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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Mr. Winnick, another record year in revenue for ASML. Can you give us a summary of the fourth quarter and the full year results?
Of course, let's first talk about the numbers. Fourth quarter sales came in at EUR 4 billion. That's just above guidance and gross margin within guidance. That translates into a full year sales number of EUR 11.8 billion and EUR 2.6 billion of net income. So it's a good year.When you look at those numbers, I think you need to look at the bigger picture. I think if you look at 2019, it was a year where the Logic business was strong. Memory was weaker because our Memory customers were digesting an overcapacity situation.But within that context, the estimate is that our equipment industry, the industry at large, will have a reduction in sales of about 10%, and ASML grew between 8% and 9%. So that's very good. And actually, it's a reflection of, I think, the importance of lithography, the increasing importance of lithography with, of course, EUV now coming on to the scene. And it's our expectation that in 2019 the share of lithography in total wafer CapEx spend has risen to about 27%. So this shows also the importance of EUV. It's also in that context 2019 was a very good year.
What's your market outlook? And what's your view on 2020?
Of course, January 2020. So it's a bit early to be quantitative, but let's go through the business. Logic, very clear, also supported by statements from our customers. 5-nanometer transition, 7 to 6. It's all happening. And it's all there to support 5G, big data, artificial intelligence, high-power compute. So Logic is going to be strong.Memory, interesting year. It's going to be interesting. Like I said, 2019 was a weak year. But when we listen to our Memory customers, they see the first signs of a recovery shown by memory pricing. And that's confirmed by what we see. We just look at the utilization of our machines in the memory space. It's going up. Now if you look at the slope of that trend and you extrapolate that, I think it's fair to assume that somewhere in the second half, we as an equipment industry will see a recovery also from memory customers. Now where and when and to what extent is still, of course, a bit early, but the trend is clear.Then about Installed Base Management. Installed Base Management will grow also this year as compared to 2019 driven by the fact that our installed base grows. But also, we're seeing the first EUV high-volume manufacturing kicking in. That already started last year, at the end of last year. That will lead to more income because we get paid per wafer. And on top of that, we foresee a pretty strong upgrade business, both in DPV and EUV. So all in all, when we look at the year, we think second half will be slightly higher than the first half but with upside of the Memory recovery. And all in all, I think it's going to be a good year from a top line growth point of view and a profitability point of view, both double digit.
Let's have a look at EUV. 2019 was a breakthrough year for EUV. Can you give us an update on EUV?
I think the most important to mention on EUV, as you look at 2019, is the fact that we went into high-volume manufacturing, into HVM with EUV, Logic but also Memory. It's also driven by our product introduction strategy, our 3400C is a high-productivity model, which of course helps our customers to drive the cost per wafer down. That's particularly important. So we shipped the 26 systems, totaled EUR 2.8 billion of revenue in EUV.Now looking at this year, 2020, we're going to ship about 35 systems, but EUV revenue will be about EUR 4.5 billion. So it's a significant increase. And more important also to look forward in 2021 because we see a continuation of the demand for EUV in 2021 driven by Logic and Memory. So that is going to be a matter of how many systems can we make. And this is why we focus very much on cycle time reduction in our factory, which will then support a capacity of 45 to 50 systems in 2021. So we're looking forward also to the year 2021.
Finally, any updates for your shareholders?
Yes. Clearly, like I said, we will see profitability growth not only this year but also the next couple of years. Of course we will generate cash. And I think all our shareholders will agree with me that the first source of cash should be our business. So we're going to invest in R&D and into the operational infrastructure to make sure that we can meet with the higher sales demand. That's number one.Secondly, we've always said our return strategy is that we pay an increasing dividend. And the rest of the money will go into share buybacks. So we will propose to the shareholders' meeting to increase the dividend from EUR 2.10 to EUR 2.40, which is about a 14% increase. And we're announcing a share buyback program with a size of EUR 6 billion through 2022.So all in all, I think, decent returns for all of us.