Securities and Exchange Commission
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2021
Commission file number 001-33463
ASML HOLDING NV
(Exact Name of Registrant as Specified in Its Charter)
(Jurisdiction of incorporation or organization)
De Run 6501, 5504 DR Veldhoven, The Netherlands
(Address of principal executive offices)
Telephone: +1 480 235 0934 E-mail: email@example.com
2650 W Geronimo Place, Chandler, AZ 85224, USA
(Name, Telephone, E-mail, and / or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Ordinary Shares ASML The NASDAQ Stock Market LLC
(nominal value €0.09 per share)
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Indicate the number of outstanding shares of each of the issuer’s classes of
capital or common stock as of the close of the period covered by the annual report.
402,601,613 Ordinary Shares
(nominal value €0.09 per share)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
If this report is an annual or transition report, indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.
See definition of "large accelerated filer,” “accelerated filer," and “emerging growth company" in Rule 12b-2 of the Exchange Act.:
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Yes ☒ No ☐
Indicate by check mark which basis of accounting the registrant has used to prepare
the financial statements included in this filing:
U.S. GAAP ☒ International Financial Reporting Standards as issued by the
International Accounting Standards Board ☐ Other ☐
If "Other" has been checked in response to the previous question, indicate by check mark
which financial statement item the registrant has elected to follow.
Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes ☐ No ☒
Name and address of person authorized to receive notices and communications from the Securities and Exchange Commission:
James A. McDonald
Skadden, Arps, Slate, Meagher & Flom (UK) LLP
40 Bank Street, Canary Wharf London E14 5DS England
ASML ANNUAL REPORT 2021 1
|2021 at a glance||Supervisory Board|
|Message from the CEO||Message from the Chair of our Supervisory Board|
|2021 Highlights||Supervisory Board report|
|Who we are and what we do|
|Our company||Consolidated Financial Statements|
|Message from the CTO||Report of Independent Registered Public Accounting Firm|
|How we innovate||Consolidated Statements of Operations|
|Customer intimacy||Consolidated Statements of Comprehensive Income|
|Our products and services||Consolidated Balance Sheets|
|Consolidated Statements of Shareholders’ Equity|
|Our position in the semiconductor value chain||Consolidated Statements of Cash Flows|
|Our markets||Notes to the Consolidated Financial Statements|
|Semiconductor industry trends and opportunities|
|Our strategy||Non-financial statements|
|Assurance Report of the Independent Auditor|
|Our performance in 2021||About the non-financial information|
|How we create value||Non-financial indicators|
|Message from the CFO||Stakeholder engagement|
|Long-term growth opportunities||Other appendices|
|Climate and energy||Exhibit index|
|Our supply chain|
|How we manage risk|
A definition or explanation of abbreviations, technical terms and other terms used throughout this Annual Report can be found in the chapter Definitions. In some cases numbers have been rounded for readers' convenience.
This report comprises regulated information within the meaning of articles 1:1 and 5:25c of the Dutch Financial Markets Supervision Act (Wet op het Financieel Toezicht).
In this report the name ‘ASML’ is sometimes used for convenience in contexts where reference is made to ASML Holding N.V. and/or any of its subsidiaries, as the context may require.
References to our website in this Annual Report are for reference only and none nor any portion thereof are incorporated by reference in this report.
© 2022, ASML Holding N.V. All Rights Reserved.
ASML ANNUAL REPORT 2021 3
Special note regarding forward-looking statements
In addition to historical information, this Annual Report contains statements relating to our expected business, results projections, business trends and other matters that are "forward-looking" within the meaning of the Private Securities Litigation Reform Act of 1995. You can generally identify these statements by the use of words like "may", "will", "could", "should", "project", "believe", "anticipate", "expect", "plan", "estimate", "forecast", "potential", "intend", "continue" and variations of these words or comparable words. They appear in a number of places throughout this Annual Report and include statements with respect to our expected trends and outlook, strategies, corporate priorities, expected semiconductor industry trends, R&D and capital expenditures and 2030 market opportunities and roadmap and revenue potential and other statements under the section titled “Semiconductor industry trends and opportunities”, expected trends in markets served by our customers, expected market growth and drivers of such trends and growth, expected financial results, including expected sales, service revenue, expected trends in working capital, gross margin, expected capital expenditures, R&D and SG&A expenses, cash conversion cycle, target and expected effective annualized tax rate, sales targets and outlook for 2022 and other statements under "-Trend Information", annual revenue opportunity and potential and growth outlook for 2025, expected growth in 2022, outlook for 2025 and 2030 and other statements under the section titled “Long-term growth opportunities”, expected continued growth in free cash flow generation, investments in the future and cash returned to shareholders, our Strengths, Weaknesses, Opportunities and Threats (SWOT), expected demand for upgrades, semiconductor industry dynamics and industry opportunities, expected trends in customer demand and demand for particular systems and upgrades and expected trends in end markets, including Memory, Logic and Foundry, including the continuation of investment by Logic customers in ramping new nodes and stronger lithography demand from memory customers, expected benefits of High-NA and planned target to start shipment of High-NA systems and high-volume production of systems using High-NA by 2025-2026, market opportunities for semiconductor industry end markets, expected innovation drivers, expected drivers of long-term stakeholder value, expected trends in DUV systems revenue, expected DUV sales and the expectation that DUV will continue to drive value for our customers and be used in production in most layers of their chips, expected benefits of Holistic Lithography and expected installed based management revenues, our supply chain strategies and goals, customer, partner and industry roadmaps, ASML’s applications business, expected development of High-NA and its benefits, including the expected timing for development of future generation EUV systems, expected growth in EUV sales compared to sales of DUV, expected benefits of the indirect interest in Carl Zeiss SMT GmbH and the acquisition of Berliner Glas, expected EUV adoption, expected EUV margins and margin improvement in our systems and service via cost reduction and value delivery, expected productivity and benefits of our tools, systems, and projects, EUV productivity targets and goals, potential future innovations and system performance, expected shipments of our tools and systems, including demand for and timing of shipments, statements with respect to DUV and EUV competitiveness, the development of EUV technology and EUV industrialization, expected productivity upgrade releases, enabling high-volume production of next generation chips and expected designs of such chips and their benefits, and revenue recognition, predicted growth in wafer production, sustainability targets, goals and strategies, shrink being a key driver supporting innovation and providing long-term industry growth, lithography enabling affordable shrink and delivering value to customers, environmental, diversity and sustainability strategy, ambitions, goals and targets, including circular procurement goals, targeted greenhouse gas emission and waste reduction, recycling and refurbishment initiatives, investments and goals and energy-saving strategies and targets, including statements on targeting zero carbon emissions and indirect emissions from energy use across operations and reducing intensity of all other emissions in the value chain from the making and use of ASML’s products by 2025, charity goals, the impact of the fire at our facility in Berlin on our production, repair center expansion and targets, our expectation of the continuation of Moore’s Law and that EUV will continue to enable Moore’s Law and drive long-term value for ASML well beyond the current decade, tax strategy, capital allocation policy, dividend policy, our expectation to continue to return cash to our shareholders through share buybacks and dividends including our proposed dividend for 2021 and statements relating to our share buyback program for 2021-2023, and statements with respect to the expected impact of accounting standards.
These forward-looking statements are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about the business and our future financial results and readers should not place undue reliance on them. Forward-looking statements do not guarantee future performance, and actual results may differ materially from projected results as a result of certain risks, and uncertainties. These risks and uncertainties include, without limitation, those described under How we manage risk - Risk factors. These forward-looking statements are made only as of the date of this Annual Report. We do not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
ASML ANNUAL REPORT 2021 4
Message from the CEO
Peter Wennink (President, Chief Executive Officer and Chair of the Board of Management)
2021 was a very challenging year, with strong growth in a dynamic environment. The semiconductor industry has reached new records of output and sales amid an ongoing global pandemic while still being unable to satisfy the demand for semiconductors. Industries around the world are severely affected by this lack of supply. And despite these challenging circumstances, I’m proud to say that at ASML we continued to grow and have welcomed many new colleagues. ASML reached €18.6 billion in net sales, and we welcomed our 30,000th employee in Giheung, South Korea. By now we’re at over 32 thousand people, and we expect that growth to continue. This is all due to the significant continued growth of our industry, driven by the accelerated digital transformation, of course partly due to the effects of the pandemic and the transition to working from home. In addition to this, we are witnessing a stronger-than-expected growth of Internet of Things (IoT) applications fueling the need for more and more distributed computing solutions. This global trend made us take another look at our future potential scenarios and as a result, we see an opportunity to achieve a step-up in our previously communicated revenue potential, which is now at €30 billion based on a high-market scenario in 2025.
None of this would be possible without the people at ASML and our partners. First of all our people – with their creativity, perseverance, resilience and ingenuity in difficult times, they are crucial to the success of our business. In addition, we rely on partnerships with our customers as well as partnerships with our dedicated suppliers, despite the setbacks they faced during the COVID-19 crisis. We rely on national and local governments to facilitate a social and economic infrastructure that allows us to be successful. We value our partnerships with research institutions who, like us, understand the importance of innovation and education. And not to forget our shareholders, who provide us with the backing to keep executing our technology innovation roadmap, and finally, our partnerships with the communities around us, without whom we would not thrive.
Global megatrends are driving growth in the semiconductor industry
There are several megatrends in the electronics industry that are shaping our digital, connected world and are expected to continue to fuel growth across the semiconductor market, such as artificial intelligence, 5G, virtual reality, gaming, simulation and visualization applications, and the intelligent cloud and edge. With a growing number of mobile and sensor-enabled applications and services, our society will rely more and more heavily on distributed computing and storage solutions. The electronics industry is booming – there are around 40 billion connected devices in use today, and that number is expected to grow to 350 billion in the next ten years based on external source data.
The most important end markets driving ASML’s growth are the smartphone market and the data center, server and storage market, but at the same time we are also seeing a huge increase in microchip demand in the automotive and industrial electronics markets.
Mature solutions are in demand
Another aspect of the growth we’re seeing today is that it’s not only in the most advanced nodes – a lot of the distributed computing and storage solutions I mentioned above require mature lithography technology to manufacture. We expect that by 2025, about two-thirds of our total system sales will be EUV and the rest will be DUV and metrology and inspection. This expected EUV percentage is lower than what we predicted in 2018, but that doesn't mean that the EUV market has shrunk – as a matter of fact, it is expected to grow. But the DUV and metrology and inspection markets are expected to grow even faster.
Countries are pushing for technological sovereignty
The global pandemic has alerted governments around the world that global supply chains can create significant geographical dependencies on services, raw materials and end products. Governments increasingly realize that this now also turns out to be true
ASML ANNUAL REPORT 2021 6
for semiconductors. Since semiconductors play an increasingly important role in the growth and continuity of large industrial complexes and the importance of the semiconductor industry is likely only going to increase, governments have turned their attention to securing sufficient semiconductor supply to support their local industries, creating higher levels of technological sovereignty and planning significant investments in the semiconductor industry. The US, China and the EU, as well as Japan and South Korea, are expected to nearly double the industry’s (2021) annual capital expenditures (CAPEX) of $150 billion based on external source data.
We are aware that this has created concerns about potential oversupply. However, we believe that the significant growth prospects of the semiconductor industry do require substantially more capacity and that given the high levels of capital expenditure to support all this, industry partners will apply sufficient effort to sustain an accessible and efficient innovation ecosystem.
Growing into the next decade
We believe that the advantages of scaling as expressed by Moore’s Law will continue throughout this decade and beyond. We will therefore relentlessly invest in innovation. In addition, we strive to ensure that ASML and its supply chain will be able to fulfill the increasing demand for more wafers to support advanced and mature technology. We will do this by increasing the productivity of all our machine types and by adding more manufacturing capacity.
To increase our own production capacity, we will focus on building more machines by driving down cycle time for both EUV and DUV, on adding more people and tooling, and on increasing our production space. Together with our supply chain partners, we are actively adding capacity to meet future customer demand.
Our product portfolio is very much aligned with our customers’ roadmaps. We will continue to deliver cost-effective solutions that provide value in EUV, in DUV, in applications, metrology and inspection, and in installed base management.
With great influence comes great responsibility
ASML operates in an industry that has considerable innovation power. Digital technology itself can help drive societal progress and has the potential to help cut global greenhouse gas emissions. ASML’s increasingly advanced lithography technology helps our customers to continue to produce microchips – with fewer materials and less energy consumption – that are three times more energy-efficient every two years.
We clearly recognize that climate change is a global challenge that requires urgent action by everyone, including us. That is why we are stepping up our focus on ESG (environmental, social and governance) sustainability, which we have expanded from five focus areas to a nine-part strategy aimed at contributing to the United Nations’ Sustainable Development Goals. We’re doing this because we recognize ESG’s increasing importance to all our stakeholders, but first and foremost because it’s simply the right thing to do.
Driven by our values and commitment to corporate responsibility, we want to have a positive role in society – for our employees, the communities around us, and everyone involved in our innovation ecosystem and supply chain. We are expanding on our community engagement, and with our new diversity and inclusion strategy, we want to improve our performance in this regard.
Building on our achievements so far, we have increased our environmental ambitions. Our climate goal is to strive toward zero waste disposal by 2030 and net zero value chain emissions by 2040, focusing on our manufacturing and buildings, business travel and commuting, and on our supply chain and product use.
Again, we won’t be able to achieve this alone, but will rely on strong and successful ongoing collaboration with our partners, suppliers and customers.
The last couple of years have posed new challenges to all of us that have required agility, patience and perseverance to overcome. As a global society we are faced with unparalleled challenges, but with its great workforce, partnerships and innovative power, ASML is looking toward the future with confidence, preparing for even more sustainable growth. We can only do that by continuing to be a trusted partner for all our stakeholders – we would like to thank them for their commitment and support. As I have said many times before, we are looking at a bright future, but we cannot do this alone.
Chief Executive Officer
ASML ANNUAL REPORT 2021 7
ASML ANNUAL REPORT 2021 8
For all the ways we have moved forward as a society, the world still faces crucial challenges for the future. We must change how we think and act on themes that impact everyone, such as energy use, climate change, mobility and access to healthcare and nutrition.
At ASML, we believe that the microchip industry is in a unique position to help tackle these challenges. From artificial intelligence (AI) to a vast internet of things (IoT), microchips are at the heart of modern technology. So whether it’s transitioning to sustainable energy, improving global health, increasing the safety and efficiency of transport, tackling pollution, bridging the digital divide, or feeding eight billion people without exhausting the earth’s resources, our vision is that we will enable the groundbreaking technology that will help solve some of humanity’s toughest challenges.
As the innovation leader that makes vital systems for chip manufacturing, we are proud to play our role as technology enabler in the innovation ecosystem of the semiconductor industry. We can only do this if we continue to challenge the status quo, tap into the collective knowledge of our global ecosystem and create an environment where people can contribute, learn and grow. At ASML, we believe our purpose is to unlock the potential of people and society by pushing technology to new limits.
The long-term growth of the semiconductor industry is based on the principle that the energy, cost and time required for electronic computations can be reduced by shrinking transistors on microchips. One of the main drivers of shrink is the resolution that lithography systems can achieve, which is mainly determined by the wavelength of the light used and the numerical aperture of the optics. A shorter wavelength – like a finer brush used for painting – can print smaller features. A larger numerical aperture can focus the light more tightly, which also leads to better resolution. To enable shrink, what we do – lithography – is key.
We are a focused supplier of holistic lithography solutions to all of the world’s major chipmakers. Our mission, together with our partners, is to provide leading patterning solutions that drive the advancement of microchips. Through our sustained investment in and dedication to research and development, we seek to innovate at least at the same pace as our customers. We put our innovations in the hands of chipmakers as quickly as possible by engineering in parallel, not sequentially, while ensuring their quality, reliability, manufacturability, and serviceability.
Our core values
To help solve humanity’s toughest challenges while at the same time addressing our own, we must continue to amplify ASML's core values that created our success – challenge, collaborate and care.
We challenge boundaries, question the status quo and stand up for the ideas we believe in. We’re comfortable with discussion and debate, because it is often inherent to stress-testing and championing an idea. This is what enables us to push technology forward,
ASML ANNUAL REPORT 2021 10
keep things simple and do things with care and attention. We continue to challenge ourselves to add value for our customers, ensuring that we continually improve across key aspects, such as safety, quality, efficiency and cost.
As a system architect and system integrator, we collaborate to tap into our collective potential. Together with our partners in our ecosystem, we expand our knowledge and skills, learn from each other, and share approaches to deliver the best results. What we do is unique, and we need each other to make it possible. As we continue to grow and our ecosystem of partners expands, this collaborative mindset becomes even more essential to success.
As we push technology further together, we have to do so with care. As an industry leader, we realize that our impact extends from people, to society, to the planet. We care not only for those we work with, but for our customers, suppliers, the world we live in, and the communities where we do business. We believe in integrity and respect for people and their human rights. We take personal responsibility to create a safe, inclusive and trusting environment where people from all backgrounds are encouraged and enabled to speak up, contribute, learn, make mistakes, and grow. We also seek to be clear in how we organize ourselves to achieve our goals, making sure we have a clear framework for what we do and how we do it.
We believe that these values will help our company and our employees to make smart decisions that will benefit all stakeholders. Our purpose and values, together with the great responsibility we have as an industry leader, make us optimistic for the future.
Where we come from
Our company was founded in 1984 in Eindhoven under the name of ASM Lithography, a joint venture between Philips and ASM International. As they moved into their new space near the Philips factories at Strijp-T in Eindhoven, our first employees could never have imagined that in just three decades, ASML would be a global innovation leader.
We’ve grown from our humble beginnings to a global force through relentless focus on innovation, sheer customer focus through tough times, and a willingness to rely on others to come to a better result.
Although we’re constantly looking to the future, where we have come from is just as important to us as we evolve. These pioneering behaviors have been key to our success over the past 37 years, and they’ve become even more important to us as we continue to define our purpose and articulate the values that underpin everything we do. Understanding what made us successful in the past will help us maintain our success in the future.
What guides us
Innovation is rarely a straight line. We've always known that it takes laser focus, multidisciplinary teamwork and a keen eye for how we can best help our customers. And even then, we've had to show grit. It took a decade of tenacity to get our technology off the ground. We've all cared for this company unconditionally and are proudly committed to its success. We believed then as we do now that even the biggest challenge can be overcome through perseverance, if necessary with thousands of people over many years.
We also learned to rely on others to come to a better result – without losing focus. That meant expanding our own knowledge and skills by building an ecosystem of expert suppliers, strategic partners, academia and service providers. We also acquired leading companies with unique technologies that strengthened our ability to deliver better solutions to our customers. We started to see ourselves as architects and integrators, inspiring our partners to innovate on the cutting edge of engineering while sharing risk and reward. And like us, some of our earliest customers are now leaders in the chip industry.
We are geared towards providing long-term value to our customers and other stakeholders. Our direct value chain consists of our R&D partners, supply chain and customers, as well as our own manufacturing and service activities. Together we enable product and service manufacturers, so-called Original Equipment Manufacturers (OEMs), and Original Design Manufacturers (ODMs) to create end-use devices and services for the consumer market.
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Our position in the semiconductor industry
The role of lithography
Lithography is a driving force in the creation of more powerful, faster and cheaper chips. Today’s most advanced processors, based on the Logic N5 node, contain billions of transistors. Shrinking transistors further is becoming increasingly difficult, but we aren’t as close to the fundamental limits of physics as some would think. Next-generation chip designs will include more advanced materials, new packaging technologies, and more complex 3D designs, which will create the electronics of the future.
The manufacturing of chips becomes increasingly complex as semiconductor feature sizes shrink, while the imperative to mass produce at the right cost remains. Our holistic lithography product portfolio helps to optimize production and enable affordable shrink by integrating lithography systems with computational modeling, as well as metrology and inspection solutions. Our computational models enable our customers to optimize their mask design and tape-out time (the time to send the final design to the manufacturer for production). This works through mask-correction software to prepare and modify the design for optimized exposures, while the metrology and inspection solutions help in analyzing and controlling the manufacturing process in real time.
A lithography system is essentially a projection system. Light is projected through a blueprint of the pattern that will be printed (known as a ‘mask’ or ‘reticle’). With the pattern encoded in the light, the system’s optics shrink and focus the pattern onto a photosensitive silicon wafer. After the pattern is printed, the system moves the wafer slightly and makes another copy on the wafer.
This process is repeated until the wafer is covered in patterns, completing one layer of the wafer’s chips. To make an entire microchip, this process is repeated layer after layer, stacking the patterns to create an integrated circuit (IC). The simplest chips have around 40 layers, while the most complex can have over 150 layers. The size of the features to be printed varies depending on the layer, which means that different types of lithography systems are used for different layers – our latest-generation EUV systems for the most critical layers with the smallest features, and ArFi, ArF, KrF and i-line systems for less critical layers with larger features.
Taking a closer look inside a fab
A semiconductor fabrication plant, commonly known as a ‘fab’, is a factory where microchips are manufactured. The making of a microchip involves a multiple-step sequence including lithography to create a pattern in the photoresist and chemical processing steps such as deposition, photoresist coating, ion implantation and etching, during which electronic circuits are gradually created on a silicon wafer.
Microchips are made of layers about 50 to 150 nm thick that are built on the semiconductor substrate one layer at a time. Some microchips can have up to 150 or more layers of varying complexity. Typically, the most complex layers are at the bottom and the least complex at the top. The most advanced chips require EUV and DUV immersion lithography tools to make them. Simpler microchips, such as sensors for IoT applications, can be produced using DUV dry machines.
After adding material for a new layer during deposition, the desired pattern is exposed onto it, which after development leaves lines and geometric shapes positioned precisely in the desired locations. Then the layer is etched, making these designs permanent on the wafer. The entire manufacturing process of microchips – from start to tested and packaged device, ready for shipment – can take between 18 and 26 weeks, depending on their complexity.
The heart of a fab is the cleanroom. All fabrication steps take place here, so the environment is controlled to eliminate dust on a nanoscale. Under the cleanroom floor is the so-called sub fab, which contains auxiliary equipment such as the drive laser. The utility fab – where the pumping and abatement systems for vacuum and cooling are located – is usually found one floor below this.
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Semiconductor manufacturing process
The Rayleigh criterion that drives Moore’s Law
Moore’s Law, a prediction made over half a century ago, sets the pace for our industry. Gordon Moore predicted that computing would dramatically increase in power, and decrease in relative cost, at an exponential pace. In other words, the number of transistors (tiny electrical switches) on an integrated circuit will double every two to three years at the same cost. This opens up two options to make microchips faster and more powerful: by using the same number of transistors on a chip at half the cost, or by doubling the number of transistors at the same cost. Even today, the power of this prediction is the fundamental principle of the semiconductor industry and the driving force for innovations that benefit our daily lives.
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At ASML, our job is to help the industry continue Moore’s Law. Our goal has always been to reduce the critical dimension (CD) – the smallest structure that a lithography system can print. This is defined by the Rayleigh criterion, the equation on which all our innovations are based:
•CD is the critical dimension, a measure of how small the smallest structures are that the lithography system can print.
•λ (lambda) is the wavelength of the light source used and the smaller the wavelength the smaller the structures that can be printed. Our deep ultraviolet (DUV) lithography systems, known as the industry workhorse, dive deep into the UV light spectrum to print the tiny features that form the basis of the microchip. Over the years, ASML made several wavelength steps and our DUV lithography systems range from 365 nm (i-line), 248 nm (KrF) to 193 nm (ArF). With the extreme ultraviolet (EUV) systems, we provide highest-resolution lithography in high-volume manufacturing as these systems make a major step in wavelength. With EUV tin plasma, we generate EUV light which has a wavelength of just 13.5 nm.
•NA is the numerical aperture, indicating the entrance angle of the light – with larger NA lenses/mirrors, smaller structures can be printed. Besides larger lenses, ASML increased the NA of our ArF systems by maintaining a thin film of water between the last lens element and the wafer, using the breaking index of the water to increase the NA (so-called immersion systems). After the wavelength step to EUV, ASML is developing the next-generation EUV systems, called EUV 0.55 NA (High-NA) where we push the numerical aperture from 0.33 to 0.55.
•k1 is a factor relating to optical and process optimizations. Together with our computational lithography and patterning control software solutions, we provide the control loops for our customers to optimize their mask designs and illumination conditions.
ASML's goal has always been to reduce the critical dimension. By reducing the wavelength and increasing the numerical aperture, our systems can print IC structures in increasingly smaller feature sizes. If our customers can print smaller structures, the chips can be smaller and the costs per transistor become cheaper, which in turn makes it more profitable for our customers.
Extending Moore’s Law is becoming increasingly complex and costly. What will always be needed is a way to mass produce IC designs at the right cost. That’s where the full scope of ASML’s product portfolio will continue to play a big role to ensure affordable transistor shrink. We continue to push our entire system portfolio to new productivity levels and imaging performance. We believe that our EUV 0.33 and 0.55 NA lithography will help enable tomorrow’s most advanced chips. In our computational lithography solutions, we’re bringing machine learning and big data to the forefront in predicting both lithography and metrology processes, striving for 100% accuracy. We have developed an entirely new class of e-beam inspection systems to help our customers control defectivity in manufacturing in next-generation chip nodes, as those smaller structures can hardly be detected with optical inspection.
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Message from the CTO
Martin van den Brink (President, Chief Technology Officer and Vice Chair of the Board of Management)
I’ve been asked the question many times, but let me assure you: Moore’s Law is still alive and well. And we believe it will stay with us for quite some time.
Over the past 40 years, we have gradually evolved from the era of PCs and mobile devices into the cloud era, where almost every aspect of our lives is now stored and managed online. The next step of our digital future will be about distributed intelligence, driven by the seamless integration of communication, computation and artificial intelligence (AI). All these trends require more computing power, which in turn is accelerating the demand for more powerful and energy-efficient microchips.
With our customers, we share a commitment to increase the energy efficiency performance of microchips. Together, we have a vision of the next 20 years to improve energy efficiency three-fold every two years, through system scaling including ongoing improvements in the resolution of our lithography systems, and through microchip device, material and transistor innovations. Moore’s Law has evolved and it is not only about printing the smallest lines.
System scaling is driving innovation
Over the last 15 years, the main driver of innovation in the semiconductor industry has expanded from pure lithography-enabled shrink (dimensional scaling) to microchip system scaling. This is achieved through new transistor structures and associated materials (device-level scaling), optimized circuit designs (circuit scaling) and innovative microchip architectures – such as 3D structures (architectural scaling) – as well as shrinking the microchip device footprint.
Advancing holistic lithography
ASML remains focused on enabling system scaling through shrink. We are integrating our complete product portfolio into a holistic lithography solution to optimize and control the lithography process. We do this through optimizing litho parameters, overlay, critical dimension (CD) and optical proximity correction (OPC), and by reducing the edge placement error (EPE) as well as improving our defect inspection capabilities.
We are uniquely able to help our customers find, measure, and correct for patterning variations. Our main focus is on improving EPE (the difference between the intended and the printed feature edge of a microchip layout), which is one of the keys to improving yield. This is because the lithography systems at our customers not only measure every single wafer that goes through the fab, but they also expose every single field on every single wafer and die individually. This allows our customers to set the actuation values of all of the control knobs that they have on our lithography systems in an optimal way.
How do we achieve that? We use scanner metrology, optical metrology, e-beam metrology and inspection to bring data from every relevant step in the process flow together. By analyzing all data in a single framework, our applications can then provide a feedback loop to the lithography system to make the required corrections, thereby delivering real value for our customers.
DUV innovation continues
Our deep ultraviolet (DUV) products are the industry backbone, supporting all semiconductor market segments. We keep innovating on all wavelengths. Our immersion and dry systems lead the industry in productivity, imaging and overlay performance for the high-volume manufacturing of the most advanced Logic and Memory chips.
We continue to systematically develop our product portfolio to optimize the installed base for our customers, while increasing our focus on productivity and performance upgrades and additional services to support our customers’ wafer demand.
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Cost-efficient scaling with EUV
Our extreme ultraviolet (EUV) product roadmap will help us drive affordable scaling well into the next decade. Our EUV 0.33 NA platform extends our customers’ Logic and DRAM roadmaps.
Chip manufacturing with EUV helps reduce the amount of critical lithography masks (-40%) and process steps (-30%) when compared to non-EUV manufacturing. This results in significant defect, cost and cycle time reductions for our customers. We expect that adoption of EUV will continue to grow, with all advanced node chipmakers expected to use EUV in production by 2024.
With our next-generation EUV 0.55 NA platform, we will continue to enable cost-efficient scaling for future nodes. The novel optics design with a higher numerical aperture will enable 60% smaller features and increase microchip density by a factor of almost 3 times. Our first early-access system is expected to be available in 2023 and we expect our customers will start their R&D in the 2024-2025 timeframe. High-volume manufacturing is projected to start in 2025-2026.
In everything we do, a trusted relationship with our customers is key. Our comprehensive product portfolio is therefore aligned with our customers' roadmaps to deliver cost-effective solutions in support of all their applications, from advanced to mature nodes. We are aware that commonality across our DUV and EUV platforms allows faster and more cost-effective innovation, production and maintenance. That is why we increasingly focus on using common technology across our portfolio.
We are investing in the energy efficiency of our products to help reduce the energy needed to produce a wafer. In addition, we have a strong roadmap to reduce waste. We are committed to re-using parts, tools and packaging whenever possible in our value chain. We are working together with our customers and suppliers to remanufacture used system parts, re-using them as new parts to prevent unnecessary waste.
I strongly believe that we have a solid roadmap for the coming 10 years that will drive the continuation of Moore’s Law. Enabled by shrink, ongoing system scaling on all levels – on device, circuit, dimensional and architectural level – will require substantial innovation across our whole portfolio. This will be key to increasing the circuit density and energy efficiency of microchips while lowering their cost for many years to come.
Martin van den Brink
Chief Technology Officer
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How we innovate
A tiny microchip, a global ecosystem
At almost every moment of every day, all of us make use of technology that contains microchips: small but mighty devices. A microchip is a unique product – fabricating the layers on even the simplest chip requires an elaborate process that few companies in the world have mastered.
During this process, which can take months from start to finished product, the silicon wafer travels through dozens of different machines in a chipmaker’s fab (semiconductor fabrication plant), before it finds its way into electronic products.
This multifaceted production process has led, over decades, to the semiconductor industry becoming a global ecosystem. This ecosystem includes companies specialized in chip design, equipment and infrastructure suppliers, and chipmakers themselves.
As a crucial manufacturer of lithography equipment, ASML is a vital part of this ecosystem chain. A critical step in the chip manufacturing process is the fabrication of the circuitry patterns on silicon wafers, made possible by our lithography systems which can be found in the factories of every major chipmaker in the world.
But our systems are just one part of the process involving numerous suppliers and chip-making equipment. Every step and every machine in the process is important. That’s why collaboration and innovation are key. From academics who help us understand and bend the laws of physics, to customers who identify new possibilities and suppliers that translate our ideas into products and technology – we collaborate to succeed. This huge collaborative network that we call the semiconductor industry is at the cutting edge of our digital future.
Examples of our ecosystem partners
Product development in the semiconductor industry is managed through so-called ‘roadmaps’, which is essentially planning product development. When an idea has become a more specific definition, this transforms into a roadmap giving guidelines on how the product development should proceed during the next couple of years. By combining the roadmap of our customers and the technological feasibility, we design a product roadmap that outlines the specifications and functionalities of new types of machines that are feasible for us to produce and that meet our customers’ demands.
Product development at ASML is exposed to multiple complexities. Some of our products consist of more than 300,000 parts delivered by more than 700 suppliers, and 50 unique functions that need to be integrated to create a fully functioning system. We need more than 80 specialized disciplines to support successful product and process development. Moreover, we are part of the semiconductor value chain, working closely together with numerous customers, partners and suppliers.
ASML's success depends on the timely delivery of innovative and complex products. This brings uncertainty and risk, and the positive and negative impact of decisions made throughout product development can be huge. Compare it to a sailing race: The goal is clear, but the route is not. There are numerous variables to be managed, at high speed. Every piece of information is crucial to plan and reach the goal.
For more than a decade, we have applied our tailor-made modular innovation and product development process, which we call the Product Generation Process (PGP). PGP describes the way we develop products at ASML, how we introduce these products to the market, and eventually how we phase them out. PGP is a decision-based process. There are 15 sequenced Key Decisions that
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determine the main stream of the product development. This means that PGP enables decisions to be made as to whether or not the development of a product should continue.
The modular design of our products allows us to work out solutions to technological challenges independently of projects. This independent work enables us to consistently improve our solutions and it leads to an efficiency in development through reuse of system design and architecture.
Our ecosystem partners
We innovate through partnerships. Our innovation philosophy is one where we see ourselves as architects and integrators, working with partners in an innovation ecosystem. We develop our technology in close collaboration with our customers to ensure we build today what they need tomorrow. Our machines are developed based on their input, and we engage closely with them to help achieve technology and cost roadmaps. Read more in: Customer intimacy.
In the same way, we work closely with our suppliers, trusting them to manufacture parts and modules for our systems. Many of them are deeply involved in developing new technology and achieving the innovations we seek. With some of these so-called ‘farmout suppliers’, we work as co-investors. Read more in: Our performance in 2021 - Social - Our supply chain.
We have been in a partnership with Carl Zeiss SMT Holding GmbH & Co. KG for over three decades and we also hold an interest in the company. This partnership runs according to the principle of ‘two companies, one business’ working together to drive operational excellence in innovation and technology. Read more in: Our performance in 2021 - Social - Our supply chain.
We co-develop expertise within a wide network of technology partners, such as universities and research institutions. Some of our partners include imec in Belgium, the technical universities in Twente, Delft and Eindhoven in the Netherlands, and the Advanced Research Center for Nanolithography (ARCNL), also in the Netherlands. Read more in: Our performance in 2021 - Social - Innovation ecosystem.
Every day at ASML, more than 11,000 of the brightest minds in R&D take on the exciting challenge to innovate the most advanced lithography systems in the world. We manage this process by balancing our customers’ needs, product capabilities and technology solutions. To stay ahead, we invest heavily in R&D. In 2021, we spent €2.5 billion on R&D, compared to €2.2 billion in 2020.
Our Research department’s focus is to generate and explore ideas and demonstrate their feasibility in the long term. The department also helps to find technological solutions to challenges in our products and applications that have moved into development.
Our researchers continuously scout for technological innovations and solutions – within the semiconductor industry and beyond – to assess if they can be applied in ASML’s technology roadmap to support our customers to drive the semiconductor device roadmap. We encourage our experts to build a wide network in the broader technology space.
The constant stream of new ideas is crucial to fill our technology pipeline that flows through the so-called ‘innovation funnel’. Here we select new ideas that have the potential to advance our products and customer application. Ideas that successfully pass the ‘proof of concept’ stage in our Research department are transferred to the Development & Engineering (D&E) department. D&E takes them on into our Product Generation Process (PGP) for product development. We then build and test system prototypes in the necessary environments. Prototypes that pass these tests may eventually lead to new product releases.
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Our D&E engineers drive our machines forward by creating new components or subsystems, integrating them into the functional system, or developing new applications to help move the industry forward.
In D&E, we work on a multitude of advanced optical and mechatronic modules, along with application software, data science and operating systems. D&E innovates with a strong focus on time-to-market, often starting new system development before the previous generation has even reached the customer. Teams in D&E have extensive contact with leading research institutes, keeping up to date with the latest developments in their respective fields.
Every day, our teams take on the exciting challenge of building and driving innovation forward to maintaining the most advanced lithography systems in the world. To do this, we apply concurrent engineering, often starting new system development before the previous generation has even reached the customer. At the same time we continuously seek to improve our products capabilities, while guarding our products’ reliability, manufacturability and serviceability.
In 2021, our research and D&E teams showed great achievements. A few examples are provided below.
Berthold Leibinger Stiftung’s 2021 Innovation Prize
A prestigious honor granted every two years, the Berthold Leibinger Innovation Prize is an international award that recognizes excellence in research and development work on the application or generation of laser light.
EUV technology is now the core technology for making modern computer and smartphone chips. A team of ASML scientists – Daniel Brown, Alexander Schafgans, and Yezheng Tao from ASML, in the Netherlands and the US – have been awarded the Berthold Leibinger Stiftung’s 2021 Innovation Prize for a “breakthrough in laser-produced plasma source for Extreme Ultraviolet Lithography scanner enabling high-volume manufacturing”.
The prize is for unprecedented advancement and research in EUV light source power scaling using a CO2 laser architecture. The team's work in the area of laser-produced plasma physics aided greater stability and robustness to EUV light source power, removing performance limitations and enabling greater scaling in high-volume manufacturing. This significant contribution was recognized by a jury of experts from science and industry across the globe.
For more information, please visit www.asml.com
Modular wafer clamp
We don’t say 'no' to a challenge. Our global research and D&E teams were challenged to create a new wafer clamp design that could be manufactured faster while meeting tighter specifications. After two years of research, design and engineering, our team launched the first full-scale prototype of the modular wafer clamp, ready for qualification in an EUV scanner. This achievement is a true testimony of cross-continental challenge and collaboration.
Wafer table coating
Unlike any other module in the scanner, the wafer table is the only scanner part in direct contact with the wafer during exposure. The requirements for flatness and surface stability are therefore rigorous. Thousands of wafers with different shapes and process
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characteristics are clamped to it on a daily basis as it moves under high acceleration forces, leading to unwanted drift and leaving behind a clamping fingerprint which affects the overlay performance.
Our teams sought a solution to these fundamental issues affecting wafer table performance and found a more effective coating solution which ensures stability and also has substantial lifetime improvement benefits.
Water-cooled EUV mirrors
EUV systems use several mirrors instead of lenses to guide the EUV light to the wafer, shrinking the reticle pattern by a factor of four. When EUV light travels through the machine, part of it is absorbed into each reflecting mirror. This gives rise to so-called mirror heating, which influences imaging and overlay performance.
Our researchers and engineers investigated new ways of thermal conditioning for the mirrors. Simulation and modelling showed good results on water-cooled mirrors. Testing of bonded substrates with water channels is underway, with encouraging results.
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As one of the world’s leading manufacturers of chip-making equipment, we enable our customers to create the patterns that define the electronic circuits on a chip. Our customers are the world’s leading microchip manufacturers, and our success is inextricably linked with theirs.
We collaborate with our customers to understand how our technology best fits their needs and challenges. For this reason, we engage with our customers at all levels: building partnerships, sharing knowledge and risks, and aligning our investments in innovation. We develop our solutions based on their input, engage in helping them achieve their technology and cost roadmaps, and work together, often literally in the same team, to make sure our solutions match.
Despite continued travel restrictions and mandatory quarantine and workforce constraints, thanks to our collaborative efforts across the company and our business partners, we were able to maintain a high level of engagement with our customers and prevent any major impact on their business requirements. Customers around the world have recognized our additional support efforts and interventions during the pandemic. We were presented with several ‘customer awards’ in recognition of our rapid response to their needs and good overall customer service.
In 2021, the demand for chips substantially increased driven by market fundamentals such as distributed computing, sensor technology, 5G, AI and digitalization accelerated by the pandemic. This also meant that the need for our customers to increase their capacity was at a record high. Rapidly increasing the number of systems shipped is challenging in our business, requiring seamless coordination with our suppliers who are also experiencing their own supply constraints. While we still managed to produce significantly more systems in 2021, we continued to work in close collaboration with our customers to weather the supply and delivery challenges by optimizing the installed base productivity.
Achieving customer intimacy
To us, customer intimacy is about the entire customer relationship across all channels, from the early stages of innovation onwards. We aim to foster loyalty, advocacy and continuous engagement with the goal of achieving complete customer satisfaction.
We aim to leverage our innovation leading to more sophisticated solutions and interactions with our customers. As customer requirements become more complex, it takes longer to align, so we need to start earlier. Transparency is key in this process, and our customer intimacy strategy supports this.
It’s crucial to be in a true partnership with our customers, to share in the risks and rewards of what we do. Trust and a shared vision are at the heart of this.
Staying close to our customers
To support and sustain our partnerships with customers, we have a structure of customer interactions across various channels in the organization, including, for example, customer alignment meetings. Here, members of our Board of Management, senior managers and customer representatives come together to make sure our product development plans are in line with our customers' business goals and needs.
We run regular customer alignment meetings with our key customers. These meetings include our Executive Review Meetings, at which members of our senior management team and Board of Management discuss business and strategies with customers; Technology Review Meetings, at which our senior technology experts and our Chief Technology Officer discuss technology roadmaps and requirements with customers; and Operational Review Meetings, where we review topics related to our customers’ operational activities.
We have a dedicated Sales and Customer Management department, which is responsible for building and maintaining our customer relationships and ensuring all relevant ASML departments contribute to meeting their needs. We market and sell our products directly to our customers, without agencies or other intermediaries. Our account managers, field and application engineers, and service and technical support specialists are located close to our customer locations throughout Asia, the US and Europe.
Another focus area is training – boosting the capabilities of the local customer service teams as well as enhancing local technical expertise. The travel restrictions, among others, highlighted just how essential the need is for well-trained engineers in the regions where we operate. With the help of remote control capabilities, we were able to increase the self-sufficiency of the local field engineers.
Measuring our approach
Our Voice of the Customer program helps ensure our employees hear firsthand about our customers’ needs and challenges. This is especially important for employees without direct access to customers. To reach as many of our people as possible, the program makes use of different channels of communication: live presentations and Q&As with senior customer representatives, recorded customer interviews, online articles, and personal engagement with customer representatives.
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In 2021, travel restrictions and other mitigation measures related to COVID-19 continued to limit our in-person interactions to a large extent. Our account teams adapted quickly, introducing alternative solutions such as more local Voice of the Customer initiatives and remote customer interviews. Local account and support teams visited our customers at their locations, interviewed them on video, and then shared feedback with teams at ASML. Except for live presentations with large audiences, we were able to adhere to our regular schedule of interactions throughout the year.
Another valuable customer feedback tool is our biennial Customer Feedback Survey, which asks our customers to rate our performance. We also use this opportunity to collect open feedback. The direct ratings and frank comments provide valuable insight into customers’ successes and challenges. We carefully analyze the results per customer, check our gained insights with the customer, and then define targeted, continuous improvement plans together with them, taking their priorities into account. Key elements in this process are: truly understanding what customers need from us, validating that we are on the right track with the right improvements, and updating our customers regularly on progress being made. In 2021, we continued deploying the improvement actions identified from the survey results of 2020. The next survey will be sent out in September 2022.
We also set ourselves a target of achieving a VLSI top-three ranking among large suppliers of semiconductor equipment. The VLSI research annual Customer Satisfaction Survey benchmarks the performance of suppliers across the semiconductor industry based on three key factors: supplier performance, customer service and product performance. We moved up to second place in the 2021 VLSI research Customer Satisfaction ranking of the ’10 Best Large Suppliers of Chip Making Equipment’. We've maintained our position in the top three overall ‘Large Suppliers of Chipmaking Equipment’ and also in the top three individual categories: number one in ‘Best Suppliers of Fab Equipment’, ‘Wafer to Foundation Chipmakers’, and ‘Wafer Fabrication Equipment to Specialty Chipmakers’.
In line with our business strategy, we continued in 2021 to work towards securing our full product portfolio that will sustain our company into the future. This includes working with our customers to increase the adoption of EUV in high-volume manufacturing environment, engaging with our customers to introduce EUV 0.55 NA platform, securing our products in mature markets and optimizing the installed base for our customers.
Our product portfolio is aligned with industry trends and our customers’ detailed product roadmaps, which require lithography-enabled solutions. Our customers are showing their trust in us by investing in our newest technology, supporting the industry driver of shrink beyond the current decade.
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Our products and services
The semiconductor industry is driven by affordable scaling (the ability to make smaller more energy efficient transistors at the right price). Our holistic lithography product portfolio is geared toward lithography-enabled shrink far beyond the current decade, to allow our customers to generate the greatest value per silicon wafer.
Our product offerings in our holistic product portfolio provide patterning solutions for every possible wavelength – from the most advanced 13.5 nm EUV wavelength to the industry’s workhorse DUV wavelengths of 193 nm, 248 nm and 365 nm. This comprehensive portfolio supports customers across the semiconductor industry from mass-producing advanced Logic and Memory chips to creating novel ‘More than Moore’ applications or cost-effective manufacturing of mature chip technologies.
To make sure that every individual pattern on an integrated circuit is connected flawlessly, we provide advanced process control solutions through our metrology and inspection systems and computational lithography solutions. In addition, we support our growing installed base with best-in-class customer support. Our highly differentiated solutions provide unique value drivers for our customers and ASML, working together to enable affordable shrink well into the next decade.
Extreme ultraviolet (EUV) lithography systems
More than two decades ago, we started developing EUV technology. It was "no walk in the park" and, since the start, we have invested billions in R&D, acquired Cymer to accelerate EUV source technology, and helped solve several technical challenges to enable the EUV infrastructure that our customers need for high-volume manufacturing. We succeeded by innovating in close cooperation with our customers and suppliers. This partially explains why ASML is the world’s only manufacturer of EUV lithography systems. Since its introduction, our EUV installed based produced more than 59 million wafers by end of 2021, compared to 26 million wafers produced by end of 2020.
EUV 0.33 NA
Our EUV platform extends our customers’ Logic and Memory roadmaps by delivering resolution improvements, state-of-the-art overlay performance and year-on-year cost reductions. EUV lithography uses light with a wavelength of just 13.5 nm and a numerical aperture of 0.33. This is a wavelength reduction of almost 15 times compared to the next most advanced lithography solution used in advanced chipmaking – deep ultraviolet (DUV) argon fluoride (ArF) lithography with its 193 nm light. This allows our customers to use EUV in a single exposure, rather than complex multiple patterning strategies with ArF immersion, and allows them to further shrink microchip structures. Our EUV product roadmap is intended to drive affordable scaling to 2030 and beyond.
The TWINSCAN NXE:3600D is our latest-generation EUV 0.33 NA lithography system. It combines the highest resolution with 15-20% increased productivity and around 30% better overlay compared to its predecessor the TWINSCAN NXE:3400C, while also improving system availability.
EUV 0.55 NA (High-NA)
After five years of engineering, we have started to build the next generation of EUV lithography systems that further improves resolution with a higher numerical aperture (NA) of 0.55 compared to the 0.33 NA of our current EUV platform. To reduce technological introduction risk and R&D costs, the EUV 0.55 NA (High-NA) platform maximizes commonality with the EUV 0.33 NA platform.
The capabilities of our EUV 0.55 NA system, called EXE:5000, bring considerable benefits to our customers by enabling lithography simplification for future nodes, higher yield and decreased defect density for both Logic and DRAM. With its larger optics, it can print smaller features with higher density, reducing patterning costs for customers significantly. EUV 0.55 NA helps our customers to extend their shrink roadmap and minimize double or triple patterning compared to 0.33 NA, leading to reduced patterning complexity, lower risk of defects and a shorter cycle time.
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We believe this technology will enable affordable geometric scaling well into the next decade as EUV 0.55 NA offers higher resolution that enables 1.7x smaller features and 2.9x increased density compared to EUV 0.33 NA. EUV 0.55 NA is expected to enter high-volume manufacturing at our customers in 2025–2026.
Deep ultraviolet (DUV) lithography systems
DUV lithography systems are the workhorses of the industry. Supporting numerous market segments, DUV systems produce the majority of layers in a customer device today and will remain important for future devices. We offer immersion as well as dry lithography solutions for all DUV wavelengths currently used in the semiconductor industry – i-line using 365 nm wavelength, KrF using 248 nm and ArF using 193 nm. These systems help manufacture a broad range of semiconductor nodes and technologies, and support the industry’s cost- and energy-efficient scaling.
Our DUV immersion and dry systems lead the industry in productivity, imaging and overlay performance for high-volume manufacturing of the most advanced Logic and Memory chips in combination with EUV, while continuing to deliver value for mature nodes and lower-volume applications.
ArF immersion lithography maintains a thin film of water between the lens and the wafer, increasing NA and improving resolution to support further shrink. Our immersion systems are suitable for both single-exposure and multiple-patterning lithography, and can be used in seamless combination with EUV systems to print different layers of the same chip.
The TWINSCAN NXT:2050i is our current state-of-the-art immersion system and is being used in high-volume manufacturing of the 5 nm Logic and fourth generation of 10 nm DRAM nodes. The NXT:2050i is based on a new version of the NXT platform, which includes new developments in the reticle stage, wafer stage, projection lens, and exposure laser. Thanks to these innovations, the system delivers better overlay control at higher productivity than its predecessor.
Not every layer on a chip necessarily needs the latest and greatest immersion lithography systems to produce them. There may be more complicated layers that are made using more advanced lithography systems, but the rest can often be printed using ‘older’ technology such as dry lithography systems. Our dry systems product portfolio offers more cost-effective solutions for all types of wavelengths for our customers.
The TWINSCAN NXT:1470 is our latest dry ArF lithography system, offering a record productivity of 300 wafers per hour with a 4 nm overlay capability. It is also the first dry NXT system, building on our successful immersion platform, and delivers improvements in matched machine overlay, productivity and its fab space.
With an 0.80 NA, the TWINSCAN XT:860N is our new-generation KrF system, supporting high-volume 200 mm and 300 mm wafer production at and below 110 nm resolution. The XT:860N features the new Large Range Level Sensor that allows customers to measure high topology 3D NAND wafers at increased productivity of 260 wafers per hour – up from the 240 wafers per hour capability of the XT:860M. For more critical KrF layers, the 0.93 NA TWINSCAN XT:1060K is our most advanced KrF lithography system, and offers best-in-class resolution at and below 80 nm and overlay.
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The TWINSCAN XT:400L is our latest i-line lithography system, which can print features down to a resolution of 220 nm for 200 mm and 300 mm wafer production.
Mature products and services
Before EUV, before immersion, and even before our TWINSCAN systems, there was the PAS. In 1991, seven years after the company was founded, we launched the PAS 5500, which turned out to be our breakthrough platform. This system was able to dramatically reduce manufacturing times for our customers, and its modular design enabled them to produce multiple generations of advanced chips using the same system.
Our refurbished products business, known as Mature Products and Services (MPS), refurbishes and upgrades our older lithography systems to extend their lives and offer associated services. MPS’s customer base is wide and active in a variety of markets, especially in the 'More than Moore' space.
ASML systems have a very long operational lifetime that often exceeds their role at the initial customer. As a result, many customers are able to generate value by selling off systems that are no longer required. To support this sustainable product use and ensure used systems deliver the quality that ASML stands for, ASML is actively involved in the used system market through our refurbishment and associated services. Over 90% of the PAS systems ASML has ever sold are still in use.
We offer refurbished systems of the PAS 5500 and first-generation AT, XT and NXT systems. Through our refurbishment and associated services, we extend the lifespan of our customers' installed base, drawing value from their capital and contributing to sustainable product use. Read more in: Our performance in 2021 - Environmental - Circular economy - Recycle mature products through refurbishment.
Metrology and inspection systems
Our metrology and inspection systems allow chipmakers to measure the patterns that they actually print on the wafer to see how well they match the pattern intended. Our portfolio covers every phase of bringing a chip to market, from R&D to mass production, and each step of the manufacturing process – allowing them to assess the performance of the entire process. The systems offer the speed and accuracy to create automated control loops via our process control solutions, optimizing the lithography system settings for each exposure to reduce edge placement error (EPE), enlarge the process window and achieve the highest yield and best performance in mass production.
Our YieldStar optical metrology solutions allow chipmakers to assess the quality of patterns on the wafer in volume production, through fast and accurate overlay measurements. Overlay, or how well one layer of a chip is aligned with the previous one, is an important measure of lithography performance and a key contribution to EPE. As structures on microchips get smaller and smaller, overlay and EPE become more and more important.
The YieldStar 385H offers the latest in-resist post-lithography (pre-etch) overlay and focus metrology, with enhanced throughput and accuracy. Compared to previous systems, key enhancements include a faster stage and faster wavelength changing. This enables highly accurate overlay measurements and tool matching using multiple wavelengths without impacting throughput.
Our latest model, the YieldStar 1385H, provides the ability to measure after-etch device patterns enabling extended yield control capability for our customers. The YieldStar 1385H delivers improved accuracy and around 50% productivity improvement capability over the previous model YieldStar 1375F. The YieldStar 1385H is the optical tool on the market for fast, accurate in-device overlay and metrology and has the capability of measuring multiple layers at once which helps customers to improve yield through post-etch process control.
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E-beam metrology and inspection
Our HMI e-beam solutions allow customers to locate and analyze individual chip defects amid billions of printed features, extending the possibilities for process control. Historically, e-beam solutions were too slow to monitor volume production processes. However, ASML has made progress in various methods for increasing the throughput of e-beam systems.
ASML continues to extend market leadership in voltage contrast inspection and physical defect inspection with the widely adopted single-beam platform. The eScan 430 is our latest single-beam inspection system, delivering more than 35% throughput improvement across various applications in logic, DRAM and 3D NAND.
Our high-resolution e-beam metrology system eP5 offers world-class 1 nm resolution with large field-of-view capabilities at more than 10 times the speed of existing technologies. It outputs critical dimension (CD) and edge placement error (EPE) data in high volume with a quality level that customers need for monitoring and control. EPE is becoming more critical for device patterning and yield with shrinking design rules and the adoption of EUV lithography. We also released an EPE metrology application software product on eP5. It is capable of local and global EPE measurements on device, both intralayer and interlayer.
Our innovation did not stop after we launched our breakthrough multibeam inspection tool HMI eScan 1000, with a 3x3 image, a year ago. We added the next generation HMI eScan 1100 to our product portfolio. With a 5x5 image, it demonstrates successful multibeam operation, simultaneously scanning with 25 beams. The 5x5 system has higher sensitivity for detecting voltage contrast defects and physical defects while substantially increasing inspection throughput. At this stage, our customers are evaluating our multibeam systems.
System and process control
Our system and process control software products enable automated control loops to keep lithography processes operating optimally. Using powerful algorithms, they analyze metrology and inspection data and calculate necessary corrections for each individual exposure that can be fed back to the lithography system to minimize edge placement error in subsequent wafer lots. In this way they enable the creation of ever more advanced microchips with maximum yield and performance. Our system and process control roadmap aims to take increasing advantage of the huge flexibility of our lithography systems and apply more powerful algorithms with higher-order corrections to support our customers own roadmaps for increasing EPE performance.
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Our computational lithography solutions are used in the development of new chips to optimize reticle patterns and the setup of the lithography system to ensure robust, manufacturable designs that deliver high yields. Insight from computational lithography solutions is also increasingly being used to guide metrology and inspection, increasing throughput and enabling more precise process monitoring and control in high-volume manufacturing.
These products are based on accurate computer simulations of the lithography system and process, representing a wide variety of physical and chemical effects. Machine learning techniques are also increasingly used to further speed development. We are continually developing our computational lithography offering to increase the range and accuracy of models and reduce the computational time and cost.
Visit www.asml.com for more product details and specifications.
Managing our installed base systems
The installed base of ASML systems continues to grow, with many systems finding second or even third lives at new owners in new markets and applications. To provide all our customers with the best possible value proposition, we offer an extensive installed base management portfolio, including a wide range of service and upgrade options.
We develop and sell product options and enhancements designed to improve throughput, patterning performance and overlay. Through field-upgrade packages, it is possible to upgrade older systems to improved models in the field. This enables customers to optimize their cost of ownership over the system’s lifetime.
We support our customers with a broad range of applications, services, and technical support products to maintain and enhance our systems' performance. We have almost 7,000 customer support employees, who work to ensure the systems in our customers’ fabs run at the highest levels of predictability and availability. We offer 24/7 support, next-day parts delivery, an easy, centralized customer portal, and training for customer engineers. In 2021, our customer support organization has provided nearly 5,000,000 hours of customer support, up from 4,500,000 hours in 2020.
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Our customers are the world’s leading microchip manufacturers, and our success is inextricably linked with theirs. We design our machines based on their input, engage in helping them achieve their technology and cost roadmaps, and work together to make sure our machines are running smoothly in their fabs.
Our customers can be grouped into Memory and Logic chipmakers.
Memory chips can store a large amount of data in a very small area. They are used in an increasing variety of electronic products like servers, data centers, smartphones, high-performance computing, automotive or personal computers, and other communication devices. There are two main classes of Memory: NAND and DRAM.
With NAND chips, data can be stored even when a device is powered off. DRAM memory is used to efficiently provide data to the processor. These DRAM and NAND chips are typically made in dedicated Memory-chip factories.
Logic chips, which process information in electronic devices, are produced by two groups of manufacturers. The first group, known as integrated device manufacturers (IDMs), designs and manufactures Logic chips. The second group comprises contract manufacturers known as foundries. Foundry manufacturers produce chips for ‘fabless’ companies, which focus only on chip design and distribution, but do not manufacture microchips themselves.
Both Logic and Memory chips can vary greatly in complexity and capability. For example, the most advanced chips are powering leading-edge technology in artificial intelligence (AI), big data and automotive technology, while the simpler, low-cost chips are integrating sensing capabilities in everyday technology to create a vast IoT.
The chip market (worldwide semiconductor revenues) has grown by 5% per year in revenue on average over the past 20 years, and is projected to grow even stronger. The factors driving this growth have radically changed. In the 1990s, personal computers (PCs), both desktops and later laptops, drove chip demand. In the 2000s, the market driver evolved from PCs to smartphones. These in turn produced new market drivers, data centers and (edge) cloud solutions, where data from PCs and smartphones is routed, processed and stored with the extensive use of specialized Logic chips, in combination with DRAM, NAND and HDD storage.
ASML ANNUAL REPORT 2021 29
Semiconductor industry trends and opportunities
Technology is evolving fast, and the next level of computing is dawning. The era of mobile computing – where you bring the computer with you – is evolving towards immersive ‘ubiquitous computing’, with computing power available wherever you go.
The transition to ubiquitous computing is enabled by what has been termed the ‘artificial intelligence of things’ (AIoT). AIoT is a smart and connected network of devices that seamlessly communicate over powerful 5G networks, allowing us to unleash the power of data better and faster than ever. This combination of artificial intelligence (AI) technologies with the internet of things (IoT) infrastructure will achieve more efficient IoT operations, improve human-to-machine interactions, and enhance data management and analytics. The potential of AIoT will gradually open up as AI and IoT increasingly intertwine, facilitated by 5G. The vast amount of data that people can access, and the insights this provides, will fuel semiconductor business growth and digital transformation.
There are around 40 billion connected devices currently in use, with more being added every second. This number is expected to increase to 350 billion devices by 2030. Connected IoT devices are expected to create up to 175 ZB (zettabytes) of data per year by 2025 based on external research. In other words, one zettabyte (1021 byte) equals a trillion gigabytes, and to download 175 ZB of data with an average current internet connection speed would take one person 1.8 billion years. This big data will need to become fast data to allow for ubiquitous computing as we move towards ‘edge’ computing, where processing is brought as close to the source of data as possible, rather than in the cloud.
Semiconductor-enabled computing trends
Moore's Law is the guiding principle for the semiconductor industry, the motor driving the industry to transit from mobile computing to ubiquitous computing. This transition continues to expand, facilitating three major trends in computing: applications, data and algorithms.
Semiconductor industry market opportunities
In 2020, more than 953 billion chips were manufactured around the world, feeding a $440 billion industry. In 2021 the semiconductor industry increased the output to over 1.1 trillion chips, turning to a $590 billion market. Growth is set to continue, with market analysts predicting the industry could reach a nearly $700 billion market by 2025.
Semiconductor technology plays a crucial part in shaping the interconnected and intelligent network future, and end markets continue to grow. The overview below shows an outlook on the current market size and market opportunity for the entire industry based on external research.
|Market||Key driver||2020 market size ($bn)||2025 market opportunity ($bn)|
2030 estimation1 ($bn)
|Outlook CAGR 2020-2025 (%)||Previous outlook CAGR 2019-2024 (%)|
|Smartphone||Continued refresh of all semiconductor content including image sensors||116||162||210||7.0 ||%||7.9 ||%|
|Personal computing||High-end compute and Memory, fast conversion to SSD||100||121||132||3.9 ||%||2.8 ||%|
|Consumer electronics||Legacy products and packaged ICs, advanced ICs in add-ons||48||74||98||8.8 ||%||7.7 ||%|
|Automotive||Strong IC content growth: GPU, sensors, V2X communication sensing||39||82||131||16.3 ||%||9.5 ||%|
|Industrial electronics||High-end compute for AI on big data and sensors||50||82||119||10.5 ||%||7.8 ||%|
|Wired and wireless infrastructure||Devices for fast data processing, modem, base-station infrastructure refresh||38||53||63||7.0 ||%||5.5 ||%|
|Servers, data centers and storage||High processor and Memory growth, hardware accelerations including GPU||76||119||187||9.2 ||%||10.6 ||%|
|466||693||940||8.2 ||%||7.3 ||%|
1. ASML extrapolation of data to 2030 using ’15-’25 Compound Annual Growth Rate (CAGR)
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Semiconductor industry dynamics
Several factors are shaping the semiconductor industry landscape. These are some of the major trends driving industry development, both today and tomorrow.
Rising consumer demand
The convergence of wireless communication, telecom, media and cloud via connected devices continues to drive demand for advanced semiconductors across the globe. Growing populations and urbanization are creating increasing demand for advanced consumer electronic devices. Microchips are at the heart of these devices. Significant growth drivers of the emerging technologies are demanding new and advanced chips that are specifically designed for a wave of new applications. Read more in: Semiconductor industry trends and opportunities and Customer intimacy.
Global race for talent
Highly skilled people with a technical background are scarce in the labor market and competition is growing. Top-tier talent select their employer of choice, not the other way around. The global race for talent is becoming more crucial as the industry competes for a small pool of scientists, engineers and software developers with the skill set to develop innovative solutions.
Companies are trying to staff up for growth, but the high-tech resource pool is shallow. The number of STEM jobs is projected to grow significantly, but it is challenging to fill these given the shortage of qualified candidates. Retaining talent has become crucial for tech companies. Read more in: Our people.
The current trade environment presents significant challenges for the global semiconductor industry, and trade tensions and increased protectionism are likely to continue. The global pandemic has alerted governments around the world that global supply chains can create significant geographical dependencies on services, raw materials and end products. Semiconductors play an increasingly important role in the growth and continuity of large industrial complexes and the importance of the semiconductor industry is likely only going to increase. Governments have turned their attention to securing sufficient semiconductor supply to support their local industries, creating higher levels of technological sovereignty and planning significant investments in the semiconductor industry.
The industry is being forced to manage trading costs. Ultimately, this could be passed on to the end market resulting in an increase of prices of devices. Besides the financial implication, trade tensions and protectionism also introduce significant complexity throughout the supply chain and its processes. This is forcing the industry to relook at its global supply chain. Read more in: Our supply chain, How we manage risk and Risk factors.
Expanding R&D investments
In the rapidly evolving semiconductor industry, access to the latest technologies, chip designs and manufacturing processes is the basis for competition. R&D is an ever bigger priority and expense. Chipmakers are faced with supporting applications and end markets that are becoming increasingly complex. Traditional semiconductor companies are challenged to diversify their portfolio, due to the rise of tech platform companies moving toward in-house chip design.
In addition, the incremental costs of executing innovation are rising, requiring higher levels of R&D investments to achieve the same goals. Getting products to the market faster is essential – or the chipmakers risk missing the boat. As a result, there is increased pressure to get solutions to the customers early. Read more in: Innovation ecosystem, Risk factors and Financial performance.
To capitalize the convergence of megatrends such as AI, IoT, 5G and autonomous vehicles, the industry is investing significant amounts in assets that can unlock value across the portfolio.
The global semiconductor industry has shown tremendous growth in recent years and this is expected to continue. The industry is refocusing on increasing scale and proficiency in core competencies as well as expanding into new capabilities and new markets. Mergers, acquisitions and joint ventures are expected to be key parts of the chip market strategy, with deals focusing on emerging technologies. Read more in: Semiconductor industry trends and opportunities, Our supply chain and Risk factors.
Taking action on climate change
Climate change is an urgent matter around the world. It is a global challenge that requires global responsibility to limit a temperature rise to well below 2°C. The industry has a role to play.
The semiconductor manufacturing process consumes large volumes of energy and water resources. Driving Moore’s Law in enabling shrink and, at the same time, improving computing power and storage capacity, fuels the demand for these resources. New architectures and a new way of looking at the entire ecosystem will be required to enhance energy and water resource efficiency. To meet these challenges, the semiconductor industry has to reduce power consumption. Read more in: Climate and energy.
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Acting on the global trends and developments in the semiconductor industry and in society is an important factor in the success of our business, as well as in creating value for our stakeholders. Using these external and internal factors, as well as current and future potential, we have evaluated our company's competitive position in the environment we operate in. The following table provides a brief overview of our strengths, weaknesses, opportunities and threats (SWOT). More information on how we manage the topic can be found in the reference sections.
• Technology leadership
(Read more in: Our products and services, Innovation ecosystem)
• Market leadership
(Read more in: Our products and services, Our markets, Customer intimacy)
• Collaborative & enduring innovation
(Read more in: Innovation ecosystem)
• World-class workforce with 'can-do' mentality
(Read more in: Our core values, Our people)
• Strong financial position
(Read more in: 2021 Highlights, Financial performance)
• Maturity of resources and processes to support rapid growth
(Read more in: Our people, How we manage risk)
• Limited cost leadership advantage
(Read more in: Operational excellence, CFO financial review, How we manage risk)
• Increasing complexity of our products and technology
(Read more in: How we manage risk)
• Riding the tech megatrends
(Read more in: Semiconductor industry trends and opportunities, Our strategy)
• Holistic lithography portfolio expansion
(Read more in: Our products and services, Our strategy)
• Emergence of new customers in semiconductor industry
(Read more in: Semiconductor industry dynamics)
• Raising brand awareness
(Read more in: Our people)
• Increasing sustainability drive
(Read more in: Our strategy, Circular economy, Climate and energy)
• Geopolitical tensions
(Read more in: Semiconductor industry dynamics, How we manage risk)
• Supply chain disruption
(Read more in: Our supply chain, How we manage risk)
• IP technology leadership pressure
(Read more: in How we manage risk)
• Intense competition in certain markets
(Read more in: How we manage risk)
• Competition for talent
(Read more in: Semiconductor industry dynamics, Our people, How we manage risk)
• Outbreaks and the consequences of climate change
(Read more in: How we manage risk, Climate and energy)
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The long-term growth of the semiconductor industry is based on the principle that the power, cost and time required for every computation on a digital electronic device are continuously reduced by a combination of shrinking – increasing the density of transistors on microchips – and system scaling – improving microchip design, materials and architecture.
For the next decade, we believe that Moore’s Law will continue to evolve from cost of power and time, through system scaling, to measuring energy and time efficiency combined. This means that the semiconductor roadmap will continue to drive scaling in four areas:
•Device-level scaling through new transistor structures and associated materials
•Circuit scaling through optimizing microchip circuit designs
•Dimensional scaling through shrink
•Architectural scaling through 3D-integrated circuits
Scaling fuels the need for advanced semiconductor solutions, where dimensional scaling (shrink) is key to improving circuit density and cost. To drive affordable scaling into the next decade, chip manufacturers’ roadmaps require continued shrink. Lithography is the key enabler for shrink, since it is the process used to pattern the structures on a microchip.
We invest in a technology-based innovation roadmap that enables the continued shrink of microchips by enhancing resolution with EUV, together with the holistic scaling of overlay and pattern fidelity control. Furthermore, we also invest in continued innovations in DUV and metrology and inspection technology, which supplement the power of EUV-led shrink. This is how we pursue our long-term strategic vision.
We innovate across our entire product portfolio at the same pace as our customers through large and sustained investment in research and development. To accelerate our product development, we engineer in parallel, not sequentially, all the while guarding the product’s quality, reliability, manufacturability and serviceability. This enables us to get our innovations into the hands of chipmakers faster. We collaborate with chipmakers to understand how our technology best fits their needs, including their challenges and visions of the future. It is through this collaboration and trust that we can build for today and develop for tomorrow.
Five pillars of our core strategy
To realize our long-term strategic vision within the semiconductor industry, we continue to drive our core strategy, which we define around five major pillars: strengthen customer trust, holistic lithography and applications, DUV competitiveness, EUV 0.33 NA for manufacturing and EUV 0.55 NA insertion.
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Our sustainability strategy
Through our sustainability strategy that comprises five strategic areas – Climate & energy, Circular economy, People, Innovation ecosystem and Responsible supply chain – we continue to advance our corporate responsibility to create long-term value for our stakeholders as well as contribute to the United Nations’ Sustainable Development Goals (SDGs).
We want to ensure sustainable impact while providing the best value for our stakeholders today and in the future. Staying focused on what matters for our business and stakeholders, is the cornerstone of our strategy. Through a materiality assessment, we identify and assess the topics that are most relevant to our stakeholders and sustain ASML's long-term business growth. Read more in: Non-financial statements - Materiality assessment.
For more than a decade, we have been committed to sustainability through multifaceted sustainability programs. We aim to address the issues that are most relevant to us and our stakeholders as part of our duty towards corporate responsibility.
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Our current sustainability strategy was launched in 2018 for the time period 2019–2025, focusing on five strategic sustainability areas. Over the past years, we have shown continuous improvement and consistent performance while gradually expanding our scope. However, the evolution of our company and the increasing demand for transparent reporting on environmental, social and governance (ESG) aspects of sustainability have made us re-assess our sustainability strategy in 2021.
To this end, we have updated our materiality assessment for the remaining period of 2022–2025, based on major sustainability topics and their relative importance to our business operations. The outcome of this assessment served as the basis for ASML to reshape and reformulate our long-term sustainability ambition and targets for 2025 and beyond to strengthen the correlation between our stakeholder expectations and our sustainability strategies.
Raising the bar on ESG sustainability
At ASML, we aim to make positive contributions to a digital and sustainable future with lithography products and services that enable further shrink. As a responsible organization, we want to do more to become a leader in sustainability, using our innovation strengths to get there.
We believe digital technologies are the cornerstone of a sustainable society. Enabled by microchips, they form the heart of tools and solutions that can help society make progress and address global challenges, such as tackling climate change by reducing energy consumption and greenhouse gas (GHG) emissions.
Our products continue to support the continuation of Moore's Law, which makes computation, communication and countless aspects of our lives more energy efficient. Pursuing our vision, we develop lithography technology to continue to produce microchips that are three times more energy efficient every two years. In addition, we are helping our customers to minimize the use of materials and energy required to produce advanced microchips.
We have defined a roadmap to get us to net zero waste disposal to landfill by 2030 and net zero value chain emissions by 2040. We aim to achieve this with a diverse, engaged and talented workforce and a strong network of innovation partners, all with a keen eye for the needs of a more sustainable society. To be successful, we need to embed this ESG ambition into our corporate culture, mindset and everyday operations.
Our ESG sustainability roadmap 2022–2025
Building on our current sustainability strategy and the progress we have made, we have re-assessed and are currently enriching our roadmaps toward 2025. We look at our impact at various levels, from society at large to our own operations. As a result of this extensive re-assessment, we have consolidated the material issues and our impact areas to nine sustainability themes categorized by the environmental, social and governance (ESG) aspects of our company, business and operations.
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|Environmental||Energy efficiency & climate action|
|Social||Attractive workplace for all|
Responsible supply chain
Valued partner for our communities
We develop lithography technology to continue to produce microchips that are more energy efficient with each new generation, replacing many energy-inefficient technologies, products and services. Reducing our environmental footprint and managing our waste – both from our operations and the use of our products and services – is key to our circular economy approach and sustainability practices.
We maintain our ambition to achieve carbon neutrality with net zero emissions in our operations (scope 1 and 2) by 2025. At the same time, we raise our ambition on scope 3 emissions. Through close collaboration with our tier-1 suppliers we aim to achieve net zero emissions in our supply chain by 2030. In addition, through industry collaboration on a joint roadmap, we strive toward net zero emissions for our products’ use at our customers (scope 3) by 2040.
As a multinational technology company, we impact many people’s lives, both directly and indirectly. Driven by our values and commitment to corporate responsibility, we want to have a positive role in society – for our employees, the communities around us, and everyone involved in our innovation ecosystem and supply chain.
We aim to provide the best possible employee experience, wanting the talent we need to choose to work for us and want to stay with us for the long run. We foster a culture where different identities, backgrounds, talents and passions are valued and celebrated, and we enable our leadership to bring out the best in people – leading through trust, empowerment and accountability. We also play an active role in the communities around us. We aim to be a valued and trusted partner, improving the quality of life for all, with a special focus on people in underserved communities.
We strengthen innovation and nurture young entrepreneurship in our industry and innovation ecosystem. We collaborate closely with our customers and partners in our value chain to help them achieve their goals and realize new technology and applications. We strive to meet industry social, ethical and environmental standards, and we require our suppliers to meet them as well.
With the growth of the company, organizational structures have become more complex. We champion good integrated corporate governance, of which independence, accountability and transparency are the most significant elements. These are also the elements on which a relationship of trust, respect and mutual benefit between us and our stakeholders – shareholders, customers, suppliers, employees and society – can be built. Continuous stakeholder engagement, in which we embrace open dialogue and knowledge-sharing through various channels and at a variety of levels, is important in our innovation-driven industry and helps us to identify areas of improvement.
To achieve our ambitions within the timeframe set, we focus on strengthening our organization’s governance structure to ensure that each project on our ESG sustainability roadmap is embedded in operational business plans and is best-equipped to meet its targets.
Reader’s guidance on ESG topics in this annual report
The 2021 Annual Report outlines ASML’s strategy, programs and performance during the 2021 calendar year. In terms of sustainability performance, we refer to the five strategic areas of sustainability – Climate & energy, Circular economy, People, Innovation ecosystem and Responsible supply chain – consistent with our disclosure since 2019.
While we have launched our updated ESG focus areas on ASML’s Investor Day on September 29, 2021, the process of defining the metrics to measure our performance and success was underway and implementation will start in 2022. We will report on our updated ESG ambitions using this set of metrics per our 2022 Annual Report.
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How we create value
The success of our business depends on strong, sustainable relationships with all stakeholders in the value chain to achieve the desired innovations in semiconductor technology. We use input from stakeholders and trends in our industry and society to develop our strategy, our products and services. We define our stakeholders as our shareholders, customers, suppliers, employees and the society we operate in.
We are committed to creating long-term value for our stakeholders and generating broader impact towards the UN's Sustainable Development Goals (SDGs). We base our value creation model on the framework developed by the International Integrated Reporting Council (IIRC), in which we modeled the capital resources we use for our business activities in the executing of our strategy, to the financial, environmental, social and governance topics. Each capital resource is interrelated, and business activities often require a mix of capital. For each topic we developed performance indicators that measure progress on the outcomes against the capital resources used. We aim to use our capital resources in the most effective way by maximizing their potential value and minimizing their negative impact as part of our continuous drive to improve and to generate long-term value for all of our stakeholders.
Our purpose and strategy is aimed at creating both short- and long-term value through our financial, environmental, social and governance focus areas and topics. The short-term value – time horizon of one year – is expressed in the 2021 outcome performance indicators. More information on our progress can be found in subsequent sections of this annual report. The long-term value – time horizon of five to ten years – is described below, which is categorized in the value created per stakeholder. Lastly we have linked our long-term impact along the entire value chain to the SDGs set by the United Nations. We focus on five SDGs where we can make the greatest impact: SDG 4 Quality education, SDG 8 Decent work and economic growth, SDG 9 Innovation and infrastructure, SDG 12 Responsible production and consumption, and SDG 13 Climate action.
Long-term stakeholder value
Our core values – challenge, collaborate and care – are a key contributor to our culture aimed at long-term value creation and as such an important enabler in the execution of our strategy. We define our long-term value for all our stakeholders as follows:
Our large and sustained investments in research and development to execute our business strategy enable us to maintain our position as a leader in holistic lithography. Our innovations contribute to the long-term growth of the semiconductor industry, which contributes to our solid financial performance and capital return policy.
As one of the world’s leading manufacturers of chip-making equipment, we invest in innovations that enable the continued shrink of microchips. With EUV 0.33 NA and the next-generation EUV 0.55 NA platform, we pursue the continuation of Moore’s Law. This allows our customers to develop ever-more powerful chips for new applications and devices. At the same time, we help our customers to reduce their costs and environmental footprint by embedding circularity principles in our products.
As we grow and our innovations enter ever-higher levels of complexity, we want our suppliers to grow with us. We innovate together with our supplier network, sharing knowledge and tapping into each other’s technology expertise. Long-term relations, close cooperation and transparency with our suppliers are key to our success.
Our workforce has grown steeply in recent years, almost doubling from around 16,500 FTE in 2016 to over 32,000 FTE in 2021. For example, with 16,727 employees at our headquarters in Veldhoven, the Netherlands, we are a major employer in the community. We are a proud employer of 122 nationalities, allowing for diverse points of view in our quest to develop the best ideas. Developing our people is crucial to the sustained success of our business, so we invest in their career development and well-being.
With our continuous innovations, we enable new technology that supports the growth and transformation of the semiconductor industry, using artificial intelligence to offer new applications and services to address society’s needs. Through our innovation ecosystem we nurture innovation by giving back to society, such as by sharing our expertise with universities and research institutes, supporting young tech companies, and promoting STEM education worldwide. We also develop groundbreaking technology to reinforce our innovation footprint and minimize our environmental footprint. We do this by seeking to minimize waste and maximize the value of material we use, and execute our carbon footprint strategy and product energy efficiency strategy.
We believe the chip industry is in a unique position to tackle socioeconomic and environmental challenges. We focus on the challenges and sustainability areas that are most relevant to our stakeholders and where we believe ASML can have the greatest
ASML ANNUAL REPORT 2021 40
impact in the long term. Read more in: Non-financial statements - Materiality assessment and Semiconductor industry trends and opportunities - SWOT analysis). We focus on those United Nations Sustainable Development Goals on which ASML can make a real difference.
ASML ANNUAL REPORT 2021 41
Message from the CFO
Roger Dassen (Executive Vice President and Chief Financial Officer)
Strong growth in semiconductor end markets, driven by the acceleration of the digital infrastructure, and increasing lithography intensity on future advanced nodes fuel demand for our products and services. These dynamics drive the growth of our company, in terms of sales, our workforce and the investments we make to increase our capability in support of our customers’ wafer demand. With our continued investments in technology leadership we have created significant value for all our stakeholders and we have the right tools in place to achieve continued sustainable growth for the years ahead.
Record net sales in 2021
This was another growth year for ASML, setting a record with €18.6 billion in net sales, an increase of €4.6 billion. The COVID-19 crisis has accelerated digitalization worldwide, which has led to a strong increase in demand from our customers across all market segments from both advanced and mature nodes.
Logic system sales grew by €2.2 billion, or 30%. This was due to customers continuing to see strong demand for both advanced and mature nodes in support of the ongoing digital transformation, which includes secular growth drivers, such as 5G, AI, virtual reality, gaming, simulation and visualization applications, and the intelligent cloud and edge that will be an integral part of the growing digital infrastructure. Memory system sales grew by €1.1 billion, or 39%, as a result of strong end-market demand for servers and smartphones.
In EUV we see an increased layer adoption by customers in Logic and DRAM. Adoption is expected to continue to grow to reduce patterning complexity and cost and support our customers' surging demand. This led to EUV system revenue of €6.3 billion in 2021, an increase of €1.8 billion compared to 2020. We successfully shipped and recognized 42 EUV systems in 2021, including our first NXE:3600D for use in high-volume manufacturing. In total we shipped 26 NXE:3600Ds in 2021. Compared to the NXE:3400C the NXE:3600D has around 30% better performance in product overlay and offers 15% to 20% increased throughput productivity.
Net service and field option sales grew by €1.3 billion, or 35%, driven by an increase in the sales of productivity, overlay and focus upgrade packages, in combination with a growing installed base. With the global chip shortage, our customers have pulled forward demand for our productivity enhancement packages, which provide the most effective and efficient way to increase wafer output as they can be installed quickly.
Challenges in our supply chain
To meet the strong demand across our entire product portfolio, we have been driving down our manufacturing cycle times and we are working with our supply chain to increase our output capability for EUV as well as DUV. In the process of increasing capacity to meet the increased demand, the after-effects of the COVID-19 crisis were felt in the form of some materials shortages in our supply chain. We worked closely with our suppliers and customers to address the materials shortages to support the increased worldwide demand across all our business lines, but these shortages did result in the late start on the assembly of a number of systems. In addition, we experienced issues in the start-up of our new logistics center. As a consequence of these factors and the high-demand environment, our customers are more frequently requesting fast shipments, where we expedite the delivery of systems by shipping before completion of the normal Factory Acceptance Tests (FAT), in order to bring systems into production as quickly as possible. This resulted in revenue recognition being delayed from shipment until after formal customer acceptance tests are completed in the field.
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As a result of the start-up issues at our new logistics center in Veldhoven and the materials shortages in our supply chain, we experienced delays in shipments. In order to address our customers' needs for additional wafer capacity, we expedited delivery of productivity upgrades. Overall, our capabilities to support the strong customer demand has contributed to total net sales growing by 33% in 2021.
The ongoing digital transformation and current chip shortage further fuel the need to increase our capacity to meet the current and expected future demand. We expect continued growth in our Logic business assuming that customer demand remains strong for both advanced and mature nodes. For Memory this year's growth is expected to continue into 2022 as lithography tool utilization remains very high, while customers indicate they see strong demand growth for DRAM and NAND. To meet demand for this expected bit growth, customers will need to add capacity as well as continue to make node migrations. As customers migrate to more advanced nodes we also expect to see an increase in EUV demand for Memory. Our services and upgrades business will continue to scale as our installed base grows, and we expect significant demand for upgrades, with increasing contribution from EUV service revenue as this technology ramps in volume production.
Strong gross profit, net income and cash provided by operating activities
Gross profit as a percentage of net sales increased from 48.6% in 2020 to 52.7% in 2021, mainly attributable to the NXE 3600D and DUV immersion systems value proposition and continued growth in our installed base business. We continue to drive profitability of our EUV systems, and as a result, we achieved 50% system gross margin in 2021. Looking ahead, we will continue to seek improvements in the margins in both systems and service via cost reduction and delivering more value, leading to higher selling prices.
Our effective tax rate increased to 15.2% mainly due to an increase in the innovation box tax rate in the Netherlands as of 2021. We expect our effective tax rate to be approximately 16% in the coming years.
Our strong net income and continued working capital improvement initiatives resulted in Net cash provided by operating activities increasing by €6.2 billion in 2021. The significant growth allowed us to return record amounts to our shareholders through dividends and our share buyback programs. In 2021 we repurchased shares for a total consideration of €8.6 billion and paid dividends totaling €1.4 billion. We expect continued strong cash returns to shareholders for next year.
Overall, it was another record year for ASML, driven by the ongoing digital transformation and current chip shortage. The secular growth trends, as part of the digital transformation to a more connected world, and countries pushing for technological sovereignty are fueling future demand across all market segments at both the advanced and mature nodes.
Chief Financial Officer
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ASML operations update on key performance indicators
The following table presents the KPIs used by our Board of Management and senior management to measure performance.
|Year ended December 31 (€, in millions, unless otherwise indicated)||2020|
|Total net sales||13,978.5 ||18,611.0 |
|Year-over-year increase in total net sales (%)||18.3 ||33.1 |
|Net system sales||10,316.6 ||13,652.8 |
|Net service and field option sales||3,661.9 ||4,958.2 |
Sales of lithography systems (in units) 2
|Immersion systems recognized (in units) ||68 ||81 |
|EUV systems recognized (in units)||31 ||42 |
|Gross profit||6,797.2 ||48.6 ||9,809.0 ||52.7 |
|Income from operations||4,051.5 ||29.0 ||6,750.1 ||36.3 |
|Net income||3,553.7 ||25.4 ||5,883.2 ||31.6 |
|Cash and cash equivalents||6,049.4 ||6,951.8 |
|Short-term investments||1,302.2 ||638.5 |
|Net cash provided by operating activities||4,627.6 ||10,845.8 |
Free cash flow 3
|3,626.8 ||9,905.5 |
1.As a percentage of total net sales.
2.Lithography systems do not include metrology and inspection systems.
3.Free cash flow is a non-GAAP measure and is defined as net cash provided by operating activities (2021: €10,845.8 million and 2020: €4,627.6 million) minus purchase of property, plant and equipment (2021: €900.7 million and 2020: €962.0 million) and purchase of intangible assets (2021: €39.6 million and 2020: €38.8 million). We believe that free cash flow is an important liquidity metric for our investors, reflecting cash that is available for acquisitions, to repay debt and to return money to our shareholders by means of dividends and share buybacks. Purchase of property, plant and equipment and purchase of intangible assets are deducted from net cash provided by operating activities in calculating Free cash flow because these payments are necessary to support the maintenance and investments in our assets to maintain the current asset base.
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Operating results of 2021 compared to 2020
|Year ended December 31 (€, in millions)||2020|
|Net system sales||10,316.6 ||73.8 ||13,652.8 ||73.4 ||32.3 |
|Net service and field option sales||3,661.9 ||26.2 ||4,958.2 ||26.6 ||35.4 |
|Total net sales||13,978.5 ||100.0 ||18,611.0 ||100.0 ||33.1 |
|Cost of system sales||(5,169.3)||(37.0)||(6,482.9)||(34.8)||25.4 |
|Cost of service and field option sales||(2,012.0)||(14.4)||(2,319.1)||(12.5)||15.3 |
|Total cost of sales||(7,181.3)||(51.4)||(8,802.0)||(47.3)||22.6 |
|Gross profit||6,797.2 ||48.6 ||9,809.0 ||52.7 ||44.3 |
|Research and development costs||(2,200.8)||(15.7)||(2,547.0)||(13.7)||15.7 |
|Selling, general and administrative costs||(544.9)||(3.9)||(725.6)||(3.9)||33.2 |
|Other income||— ||— ||213.7 ||1.1 ||N/A|
|Income from operations||4,051.5 ||29.0 ||6,750.1 ||36.3 ||66.6 |
|Interest and other, net||(34.9)||(0.2)||(44.6)||(0.2)||27.8 |
|Income before income taxes||4,016.6 ||28.7 ||6,705.5 ||36.0 ||66.9 |
|Income tax expense||(551.5)||(3.9)||(1,021.4)||(5.5)||85.2 |
|Income after income taxes||3,465.1 ||24.8 ||5,684.1 ||30.5 ||64.0 |
|Profit from equity method investments||88.6 ||0.6 ||199.1 ||1.1 ||124.7 |
|Net income||3,553.7 ||25.4 ||5,883.2 ||31.6 ||65.6 |
1.As a percentage of total net sales.
For a comparison of ASML’s operating results for the year ended December 31, 2020 with the year ended December 31, 2019, please see CFO financial review - Financial performance - Operating results of 2020 to 2019 of ASML’s annual report on Form 20-F for the year ended December 31, 2020.
Total net sales and gross profit
We achieved another record year in 2021, with Total net sales increasing by €4,632.5 million, 33.1%, reflecting an increase in Net system sales of 32.3%, and an increase in Net service and field options sales of 35.4% compared to 2020.
We saw growth in both Logic and Memory markets, which is a reflection of our customers' drive to innovate and continue to invest in future technology nodes to facilitate the acceleration of the digital infrastructure and the push for ‘technological sovereignty’, and increase manufacturing capacity to address the global chip shortage. Logic demand for both advanced and mature nodes continues to be strong, driven by the digital transformation and distributed computing. Memory demand continues to grow, fueled by end-market demand for servers and smartphones.
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The increase in Net sales was driven by a strong increase in demand from our customers across all technologies. Our DUV and EUV sales volumes increased to keep up with customer demand driven by the ongoing digital transformation and current chip shortage. We recognized revenue for 42 EUV systems in 2021 compared to 31 EUV systems in 2020. Our system sales across our DUV technologies increased from 227 units in 2020 to 267 units in 2021.
In addition to the growth in EUV and DUV, Service and field options sales were also a key driver for our overall growth in net sales. The increase is driven by an increase in the sales of productivity, overlay and focus upgrade packages, which provide the most effective and efficient way to increase wafer output quickly, supported by a growing installed base. EUV continues to contribute in a more meaningful way to net service and field option sales as our installed base continues to grow and our customers continue to run more EUV systems in their high-volume production.
Gross profit increased as a result of both an increase in sales and profitability. Gross profit as a percentage of net sales increased from 48.6% in 2020 to 52.7% in 2021, mainly attributable to improvement in our EUV profitability as we deliver more value to our customers, DUV product mix and improved profitability in our installed base business through a ramp in production and an increase in the number of productivity upgrades.
Research and development costs
R&D costs were €2,547.0 million in 2021 as compared to €2,200.8 million in 2020. The increase is across each of our EUV, DUV and Applications programs supporting our holistic lithography solutions, with the most significant investments going toward our roadmap to continue enhancing EUV high-volume manufacturing, as well as our development of EUV 0.55 NA (High-NA). In 2021, R&D activities mainly related to:
•EUV – Continued investments in EUV high-volume manufacturing, finalizing the development of the NXE:3600D, investments in the development of the NXE:3800E, and further improving availability and productivity of our installed base systems. In addition, our roadmap includes High-NA, our next-generation EUV 0.55 NA systems, to support our customers with future nodes for both Logic and DRAM.
•DUV – Ramp-up of our latest-generation immersion system NXT:2050i and introduction of the dry system XT:860N. Continued developments for the next generation of scanners shipping in 2022, NXT:2100i for the most critical DUV layers, and NXT:870 for break-through productivity in the KrF dry market. Productivity improvements continue to be developed to boost wafer-per-day at customers' installed base.
•Applications – Continued investment in Single Beam Inspection, E-Beam Metrology and Optical Metrology (Yieldstar ADI and IDM solutions). In addition, securing our Multibeam Inspection roadmap and continuously expanding our investment in the holistic software applications space.
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Selling, general and administrative costs
SG&A costs increased by 33.2% from 2020 to 2021 due to an increase in the number of employees, as well as investments in digitalization and cybersecurity to support our growth. Our selling, general and administrative costs as a percentage of net sales in 2021 remained at 3.9% (in 2020 3.9%).
The effective tax rate increased to 15.2% in 2021, compared to 13.7% in 2020. The higher rate is mainly due to an increase in the innovation box rate in the Netherlands changing from 7% to 9% as of 2021.
Net income in 2021 amounted to €5,883.2 million, or 31.6% of total net sales, representing €14.36 basic net income per ordinary share, compared to net income in 2020 of €3,553.7 million, or 25.4% of total net sales, representing €8.49 basic net income per ordinary share.
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Cash flow analysis
This year we achieved a record setting cash flow performance. Our Net cash provided by operating activities increased to €10.8 billion (2020: €4.6 billion) driven by the strong worldwide demand from our customers and our working capital initiatives. We also continued our efforts to return cash to our shareholders. We were able to return a record amount of cash to our shareholders through our share buyback program and growing dividends. In 2021 we purchased €8.6 billion (2020: €1.2 billion) of shares and paid out a total dividend of €1.4 billion (2020: €1.1 billion).
We continue to heavily invest in our next-generation technologies in order to secure future growth opportunities which requires significant cash investment in net working capital, capital expenditures and R&D. However, our capital allocation policy remains unchanged.
|Year ended December 31 (€, in millions)||2020||2021|
|Cash and cash equivalents, beginning of period||3,532.3 ||6,049.4 |
|Net cash provided by (used in) operating activities||4,627.6 ||10,845.8 |
|Net cash provided by (used in) investing activities||(1,352.2)||(72.0)|
|Net cash provided by (used in) financing activities||(753.0)||(9,891.7)|
|Effect of changes in exchange rates on cash||(5.3)||20.3 |
|Net increase (decrease) in cash and cash equivalents||2,517.1 ||902.4 |
|Cash and cash equivalents, end of period||6,049.4 ||6,951.8 |
|Short-term investments, end of period||1,302.2 ||638.5 |
|Cash and cash equivalents and short-term investments||7,351.6 ||7,590.3 |
|Purchases of property, plant and equipment and intangible assets||(1,000.8)||(940.3)|
Free cash flow 1
|3,626.8 ||9,905.5 |
1.Free cash flow is a non-GAAP measure and is defined as net cash provided by operating activities (2021: €10,845.8 million and 2020: €4,627.6 million) minus purchase of property, plant and equipment (2021: €900.7 million and 2020: €962.0 million) and purchase of intangible assets (2021: €39.6 million and 2020: €38.8 million).
Net cash provided by (used in) operating activities
The significant increase in Net cash provided by operating activities of €6.2 billion compared to 2020, is mainly due to an increase in Net income of €2.3 billion and increase in down payments from our customers in connection with our continued working capital improvement initiatives.
Net cash provided by (used in) investing activities
The decrease in Net cash used in investing activities of €1.3 billion compared to 2020, is mainly due to the maturity of most of our short-term investments offset with limited purchases of new short-term investments as significant cash was used for our share buyback program. In 2021 we sold the non-core business acquired as part of the Berliner Glas acquisition for €0.3 billion, while Berliner Glas was acquired for total consideration of €0.3 billion in 2020.
Net cash provided by (used in) financing activities
The significant increase in Net cash used in financing activities of €9.1 billion compared to 2020, is mainly due to an increase of €7.4 billion in the shares purchased through our share buyback program resulting in a total of €8.6 billion purchased shares. Additionally, we were able to increase our dividend by €0.3 billion to a total of €1.4 billion. In 2020, we had net proceeds from issuances of notes of €1.5 billion, with no issuance in 2021.
As of December 31, 2021, management has determined that ASML has sufficient working capital for the company’s present requirements.
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Long-term growth opportunities
We expect 2022 to be another growth year with an expected net sales increase of around 20% compared to 2021 driven by healthy Logic demand and growth in the Memory market. The expected growth is driven by increasing sales on all platforms, as well as growth in our installed base business. The positive industry momentum around innovation and expanding new markets further strengthen our confidence in the 2022 outlook and our 2025 growth scenarios.
In Logic, we see the digital transformation that is underway as we move to a more connected world. The broadening application space and secular growth drivers translate to very strong demand for both advanced and mature nodes. With this continued strong demand, we expect Logic system revenue to be up more than 20% year-on-year.
In Memory, we also expect continued growth of our business this year. Customers have indicated systems are operating at higher utilization levels. As customers are making the technology transition to support projected growth, additional capacity additions are expected to be required. Subsequently, this is expected to trigger equipment demand. As a result, it seems likely that we will see strong lithography equipment demand from the Memory market in 2022 with a system revenue to be up around 25% year-on-year.
Customers adopted EUV, and with increasing customer confidence in EUV, this is translating into more layers in their next nodes, for Logic production as well as the adoption in Memory. We expect to ship around 55 systems of which we expect revenue from 6 systems to be deferred to 2023 due to fast shipments. Despite this shift, we expect 25 percent growth in our EUV system revenue in 2022.
In our DUV and Applications business, we expect growth in both immersion and dry systems, as well as continued demand for metrology and inspection systems. We expect revenue growth of over 20% for non-EUV shipment revenue.
We expect further growth in our Installed Base Management business to around 10% year-on-year as the demand for services will continue to expand as our installed base grows. Additionally, we anticipate an increased contribution to service sales from EUV as more and more systems start running wafers in volume manufacturing, as well as expect significant demand for upgrades, particularly in EUV, as customers utilize upgrades as a quick way to increase capacity.
Our expectations and guidance for the first quarter of 2022 can be summarized as follows:
•Total net sales between €3.3 billion and €3.5 billion
•Gross margin of around 49%
•R&D costs of around €760 million
•SG&A costs of around €210 million
•Annualized effective tax rate between 15% and 16%
The trends discussed above are subject to risks and uncertainties. Read more in: Special note regarding forward-looking statements.
Outlook 2025 and 2030
This decade is all about distributed computing, bringing the cloud closer to devices at the edge, and through connectivity the computing power will be available to all of us ‘on device’ enabling a connected world. These global megatrends in the electronics industry, supported by a highly profitable and fiercely innovative ecosystem, are expected to continue to fuel growth across the semiconductor market. This translates to increased wafer demand at both advanced and mature nodes.
The push of countries around the globe for technological sovereignty is expected to drive increased capital intensity. This means that the industry is expected to make significant investments in wafer capacity, with increasing lithography spending. The semiconductor end markets, such as automotive, data centers, industrial and consumer electronics, are expected to grow more than 7% year on year until at least 2025, fueling the strong growth of our business based on an increased mix of EUV while the demand for DUV is expected to remain strong across all wavelengths. To achieve this, we and our supply chain partners are actively adding and improving capacity to meet future customer demand.
On September 29, 2021 we presented at our Investor Day, our upward revised long-term growth opportunity for 2025 in which we re-modeled our previous sales scenarios in a low and high market due to the rapid evolution of digitalization we have seen in the past two years. Customers’ strong capital expenditure growth is expected to continue, translating to an expected lithography capex CAGR of 13.8% (2017-2025). This compares to previous expected CAGR estimate of 7.5% over the same period, as shown at our Investor Day 2018.
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Based on the different market scenarios, we believe we have an opportunity to reach annual sales in 2025 between approximately €24 billion and €30 billion, with a gross margin between approximately 54% and 56%.
Moving beyond 2025, we also announced that we see that the growth opportunities will continue and that we expect our Systems and Installed Base Management to provide an annual sales growth rate of around 11% for the period 2020-2030, based on third-party research and our assumptions.
Our sales potential is primarily based on assumed organic growth. We continuously review our product roadmap and have, from time to time, made focused acquisitions or equity investments to enhance the industrial synergy of our product offering. Based on such reviews and the assessment of clear potential product and value synergies, we may also evaluate and pursue focused merger and acquisition activities in the future. Within this growth ambition, we expect to continue to return significant amounts of cash to our shareholders through a combination of growing annualized dividends and share buybacks.
Lastly, we seek to continuously improve our performance on ESG Sustainability KPIs and upgrade the KPIs in 2022 based on our ESG Sustainability strategy roadmap update to accelerate progress in close collaboration with our partners. Read more in: Our position in the semiconductor value chain - Our strategy.
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Climate change is a global challenge that requires urgent action by everyone, including us. The challenge to limit the temperature rise to well below 2°C is a global responsibility. At ASML, we’re committed to reducing our carbon footprint. In terms of carbon footprint, we identify three impact areas: the direct emissions from fossil fuels (scope 1) used on our premises, the indirect emissions from the electricity consumption (scope 2) on our premises, and the indirect emissions in our value chain (scope 3) from upstream supply chain and downstream use of our products by customers.
In our carbon footprint strategy, we have determined our ambition and set targets in all three areas. We are taking direct responsibility over the CO2 emissions from our own operations (scope 1 and 2), for which we aim to achieve net zero CO2 emissions by 2025. We also recognize that our footprint extends beyond this to our value chain (scope 3). Our main influence on scope 3 emissions is the carbon footprint of our products which we aim to reduce by enhancing their energy efficiency while increasing their productivity.
We identify and assess the impact of climate-related risks and opportunities using the assessment guidelines of the Task Force on Climate-related Financial Disclosures (TCFD). Read more in: Our TCFD Recommendations: climate-related disclosure, available on www.asml.com.
Carbon footprint strategy
Over the past years, we have made significant steps in our performance and achievements with regard to reducing our scope 1 and 2 carbon footprint and energy consumption, as well as maturing our scope 3 calculation. Although we see many positive results and are making progress, we also realize that we are not there yet.
Our scope 1 and 2 carbon footprint strategy is built on three principles: reducing energy consumption wherever we can, using only green renewable energy, unless no other solution is possible or reasonably feasible, and compensating for the residual emissions.
Our target is to achieve scope 1 carbon neutrality by 2025, we aim to do this by direct energy saving of 100 TJ (or 2.5 kt) by executing the more than 25 projects we have defined in our master plan, adding renewable production of energy on our sites, optimizing the use of our m2 and relocating our employees to more energy-efficient offices (BREEAM certified) and implementing an off-setting strategy for the remaining emissions. The main components of the energy-saving master plan are improving the energy efficiency of technical installations, improving energy management of our operations, and increasing the production of our own renewable energy. The table below, includes the top three key projects.
|Key projects||Total estimated energy saving - annual (in TJ)||Estimated scope 1 reduction: neutral gas (in TJ)||Estimated scope 2 reduction: electricity (in TJ)|
|Implement adiabatic humidification and elimination of steam generation||12||-12||0|
|Air change reduction (feasibility study)||20||0||-20|
With regard to scope 2, our ambition is to increase the share of direct green energy purchases (so-called bundled renewable electricity) from renewable electricity produced close to our premises in the Netherlands, and to reduce the share of certificates. For the US and Asia, our ambition is to purchase renewable energy attribute certificates (respectively RECs and IRECs) and monitor
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the evolution of renewable energy in those countries. Our scope 1 and 2 emissions reduction targets are consistent with reductions required to keep warming to 1.5°C and are approved by the Science Based Targets initiative (SBTi) – under category 'near-term'.
We recognize that environmental impact goes beyond our operations. In general, most of the environmental impact of energy consumption in our value chain (scope 3) comes from the greenhouse gas emissions of our suppliers (upstream) and the use of our products at our customers (downstream). Results show that the indirect emissions (scope 3) from upstream and downstream value chains account for around 98% of the total emissions footprint (scope 1, 2 and 3). Of this, indirect emissions in the value chain, the category ‘downstream' – use of sold products at our customers’ sites – accounts for nearly 65%, and the category ‘upstream' – emissions related to the goods and services we buy – accounts for 30%. The remaining 5% of our scope 3 emissions relates to, among other things, activities linked to transportation, business travel, and commuting.
Our scope 3 target for 2025 is to reduce the intensity level compared to our 2019 baseline of 0.55. The intensity is measured by the total scope 3 emissions (in kilotonnes) normalized to the total revenues (in € million). Taking into account the change in product mix (an increase in the number of EUV systems sold) and the fact that our output in terms of product units manufactured is expected to increase, the overall emissions in the entire value chain are expected to rise. Our supplier sustainability program is a key enabler to reduce the upstream footprint. Read more in: Our performance in 2021 - Social - Our supply chain. And by executing our product energy efficiency strategy, we can reduce our downstream footprint. Read more in: Product energy efficiency strategy.
What we achieved in 2021
In 2021, we expanded our environmental reporting scope to 57 locations – covering more than 95% of our worldwide CO2 emissions – up from the 20 locations in the previous reporting scope, which covered around 90% of our emissions. The extended scope gets us ready for reporting against science-based targets principles in the near future. The combination of our growth and increase in reporting scope has resulted in an increase of our gross scope 1 and 2 emissions by around 19% compared to 2020. In terms of using renewable electricity, we also need to take the expanded environmental reporting scope into account, therefore the share of renewable electricity decreased to 92% compared to the 100% in 2020. Our ambition remains unchanged – for emissions resulting from our operations (scope 1 and 2), we aim to achieve carbon net neutrality (scope 1 and 2) by 2025.
Scope 1 emissions
Compared to our peers in the semiconductor industry, our energy consumption and related carbon footprint is relatively low. As a manufacturer of lithography equipment, our main direct CO2 emissions come from fossil fuels – mainly natural gas. The vast majority of the natural gas consumption is used for heating of our buildings and humidification of the cleanroom to keep them at set temperature and humidity levels. For more information, see the scope 1 breakdown chart.
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Over the 2010–2021 timeframe, we executed nearly 100 energy-saving projects that have resulted in a cumulative reduction of over 260 TJ. Over the same period, our natural gas consumption remained stable, despite significant growth in the number of cleanrooms and offices (over 10,000 m2 added since 2010).
In 2021 we started with a multi-year project to implement an energy grid to re-use waste heat for offices on our site in Veldhoven, the Netherlands. The energy grid is a two-pipe loop that makes waste heat available for heating in winter and energy-efficient cooling in summer. This project, together with the implementation of adiabatic humidification in two of our cleanrooms, is expected to lead to a reduction of around 1.7 million m3 of natural gas which equals 52 TJ.
Energy savings are mainly achieved by using more energy-efficient technical installations and improving our overall production processes. Our efforts focused on recovery of exhaust heat and reduction of the energy consumption of our cleanrooms, where maintaining the right conditions is energy intensive.
In 2021, we saved 13 TJ per year of energy thanks to projects executed in the Netherlands and in Taiwan. In the Netherlands, the largest project was completed and led to nearly 8 TJ savings in 2021 and will lead to around 11 TJ per year onwards. In Hsinchu, Taiwan, we managed to save 3 TJ energy in 2021 by optimizing the use of air-conditioning systems through time-outs.
Continuing our drive to reduce energy consumption even further, we want to achieve direct energy savings of 100 TJ by 2025 by executing around 25 projects in five different sites worldwide, as defined in our energy savings master plan.
As we grow as a company, we strive to optimize our real estate portfolio. Optimizing the use of every square meter in our portfolio contributes to reducing our environmental footprint – each square meter saved is a square meter we don’t need to heat, cool, ventilate or light up.
When building new offices and manufacturing sites, we take the opportunity to make our buildings as environmentally sound as possible. With an eye on future growth, for example, our new campus in Veldhoven, the Netherlands, is designed with a strong sustainability focus. Its design and use of materials will be assessed on sustainability performance using BREEAM guidelines with score of ‘excellent’. For 2025, we strive to implement the most suitable green building certifications in new constructions – such as BREEAM, LEED and G-SEED – in the countries where we operate.
Scope 2 emissions
Electricity accounts for nearly 80% of the energy we use at ASML. Most of our electricity consumption relates to the manufacturing of chipmaking equipment – from assembly to testing lithography and other systems – and maintaining consistent climate conditions, such as constant temperature, humidity and air quality.
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In 2021, we secured a 10-year purchase agreement for green electricity for our installations in the Netherlands which will enable us to achieve our goal of using 100% renewable electricity in the Netherlands. For our electricity consumption in the US, we also achieved 100% renewable energy. The renewable market situation in Asia is slightly different and more challenging – we are investigating various options to meet our ambitions there as well.
In 2021, we operationalized the 3,700m2 solar panels installed on our campus in Veldhoven, the Netherlands, which are expected to provide the equivalent of around 2.3 TJ per year. We plan to expand the share of solar panels on our sites in the coming years in Europe, the US and Asia.
ASML signs 10-year green power purchase agreement with RWE
In 2020. ASML and RWE, one of the world’s leading renewable energy companies and a major player in global energy trading, signed a power purchase agreement (PPA). Under the terms of the 10-year agreement, ASML will be provided with 263 GWh of green electricity per year from RWE. This agreement brings ASML closer to its objective of carbon neutral electricity by 2025.
The power will be delivered from a portfolio of various renewable energy sources across different technologies: three new RWE onshore wind farms in the Netherlands, a Belgian offshore wind farm and a Dutch solar plant. The two Dutch RWE wind farms Oostpolderdijk and Westereems are located near Eemshaven. The offshore wind farm Noordwester 2 is located off the coast of Zeebrugge in Belgium. The third wind farm and the solar plant are both situated near Borssele in the Netherlands.
Scope 3 emissions
We calculate our scope 3 emissions using guidance from the Greenhouse Gas Protocol – the organization that provides widely used international standards for emissions reporting. We are continuously seeking to improve the data quality of our scope 3 calculations. In 2021 we made another step by requesting CO2 emission data directly from our suppliers through our Suppliers Sustainability program. Recognizing that we depend on our suppliers, we also encourage our value chain partners to work with us to jointly reduce our carbon footprint. Read more in: Our performance in 2021 - Social - Our supply chain.
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Our environmental management system
We have an environmental management system (EMS) in place that helps us monitor our energy and emissions, improve performance, and enhance efficiency. Our EMS is integrated into our combined environmental, health and safety (EHS) management system. All our facilities operate on the basis of this EHS management system – the former HMI locations in Tainan (Taiwan) and San Jose (US) have been successfully integrated. Our EHS management system is ISO:14001 certified and structured in accordance with ISO:45001 requirements. This certification gives our stakeholders confidence in our commitment to achieving our environmental goals.
We measure progress in our emissions reductions by monitoring our scope 1, 2 and 3 emissions, representing three key performance indicators. Our participation in the annual assessment by the Carbon Disclosure Project (CDP), a non-profit global disclosure program, also helps steer our environmental initiatives. Our score in the most recent CDP Climate Change 2021 assessment is C, which is the same level as the sector average.
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Product energy efficiency strategy
With a growing demand for enhanced chip functionality, the complexity and energy consumption of the overall microchip patterning process, including from our lithography systems, is also increasing. A major benefit of the wider adoption of our EUV lithography systems is the ability to simplify patterning schemes to create the most critical layers of a microchip, which reduces the need for applying difficult multiple patterning schemes – this translates into less overall fab energy and materials use to fully process a wafer when compared to a multi-patterning process. However, the laser light plasma technology of EUV requires high electrical power input, therefore our product energy efficiency strategy is focused on EUV. Our challenge is to increase the energy efficiency of our products.
We have set ourselves the target to reduce the overall energy consumption of our future-generation EUV systems by 10% compared to the 2018 baseline model – NXE:3400B – by 2025, in spite of a increasing productivity. Our second target is at the same time to reduce the energy use per exposed wafer pass by 60%, as compared to the NXE:3400B (baseline 2018). To achieve this, we have developed and are executing an EUV energy efficiency roadmap.
Reducing overall energy use
The EUV light source is the key focus area of our current engineering efforts to reduce energy consumption because it requires the larger portion of an EUV system’s total energy consumption. The roadmap includes optimizing the sequence of the CO2 laser to produce the plasma for creating EUV light, for example by turning the CO2 fire off when the system is in idle mode and reducing the CO2 firing between exposures. Our longer-term goal is eventually to cut the CO2 fire between exposures altogether. This requires a feasibility study from our research team and our suppliers, to make sure that the laser beam path remains stable.
Another area for energy reduction is the cooling water strategy. We identified ways, together with our suppliers, to use cooling water of a higher temperature to remove the heat in the EUV source and electronics cabinets. This will reduce the amount of energy needed to cool the system, through recirculated process cooling water. To make this happen, we need to make sure that modules such as the drive laser can operate at a higher temperature, which we are currently developing together with our suppliers.
Creating EUV light
The larger portion of an EUV system’s energy consumption is used to operate the laser-produced plasma source to create EUV light. Molten tin droplets of around 25 microns in diameter are ejected from a generator. As they move, the droplets are hit first by a lower-intensity laser pulse. Then a more powerful laser pulse vaporizes and ionizes the flattened droplet to create a plasma that emits EUV light. This conversion process from laser to EUV light using tin droplets takes place 50,000 times per second, and is the most energy-intensive step. By increasing conversion efficiency, we can decrease an EUV system’s energy consumption at constant wafer output. Making this happen, while making sure that this will not negatively affect other functionalities of the EUV system, is a key challenge for our R&D teams.
Other challenges include developing materials and coatings that can deal with higher EUV intensities, and improving the heat management of optical components – this includes the wafer itself, which heats up through the exposure to EUV light during the production process. Tackling these challenges requires ongoing innovation and collaboration within our innovation ecosystem of customers, suppliers and knowledge institutions.
Reducing energy use per exposed wafer
By reducing the total energy consumption by 10% in absolute terms and at the same time doubling the productivity compared to the baseline model NXE:3400B, we aim to reduce the energy use per exposed wafer pass by 60%. To increase the productivity in number of wafers produced, we are continuously working on improving the conversion efficiency of wall-plug power to EUV light and on optimizing sequences, control schemes and other components, such as higher reflectivity mirrors and faster stages.
Most of our product efficiency enhancements are also offered as upgrades for the installed base of our lithography systems. For our customers, this helps to improve the economic value of the installed base, increase productivity and reduce the lithography energy use per wafer.
Our progress in 2021
In 2021, we measured the energy efficiency of our NXE:3600D system. Power consumption compared to its predecessor (NXE:3400C) was the same at 1.3 MW, but productivity at 30 mJ/cm2 dose increased from 136 wafers per hour (wph) to 160 wph. We achieved this higher throughput by improving the transmission of the optical column and by improving wafer management, reducing the so-called scanner overhead. Compared to our baseline model, we achieved 6% reduction system energy consumption. At the same time, the energy use per exposed wafer pass has reduced by 37%. This shows that we are on track in achieving our target of 10% EUV system energy consumption reduction by 2025 and 60% reduction in energy use per exposed wafer pass.
In 2021, we installed dilution systems aimed at simplifying and reducing energy use of the hydrogen abatement system. Our EUV systems need hydrogen for protecting the optics in the EUV scanner and source. For newer production cabins we chose to dilute and vent hydrogen after use, instead of combusting it. This saves energy and emissions both from methane combustion – for keeping the hydrogen flame stable – and from lowering cooling water needs.
In 2021, we continued our investigation on the use of warmer cooling water. We studied how it can be applied in the drive laser and started to engage with our customers and with SEMI (the global industry association representing semiconductor manufacturing
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supply chain), by taking the lead in an extensive update of the S23 energy standard. As this involves significant changes to the hardware both of our suppliers and of the facility installations in our customers’ fabs, this project is part of our long-term plan to reduce the wall-plug power needed per wafer pass by 60% by 2025 (baseline year 2018).
The tables below provide an overview of the system achievements in terms of output and energy usage to achieve this output.
|System||NXT:1980Di||NXT:2000i||NXT:2050i||NXT:1980Ei||NXT:1960Bi + PEP-B|
|Year of energy measurement||2015||2017||2020||2021||2021|
|Energy consumption (in MW)||0.14 MW||0.14 MW||0.13 MW||0.14 MW||0.13 MW|
|Energy use per exposed wafer pass (in kWh)||0.51 kWh||0.51 kWh||0.45 kWh||0.48 kWh||0.51 kWh|
|Wafers per year||2,409,000||2,409,000||2,584,200||2,584,200||2,190,000|
|Year of energy measurement||2017||2020||2020||2017||2019||2021|
|Energy consumption (in MW)||0.07 MW||0.06 MW||0.11 MW||0.01 MW||0.01 MW||0.01 MW|
|Energy use per exposed wafer pass (in kWh)||0.28 kWh||0.27 kWh||0.38 kWh||n/a||n/a||n/a|
|Wafers per year||2,102,400||1,830,840||2,435,280||n/a||n/a||n/a|
20 mJ/cm2 dose
30 mJ/cm2 dose
|Year of energy measurement||2015||2018||2020||2021|
|Energy consumption (in MW)||1.15 MW||1.40 MW||1.31 MW||1.32 MW|
|Energy use per exposed wafer pass (in kWh)||19.49 kWh||13.08 kWh||9.64 kWh||8.27 kWh|
|Wafers per year||516,840||937,320||1,191,360||1,401,600|
1.Dose energy in mJ' refers to the energy required per expose per cm2. The number of 'wafers per year' calculated assumes 100% uptime and 100% utilization according to the SEMI S23 standard.
Advanced patterning with EUV helps to limit growth in energy and water use and GHG emissions
More advanced microchips mean smaller features, which need shorter wavelengths in lithography to manufacture them. With a single exposure of DUV light at 193 nm, for example, the smallest feature of the image of a microchip pattern reaches its physical limit around 40 nm. However, by using two or more exposures of the same pattern – so-called multiple patterning – it is possible to image details at 20 nm with 2 or 10 nm by 4 exposures and additional process steps.
Over the past decades, multiple patterning with DUV has become mainstream in semiconductor manufacturing, at the cost of having to go through the same process steps multiple times, which increases production cycle time and environmental impact.
As compared to DUV, EUV at 13.5 nm enables a more efficient chip-manufacturing process – because of the higher resolution of an EUV system, several exposures and process steps can be replaced by a single exposure and fewer process steps to do patterning of a chip. According to a study conducted by imec1, with EUV the number of non-lithography processing steps for some critical layers can be reduced by up to three to five times – this reduces production cycle time significantly. The fab also benefits from reduced energy and water usage, resulting from the lower number of deposition, etching and cleaning steps.
With increasing productivity of our EUV systems – which allows creating more advanced and more energy-efficient microchips faster – the energy consumption of the total patterning process per wafer will thus be lower using EUV lithography, as compared to complex multi-patterning strategies with DUV.
Our next-generation EUV systems, EUV 0.55 NA (High-NA), will enable further shrink and partly eliminate double exposure schemes, again replacing multiple 0.33 NA exposures with a single 0.55 NA exposure. With EUV 0.55 NA, the number of non-lithography processing steps can therefore again be reduced. This will effectively limit the total energy consumption of the patterning process per wafer even further.
1 Source: M. Garcia Bardon et al, DTCO including Sustainability: Power-Performance-Area-Cost-Environmental score (PPACE) Analysis for Logic Technologies, IEDM2020
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Climate and energy KPIs
The table below shows the key performance indicators (KPIs) and the related 2025 targets. Read more in: Non-financial statements - Non-financial indicators - Climate and energy for our performance indicators (PIs) and related results. The non-financial data may include a degree of uncertainty, because of limitations in measurement method and assumptions applied. Read more in: Non-financial statements - About the non-financial information - Reporting indicators .
System energy efficiency NXE:3x00 1
|Energy consumption (reduction in % of baseline 2018)||-||-6 ||%||-6 ||%||Reduction 10% from baseline 2018 (1.40 MW)|
|Energy use per exposed wafer pass (reduction in % of baseline 2018)||-||-26 ||%||-37 ||%||Reduction 60% from baseline 2018 (13.1 kWh)|
|Wafers per year||-||1,191,360||1,401,600|
|Renewable electricity (of total electricity purchased)||97 ||%||100 ||%||92 ||%||100 ||%|
|Renewable energy attributes (in kton)||137||140||145|
Fossil fuels consumed (in TJ) by location2
CO2 footprint (in kt) - Gross 3
|Scope 1 - Direct emissions from fossil fuels in our operations||16.9||15.4||19.3|
|Scope 2 - Indirect emissions from energy consumption||141.4||139.8||165.1|
|Scope 3 - Indirect emissions from total value chain||6,500.0||8,400.0||8,800.0|
|Total footprint (in kt) - Gross||6,658.3||8,555.2||8,984.4|
CO2 footprint (in kt) - Net 3
|Scope 1 - Direct emissions from fossil fuels in our operations||16.9||15.4||19.3||Net zero|
|Scope 2 - Indirect emissions from energy consumption||5.3||0||20.1||Net zero|
|Scope 3 - Indirect emissions from total value chain||6,500.0||8,400.0||8,800.0||Reduce intensity rate from baseline|
|Total footprint (in kt) - Net||6,522.2||8,415.4||8,839.4|
1.System-energy efficiency is measured according to the SEMI S23 standard and scaled to 100% productivity of our systems.
2.San Jose, Tainan and 'other' have been in scope for this indicator since 2021. 'Other' includes the locations with more than 250 FTE combined.
3.The guidance from the Greenhouse Gas Protocol – the organization that provides widely used international standards for emissions reporting – is used for the calculation of the emission scope. Market-based conversion factors are used to calculate the scope 1 and scope 2 CO2 emissions in kt.
Contributing to the UN's Sustainable Development Goals
Our ambitions, commitments and programs as described in this chapter contribute to the following SDGs. For further information on the performance, read more in: Non-financial statements - Non-financial indicators - Climate and energy.
|SDG target||How we measure our performance|
|SDG target 13.1 - Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries|
•Energy efficiency of our products measured per wafer pass
•Renewable electricity strategy
•Scope 1 and 2 emissions
•Optimize real estate to enhance energy efficiency
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We are committed to a circular economy and ensuring that any materials we use retain and generate as much value as possible for us and for our partners in the ecosystem. To minimize waste and maximize resources, we focus on three core strategies:
•Reduce waste in our operations
•Re-use parts and materials from the installed base
•Recycle mature products through refurbishment
The cornerstone of our circular approach is the modular design of our products. It enables us to upgrade a system to a higher performance level at a customer site rather than having to replace the entire product. We can further extend the lifetime of our products by refurbishing systems after they have been used in the most advanced chipmaking factories, repurposing them for other customers and semiconductor environments. As a result of our approach, nearly 94% of the lithography systems we’ve ever sold across our whole portfolio, are still in use at customer sites, highlighting our ability to contribute to a circular economy.
Our circular economy approach
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Reduce waste in our operations
Within our operations, the main waste streams are:
•Non-hazardous waste, such as packaging material, product-related waste from parts resulting from upgrades or defects, and general waste. This category also includes construction waste, which results from building activities.
•Hazardous waste, for example the chemicals we use in our manufacturing processes
We have set ourselves two targets to reduce our waste footprint. The first target is to reduce our waste intensity – the amount of waste generated in kg per € million revenue – by 50% in 2025 compared to baseline year 2019. The second target is to increase our material recycling to 85% by 2025. These targets include hazardous and non-hazardous waste.
To achieve these targets, we are focusing on circular procurement, driving awareness across our company, implementing (process) efficiency and improvement projects and supporting employee initiatives. We prioritize solutions to reduce, re-use and recycle our waste as much as possible, rather than sending it to an incineration plant or landfill.
Our results and progress
Managing waste from our operations is a complex issue and relies on having detailed and accurate insight into waste streams to and from ASML. We manage our waste through proper classification, separation and safe disposal. Although we’ve developed procedures to monitor and measure waste that leaves our premises, it’s much harder to gain insight on the waste streams of our customers.
In 2021, we generated 5,878 tonnes of waste from the activities on our sites and 77% of this was recycled (from 85% in 2020). Compared to 2020, the total amount of waste increased by nearly 12% (from 5,257 tonnes), mainly due to both the increase of our reporting scope from 20 locations in 2020 to 57 locations in 2021 and the growth of the company. Waste reduction programs for the expanded scope need to be defined and implemented, aiming at 2022.
Non-hazardous waste accounted for 93% (5,483 tonnes) of our total waste in 2021, of which the vast majority was diverted through recycling. We reduced non-hazardous waste through several ongoing programs, such as:
•Circular IT life cycle: After four years of use, we give all functioning computers and laptops a second life. In the case of defective computers, we recycle clean, separated streams of recycled plastic, iron, steel, copper, aluminum, glass and precious metals. This has led to over 30,000 kg of materials recycled, which is a sharp increase of 25% compared to 24,000 kg recycled in 2020.
•Flexible cleanrooms: These are cleanrooms that can be moved between locations and assembled quickly, while providing the same standards and performance as our current fixed cleanrooms. More than 95% of the materials used in the flexible cleanroom set-up are re-usable with a lifespan of more than 30 years. In 2021 we used the flexible cleanroom concept for five service warehouses.
•Other examples are local waste reduction initiatives initiated by our employees, such as plastic recycling and working with re-usable gloves in cleanrooms.
•Construction waste: As we expand our operations, we try to make sure that waste from construction activities are recycled wherever we can. Construction waste accounted for 3% (199 tonnes) of our total waste generated in 2021 (compared to 4% in 2020), of which 85% was recycled. In 2021, we added three work centers and one logistics warehouse to our Veldhoven campus. In our real-estate portfolio management we apply BREEAM standards which emphasize sustainability through the circular use of materials. For example, almost all of the material from a demolished sprinkler basin was re-used in our new buildings and we recycled ‘old’ cleanroom suits into acoustic wall panels for our meeting rooms.
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To produce and operate our products and systems, we need to make use of hazardous substances. In 2021, hazardous waste accounted for nearly 7% (395 tonnes) of our total waste generated. Of this, nearly 88% was recycled. Hazardous waste can include lamps, batteries, hazardous liquids, empty packaging from hazardous materials, and cleaning wipes and filters. Liquids, including acetone and sulfuric acid, are the majority of our hazardous waste streams.
The use of hazardous substances makes us subject to a variety of governmental regulations relating to environmental protection (as well as employee and product health and safety). These include transport, use, storage, discharge, handling, emission, generation, and disposal of hazardous substances.
Re-use parts and materials from installed base
We are committed to re-using system parts, tools, packaging and other materials, whenever practical in our value chain to reduce and prevent waste and reduce costs. We believe that re-use is a learning opportunity for all of us in the value chain, so we work closely on this with our customers and suppliers. Our target is to increase our rate of re-use to 95% of defective parts in ASML factories and in the field by 2025.
To achieve this ambition, we focus on:
•Design for re-use through more robust and repairable designs at an early stage of development
•Return for re-use of transportation packaging and materials for shipments to our customers
•Repair at local repair centers to improve parts repair yields by reducing cycle-time of root-cause analysis and repairs
•Remanufacture modules and parts that return from the field to as-new quality
•Harvesting of end-of-life parts through disassembly to re-use subcomponents
Progress and results in 2021
We accelerated our efforts on re-use, formalizing and structuring many parts of the process. Our Re-use Board, chaired by our Chief Operations Officer and Chief Technology Officer, signed off on a field repair strategy that promotes the repair of parts in local supply chains where possible, driven by our local repair centers. We extended our re-use policy to all product-related packaging, parts, materials and tools, and created a dedicated cross-sector Re-use department to drive this change on a global scale. Whether parts returning from the field are well-functioning, defective or unused, we are working hard to get them back into action in as-good-as- or better-than-new condition.
We further embedded our re-use commitment by enhancing our Supplier Sustainability Program. Read more in: Our performance in 2021 - Social - Our supply chain.
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We have started a life cycle assessment of the NXE:3400 EUV system to gain relevant insights into designing, developing and manufacturing our lithography systems with a lower carbon footprint. In this assessment we applied the life cycle assessment model for calculating the impact of waste and waste-reduction activities, which we developed in 2020. Similar assessment of our NXT and EXE lithography systems is planned for 2022.
In 2021, our re-use rate of defective parts was 85% (from around 86% in 2020).
Saving materials through reclaim
Our Reclaim program in San Diego (US) focuses on re-using a constant flow of returned parts. This program includes design for reclaim, improving the ability to re-use and recondition the assemblies to enable further increase of circularity of parts and materials, so that they can either be re-used for spare parts or incorporated into new system builds. This program has been running successfully for more than a decade. In 2021, we achieved over 375,000 kg material savings.
Design for re-use
In 2021, we integrated re-use into our Product Generation Process (PGP), as a key element of preventing waste that will help us meet our long-term goals. Our design for re-use methodology contains five elements – reliability, accessibility, replaceability, repairability and re-manufacturability – to enable the re-use of parts throughout the entire product life cycle. This means that re-use requirements are now part of the product design strategy and specifications. For example, through the modular design of our products and their components, we make sure that future upgrades, wear parts and components can be replaced as a single unit. Through commonality in designing a part, it can be used in multiple contexts in the product and even in future product generations.
The Re-use department’s focus for 2021 was on embedding re-use into our New Product Implementation (NPI) programs and driving waste reduction in our ‘reverse flows’ (materials coming back to us or to our suppliers from the field). Work continues to resolve bottlenecks in the execution of re-use and to clarify direction, guidelines and ‘re-use rules’ across the business. We are also looking to further mature our waste reporting data.
Return for re-use of transportation materials
When modules and systems are shipped, either from our suppliers to our factories, or from our factories to our customers, many transportation materials are used, such as packaging, locking and parts, to ensure that the products arrive safely. These so-called auxiliary parts (plugs, caps, clamps, cover plates, flanges, auxiliary brackets, etc.) are removed on arrival. Instead of throwing them away, these are re-used at use level (the highest level of re-use), so preventing them from ending up as waste. Before sending these parts back for re-use, they go through an identification process and quality check, followed by logistic and financial processes required to sell them back to the original module suppliers or to ASML.
We are improving the re-use of packing, locking and transport materials from the field and factory, aiming to return and re-use 80% or more in the next installation or relocation. In 2021, over 4,300 tonnes of transportation materials were re-used, up from nearly 4,000 tonnes in 2020.
We are extending local repair centers for service parts and materials, and setting up global repair centers for factory materials. There are currently local repair centers in South Korea, Taiwan and China, with plans for all our customer regions to eventually have one or more in place. Global repair centers will also be set up at each of our factory hubs in Wilton and San Diego (US), Linkou (Taiwan) and Veldhoven (the Netherlands).
By enabling repair and re-use activities and taking ownership of repairs in the field, we are able to reduce logistics time, stocking of parts and our environmental impact.
Remanufacture ‘As-New’ quality
When a part is re-used, our customers expect it to be as good as, or better than, the original new part. We set high-quality standards on ‘As-New’ parts and expect suppliers to be involved to meet these standards. This qualification standard and requirement is identical to the one for new parts, meaning that the same specifications, performance requirements, warranty, and so on, apply.
We now have over 75 ‘As-New’ release projects ongoing at over 25 suppliers. Our ambition is to increase the use of As-New modules in our systems to prevent unnecessary scrapping of well-functioning parts and modules.
Re-use challenges and roadmap
We made good strides on re-use and are committed to continuing to reduce waste streams. Building a re-use mindset and adopting it into normal ways of working is critical to achieving re-use and preventing scrap. For example, by replacing scrap bins in our factories with what we now call ‘re-use collection corners’, we encourage employees to think of used parts as having potential rather than being seen as waste.
To fully embed our re-use vision, however, there are several challenges to overcome and processes to be defined. These include:
•Configuration control: To re-use As-New parts in a system requires traceability of those parts. This means we need to be able to trace its history, where it comes from, and know how many times it was used and repaired.
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•Organization: Across our operations, there are a variety of separate processes related to return and re-use. We need to align those to an overall end-to-end re-use process flow.
•Repair engineering and processes: Part of our new focus is creating awareness on design for re-use, and defining processes around how to include re-use in redesigns and engineering changes.
In 2021, under configuration control we reduced the risk of what we call ‘broken life cycles’ by improving the traceability of parts. We intend to finish this improvement by the end of Q2 2022, solving the broken life cycle issues we now have in 4% of our parts. We also delivered some new re-use execution processes, such as ‘harvesting at the supplier’, enabling us to send purchase orders to harvest parts to suppliers, embedded in our sourcing and logistics process.
As next steps, we have defined five priorities. These include planning of re-use before new, supplier re-use incentives and autonomy, high-quality reverse logistics, further embedding re-use in our Product Generation Process (PGP), and launching re-use change and communication campaigns across ASML and suppliers.
Recycle mature products through refurbishment
A well-maintained ASML lithography system can last for decades and can be used by more than one fab. Many ASML lithography systems start out in cutting-edge fabs – once that fab needs to upgrade, the lithography systems are given a new lease of life in a fab where the manufacturer requires comparatively less sophisticated chips, such as accelerometers or radio frequency chips.
Our Mature Products and Services (MPS) business focuses on the refurbishment of the following product families: the PAS 5500 (with around 1,800 systems at customer sites worldwide), the TWINSCAN XT systems, and, as of 2021, the NXT:1950-1980 systems.
Our refurbishment strategy focuses on buying back systems that are not operational in the field, harvesting parts from decommissioned systems, and managing the continued availability of spare parts, which is key to the extended lifetime service we offer for our systems. We provide our customers with a guaranteed service roadmap until at least 2030. This means that all support and the necessary services and spare parts they need to maintain their systems is expected to be available through at least 2030 and beyond.
For the TWINSCAN AT systems that are still in operation, we focus on measures to proactively manage their end of life by guaranteeing the availability of spare parts as long as possible on a best-effort basis.
Our performance and progress in 2021
Thirty years after its introduction, ASML’s PAS 5500 platform is still alive and kicking. Currently, 90% of the PAS 5500 systems we have ever built are still in use, whether as refurbished tools or in its original configuration. The PAS platform is used for a wide variety of niche applications, from sensors to power chips and even life-changing implantable medical devices.
Until 2021, we have refurbished and resold well over 500 lithography systems. In 2021, we celebrated the 100th refurbished TWINSCAN, which also marked the 20th anniversary of our TWINSCAN refurbishment program.
New challenge – refurbishing and upgrading first-generation NXTs
In 2021, the Mature Products and Services (MPS) business line embarked on a new challenge to refurbish and upgrade first-generation NXT lithography machines, in addition to the PAS 5500 and XT systems. With the NXT platform having established its position as the workhorse of the semiconductor industry, there are more than 200 first-generation NXTs still running production at customer sites around the world.
To support the steep growth in semiconductor manufacturing capacity, especially in ‘More-than-Moore’ markets with less advanced requirements, ASML buys back these systems, refurbishes them to the specifications of later-generation systems, and sells them to customers that do not need the specs offered by more advanced machines. This enables customers to purchase an attractively-priced tool that will support their required cost of ownership targets, while contributing to ASML’s commitment to minimize waste and maximize resources.
Securing parts availability
We are making significant investments to ensure continued supply of more than 2,000 service parts for our PAS platform, either through redesigns, a parts harvesting strategy or by finding an alternative with the same form, fit and function. If this does not work, we are generally able to secure components through Last Time Buy – a supplier's 'last call' for a part or component before production switches to its successor. Over time, when a part is no longer available, we redesign parts.
We track the spare parts we have in our portfolio, see how they are being used, and identify when we expect to run out of these parts. For the PAS systems, we use this information to update our priorities for redesigning parts. For the AT systems, we try to continue supplying parts by harvesting them from systems that are decommissioned by our customers.
To secure the availability of spare parts into the next decade, we need to replace many unavailable parts that were designed with technology from the 1980s and 1990s with parts based on state-of-the-art technology. This involves a complete overhaul of these parts. For the coming years, we have identified and plan to execute more than 100 redesign projects for nearly 300 parts. This is especially relevant for electronic parts, for which the evolution of technology has gone faster than in any other field.
Roll-out of MPS Customer Portal in Asia
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A web-based parts ordering portal has been instrumental to the business model of Mature Products and Services (MPS), keeping costs under control while providing an optimal customer experience. In June 2021, following its success in the US and Europe, the online MPS Customer Portal went live in Asia.
The portal is designed to facilitate Billable and Volume Parts Contract (VPC) parts sales for ASML. Paired with a regional hub-based logistical service, it creates an efficient and valuable sales channel for our customers that minimizes manual steps and potential delays. Depending on the location, customers can expect their parts to be delivered within a few days or even – in the case of expedited orders in Taiwan and South Korea – within a few hours.
Circular economy KPIs
The table below shows the key performance indicators (KPIs) and the related 2025 targets. Read more in: Non-financial statements - Non-financial indicators - Circular economy for our performance indicators (PIs) and related results. The non-financial data may include a degree of uncertainty, because of limitations in measurement method and assumptions applied. Read more in: Non-financial statements - About the non-financial information - Reporting indicators .
Total waste generated normalized to revenue (kg/Million €) 1
|417||360||305||-50% of 2019 baseline|
Material recycling (% of total waste) 1
|80 ||%||85 ||%||77 ||%||85 ||%|
ASML PAS5500 systems sold still in use (in %) 2
|90 ||%||90 ||%||90 ||%||n/a|
|Value of parts re-used (€, in millions)||n/a||1,151||1,236|
1.Construction waste is excluded from the calculation of this indicator, because this waste is not resulting from the daily operations of ASML. The amount of construction waste tends to fluctuate over the years and can therefore make the trend of the indicator unclear.
2.Due to a definition change in 2020, the KPI is based on PAS5500 systems sold. For other PAS systems it is not possible to determine the status of use mainly because service contracts have been terminated.
Contributing to the UN's Sustainable Development Goals
Our ambitions, commitments and programs as described in this chapter contribute to the following SDGs. For further information on the performance, read more in: Non-financial statements - Non-financial indicators - Circular economy.
|SDG target||How we measure our performance|
|SDG target 12.2 - By 2030, achieve the sustainable management and efficient use of natural resources |
•Promote circular procurement
|SDG target 12.4 - By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle, in accordance with agreed international frameworks, and significantly reduce their release to air, water and soil in order to minimize their adverse impacts on human health and the environment|
•RoHS / REACH compliance of parts used
|SDG target 12.5 - By 2030, substantially reduce waste generation through prevention, reduction, recycling and re-use|
•Increase re-use of parts and modules in our products
•Lifetime extension of used systems
•Re-use of packaging
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Pushing the limits of technology would not be possible without our engaged, diverse and highly competent workforce. Our employees are critical to the performance of our organization and our long-term success as a company. As well as working hard to attract the world’s top talent, we need to focus on helping them all reach their full potential, in an environment where they are proud to work for us and engaged with our ambitions as a company.
We continue to experience strong growth at ASML. Our workforce nearly doubled in size in the last five years. And in spite of the ongoing pandemic, we had an extraordinary year in 2021, with an over 16% increase in employees (in FTE), a revenue increase of more than 30%, and over 20% more product output. This rapid growth also brings challenges. Our organization has become more complex, our workforce is more diverse, and the expectations of our customers and stakeholders are growing.
Our people vision
The needs of our growing workforce are changing, which requires an environment and tools that support collaboration, knowledge sharing and autonomy in more diverse and interdependent teams. At the same time, we must also continue to deliver on our commitments to our stakeholders and manage our day-to-day challenges to attract, onboard, develop and retain our talent.
We’ve already created a strong foundation by articulating our purpose, vision, mission, values and leadership expectations. To stay successful in the future, we examined how our strengths translate to our current reality. Hence, we define our people vision as follows: We empower each other to thrive, fueling our growth, happiness and business success. ASML’s people vision sets out our ambition for the future, supporting our values and what we stand for. Everyone throughout the organization has an important role in this vision.
Our pathway to realizing our long-term people vision is captured in our people strategy. For the next five years, our roadmap focuses on three key areas:
•Inspiring a unified culture, with our values as our compass to guide our decisions and behavior to deliver on our strategy
•Providing the best possible employee experience, enabling us to attract, develop and retain the best talent
•Enabling our leadership to bring out the best in people, by leading through trust, empowerment and accountability
Collaborating closely with the business on a day-to-day basis, we drive several key programs, designed to provide people with more autonomy in steering their development and career aspirations and enabling our leaders to support the growth of the company.
More than ever, we need to pay attention to anchoring ASML’s identity deep in the organization, to help our people embrace our values and provide a unified direction to familiarize themselves with our company strategy and purpose.
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Our company values – challenge, collaborate and care – ensure we are all working from a commonly understood base that can be applied across our organization, helping us make choices that keep us true to ourselves. They also allow teams to discuss the natural areas of friction where these values overlap. For example, by ensuring that the founders’ traits that brought us this far (persistence, a ‘can do’ mentality and a belief that anything is possible), are balanced by the right degree of care. Embedding our values is an ongoing journey, but we aim to succeed by applying them every day.
Building on our core values, we apply six people principles – clarity and accountability, continuous learning, inclusion, enabling environment, personal growth, and trust – to guide and inspire us in our people decisions to bring the best out of our employees.
In addition to ongoing initiatives deployed earlier to make our values tangible now and in the future, we launched the ‘Values in action’ program in 2021. As opposed to previous independent annual events, such as ‘Have a safe day’, ‘Ethics week’, ‘Sustainability week’ and the ‘Volunteer fair’ we developed an ongoing program with a series of events that explored the values through the lens of environmental, social and governance (ESG) topics. At every event we ask our senior leaders to outline their plans, ambitions and commitments to ensure we live up to our values.
In 2021, we executed several 'Values in action' events around the topics of mental health safety, the ASML Foundation, 5 life-saving rules, Speak Up and green energy.
We believe a diverse and inclusive workforce provides the necessary mix of voices and points of view required to innovate and drive our business forward. We foster a culture where different identities, backgrounds, talents and passions are valued and celebrated. Therefore, we want to offer our people the best possible employee experience at all our sites, enabling them to develop their talent, feel respected and work to the best of their abilities and allows us to attract and retain the best talent.
Employee experience is the sum of all experiences an employee gains through the interactions with the company at each stage of the employee life cycle, from attracting and onboarding talent to attrition. To this end we focus on employer branding and employee engagement.
Employee engagement depends on a wide variety of factors and activities, such as talent attraction and retention, onboarding experience, learning and development, diversity & inclusion, labor practices such as fair remuneration and labor conditions, and leadership. The overall impact of these programs on the total employee experience is measured by our we@asml employee engagement survey.
With the demand for top-tier talent increasing year-on-year, employer branding is a vital strategy to ensure ASML gets its share of this talent. Our strong growth means we need to hire large numbers of employees. Highly skilled people with a technical background are scarce in the labor market and competition is growing. We see that top-tier talent selects their employer of choice, not the other way around. This is a general development of employees choosing their future employer, and it’s important for employees that a potential employer has a proper value proposition.
We view recruitment as an ongoing process, and continuously seek to improve and professionalize how we go about it. We use this information to fine-tune our target audiences and recruitment efforts.
Our performance and progress
We measure our employer brand for the main locations where we operate – the Netherlands, the US, China, Taiwan and South Korea. We do this by measuring how ASML is perceived by external audiences – and potential employees in particular – by monitoring our position in an independent external employer-branding ranking. We have defined targets for the different local labor markets on our positioning by 2025. We continue to improve our employer brand and values on our corporate website, creating a better understanding of what we do and what we stand for as an employer.
In 2021, we saw good improvement in nearly every main location compared to 2020, except for the US, which can be explained by the mix of respondents in terms of field of study, university and location. However, our operations in the US were included in the 2021 Most Loved Workplaces - top 100 ranking by Newsweek in collaboration with the Best Practice Institute (BPI). The ranking is focused squarely on the degree to which employees have a positive feeling about their employer. We are pleased to receive this recognition for our efforts to create best possible employee experience for our employees. Read more in: Our people KPIs
In 2021, restrictions on travel and large group gatherings limited our ability to meet future talent in person. Various planned activities were either postponed or adapted to a virtual space. More than ever, the internet is the optimal platform to communicate. Our labor market communications team is continuously working to optimize how we reach, inform and engage our target audiences online. To leverage recruitment efforts, we facilitate job postings and manage ASML’s presence on online social network channels. We also promote the ASML employer brand through online advertising.
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Boosting recruitment and sharing innovation in Taiwan
ASML continues to expand operations in Taiwan to provide the best support services to a growing base of customers and optimize R&D support capabilities of measurement and inspection products. To enable ASML’s ambitious roadmap, it’s crucial to attract the best talent from the market.
In March and April 2021, ASML's Innovation Experience Truck took to the road in a tour across major college campuses of Taiwan to boost recruitment of engineers, extending our client and research support team capabilities. Through augmented reality technology and interactive experiences, upcoming engineers could familiarize themselves with advanced lithography technology and high-tech EUV lithography machines.
Employee engagement is critical to the performance of our organization and our long-term success as a company. We measure the overall impact of our activities on the total employee experience using our we@ASML employee engagement survey.
Our annual we@ASML survey is a crucial tool for collecting and measuring employee feedback. It provides insights that enable us to improve the employee experience and work on our policies and processes. We set ourselves the target of achieving an employee engagement score that is at least on a par with our peers.
Throughout the COVID-19 pandemic, employees across ASML have done admirable work to continue our business, serve our customers and secure our roadmap. We knew they experienced pressure from pandemic fatigue, hybrid working and the rapid growth in our employee base on top of increasing customer demand and we expected this to impact our employee engagement score.
To understand these effects and allow us to set improvement actions, the 2021 survey featured additional questions about well-being topics. To measure the degree to which our values are embedded in the organization, the survey also included questions about our culture and values that go beyond the ‘what’ to the ‘how’.
Our performance and progress
We succeeded in creating a positive working environment amid challenging circumstances, but did not make measurable progress in our key improvement areas.
In our 2021 we@ASML employee engagement survey, we again saw good results and received valuable feedback for improvement. The engagement survey score was 78% in 2021 (80% in 2020) – 2 percentage points above our external global benchmark of 76%. Overall, we conclude that ASML still has a highly engaged population. People are proud to work for ASML. Other areas where we score high are, for example, a good working environment, good team spirit with respect and open communication, and opportunities to learn and grow. However, as expected the engagement score decreased due to the dynamics of 2021. Defining action plans to prevent further decline is a priority for us.
Despite our continuous focus and improvement actions executed, we still see the three areas from the 2020 and 2019 surveys, namely: enabling processes, cross-team collaboration and clarity of expectations are lagging behind as we still score well below the external benchmark. The 2021 results also show that we need to pay more attention to well-being. Addressing these four areas is our key priority in 2022.
Talent attraction and retention
We hired 4,373 new payroll employees in 2021, growing our workforce to 30,842 FTEs at year-end. Our workforce more than doubled compared to the 14,681 FTEs we employed at the end of 2015.
While attrition can open up a knowledge gap in the company, we also view it as an opportunity to bring in new talent and enhance existing talent. We strive for a healthy attrition rate (the percentage of employees leaving our company), aiming for an annual attrition rate of 3.0–8.0%. For high performers, our target is to have a rate that is at least 50% lower than the overall attrition rate target.
With the overall attrition rate of 5.4% and the attrition rate of our high performers of 2.6% in 2021, both are well within our target range and is below the industry average in every country we operate in. In 2021, we saw an increase in the attrition rate to 5.4%, from 3.8% in 2020, a year that was shaped by the COVID-19 pandemic, when people were less inclined to look for other jobs. We attribute the increase to the effects of the pandemic, the global shortage of employees across many industries, and the booming semiconductor industry that is providing plenty of job opportunities. Nevertheless, we view that our efforts to create a unique employee experience, our employee engagement programs, and our onboarding of new employees are paying off.
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The 2020 and 2021 FTEs in the chart above do not include the FTEs acquired through the acquisition of Berliner Glas (ASML Berlin GmbH).
As our global workforce grows exponentially, onboarding is one of our key priorities. In 2021, we welcomed our 30,000th employee. A positive onboarding experience builds a sense of connection, helps employees fit in quickly, and boosts retention. We believe onboarding is a joint effort, driven by everyone.
With the COVID-19 pandemic continuing in 2021, our new employee onboarding remained virtual to give new colleagues the best possible start. For example, the ASML onboarding event is a half-day introduction event organized by HR to make new colleagues feel welcome, learn more about ASML and connect with other new colleagues. In small groups, new colleagues work together to learn about ASML products, technology, organization, customers and programs. Business sectors and functions continue to build on our global onboarding initiatives, making sure we’re providing one consistent experience across the company, further tailored to the various departments.
To measure how new hires rate their onboarding experience, we conduct pulse surveys in each phase of their onboarding journey from feeling welcome, engaged, equipped, to feel part of ASML. On average, 89% of new hires indicated that they had a positive experience. They also perceive the support they get from their manager during onboarding as very positive. We are proud that our managers took extra efforts to guarantee a positive onboarding experience while working remotely.
Learning and development
In an innovative, high-tech, fast-changing industry, it’s vital to strengthen and continuously invest in our talent pool to anticipate evolving business requirements and developments in the labor market. We empower our employees to develop their talent, pursue their career ambitions and to thrive. We strongly believe that personal development works best when our employees can invest in themselves. At ASML, we give employees the time, opportunity and support, while they put in the effort, passion and drive needed to enhance their development. We offer tailor-made training and development programs to help grow the highly skilled professionals we employ at ASML.
To maintain our technological leadership and pace of innovation, we need to ensure the right knowledge is available to our people at the right time. To do this, we have our own technical development centers in-house for our D&E, customer support, and manufacturing employees to tailor training to the specific technical needs of these departments.
Most of our trainings take place on the job, given the nature of our collaborative innovative business. Overall, we are promoting the 70-20-10 approach for learning interventions, meaning that 70% is on-the-job learning, 20% is through coaching, and 10% is learning through training courses. In 2021, the average number of training hours in this last category, including development programs, was 29 hours per FTE.
In 2021 we continued adding virtual trainings where possible. We had to postpone some of the development activities that have a strong networking component to them with the need to bring different sectors and countries together. Due to travel restrictions and different time zones, these activities were not viable. In addition, we continued working on redesigning specific development programs to establish an effective mix between remote and in-person training, bringing people from different locations together, and making training more digestible for online purposes.
Career development opportunities
We are continuously looking into ways to improve how we can help employees identify opportunities for professional development within ASML. We offer various career paths and have various tools in place to support our employees’ career navigation.
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Two years ago, we started the discussion and thinking process around how our performance management approach and philosophy can better align with our culture and values. This forms part of a broader look at the future of performance management in the company. Together with our executive committee, we started defining how to do this more fundamentally. In 2021, we worked hard on re-shaping performance management processes and to embed them in the new tooling, which went live as of January 2022.
Diversity and inclusion
We're proud to be a culturally diverse organization, with employees from 122 different nationalities. Diversity and inclusion enhance our ability to innovate, to be creative, problem solve, and provide an environment where employees feel valued, challenged to grow professionally, and contribute to our common goals.
Since 2020, we have been developing and formalizing our approach to diversity and inclusion. We assembled a Global Diversity & Inclusion Council in 2021 that consists of senior leaders who act on behalf of ASML to provide thought leadership. The Council, chaired by a member of the Board of Management, proposes the Diversity & Inclusion strategy to the Board of Management, sets, promotes and monitors diversity and inclusion initiatives, and drives company-wide accountability towards its goals.
Our diversity and inclusion strategy includes the following:
•Engaging a larger talent pool by making opportunities more visible and accessible
•Creating shared metrics to more clearly evaluate progress
•Ensuring inclusive leadership behaviors are embedded in our culture
•Including diverse perspectives in our talent practices
•Providing employees more ways to engage and drive their careers
Our aim is to be representative of the available skilled workforce. Creating an environment where all feel welcome, know they belong and see a career path in front of them requires diversity at all levels of the organization.
We aim to increase the diversity of our workforce by fostering a culture that is inclusive of all. We@ASML, our employee survey, measures inclusion levels each year. In 2021 our Inclusion score was 83% compared to 82% of top performing global companies. Our goal is to meet or increase this level of inclusion among our employees on an ongoing basis. To do this, we set a target to score on par +/- 3% with the top 25% of this comparison company list in 2024.
In 2021, we made progress in gender diversity among all employees and senior management. Female employees now make up 18% of our workforce worldwide. This improvement has increased by 1% compared to last year. We aim to increase this trend as we move toward 2024.
We believe the most effective way to address this is by focusing on the growth of our existing team members and expanding the diversity of our talent pool. We’ve set goals to increase the hiring of women from 20% in 2021 to 23% by 2024.
We still have work to do in this area and have set specific goals focused on female leadership levels. The current representation of women at this level is 8% today and our ambition is to reach 12% by 2024. To make this tangible, we’ve set a goal to raise the hiring of female leaders, from 12% in 2021 to 20% in 2024. We believe this talented pool will be role models, paving a path for more to follow. Our ambition is to have more diversity in our workforce because we believe it is one of the best ways to attract and retain smart talented people to help us drive technological innovations forward to meet our customers’ needs.
Overall, the global STEM (science, technology, engineering and math) talent pool is scarce and it is even more challenging to recruit female talent. Our R&D workforce is 15% female. Nearly 90% of job positions are STEM related, whereas peers in the high-tech industry have more diverse, non-STEM related job positions. ASML is highly motivated to see more women pursuing careers in engineering and science now and in the future. The highly specialized nature of our industry means achieving this balance is a long-term process. We are actively engaged with multiple educational programs to grow the pipeline, deploy multiple initiatives to promote STEM education among the future female talent pool and continue to foster an environment where our current workforce can thrive.
Achievements in the US
Established in 2020, the ASML US Diversity Council serves as an advisory board and governs diversity and inclusion (D&I) programs, such as employee networks, diversity events, and recognition and education programs across the US. In 2021, the Diversity Events and Education Workstreams and US Diversity Council sponsored numerous external speakers to generate broader awareness and understanding of culturally significant holidays and observances, including Black History Month, PRIDE Month, Hispanic Heritage Month and Veteran’s Day. Over 3,000 employees cumulatively participated in over 15 diversity events. The Council also supported the development of two new employee networks in the US: SHADES for Black, Indigenous and People of Color (BIPOC) and their allies, along with a new veteran’s group.
We want our remuneration to be fair and balanced. In our remuneration policy, we are committed to gender equality and we strive for global consistency while respecting what is common practice in local markets. We continuously review how our remuneration compares to the market benchmark for technology professionals in each region where we operate and, where necessary, make changes to our remuneration policies and levels. Each year, we analyze paid salaries for gender disparity. In 2021, as in previous years, we found no major differences in these salaries. Read more in: Non-financial statements - Non-financial indicators - Our people.
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At ASML, we are committed to meeting adequate living-wage requirements, meaning that employees earn salaries that meet their and their families' basic needs, but also provide some discretionary income. Our company has a predominantly highly educated workforce with relatively high levels of remuneration. In 2020, as part of a two-year cycle, we conducted an analysis of how our lowest base salary compared to the local minimum wage and local ‘living wage’ in the countries and regions where we operate. We did not detect any gaps. On average, our salaries are significantly above local living wage. An update of the analysis is planned for 2022.
We want to provide fair labor conditions and social protection for all our employees, regardless of their location and whether they are on a fixed or temporary contract. We support the principles of the International Labor Organization (ILO) and we respect the rights of all employees to form and join trade unions of their own choosing, to bargain collectively and to engage in peaceful assembly.
We strive to comply with the relevant legislations in every country we operate in. In those countries where we have employee representation, we engage in regular dialogue with the different organizations representing our employees. In these conversations, topics are put forward and discussed by both the company and the employee representatives.
We do not have operations in countries where the freedom of association and collective bargaining for ASML employees is restricted.
In the Netherlands, we have requested dispensation from the Metalektro Collective Labor Agreement (CLA) in order to develop our own CLA. Our unique position in the global market, our size and growth as well as our very unique group of employees and the large range of competencies and activities we bring together to deliver our products have created a need for our own direction in labor conditions. The purpose of a future ASML CLA is to offer a set of labor conditions that match the diversity and needs of all our employees.
In 2021, following an intensive period of consultations, the negotiations with the trade unions began. The new CLA will be developed in close collaboration with the unions represented in the Metalektro. Once we have our new CLA in place, we will continue to work with the unions regarding labor conditions within the framework of our own CLA and maintain our active membership in various labor organizations, such as FME and PME.
Remote Working Policy
We want to have a positive impact on people’s well-being, their productivity and work-life balance. Working from the office and meeting each other face-to-face stimulates innovation and optimal collaboration within and across teams, and it is the starting point of our way of working. During the pandemic, teams expressed the need to meet in person to tackle problems together and to stay aligned toward common goals. We also recognize that a busy office may not be the best place for focused work, so quiet work in a remote office may be much better for some tasks.
Fundamentally, ASML is convinced that employees themselves can best manage their own work. On the other hand, managers are responsible for efficiently organizing the way the team is working and the organization. This means that both employees and managers have joint responsibility for the choices to be made under our Remote Working Policy.
We aim to provide ASML employees and their managers with clear guidance and help to make the right choices between working remotely and working in the office. Remote working is neither mandatory nor an entitlement. As a global guideline, employees may work up to two working days per week remotely, if the job allows. There may be exceptions for certain jobs or departments.
To remain a market leader, we must provide unified direction. This means we need authentic leadership to give our people a clear picture of where ASML is heading. This offers great opportunities for all of us to contribute to ASML’s success and make an impact, which is also quite a challenging job for our leaders. As our company grows, so does the need for clarity around roles and expectations. Leaders need to play a part here in providing role clarity for employees, as well as being clear about their own roles and responsibilities. We continue to strive to formulate and capture this more clearly so our people can understand what is expected of them.
Launched in 2020, our Leadership Framework outlines and clarifies a leader’s role in business leadership, role-modeling the values within the company, and what it means to be a people manager and coach for employees. Leadership is all about people.
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In 2021, we continued deploying behavioral competencies training, coaching programs and a practical guide to inspire and enable personal development. We have leadership programs where we fast-track the careers of our most promising managers through our Potential Acceleration Program. These programs ensure our managers are aware of what’s expected of them, and help them to develop the skills and competencies they need to become better leaders.
The effects of these programs are most visible in our employees' responses from our 2021 we@ASML survey, where 74% of our employees stated that they see their manager role modelling the three ASML values – challenge, collaborate, care – in a balanced way.
Ensuring employee safety
At ASML, safety is not just a priority – it is a prerequisite. It is an integral part of our daily work and the way we lead others. We do everything in our power to provide injury-free and healthy working conditions for everyone on our premises and ensure all our operations are safe and secure. This includes employees, contractors, suppliers, customers, and visitors. We count on each other – every one of us working at and for ASML – to share this commitment, because together, we keep each other safe.
In 2021, the persistent effects of the COVID-19 pandemic still reached into every corner, affecting people globally and across every aspect of our business. Our priorities remained unchanged: Our primary focus has always been to ensure our colleagues and their families around the world stayed safe. Our second goal was to make sure we upheld exceptional service to our customers.
We follow all government guidelines and safety measures. The corporate crisis management team provides our employees with frequent updates about the COVID-19 situation and our response to it. In 2021, we rolled out numerous well-being programs worldwide to address the physical, mental and emotional well-being of people working from home.
Our employee safety strategy
We believe that all work-related injuries and occupational illnesses are preventable. As such, we are working toward a long-term ambition of zero injuries and work-related illnesses.
It’s impossible to completely eradicate risk, but we can work proactively at all levels to identify potential issues or concerns in the workplace and develop measures toward reducing these. We do everything we can to minimize risk, and it is our responsibility to provide our people with the right protection, procedures and processes to keep them safe.
Our goal is to prevent occupational health and safety incidents. To benchmark our performance against industry standards, we use a targeted recordable incident rate of 0.20, which represents world-class performance. But our ongoing ambition is zero, and this drives our continuous improvement in processes, working conditions and employee behavior. To achieve this, we focus on an EHS management system, safety culture and training. An example is the ‘Safety Gemba Walks’, where managers visit the employees’ workplace. This helps us to increase safety performance and to strengthen a safety culture.
New global lifting training
Trend analyses and past lifting (near-miss) incidents and good catches formed the foundation of a new, soft-skill-focused, gamified training for future lifting team members worldwide. This human-focused and effective trend-based setup contributes to a safe work environment in an efficient and attractive way, by using blended-learning methodologies, timely workplace learning and modern technology.
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This EHS lifting training will be enriched with a more in-depth specialist safety training framework of lifting tools for lifting operators and awareness of lifting activities for others involved in the lifting action. The outcomes of lessons learned through incident reporting and incident investigation improve the quality and impact of our EHS training solutions, helping to take safety culture within ASML to the next level.
Managing a safe workplace
We are committed to a well-established EHS management system. We use the highest possible professional standards, and continuous improvement is a key principle of our management system. Our EHS management system is based on the ISO 45001 standards and complies with its requirements.
We have established a Corporate EHS Committee, chaired by our Chief Operations Officer, to oversee and approve ASML’s EHS strategy and lead the EHS management system. Our line managers are responsible for day-to-day EHS management. Our EHS Competence Center gathers best practices and defines the EHS standards for ASML, helping our managers to implement these standards in the workplace.
Our employee and product safety commitment is captured in our Sustainability Policy, which applies to ASML worldwide. In addition, our ASML EHS Guide aims to provide practical, useful and essential information for our employees, contractors, and any other parties working for us. The guide – designed to create awareness and ownership – explains our aims and objectives, and clearly describes the rules and policies we follow.
Incident and risk management are key elements of our EHS management system. We record and investigate all incidents and near-misses to determine the root cause and take corrective action to prevent them from recurring or occurring in the future.
We conduct regular hazard and risk evaluations, with a focus on preventing employees’ potential exposure to hazards such as chemicals, fire, radiation, mechanical handling, and ergonomic risks. These provide us with further insights into the main hazard and risk areas at ASML. We can then take appropriate action to mitigate these risks. We ensure continuous improvement through internal EHS audits.
Strengthening a safety culture
In 2020, we introduced five life-saving safety rules to create a safer workplace and enhance our safety performance. Respecting and adhering to these rules could not only save lives, but also make us collectively more aware of safety risks across our organization. Active and consistent deployment of these rules in 2021 led to increased awareness, better insights and actions for improvement, such as improved procedures, tools and education. At ASML, it is standard practice to inform our employees and anyone else accessing our premises and customer sites independently – including contractors and suppliers – about our safety culture and to raise awareness around these. Training is one of the ways we prepare and inform our people about this.
Our results and progress
We register EHS-related incidents in line with the US Occupational Health and Safety Act. Our recordable incident rate decreased from 0.18 in 2020 to 0.17 in 2021, outperforming the electronic industry benchmark of 0.20. The recordable incident rate is the number of recordable cases beyond first aid in a year per 100 FTE. As in previous years, we did not record any work-related fatalities or permanent disabilities.
Safety goes beyond procedures, rules and the right equipment to human mindset, behavior, attitude and habits. Following the five safety rules, we deployed various department specific awareness programs. For example, we have been rolling out the hein® safety campaign in D&E which helps us develop a common safety language and dialogue. Workshops and trainings took place in many clusters with many interesting discussions and insights into our safety behaviors.
In 2021, we extended the EHS Fundamentals program with a new safety training module. As of September 2021, new hires expected to work in a cleanroom will have to complete EHS Cleanroom Fundamentals, a training module designed to prepare new employees to safely enter, leave and work in a cleanroom at ASML. By year end 2021, 95% of eligible candidates had completed this mandatory training. We are also planning a company-wide reassessment of the safety culture in our company in early 2022, to validate if our safety culture transformation program has the right effect, and to create insights into where we need to step up.
To improve our EHS performance, we encourage our employees to speak up whenever they encounter safety risks. Every employee is empowered to stop working if they feel unsafe. Together with their manager and EHS expert, a safe way of working will be defined, so the work can resume.
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Our people KPIs
The table below shows the key performance indicators (KPIs) and the related 2025 targets. Read more in: Non-financial statements - Non-financial indicators - Our people for our performance indicators (PIs) and related results. The non-financial data may include a degree of uncertainty, because of limitations in measurement method and assumptions applied. Read more in: Non-financial statements - About the non-financial information - Reporting indicators .
|Engagement score We@ASML survey ||77 ||%||80 ||%||78 ||%||Be on par with peers|
Employer brand ranking1
|Netherlands||10 ||10 ||6 ||Top 10|
|US||— ||99 ||133 ||Top 75|
|China||— ||168 ||148 ||Top 100|
|Taiwan||— ||22 ||6 ||Top 20|
|19 ||24 ||14 ||Top 20|
1.Employer brand ranking from Universum: engineering students.
2.As of 2021, overall ranking for South Korea is no longer conducted by Universum. The result reported for 2021 is based on a customized ranking report. The target 2025 refers to the overall ranking. Going forward we need to define our target based on the customized ranking.
Contributing to the UN's Sustainable Development Goals
Our ambitions, commitments and programs as described in this chapter contribute to the following SDGs. For further information on the performance, read more in: Non-financial statements - Non-financial indicators - Our people.
|SDG target||How we measure our performance|
|SDG target 4.3 - By 2030, ensure equal access for all women and men to affordable and quality technical, vocational and tertiary education, including university|
•Employee training and development indicators
|SDG target 4.4 - By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship|
•Community involvement and technology promotions
|SDG target 4.5 - By 2030, eliminate gender disparities in education and ensure equal access to all levels of education and vocational training for the vulnerable, including persons with disabilities, indigenous peoples and children in vulnerable situations|
•ASML Foundation projects
|SDG target 8.1 - Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7% gross domestic product growth per annum in the least developed countries|
|SDG target 8.2 - Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high value-added and labor-intensive sectors|
•Human capital return on investment
•Employee engagement score
|SDG target 8.5 - By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value|
•Workforce data including diversity and inclusion
•Fair remuneration pay ratio
|SDG target 8.6 - By 2020, substantially reduce the proportion of youth not in employment, education or training|
•Employee attrition rate
|SDG target 8.8 - Protect labor rights and promote safe and secure working environments for all workers, including migrant workers, in particular women, migrants, and those in precarious employment|
•Employee safety indicators
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Being part of a community means not only caring for our own employees, but also looking out for those beyond our organization. We foster close community ties and encourage our employees to get involved and do their part as well. ASML needs the support of the community to be successful and will earn that support if ASML lets the community benefit from its presence and is considerate of the community's needs.
We aim to be a valued and trusted partner in our communities, improving the quality of life for all, with a special focus on disadvantaged communities. We support skills development for young people under the age of 18 to prepare them for an increasingly digital future, as well as community services for disadvantaged people, and local arts and culture initiatives.
We benefit from each other’s presence and support each other’s development. For ASML it is important to create a healthy foundation for long-term sustainable strategy execution by motivated employees. For the community, success means that we are able to close the divide, so that citizens and their environment thrive.
Our community engagement program, which falls under our CEO's area of responsibility, is built on three pillars where ASML has competence and can create impact:
2.Arts & culture