WEBVTT - ASML CEO Talks AI, Chips and China 0:00:02.480 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio news. 0:00:07.040 --> 0:00:12.080 Let's bring you that conversation live with the CEO of ASML. 0:00:11.920 --> 0:00:16.040 Christoph Fouke, speaking to Bloomberg's Tom Giles. We can listen 0:00:16.120 --> 0:00:16.520 in now. 0:00:16.640 --> 0:00:20.479 After that surprise cuts to the outlook from asmling around 0:00:20.480 --> 0:00:23.119 the world. But last week you had to do some 0:00:23.960 --> 0:00:28.720 expectation resetting in terms of bookings, in terms of your 0:00:28.760 --> 0:00:32.200 outlook for twenty twenty five and how long the chip 0:00:32.240 --> 0:00:37.120 recovery will extend, you said on the call today. Without AI, 0:00:37.640 --> 0:00:39.839 the market would be very sad if you asked me. 0:00:40.880 --> 0:00:44.640 That definitely spread some sadness in the market, in the 0:00:44.680 --> 0:00:48.120 stock price. Could you give us a sense when you 0:00:48.200 --> 0:00:52.880 talked about the new expectations, you focused on a couple 0:00:52.880 --> 0:00:56.400 of things, some of your customers, customers like Samsung and Intel, 0:00:56.680 --> 0:00:59.640 but also China, And so I'm wondering if you could 0:00:59.640 --> 0:01:03.080 give us a sense of unbalanced how much of your 0:01:03.480 --> 0:01:08.840 resetting expectations was related to changes in China versus weakness 0:01:08.920 --> 0:01:11.520 in some of the large customers that I mentioned. 0:01:12.560 --> 0:01:16.280 Yeah, So I think last week we said a few things, 0:01:16.360 --> 0:01:18.760 and I think the first thing we said was that 0:01:18.840 --> 0:01:22.880 we still CAI as a huge opportunity for the industry, 0:01:23.200 --> 0:01:26.920 and we still see even upside on the short term. 0:01:27.240 --> 0:01:29.120 So I think AI has been with us now for 0:01:29.160 --> 0:01:31.880 a couple of years. It's created a lot of excitement, 0:01:32.760 --> 0:01:35.680 and like all our peers in the industry, I do 0:01:35.760 --> 0:01:40.160 believe that AI will bring a tremendous opportunity for this industry. 0:01:40.200 --> 0:01:41.600 So that's the first thing we have said. So I 0:01:41.600 --> 0:01:43.200 said on the long term. 0:01:43.200 --> 0:01:47.160 AI is going to build up a real strong opportunity 0:01:47.520 --> 0:01:48.200 for the industry. 0:01:49.040 --> 0:01:50.240 Now on the short term. 0:01:50.120 --> 0:01:54.200 I think you're aware of that not everyone is surfing 0:01:54.440 --> 0:01:58.320 yet on the AI web. I think some company have 0:01:58.360 --> 0:02:00.920 been doing extremely well, of course, and Vidia comes to 0:02:01.000 --> 0:02:06.800 mind TSMC because they are providing the first one, the product, 0:02:06.960 --> 0:02:09.560 the second one the process that is going to manufacture 0:02:10.160 --> 0:02:13.880 the product. So they're very strong. I think you see, 0:02:13.919 --> 0:02:15.360 and I'm sure you will see that in the weeks 0:02:15.400 --> 0:02:18.120 to come, a very very strong demand. Now, what we 0:02:18.280 --> 0:02:23.440 also said is that not every semiconductor manufacturer is involving AI. 0:02:23.960 --> 0:02:30.560 Some of them are doing chiaps for more traditional application mobile, PC, automotive, 0:02:31.480 --> 0:02:35.520 and that part of the market is not recovering as 0:02:35.600 --> 0:02:38.720 quickly as we hoped, and it does recover, so we 0:02:38.760 --> 0:02:42.120 see progress and people are reporting that, but it's slower 0:02:42.160 --> 0:02:43.320 maybe than a lot. 0:02:43.160 --> 0:02:44.280 Of us expected. 0:02:45.320 --> 0:02:48.880 And I would say that concern quite a few companies. 0:02:50.280 --> 0:02:53.200 All the companies in fact that today are not directly 0:02:53.280 --> 0:02:54.720 benefiting from. 0:02:54.639 --> 0:02:59.600 The AI boost. That's a bit the split of the 0:02:59.680 --> 0:03:01.920 market we see today at least. 0:03:02.000 --> 0:03:04.639 Does that mean that we shouldn't expect a full recovery 0:03:04.720 --> 0:03:06.359 until twenty twenty six. 0:03:07.120 --> 0:03:10.400 Well, that's always very difficult to say, because you know, 0:03:10.440 --> 0:03:14.600 there's something we watch every quarter. You know, last week's 0:03:14.639 --> 0:03:18.200 people were maybe a bit disappointed that we didn't give 0:03:18.520 --> 0:03:22.079 more heads up, but that's something we just keep watching. 0:03:22.960 --> 0:03:25.440 And you know, in the last three months, for example, 0:03:25.520 --> 0:03:27.480 we have seen that people we are starting to push 0:03:27.560 --> 0:03:27.919 the break. 0:03:29.760 --> 0:03:31.440 When do they start to push. 0:03:31.200 --> 0:03:33.760 The accelerator again, we don't know, because you know, when 0:03:33.800 --> 0:03:36.119 you become cautious, its usually takes a bit of time 0:03:36.160 --> 0:03:41.560 before you look at the longer term again. But you know, 0:03:42.240 --> 0:03:47.560 long term we see gross, We see tremendous opportunity, which 0:03:47.600 --> 0:03:50.800 means that at some point of time this has to come. 0:03:51.840 --> 0:03:54.040 Twenty twenty five, by the way, we still see as 0:03:54.040 --> 0:03:57.920 a grocer for the industry for SML, the gross is 0:03:57.960 --> 0:04:01.040 not as high as I think a lot of people 0:04:01.240 --> 0:04:05.600 expected by Dan but still a gross here. We also 0:04:05.640 --> 0:04:08.320 expect twenty six to be a gross here, but it's 0:04:08.360 --> 0:04:12.720 too early to know to quantify that in very high 0:04:12.760 --> 0:04:14.440 accuracy or very high precision. 0:04:14.560 --> 0:04:14.920 Got it. 0:04:15.440 --> 0:04:17.039 I want to talk a little bit about China. 0:04:17.200 --> 0:04:21.160 At one stage they accounted for almost half of total revenue. 0:04:21.520 --> 0:04:23.440 What you shared with the market was that we have 0:04:23.520 --> 0:04:26.920 to think about China in its more historical perspective, where 0:04:26.960 --> 0:04:31.080 it accounted for something more like twenty percent of total 0:04:31.080 --> 0:04:34.479 revenue for you as a company, I'd like to get 0:04:34.480 --> 0:04:38.000 a sense from you of how much of that changing 0:04:38.160 --> 0:04:45.279 viewpoint on China is coming from weakness internally versus limits 0:04:45.360 --> 0:04:51.040 on what Chinese manufacturers can buy given export controls. 0:04:51.760 --> 0:04:54.600 Yeah, so maybe first a step back. If you look 0:04:54.640 --> 0:04:57.440 at China. You know we just talked about AI, AI 0:04:57.560 --> 0:05:00.880 is very advanced to me conduct term manufacturing advanced chips. 0:05:01.520 --> 0:05:04.400 China for a few years now is focusing on what 0:05:04.440 --> 0:05:08.479 we call mainstream semiconductor. So semiconductor we used to. 0:05:08.480 --> 0:05:09.440 Talk about IoT. 0:05:09.800 --> 0:05:12.599 You know, all those chips that you have in all 0:05:12.680 --> 0:05:16.760 the product making those products smarter. That the type of 0:05:16.839 --> 0:05:20.320 chips China is basically manufacturing today. 0:05:21.600 --> 0:05:22.640 One part of. 0:05:22.640 --> 0:05:24.920 The reason for that is, of course the restriction that 0:05:24.960 --> 0:05:27.960 have been applied on EUV as you know, which have 0:05:28.080 --> 0:05:30.919 prevented China to move to very advanced node. So the 0:05:30.960 --> 0:05:35.359 focus of China is on mainstream semiconductor. The demand for 0:05:35.440 --> 0:05:40.000 that has boomed in twenty twenty one twenty two. As 0:05:40.000 --> 0:05:42.560 a resource, the demand we had in China in twenty 0:05:42.600 --> 0:05:45.680 twenty one twenty two has boomed as well. And twenty 0:05:45.720 --> 0:05:49.279 one twenty two was the time, if you recall, where 0:05:49.760 --> 0:05:54.640 the demand was extremely high and amer was struggling to 0:05:54.720 --> 0:05:57.160 deliver tools to everyone. 0:05:57.920 --> 0:05:59.160 Therefore we couldn't. 0:05:58.839 --> 0:06:02.400 Deliver a large part of the demand in China. Backlog 0:06:02.400 --> 0:06:06.800 in China grew twenty twenty three. The rest of markets 0:06:06.800 --> 0:06:11.360 often we got tools we could ship to China, same 0:06:11.400 --> 0:06:14.440 in twenty twenty four. So the level of business we 0:06:14.480 --> 0:06:17.080 had with China twenty three twenty four was more of 0:06:17.160 --> 0:06:20.440 a resource of the non deliver capacity in twenty two 0:06:20.520 --> 0:06:24.479 twenty one than anything else. And we've always explained that, 0:06:24.560 --> 0:06:28.240 you know, our quarter at fifty percent of the business 0:06:28.240 --> 0:06:29.680 in China, almost fifty percent. 0:06:29.880 --> 0:06:30.839 This was not normal. 0:06:31.279 --> 0:06:36.320 This was a peak resulting from basically a lack of 0:06:36.520 --> 0:06:40.200 delivery before. The normal business in China is around twenty 0:06:40.279 --> 0:06:45.040 twenty five percent, and that's the normal demand related to mainstreams. 0:06:45.040 --> 0:06:46.880 Tom Conductor and I think we're going to go back 0:06:46.920 --> 0:06:48.080 to those number over time. 0:06:48.320 --> 0:06:51.599 But there is something artificial about the way we think 0:06:51.640 --> 0:06:55.839 about China as a purchaser of equipment like asmls in 0:06:55.880 --> 0:07:01.560 the sense that many countries around the worlds principally have 0:07:01.560 --> 0:07:07.600 have have been exerting export controls on the country. Are 0:07:07.720 --> 0:07:11.920 those controls going to become even more stringent? For example, 0:07:14.000 --> 0:07:16.480 China is not able to buy your most advanced machines. 0:07:16.600 --> 0:07:20.440 Is it possible that those restrictions could extend to the 0:07:20.560 --> 0:07:25.640 DUV level, which is used for more mainstream products. 0:07:26.600 --> 0:07:26.800 Yeah. 0:07:26.840 --> 0:07:30.240 So if you go back to the root cause, or 0:07:30.240 --> 0:07:33.800 the the prime motivation of export controlly to us to 0:07:33.840 --> 0:07:37.920 prevent China to have access to advanced technology, EWE is 0:07:37.920 --> 0:07:42.240 not in China. By not having you in China, we 0:07:42.480 --> 0:07:47.240 pretty much stop the ability of China to go beyond 0:07:48.240 --> 0:07:51.640 the five maybe free anometer note may be able to 0:07:51.760 --> 0:07:54.320 do a few chips. You may see some of that 0:07:54.360 --> 0:07:57.720 in the press because of course everyone is watching very carefully. 0:07:58.400 --> 0:08:04.000 But fundamentally, by not having ev we have placed China. 0:08:04.400 --> 0:08:07.080 The regulation have placed China I would say ten to 0:08:07.120 --> 0:08:11.200 fifteen years behind. When it comes to advanced technology. We 0:08:11.240 --> 0:08:14.880 always talk about China. We usually forget to mention the 0:08:14.920 --> 0:08:18.040 fact that while those restrictions have applied on China and 0:08:18.240 --> 0:08:22.000 V a lot of work has been done with other 0:08:23.120 --> 0:08:28.320 player and industry Intel, TSMC, Samsung on the most advanced 0:08:28.320 --> 0:08:32.160 IV technology as we know it today, et. 0:08:32.000 --> 0:08:32.560 Cetera, et cetera. 0:08:32.720 --> 0:08:35.240 So there's been a lot of work down every single 0:08:35.360 --> 0:08:39.240 day to continue to widen if you want this technology 0:08:39.240 --> 0:08:44.600 gap and EVIE is a key element to be able 0:08:44.640 --> 0:08:47.040 to do advanced technology, you know. I think Intel has 0:08:47.120 --> 0:08:50.000 proven to the world a few years ago that without 0:08:50.040 --> 0:08:53.439 ev life was getting impossible. That's also true for China. 0:08:54.280 --> 0:08:57.040 So this limit part of the activity there. 0:08:58.000 --> 0:09:01.840 Based on your interaction, it's the Prime Minister of the 0:09:01.840 --> 0:09:06.800 Netherlands with the Foreign Ministry, is it your expectation that 0:09:06.880 --> 0:09:12.880 the restrictions will become even more limiting on China's ability 0:09:12.880 --> 0:09:15.679 to purchase machinery like asmls. 0:09:16.240 --> 0:09:20.439 Well, if you look at the geopolitic landscape, I think 0:09:20.480 --> 0:09:23.439 it's clear that the United States will continue to apply 0:09:23.600 --> 0:09:28.000 pressure on their life for more restriction. Now the question 0:09:28.720 --> 0:09:31.959 the discussion we have with the Dutch Prime Minister, I 0:09:31.960 --> 0:09:36.520 would say, the European political leader, because at the end 0:09:36.559 --> 0:09:40.920 of the day, we are a technology champion company, right, 0:09:40.960 --> 0:09:44.120 so these other people we have this discussion with, and 0:09:44.160 --> 0:09:48.040 the question is what is right for the Netherlands, what 0:09:48.160 --> 0:09:50.640 is right for Europe and as a result, what is 0:09:50.720 --> 0:09:54.880 right for SML. So what restriction makes sense when it 0:09:54.920 --> 0:09:57.920 comes to national security which has been the prime argument, 0:09:59.200 --> 0:10:02.280 and where does it right because, like I said, a 0:10:02.320 --> 0:10:04.760 lot of the focus in China today is on mainstream 0:10:04.920 --> 0:10:10.160 semiconductor and this is very different from you know AI. 0:10:10.920 --> 0:10:13.360 So that's the discussion we have. Is think the pressure will. 0:10:13.200 --> 0:10:16.280 Continue to be there because you know, if you look 0:10:16.320 --> 0:10:19.679 at the landscape, that's what it is. But I think 0:10:19.720 --> 0:10:24.120 that the discussion will get more sophisticated over time, the 0:10:24.160 --> 0:10:27.760 stake will become higher, and I think that country like 0:10:27.800 --> 0:10:31.080 the Netherlands, all of Europe where again we belong to, 0:10:31.880 --> 0:10:35.680 will also more and more start to discuss what makes 0:10:35.679 --> 0:10:36.720 sense for US? 0:10:37.360 --> 0:10:42.080 Does it make sense for the European Union to be 0:10:42.360 --> 0:10:45.880 to work in such close concert with the US in 0:10:47.120 --> 0:10:49.760 making it difficult for China to get access to these 0:10:50.800 --> 0:10:55.840 machines at what stage and do you find yourself wishing 0:10:55.960 --> 0:10:59.200 that the Dutch government and maybe the EU government would 0:10:59.240 --> 0:11:02.960 push back harder on some of the restrictions that the 0:11:03.080 --> 0:11:04.960 US would like you to impose. 0:11:05.840 --> 0:11:10.120 Well, I think you know, as a European citizen right Dutch, 0:11:11.240 --> 0:11:15.160 I would say residents, not citizens, as you know. I 0:11:15.400 --> 0:11:18.200 like to know that they do what is right for 0:11:18.320 --> 0:11:20.280 Europe and for the Netherland. I think that's the most 0:11:20.280 --> 0:11:23.199 important things we have always said in SML. 0:11:23.400 --> 0:11:26.480 We don't make the law. I'm not a politician. I 0:11:26.520 --> 0:11:27.559 don't know half of. 0:11:27.520 --> 0:11:30.080 What they know, of course, and they may be good 0:11:30.120 --> 0:11:34.199 reason to restrict and if there is a good reason 0:11:34.240 --> 0:11:37.280 to do so, and our government believe that, then we 0:11:37.320 --> 0:11:38.000 will go with it. 0:11:38.040 --> 0:11:38.520 Of course. 0:11:39.080 --> 0:11:42.199 I think what's very important is to have the discussion 0:11:42.840 --> 0:11:46.200 with them so that they understand what we do, maybe 0:11:46.280 --> 0:11:50.560 understand the industry bit better, and they are better equipped 0:11:50.640 --> 0:11:57.000 to really decide what is good again overhaul the for 0:11:57.080 --> 0:11:59.679 your European countries and for the Netherlands. 0:12:00.120 --> 0:12:05.040 Done your interaction with your customers in China and globally, 0:12:06.040 --> 0:12:10.079 is it your perception that the motivations for export controls 0:12:11.240 --> 0:12:15.319 are truly about national security interests and regional security interests 0:12:15.400 --> 0:12:18.960 versus economic competition. In other words, how much do you 0:12:19.040 --> 0:12:24.400 think this is about keeping China from becoming economically more 0:12:24.480 --> 0:12:27.280 competitive with the rest of the world versus these are 0:12:27.360 --> 0:12:29.800 legitimate security threats. 0:12:30.320 --> 0:12:32.120 Yeah, so Tom, I could almost turn you back to 0:12:32.240 --> 0:12:35.200 question right. You almost have a rectory question I see 0:12:35.559 --> 0:12:38.520 in here, and what you see happening is more and 0:12:38.559 --> 0:12:43.040 more people asking themselves this exact question. And if you 0:12:43.080 --> 0:12:46.040 look at the press, I think there is a real 0:12:46.120 --> 0:12:49.800 debate happening. That's one of the debate easy treaty about 0:12:49.880 --> 0:12:54.360 national security. We know that there is, of course a 0:12:54.440 --> 0:12:59.640 strong economic competition between the US, Europe, China. 0:12:59.679 --> 0:13:00.920 We see it everywhere. 0:13:01.960 --> 0:13:05.480 People question how much of that as a play in 0:13:06.800 --> 0:13:11.080 the decision. The other debate you start to see, which 0:13:11.120 --> 0:13:13.680 is I think is also related is does it help 0:13:13.760 --> 0:13:16.439 us or does it hurt us? I think a lot 0:13:16.480 --> 0:13:19.120 of companies in the US that start to also question 0:13:20.120 --> 0:13:22.640 is that a good thing for us? And I think 0:13:22.679 --> 0:13:26.200 that's the key debate to have, because, like I said, 0:13:26.240 --> 0:13:28.400 I think at the end of the day, we need 0:13:28.440 --> 0:13:32.480 our governments to do the right thing for their people, 0:13:32.840 --> 0:13:36.600 and I think those debate are far more. I say 0:13:36.640 --> 0:13:41.240 that active far more lively than they were two years ago, 0:13:41.240 --> 0:13:42.160 and I think it's very good. 0:13:42.400 --> 0:13:43.480 I think it's very good. 0:13:43.320 --> 0:13:46.200 Because most probably these bring us to what I would 0:13:46.240 --> 0:13:50.320 call a more rational discussion and a more balanced set 0:13:50.360 --> 0:13:52.800 of decision moving forward. So I think we can only 0:13:52.840 --> 0:13:55.040 welcome debate in such complicated issues. 0:13:55.160 --> 0:13:57.400 Thank you. I want to talk a little bit more. 0:13:57.520 --> 0:14:00.000 Let's bring things a little bit more local to the Netherlands. 0:14:00.200 --> 0:14:04.280 Where ASML has discussed with the Dutch cabinet it wants 0:14:04.320 --> 0:14:08.680 to operate successfully in the country. Your predecessor Wennex said, 0:14:08.720 --> 0:14:11.440 if the Netherlands shuts down and we cannot get immigrants 0:14:11.800 --> 0:14:16.240 or foreign students, then fine, you should accept the consequences. Now, 0:14:16.400 --> 0:14:19.520 the Dutch government, to its credit, has set up a 0:14:19.520 --> 0:14:22.760 task force said it will spend billions of euros in 0:14:22.800 --> 0:14:27.000 the Einhoven region to keep ASML at home. My question 0:14:27.320 --> 0:14:31.320 is is that enough, particularly in a world where there 0:14:31.560 --> 0:14:35.360 is a coalition led by a far right lawmaker that's 0:14:35.480 --> 0:14:41.440 looking to implement the strictest ever anti immigration policies. The 0:14:41.480 --> 0:14:46.000 cabinets working on areas to restrict labor migration. You are 0:14:46.040 --> 0:14:51.000 dependent on labor from not just domestic but around the world. 0:14:51.480 --> 0:14:54.840 How concerned are you about the forces at work bringing 0:14:54.840 --> 0:15:02.080 this anti immigrant rhetoric and policy to the Dutch government. 0:15:02.640 --> 0:15:05.560 Yeah so here also, maybe if you take a bit 0:15:05.600 --> 0:15:09.160 of airs step back, think that this is almost an 0:15:09.200 --> 0:15:12.280 issue for Europe. What you describe as it's happening in Netherlands, 0:15:12.320 --> 0:15:14.680 it's happening in many countries. 0:15:14.280 --> 0:15:16.760 As we speak. It's happening in the US, it's happening 0:15:16.800 --> 0:15:17.320 in the US. 0:15:18.120 --> 0:15:21.480 And what we try to do again in our discussion 0:15:21.680 --> 0:15:24.720 with our government, every government wants to have company like 0:15:24.760 --> 0:15:28.680 ASML in Europe, in the Netherlands, right, anyone wants that. 0:15:29.000 --> 0:15:29.800 The more the better. 0:15:31.080 --> 0:15:34.040 But to be able to have company like this, you 0:15:34.120 --> 0:15:36.680 need a few things. You need to have access to capital, 0:15:37.040 --> 0:15:40.320 access to people, access to energy, you need to have 0:15:40.360 --> 0:15:44.440 a place to build your factory. All those conditions have 0:15:44.600 --> 0:15:47.720 to be there. And if you want to compete with 0:15:47.920 --> 0:15:52.680 other country China, the US, whatever, not only you need 0:15:52.720 --> 0:15:54.840 to have those conditions, but those conditions has to be 0:15:54.920 --> 0:15:57.760 as good as possible so that you can be competitive. 0:15:57.960 --> 0:16:03.600 Because this industry is extremely competitive and no one should 0:16:03.640 --> 0:16:07.640 ever take any success for granted. Right, of course, the 0:16:07.680 --> 0:16:10.960 story of SML is great, but it's only great after 0:16:11.120 --> 0:16:15.560 forty years of very hard walk and this is you know, 0:16:15.720 --> 0:16:20.280 something you have to preserve, so we need all those 0:16:20.320 --> 0:16:22.760 conditions to be there. I think, you know, the Drage 0:16:22.880 --> 0:16:26.280 report was also a good way to summarize what the 0:16:26.440 --> 0:16:30.080 entire industry in Europe think and our government have to 0:16:30.120 --> 0:16:34.040 work on that. And you know, of course there's a 0:16:34.040 --> 0:16:38.320 bit of you know, immigration is a bit of a topic. 0:16:38.040 --> 0:16:41.840 Of the day because that's a way to get people attention. 0:16:42.360 --> 0:16:43.840 And I think what we have said is we have 0:16:43.960 --> 0:16:47.960 built our company with one hundred more than one of 0:16:48.040 --> 0:16:52.240 the nationalities. So bringing tenants from everywhere has been an 0:16:52.280 --> 0:16:56.800 absolute condition for success and this has to continue. The 0:16:56.800 --> 0:16:59.720 good news is that you said, I think people are listening. Okay, 0:17:00.080 --> 0:17:03.000 maybe when you know, you get down to business, people 0:17:03.000 --> 0:17:05.280 are more reasonable that maybe when they run a campaign 0:17:05.480 --> 0:17:06.720 or try to get elected. 0:17:07.320 --> 0:17:12.040 Does it make sense for ASML to consider locating or 0:17:12.080 --> 0:17:16.920 relocating some operations outside of the Netherlands as at least 0:17:16.960 --> 0:17:20.320 a contingency measure to ensure that you have access to 0:17:20.400 --> 0:17:23.600 those ingredients that you mentioned that over forty years have 0:17:23.720 --> 0:17:25.720 made ASML a great company. 0:17:26.359 --> 0:17:29.159 So the treashold to do that is pretty high for 0:17:29.320 --> 0:17:37.520 us because we are developing extremely sophisticated machines. Technology in 0:17:37.560 --> 0:17:40.840 fact is a combination of many many technologies that we 0:17:40.920 --> 0:17:45.879 have to bring together. Our supply chain is eighty percent 0:17:45.920 --> 0:17:50.080 of it around the Netherland, Germany, in Netherland, France, Italy 0:17:50.320 --> 0:17:55.040 very close our engineer our R and D is now, 0:17:55.280 --> 0:17:57.960 of course almost fully in the Netherlands. We have RNDY 0:17:57.960 --> 0:17:59.720 center also in the US, but I would say the 0:18:00.080 --> 0:18:02.800 large part of it is in the Netherlands. And one 0:18:02.920 --> 0:18:06.320 very important things because of the complexity of our tools, 0:18:07.000 --> 0:18:10.760 we want to keep our research developments very close to 0:18:10.800 --> 0:18:12.520 our manufacturing center. 0:18:13.160 --> 0:18:14.359 Because what you may not. 0:18:14.320 --> 0:18:18.240 Realize is every two years we make a new step 0:18:18.280 --> 0:18:20.680 on our machines, so we have to improve them every 0:18:20.680 --> 0:18:23.320 couple of years like our customer. And it's meant that 0:18:23.359 --> 0:18:26.760 every two years we build new machine and we have 0:18:26.840 --> 0:18:30.720 to teach our manufacturing people very quickly to be able 0:18:30.760 --> 0:18:33.760 to build a new machine. So there's been a long 0:18:34.240 --> 0:18:37.200 lasting principle in ICML that we want to keep R 0:18:37.280 --> 0:18:40.119 and D and manufacturing together, and we like to do 0:18:40.200 --> 0:18:42.480 that in the Netherlands because this is where we are. 0:18:43.680 --> 0:18:48.760 So the threashold to change that ethic is very high 0:18:49.600 --> 0:18:53.959 and I would say new things like geopolitics give us 0:18:53.960 --> 0:18:57.280 even more reason to stay in the Netherlands so that 0:18:57.359 --> 0:19:00.800 we can build this very strong relationship with Dutch government, 0:19:01.280 --> 0:19:05.960 with the European countries around us to also get the 0:19:06.000 --> 0:19:10.159 support of those government activity. 0:19:11.080 --> 0:19:14.400 So it's not really being considered now to maybe locate 0:19:14.480 --> 0:19:16.240 some operations elsewhere. 0:19:16.600 --> 0:19:22.000 We have operation elsewhere further, but we will only grow 0:19:22.080 --> 0:19:25.159 dose operation based on the activity we have in the 0:19:25.200 --> 0:19:28.080 different countries. But we don't at all consider to move 0:19:28.119 --> 0:19:31.720 a large part of our operation outside of the Netland, 0:19:32.080 --> 0:19:33.240 not at all. 0:19:34.320 --> 0:19:37.600 European Union has a multi tens of billions of dollars 0:19:37.640 --> 0:19:41.919 plan to expand local manufacturing capacity, with a goal of 0:19:42.000 --> 0:19:46.240 doubling output from the region to twenty percent of the 0:19:46.240 --> 0:19:50.879 global market by twenty thirty In your estimation, is this 0:19:50.920 --> 0:19:54.400 a realistic expectation and what are some of the hurdles 0:19:54.400 --> 0:19:57.360 that the region needs to overcome. This is the idea 0:19:57.480 --> 0:20:01.560 of increasing the region's capacity to be a bigger producer 0:20:01.600 --> 0:20:04.000 of global of chips to the global market. 0:20:04.720 --> 0:20:06.240 Yeah, so I think it's very simple. 0:20:06.320 --> 0:20:08.720 If you want to achieve this kind of target, you 0:20:08.800 --> 0:20:13.080 have to build capacity. If we look at, for example, 0:20:13.200 --> 0:20:17.560 where we ship our system today, most of our systems, 0:20:17.600 --> 0:20:20.240 eighty percent of our system are still being shipped to Asia, 0:20:20.840 --> 0:20:23.480 so Asia remains at least for quite. 0:20:23.280 --> 0:20:23.959 A few years. 0:20:25.320 --> 0:20:28.320 I would say that the key manufacturing place for semiconductor. 0:20:29.440 --> 0:20:32.959 To get to thirty percent share of the output, you 0:20:33.080 --> 0:20:36.200 have to take more than thirty percent of the tool 0:20:36.240 --> 0:20:39.080 that are going to be shipped. We don't see that yet, 0:20:39.119 --> 0:20:43.680 so I think that mostly the progress is not as 0:20:43.840 --> 0:20:47.399 fast as some people hope. I think you have also heard, 0:20:47.880 --> 0:20:51.000 of course, some major delay right in some of the 0:20:51.040 --> 0:20:53.760 factory in the US. So this is pointing to most 0:20:53.800 --> 0:20:59.120 probably a slower execution. But you know, you only can 0:21:00.160 --> 0:21:03.119 start to believe the target would be achieved when the 0:21:03.200 --> 0:21:08.760 capacity build is exceeding thirty percent of the total worldwide capacity, 0:21:08.760 --> 0:21:09.840 which is not the case yet. 0:21:11.800 --> 0:21:14.520 In our introduction, Caroline reminded us that we have an 0:21:14.560 --> 0:21:16.560 election in the US in a couple of weeks. 0:21:16.600 --> 0:21:17.760 You might have heard about. 0:21:17.480 --> 0:21:19.320 It, do you. 0:21:21.040 --> 0:21:23.119 It's very close so far in the polls. 0:21:23.480 --> 0:21:28.240 Would you expect conditions for the global chip making world 0:21:28.920 --> 0:21:34.240 to become better under one candidate versus the other in 0:21:34.280 --> 0:21:35.400 the US? 0:21:36.200 --> 0:21:38.880 Well, you know there's a lot of yeah, of course, 0:21:39.000 --> 0:21:41.760 like anyone else. You know, I followed the election in 0:21:41.800 --> 0:21:46.080 the US and you can see a lot of polarization. 0:21:46.240 --> 0:21:51.199 I think in the debates there's one topic that still 0:21:51.400 --> 0:21:56.399 is I would say shared by both side in the US. 0:21:56.520 --> 0:22:01.040 It's China. That's one I think one m of agreement. 0:22:01.160 --> 0:22:06.040 So we don't expect major changes there. We expect the 0:22:06.080 --> 0:22:10.359 pressure on export called hol in China to remain. To 0:22:10.720 --> 0:22:13.240 tell you exactly how this will play out, I really 0:22:13.280 --> 0:22:13.560 don't know. 0:22:13.640 --> 0:22:14.280 To be an SSEC. 0:22:14.359 --> 0:22:16.560 Do you think it'll be ratcheted up? Do you think 0:22:16.560 --> 0:22:19.240 that pressure will be you talked about it's going to remain. 0:22:19.480 --> 0:22:21.480 Do you expect it to be ratcheted up? 0:22:22.200 --> 0:22:23.680 I think you know. I told you the pressure will 0:22:23.760 --> 0:22:25.639 be there after. I don't know. It's speculation. 0:22:25.800 --> 0:22:28.040 If you know one a candidate may may want to 0:22:28.040 --> 0:22:31.080 do more than the other. I don't know, but like 0:22:31.160 --> 0:22:34.720 I said that most probably will not come. 0:22:35.160 --> 0:22:36.040 Without a debate. 0:22:36.359 --> 0:22:38.840 And I think that you know, this is what we've 0:22:38.880 --> 0:22:40.800 seen happening now for for a few months. 0:22:40.920 --> 0:22:41.719 But we'll see. 0:22:41.920 --> 0:22:44.280 At Bloomberg Tech, we like to talk about new products. 0:22:44.280 --> 0:22:48.399 You've got a new one coming out high NAUV. We 0:22:48.440 --> 0:22:51.040 showed an image of it earlier three hundred and eighty 0:22:51.119 --> 0:22:55.200 million dollars one of our sizes and the scopes. It's 0:22:55.280 --> 0:22:57.600 the it's the size of a bus or a size 0:22:57.600 --> 0:23:03.439 of a small Amsterdam flat. Some of Amasmhal's customers have 0:23:03.560 --> 0:23:05.240 raised concerns about the price tag. 0:23:06.320 --> 0:23:07.840 One SVP and. 0:23:07.880 --> 0:23:11.760 A major customer said, I like the high naeuv's capability, 0:23:12.040 --> 0:23:16.159 I don't like the sticker price. What's your what are 0:23:16.200 --> 0:23:20.080 you concerned that the price tag could affect demand for it? 0:23:20.280 --> 0:23:22.399 And I'm asking this as someone who has about one 0:23:22.480 --> 0:23:25.639 hundred percent market sharing it, so I understand no. 0:23:25.960 --> 0:23:29.080 So you know, I had the question many many times 0:23:29.119 --> 0:23:32.000