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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. Dassen another record year for ASML.
Can you give us a summary of the fourth quarter and the full year results?
A record year but also a very strong Q4 with total revenue at EUR 4.3 billion. Included in there, EUR 1.1 billion in Installed Base revenue and both higher than guided. Primarily, I would say, as a result of higher sales in DPV, DPV immersion and also as a result of more upgrades. If we look at the gross margin, gross margin came in at 52%, also quite a bit better than we guided. Again, same results, if you look at the product mix with more immersion in there and also upgrades, that's really what drove it. In terms of net income, EUR 1.4 billion. So overall, really a strong quarter and also the order intake was very, very strong with EUR 4.2 billion of order intake, net bookings included in that net 6 EUV systems representing EUR 1.67 billion.
So that's the quarter. What about the full year?
As I said, a record year with EUR 14 billion of revenues, included in there EUR 3.7 billion for installed base revenue. Gross margin at 48.6% and net income at EUR 3.6 billion.
2020 was a dynamic year for everyone, also for ASML, record year, as you said. How do you look back on it?
A dynamic here, in fact, an extraordinary year. An extraordinary year, starting with concluding as we just did, this was a record year for ASML, but a year where we, obviously, had to navigate the challenging circumstances of COVID-19. And I have to say, the way we were able to navigate that with the stellar performance of our people but also the support of all of our partners, suppliers, other partners, customers have been fantastic. And I really would like to take this opportunity to thank our people and our partners for being able to put up this performance. We also have to recognize COVID-19 is not yet behind us, but I think the past experience really strengthens us, I think, in our conviction that we're able to navigate these really tough circumstances.
Further to the results, how is your EUV business doing?
EUV is doing very well, both on the Logic front and on the DRAM front. If we start looking at the numbers for Q4, we shipped 9 systems, only 8 were taken in revenue. The one system that we did not recognize as revenue was because it's a new system configuration at a customer that needs to be qualified at the customer still in early 2021. As soon as that has happened, it will also be recognized in revenue. If we look at the full year, all in all, 31 systems taken in revenue, total revenue on the system side of EUR 4.5 billion. So a very significant uptick there of 60% in terms of revenue recognized for EUV. If you look at the gross margin, as we have been projecting, more than 40% was the gross margin on EUV for the full year and on the system side. And if we look at 2021, I would say that with the introduction of the 3600D, that will be the point in time where we will see EUV systems gross margin at the level of the corporate gross margin. And also at the service level, as you know, we broke even on EUV service gross margin this year. And we expect that to gradually go to corporate gross margin, and I would say about 4 years' time, and we'll make a gradual step-up again this year.
Overall, how is EUV demand developing?
EUV demand is developing very, very strongly. We have an order book of EUR 6.2 billion. Now if we look a little bit into this year and the expectations for this year, we expect total EUV system sales this year of EUR 5.8 billion, which is 30% up in comparison to the EUR 4.5 billion that we had for 2020. We are making good progress, I would say, in our manufacturing capacity, primarily, as we said before, by driving down the cycle time. I think the one limiting factor that we have this year really is the orders that we placed into the supply chain. We had to adjust that in the -- during the COVID situation, so that will be the limiting factor for this year.
And what about High-NA? How are you developing over there?
Overall, High-NA is developing very well. But I think it's also important to recognize that we have a significant road map still ahead of us for 0.33. And we're very aggressively working on that road map, really putting performance for our customers to meet their requirements, both on throughput, both on imaging, on overlay requirements. We think that will cater to the demand of our customers for the next couple of years. And then there will be a certain point in time, and we think that probably will be in '25, '26 time frame, where our customers will no longer be able to perform based on -- or to meet the demands of their customers by applying double patterning. Then they will have to go beyond that. They will want to reduce the process complexity, and that will then require the need for them for High-NA. In terms of our own time frame, I think this year, we'll see the first integration of modules. Next year, we will see the availability of the first system available for R&D purposes at our sites. Customers will then have access to that tool in 2023. 2023, we will also see the first initial installations of High-NA tools at customers. And again, then in the '25, '26 time frame, that's where we really see a High-NA going into high-volume manufacturing.
How does your present business translate into a cash flow dividend share buyback?
As promised, Q4 was very, very strong from a free cash flow perspective, as I think people have been able to see in the numbers. So really strong performance on that front. And also, for this year, for 2021, we expect a significant generation of free cash flow. Our capital allocation policy hasn't really changed. So in essence, what we say, what we need and the business will need, so whatever we need for R&D, for CapEx, et cetera, we'll use that in the business. And whatever -- what is not necessary for that, we will be able to distribute back to our shareholders by way of increasing dividends over time and share buybacks. As far as dividend is concerned, we're looking at a total dividend for 2020 of EUR 2.75. And in terms of share buyback, as you know, we have a 3-year program for share buybacks have in total EUR 6 billion. We were able to execute EUR 1.2 billion last year, and we're looking at executing a significant share buyback in Q1 of 2021.
What's your market outlook for the quarter and for the full year 2021?
For the quarter, we're looking at sales between EUR 3.9 billion and EUR 4.1 billion, included in there, EUR 950 million of installed base revenue. We're looking at a gross margin between 50% and 51%. For the full year, we're looking at a year of continued growth, both in sales and in gross margin. If I just look at the different businesses that we're in, the different market segments that we're in, we're actually looking -- let's start with Logic. Logic already very strong this year. And still, we believe that Logic, we expect that to grow another 10% in 2021. And that really is because of all the changes that we see, the really continued development in the digital economy that we're witnessing and even more strongly after last year. And you see that everywhere. You see it on the advanced nodes with the secular trends in AI, high-performing compute, 5G. I mean those are the big drivers behind the big demand in advanced nodes, but also in the more mature nodes, where you see, particularly in the Internet of Things and also the application of that, both in the consumer, automotive and industrial markets. You see that also the demand for the more mature nodes is at very, very high level. So all in all, very, very positive and therefore, expect another increase of 10% on Logic. If we move to Memory, as we projected, you already saw the momentum being turned positively for, particularly, DRAM in 2020. So you did see some growth in DRAM, in particular, last year, and we see that momentum actually sustained into 2021. And that is because of all the demand for data centers but also the application of memory into consumer devices is something that we just continue to see. And in that combination of continued bit growth, but also the fact that the utilization of our tools really is at an extremely high level that provides us the comfort that we think Memory is going to increase further, and we believe Memory can grow with 20% for this year in comparison to last year. Finally, installed base revenue, again, a significant growth in last year of about 30%, and we expect that to grow another 10% this year. And that's a combination of, on the one hand, the service margin and the service revenue growing. As a result of the fact that the installed base is growing, as a result of the fact that we see more and more EUV tools really going into high-volume manufacturing and really producing a larger and larger number of wafers, so that combination really increases the revenue from service. And we also recognize that customers are more and more interested in upgrades in order to increase their capacity but also to increase performance on overlay performance on imaging. So those are things that can be catered to with more and more upgrades, and they will be available also in this year. And we believe that will lead to another growth on that front. So if you take it all together, what we're looking at really is another year of double-digit growth as a result of the different dynamics that I just mentioned there. We believe there can be actually even more growth than what we just discussed but that would then be under the assumption that we will not be faced with more limitations on the geopolitical front and the export controls front than what we're seeing today. That will be an important dynamic, I think, for all of us to watch for. If we're not confronted with more limitations there, then we believe there is still some more potential on growth than the numbers that I just shared with you. So all in all, we're looking with a lot of passion and a lot of comfort, if you like, and a lot of faith into this year and also, quite frankly, beyond this year. We think the growth trends are there, our products are there, the road map that we have caters to demand of our customers. And that gives us a lot of confidence in the performance of ASML in the short and the longer term. We really look forward to having conversations with all of you in our Investor Day that we will have later this year.