we work together as

an integrated supply chain?

9 December 2015

Public

Open Innovation from design to manufacturing

Virtual innovation network

Academia, technology providers, research institutes

Co-solution network

Mask, Resist, Wafer track

Wafer processing

Customers

Semiconductor producers

Supplier and

partner network

Optics, measurement

systems, parts, subsystems

14 October 2015

Public

Slide 13

Open Innovation from design to manufacturing

Academia

Customers

Technology

partners

Co-solution

partners

Suppliers

Advanced Research Center

for Nanolithography

14 October 2015

Public

Slide 14

9 December 2015

Public

This is how we start: understanding trust in our relation

Trust =x ReliabilityCapability

Self-Interest

x Transparency

Realize that one day you are a customer,

and the next day you are a supplier.

9 December 2015

Public

Founded in 1984 as a spin-off from PhilipsASML had a Big Idea, and suppliers within Philips helped to get started

Supplier profiles measures Supplier on: • Quality• Logistics• Technology• Total Cost• Sustainability

67 out of 67 measured suppliers have a completed Supplier Profile,

100.0% 90.0% 75.0% 50.0% < 50%

A B C D E

Maturing the collaboration to close gaps: QLTC-S More than a decade of experience and still fine-tuning

18

Supplier profiles measures Supplier on: • Quality• Logistics• Technology• Total Cost• Sustainability

65 out of 67 measured suppliers have a completed Supplier Profile,

100.0% 90.0% 75.0% 50.0% < 50%

A B C D E

General Report (Month)

24 26 29 31 30

1114

17 17 18

1211

10 9 9

9 7 7 7 7

1 2 1 1 1

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Aug-15 Sep-15 Oct-15 Nov-15 Dec-15

# o

f Su

pp

lier

Pro

file

s

PR - S Vendor Rating

E

D

C

B

A

Maturing the collaboration to close gaps: QLTC-S More than a decade of experience and still fine-tuning

This is not a

law of nature

It’s getting harder

and harder to deliver

robust solutions in

time and spec, and

at the right price

9 December 2015

Public

October 2015

Slide 20

Company secret

The C in QLTC-S is becoming more challengingMoore’s Law depends on cost control

• Traditionally, Moore’s Law predicted a doubling of the

number of transistors every two years at stable cost

• Below the 60 nanometer node, we have entered an

era of increasing cost and process complexity as a

result of multiple patterning together with new

device structures and materials

Suppliers need to help drive cost, quality and innovationSuppliers need to act more like OEMs, and adopt (more) R&D

Sourcing spend 2014 per region

Netherlands(of which 50% Brainport region)

Germany

Europe excl. NL

and Germany

Asia

USA

43%

31%

8%

16%

2%

Public

9 December 2015

Summarizing…

Ensure competitive pricing; focus on Total Cost of Ownership

Give cost transparency to help ASML drive efficiency

Long term contracts based on annual cost improvements

Think about mutual risk-reward arrangement

QLTC-S Supplier Profile is the ‘change trigger’

The Supplier Idea Generation process helps bring innovations

Long term relationships based on trust and mutual gain

We want to understand a supplier’s strategy beyond this year’s account plan

Innovations in supply chain can fuel our strategy

9 December 2015

Public