We are over 42,400 individuals – thinkers, innovators, problem solvers, planners, movers and makers. | |
As a team, working together with our partners and customers, we help feed the world’s ever-growing demand for faster and more efficient microchips. | |
We create impact by pushing technology to new limits, unlocking the potential of society and enabling people to tackle some of humanity’s biggest challenges. | |
Together we create impact. |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 2 |
Together we create impact | ||||
Throughout this year's report we feature ASML colleagues and look at the impact they are having on ASML and society. | ||||
Delivering for our customers | ||||
Embracing change, driving innovation | ||||
A sustainability mindset | ||||
Making a difference | ||||
Helping our teams thrive | ||||
Working together, growing together | ||||
Impact through collaboration | ||||
View our Highlights online > | ||||
Our 2023 online report highlights key information from this pdf with additional links to relevant information on our corporate website. | ||||
Risk | |
How we manage risk | |
Risk factors | |
Q&A with the CBO | |
Environmental, social and governance | |
Our material ESG sustainability topics | |
Contributing to the UN Sustainable Development Goals | |
Environmental | |
Energy efficiency and climate action | |
Circular economy | |
Water management | |
Social | |
Attractive workplace for all | |
Responsible supply chain | |
Innovation ecosystem | |
Valued partner in our communities | |
Governance | |
ESG integrated governance | |
Transparent reporting |
Corporate Governance | |
Board of Management | |
Supervisory Board | |
Other Board-related matters | |
AGM and share capital | |
Financial reporting and audit | |
Compliance with Corporate Governance requirements | |
Supervisory Board Report | |
Message from the Chair of the Supervisory Board | |
Supervisory Board focus in 2023 | |
Meetings and attendance | |
Supervisory Board committees | |
Financial statements and Profit Allocation | |
Remuneration Report | |
Message from the Chair of the Remuneration Committee | |
Remuneration at a glance | |
Remuneration Committee | |
Board of Management remuneration | |
Supervisory Board remuneration |
Consolidated Financial Statements | |
Report of Independent Registered Public Accounting Firm | |
Consolidated Statements of Operations | |
Consolidated Statements of Comprehensive Income | |
Consolidated Balance Sheets | |
Consolidated Statements of Shareholders’ Equity | |
Consolidated Statements of Cash Flows | |
Notes to the Consolidated Financial Statements | |
Non-financial Statements | |
Assurance Report of the Independent Auditor | |
About the non-financial information | |
Non-financial indicators | |
Other appendices | |
Definitions | |
Exhibit index |
ASML ANNUAL REPORT 2023 | CONTENTS | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 3 | |
Contents |
STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS & NON-FINANCIALS |
A definition or explanation of abbreviations, technical terms and other terms used throughout this Annual Report can be found in the Definitions section. 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 NV and/or any of its subsidiaries, as the context may require. References to our website and/or video presentations in this Annual Report are for reference only and none nor any portion thereof are incorporated by reference in this report. © 2024, ASML Holding NV All Rights Reserved. | |||
ASML ANNUAL REPORT 2023 | FORWARD-LOOKING STATEMENTS | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 4 | |
Special note regarding forward-looking statements |
ASML ANNUAL REPORT 2023 | MESSAGE FROM THE CEO | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 5 | |
Managing the cycle, preparing for greater growth in years to come | ||||||
Despite macroeconomic and geopolitical challenges, ASML has again delivered strong performance. Now, as we see signs of the industry coming out of its cyclical downturn, we are laying plans for further significant growth. |
Our holistic approach to lithography provides customers with support and solutions at every stage of the chipmaking process.” |
Peter Wennink |
President, Chief Executive Officer and Chair of the Board of Management |
ASML ANNUAL REPORT 2023 | MESSAGE FROM THE CEO CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 6 | |
Managing the cycle, preparing for greater growth in years to come (continued) |
Our task in 2024 is to reflect on our organization and capabilities and prepare for the rapid growth that is sure to come.” |
Peter Wennink |
President, Chief Executive Officer and Chair of the Board of Management |
ASML ANNUAL REPORT 2023 | MESSAGE FROM THE CEO CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 7 | |
Managing the cycle, preparing for greater growth in years to come (continued) |
Our values of challenge, collaborate and care have been instrumental in our success.” |
Peter Wennink |
President, Chief Executive Officer and Chair of the Board of Management |
Key facts in 2023 | ||||
€27.6bn | 42,416 | |||
Total net sales | Employees (FTE) | |||
€23.2bn Asia €3.2bn US €1.2bn EMEA | 19,805 in Operations 15,604 in R&D 7,007 in Sales and Support | |||
€4.0bn | 35.1 kt | |||
R&D investments | Scope 1 and 2 CO2e emissions | |||
We innovate across our entire product portfolio through strong investment in R&D | ||||
(2025 target net zero) | ||||
€15.5bn | 80.3% | |||
Total sourcing spend1 | Employee engagement score against benchmark | |||
(Netherlands: 40% | EMEA (excl. NL): 40% North America: 13% | Asia: 7%) | ||||
1.Reported for non-financial (GRI) reporting purposes | ||||
(2025 target -2% vs. top 25% performing companies) | ||||
What we do | ||||
At ASML, we design and integrate lithography systems with computational tools, metrology and inspection systems, and process control software solutions. This holistic approach to lithography provides chipmakers with support and solutions at every stage of the chipmaking process, from early design and development to high-volume production. It enables chipmakers to optimize the lithography system setup and process window for high-volume manufacturing, helping them achieve their highest yields and best chip performance. | ||||
Our key products and services | ||||
•Lithography systems •Metrology and inspection systems •Computational lithography •Supporting our customers | •System and process control software •Managing our installed base systems •Refurbished systems | |||
Read more in Our products and services on |
Where we operate – more than 60 locations across 3 continents | ||||||
Asia | ||||||
China | ||||||
Japan | ||||||
Malaysia | ||||||
Singapore | ||||||
South Korea | ||||||
Taiwan | ||||||
North America | ||||||
Arizona | New Mexico | |||||
California | New York | |||||
Colorado | Oregon | |||||
Connecticut | Texas | |||||
Idaho | Utah | |||||
Massachusetts | Virginia | |||||
EMEA | ||||||
Belgium | ||||||
France | ||||||
Germany | ||||||
Ireland | ||||||
Israel | ||||||
Italy | ||||||
Netherlands | ||||||
United Kingdom | ||||||
ASML ANNUAL REPORT 2023 | AT A GLANCE | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 8 | |
We are a global innovator | ||||||
As one of the leading innovators in the semiconductor industry, we’ve been helping chipmakers push technology to new limits and unlock the potential of society since 1984. Together, our hardware, software and services provide a holistic approach to mass producing the patterns of microchips. | ||||||
Berliner Glas (ASML Berlin GmbH) is reflected as part of our business throughout this report, with the exception of non-financial reporting. We are preparing to integrate this in 2024 in line with Corporate Sustainability Reporting Directive (CSRD) requirements. |
Why we exist – our purpose | ||
Unlocking the potential of people and society by pushing technology to new limits. | ||
What we try to achieve – our vision | ||
We enable ground-breaking technology to solve some of humanity’s toughest challenges. | ||
What we uniquely do – our mission | ||
Together with our partners, we provide leading patterning solutions that drive the advancement of microchips. | ||
You can see the impact of our collaboration in the commercial results of ASML and our customers.” | |
George Tao | |
Director Customer Service Applications | |
Managing expansion in high-stress situations means focusing on your people and their well-being.” | ||
Mark Bergkotte | ||
Director Logistics Operations | ||
The interaction among supply chain partners helps us all improve to support faster growth.” | |
Manon Hendriks | |
Senior Director Sourcing & Procurement | |
ASML ANNUAL REPORT 2023 | AT A GLANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 9 | |
We work together to help society progress |
We challenge | ||
We challenge boundaries and question the status quo to keep pushing technology forward. | ||
We collaborate | ||
By tapping into the collective potential of our ecosystem of customers, partners and stakeholders, we can create better solutions. | ||
We care | ||
We act with integrity and respect, and provide a safe, inclusive and trusting environment where our people can learn and grow. | ||
Sustainability is a design challenge that must be solved in parallel with system cost and performance.” | |
Ton van der Net | |
Principal Architect D&E | |
ASML’s focus on technology and its supportive culture mean you can go wherever your talent and ambition take you.” | ||
Anya Kish | ||
Program Director EUV Source | ||
My new role will help us safeguard our innovation power as we evolve to support future growth.” | |
Ron Kool | |
Head of Business Performance Improvement | |
Every few months, I have been given a new challenge to extend myself.” | |
Manisha Devi | |
Solution Test Architect | |
ASML ANNUAL REPORT 2023 | AT A GLANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 10 | |
We live by our values to drive success |
The Rayleigh criterion that drives Moore’s Law | ||||||
Over the years, ASML has made several wavelength steps, and our DUV lithography systems range from 365 nm (i-line), through 248 nm (KrF) to 193 nm (ArF). With our 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 has increased the NA of our ArF systems by maintaining a thin film of water between the last lens element and the wafer in our so-called immersion systems, using the breaking index of the water to increase the NA. | After the wavelength step to EUV, we are 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. | |||||
•CD is the critical dimension, a measure of how small the smallest structures are that the lithography system can print. •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 a microchip. | Watch Gordon Moore video | |||||
What is a process window? | ||
Lithography and all other stages in the microchip manufacturing process must be closely aligned for an optimal result. The process window is the collection of acceptable variations of process parameters that allow a microchip to be manufactured and to operate under desired specifications. By incorporating computational lithography, metrology and inspection, ASML’s holistic lithography portfolio enables customers to maximize the process window, keeping lithography systems stable in a high-volume manufacturing setting, which leads to a higher yield with more good wafers per day. |
ASML ANNUAL REPORT 2023 | OUR UNIQUE OFFER | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 11 | |
Holistic lithography | ||||||
What is edge placement error (EPE)? | ||
Creating a microchip involves the patterning of tiny features in precise locations. Edge placement error (EPE) is the difference between the intended and the printed features of the layout of a microchip. For example, a feature could be a line, which has right and left edges. On a microchip, this line and its edges must be precise and placed in exact locations. Any deviation, no matter how slight, can result in misalignment, or an EPE. If one or more EPE issues crop up in the microchip production flow, the device is subject to shorts or poor yields, which could cause the entire chip to fail. | ||
ASML plays an integral role in the microchip manufacturing process | |
ASML ANNUAL REPORT 2023 | OUR UNIQUE OFFER CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 12 | |
Holistic lithography (continued) |
Extreme ultraviolet (EUV) lithography systems |
ASML ANNUAL REPORT 2023 | OUR PRODUCTS AND SERVICES | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 13 | |
World-leading holistic lithography solutions | ||||||
Our comprehensive product portfolio is aligned to our customers’ roadmaps, delivering cost-effective solutions in support of all applications, from leading-edge to mature nodes. |
Deep ultraviolet (DUV) lithography systems |
Refurbished systems |
ASML ANNUAL REPORT 2023 | OUR PRODUCTS AND SERVICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 14 | |
World-leading holistic lithography solutions (continued) |
Metrology and inspections systems |
ASML ANNUAL REPORT 2023 | OUR PRODUCTS AND SERVICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 15 | |
World-leading holistic lithography solutions (continued) |
System and process control software |
Our roadmap aims to apply more powerful algorithms with higher- order corrections to enable our customers to continue improving EPE performance. |
Computational lithography |
Managing our installed base system |
ASML ANNUAL REPORT 2023 | OUR PRODUCTS AND SERVICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 16 | |
World-leading holistic lithography solutions (continued) |
ASML ANNUAL REPORT 2023 | OUR PRODUCTS AND SERVICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 17 | |
Supporting our customers | ||||||
We believe a true partnership with our customers based on mutual trust is vitally important, ensuring that we share the risks and rewards of what we do. |
We collaborate with our customers to understand how our technology best fits their needs and challenges. |
Every few months, I have been given a new challenge to extend myself.” | ||
Manisha Devi | ||
Solution Test Architect | ||
4 years at ASML |
Delivering for our customers | |
After joining ASML four years ago, Manisha Devi led a team of engineers in the roll-out of ASML’s digital platform to customers in 2023. Aware that any mishaps could lead to unplanned downtime that may cost customers millions in lost revenue, Manisha knew the stakes couldn’t be higher. |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 18 |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 19 | |
We expect High NA EUV high-volume manufacturing systems to be fully operational in customer factories by 2025.” | |
Martin van den Brink | |
President, Chief Technology Officer and Vice Chair of the Board of Management |
Q | What were the highlights in technology development and innovation in 2023? |
ASML ANNUAL REPORT 2023 | Q&A WITH THE CTO | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 20 | |
Driving Moore’s Law across four decades of innovation | ||||||
In conversation with our President, Chief Technology Officer and Vice Chair of the Board of Management | ||||||
Martin van den Brink |
On April 24, 2024, ASML President & CTO Martin van den Brink will retire from ASML upon completion of his current appointment term. “It has been a privilege to co-lead ASML with Peter Wennink and to have brought a strong focus on product, technology and engineering capabilities to the company and its suppliers. I am proud of the innovations that we have delivered together with our customers over the decades." | ||
Q | Is shrink still the most important driver of innovation? |
Q | How have your ecosystem partners driven innovation in 2023? |
Q | How do you safeguard ASML’s ability to continually improve? |
Q | Can you update us on future developments such as Hyper NA? |
Digitalization will continue to enable many of the solutions that are transforming our planet.” | |
Martin van den Brink | |
President, Chief Technology Officer and Vice Chair of the Board of Management |
Q | How do you envisage ASML on its 50th anniversary? |
ASML ANNUAL REPORT 2023 | Q&A WITH THE CTO CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 21 | |
Driving Moore’s Law across four decades of innovation (continued) | ||||||
In conversation with our President, Chief Technology Officer and Vice Chair of the Board of Management | ||||||
Martin van den Brink |
We innovate through partnerships. By developing our technology in close collaboration with our customers, we seek to build today what they need tomorrow. |
ASML ANNUAL REPORT 2023 | INNOVATION | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 22 | |
How we innovate | ||||||
As a crucial manufacturer of lithography equipment, ASML is a vital part of the semiconductor ecosystem value chain. We don't innovate in isolation, but work as architects and integrators – collaborating closely with customers, our supply chain, and industry and research partners in a strong innovation ecosystem. |
Innovation achievements in 2023 | ||||
Our goal is to give customers the products and capabilities they need to deliver on technology’s potential to make a positive contribution to society. As well as creating some of the most advanced machines in the world, this includes an increased focus on sustainability through parts commonality and reuse, and improvements in the performance and energy efficiency of our products to reduce costs and waste. Innovation achievements of the last 12 months include: •Soft x-ray (SXR) scatterometry. Using 10-20 nm wavelength light, this is a revolutionary next-generation metrology for 3D metrology suitable for measuring 3D profiles of advanced devices such as Gate All Around (GAA) transistors. | •Generation of smooth mirror surfaces. This innovation is used on the EXE:5200 mirror block. The mirror block carries the wafer table, with its mirrors used to position the wafer in three dimensions. The smooth mirror surface has greater stiffness compared to other glass materials, enabling it to better cope with the extreme stage accelerations in our next-generation NXE and EXE systems. | |||
ASML ANNUAL REPORT 2023 | INNOVATION CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 23 | |
How we innovate (continued) |
ASML ANNUAL REPORT 2023 | MARKETPLACE | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 24 | |
The world around us | ||||||
The macroeconomic situation remains volatile and we continue to see macro trends such as high interest rates, inflation, fear of recession and geopolitical tensions increasing in some parts of the world. The semiconductor industry is trying to manage its inventory levels in some end-market segments to balance supply and demand. | ||||
The semiconductor market was still in the aftermath of the COVID-19 crisis in 2023, during which large stimulus packages accelerated economic growth. This created shortages in supply in the electronics industry as companies built safety stocks to increase future resilience. End demand for electronics slowed as we reached the end of the pandemic, while the supply chain was still building safety buffers. This resulted in a supply chain correction in 2023 which impacted our industry. In the context of demand for lithography, some customers delayed the timing of their demand for specific systems, as some of their facilities were not ready to receive the systems as well as a result of their end demand. This provided an opportunity to allocate these systems to customers whose demand profile we could not initially meet. Despite these delays, for certain system types the supply is still the main constraint, with demand being higher than supply, albeit at a reduced level than was experienced at the start of the year. | All in all, global trends – such as generative AI, the energy transition, the electrification of mobility and the industrial Internet of Things (IoT) – continue to fuel semiconductor growth in the longer term. Our highest-priority objective is to optimize supply so that we can deliver and live up to our customers’ expectations. We have strong confidence that the semiconductor ecosystem will continue to innovate and grow at a high single-digit compound annual growth rate. Factors that may impact our business are explained in more detail over the next few pages, including: | |||
1.Macroeconomic and geopolitical trends | ||||
2.Semiconductor market trends | ||||
3.Semiconductor application areas | ||||
4.Semiconductor industry market | ||||
1. Macroeconomic and geopolitical trends | ||||||||
Economic outlook | Middle East conflict | Russia-Ukraine war | ||||||
Description The macroeconomic situation did not improve in 2023; inflation rates and interest rates stayed relatively high and the fear of recession, amid the geopolitical conflicts, remained. The continued macroeconomic uncertainty means our customers in different market segments have remained cautious. A later recovery of markets is expected, and the timing and shape of the recovery slope remains unclear. What it means for ASML Our EUV business saw a slight shift in demand timing, predominantly driven by a lack of readiness of fabs. This was due to the market environment and a shortage of people who have the capability to build advanced fabs. With DUV demand higher than we can deliver, particularly in China, we are working closely with our customers and suppliers to ride out the uncertainty and manage the risks. | Description The military action in the Middle East is an additional factor in the current uncertainty in the macroeconomic environment. What it means for ASML Both ASML and our customers have operations in the Middle East. Additional military action in the region has and could further adversely affect the global economy, financial markets and the supply chain. This may impact our people and operations and our customers' operations, customer demand, delivery of products and services to customers, and the ability to obtain parts and components due to supply chain disruption. The safety and well-being of our employees and their families are a priority for us. | Description The military action in Ukraine is an element of the current uncertainty in the macroeconomic environment. What it means for ASML While we do not have operations in Russia or Ukraine, sanctions and other measures taken in response to the military action have adversely affected – and could further affect – the global economy, financial markets and the supply chain. This may impact our customer demand, delivery of products and services to customers, and the ability of us and our suppliers to obtain parts, components and gas supply due to supply chain disruption. | ||||||
Read more in Our business strategy Read more in Risk - How we manage risk | ||||||||
1. Macroeconomic and geopolitical trends (continued) | ||||||||||||
Global geopolitics – technological sovereignty | Global geopolitics – export controls | Mitigating climate change | ||||||||||
Description Semiconductors are crucial to the economic and strategic development of countries and regions, with the strategic importance of the semiconductor industry only likely to grow. Many countries and regions are pushing for ‘technological sovereignty’ to ensure security of supply, resilience and technological leadership in semiconductor technologies and applications. This is fueling capital expenditures in new regions. What it means for ASML As governments increasingly see semiconductor manufacturing as strategically significant, chips acts are incentivizing our customers to build manufacturing facilities in the US, Europe and Asia. Besides sharing our views with governments on semiconductor manufacturing, we work closely with our customers to build the semiconductor manufacturing ecosystem in new regions, while retaining our focus on supporting incumbent regions. | Description On June 30, 2023, the Dutch Government published new regulations regarding the export control of semiconductor equipment that came into effect on September 1, 2023. These controls focus on advanced chip manufacturing technology, including the most advanced deposition and immersion lithography systems (NXT:2000i, NXT:2050i, NXT:2100i and subsequent systems). In addition, in October 2023, the US government published updated US export control regulations which include restrictions on shipping mature immersion lithography systems (NXT:1970 and NXT:1980) to a limited group of customers in certain countries (including China). Governments have turned their attention to securing sufficient semiconductor supplies to ensure greater technological sovereignty and support local industries. Significant investments in the semiconductor industry are being planned, with industry forecasts suggesting that the top three semiconductor manufacturers plan to invest over $300 billion in global capacity in the coming years. While the industry is managing its overall costs, price rises could ultimately be passed on to the end market, driving up the price of devices. Trade tensions and protectionism introduce significant complexity across the supply chain and the processes required. | Like so many others in this trading environment, the semiconductor industry needs to review its global supply chain. At the end of 2023, the Dutch Government partially revoked a license for the shipment of NXT:2050i and NXT:2100i lithography systems, impacting a small number of customers in China. What it means for ASML The new regulations require ASML to apply for Dutch export licenses for all shipments of its most advanced DUV immersion lithography systems (TWINSCAN NXT:2000i and subsequent immersion systems) as well as US licenses for mature systems for a limited number of customers in China. The governments will determine whether to grant or deny the required export licenses and provide further details to the company on any conditions that apply. From January 1, 2024, we will work with our customers to deliver the non-advanced lithography systems which are not impacted by the new restrictions. We continue to educate governments on the semiconductor manufacturing process and ecosystem to foster understanding of the potential impacts of current and future regulatory measures. | Description With an urgent collective response needed to limit global warming to 1.5°C, climate change is a crucial matter for governments, companies and individuals worldwide. Energy and water resources Technologies to counter climate change – from the energy transition to electrification, smart mobility and agricultural innovation – require semiconductors. Semiconductors are crucial to the generation, storage, distribution and consumption of electrical energy. They are at the core of smart (home) devices and play an important role in reducing overall energy consumption. The semiconductor industry also has an important role to play by reducing its own climate impacts; the semiconductor manufacturing process consumes large volumes of energy and water resources. Driving Moore’s Law to enable shrink and improve computing power and storage capacity fuels demand for these vital resources. Innovative architectures and a new way of looking at the entire ecosystem will be required to enhance energy and water resource efficiency of the industry. | What it means for ASML Our goal is to achieve net zero emissions across our value chain by 2040. We plan to do it by decreasing our GHG emissions and reducing our carbon footprint across our value chain, enhancing the energy efficiency of our products and properties. We aim to achieve this by reducing energy consumption, using renewable energy and compensating CO2 emissions. We are also committed to using water responsibly. This includes acting to preserve water quality and conservation across our operations and in the communities where we operate. We work closely with our customers and suppliers to minimize waste and maximize the value gained through use of resources. By 2030, we aim to send zero waste from operations to landfill or incineration. | ||||||||
Read more in Environmental – Energy efficiency and Read more in Risk – Risk factors | ||||||||||||
Read more in Risk - Risk factors |
ASML ANNUAL REPORT 2023 | MARKETPLACE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 25 | |
The world around us (continued) |
ASML ANNUAL REPORT 2023 | MARKETPLACE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 26 | |
The world around us (continued) |
Technology is evolving at pace – we are moving fast toward intelligent edge computing, the next level of computing which focuses on processing data closer to its source rather than in centralized data centers. The current era of mobile computing – where you bring the computer with you – is moving us into an immersive world of ubiquitous computing, with computing power available everywhere, driven by artificial intelligence (AI). |
2. Semiconductor market trends | ||||||
Trends | ||||||
Increasing market demand The continuing convergence of wireless communication, telecoms, media and cloud technology via connected devices is driving demand for advanced semiconductors across the globe. Growing populations, urbanization, the energy transition and electrification to support smart mobility are increasing demand for advanced electronic devices. Microchips are at the heart of these devices, ranging from sensors and actuators to smart, scalable and flexible computing solutions. This is driving demand for chips in both leading edge and mature process nodes, which are specifically designed for innovative applications in areas ranging from smart homes, cities and industries to predictive healthcare, smart wearables and autonomous robotics. The virtuous cycle of a data- driven society Moore’s Law is the guiding principle for the semiconductor industry. It is the motor behind the industry transition from mobile computing to ubiquitous computing. This transition continues to expand, driving the three main elements in computing – applications, data and algorithms – that | feed each other in a virtuous cycle: applications generate data, data fuels new algorithms, which again leads to new applications that generate new data, etc. This is the virtuous cycle of our data-driven society. Unleashing the power of data better and faster with AI AI is becoming more ubiquitous and embedded into the environment and smaller devices, which moves us into the era of intelligent edge computing – smart, connected networks of more energy-efficient devices that seamlessly communicate over powerful 5G networks to unleash the power of data better and faster than ever. This provides people with more innovative functionalities and applications, improves human-to-machine interactions, and enhances data management and analytics. With intelligent edge computing, data processing is brought as close to the source of data as possible, rather than happening in the cloud. The vast amounts of data and insights that people can access are expected to fuel semiconductor business growth and the digital transformation. | Edge intelligence and AI-empowered mobile and ubiquitous computing technologies are key to solving some of society's toughest challenges, such as mitigating climate change, enabling the energy transition, creating sustainable social communities and improving quality of life. | ||||
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The world around us (continued) |
3. Semiconductor application areas |
Automotive | ||
Automotive is one of the fastest- growing market segments driven, by electrification, autonomy and other mega trends. Integrated automotive systems consist of a full range of scalable, flexible computing solutions that require advanced and mature semiconductor devices. Advanced driver-assistance systems (ADAS) enabled by electronics and semiconductors, considered supercomputers on wheels, are also expected to contribute to the growth of the automotive segment in the semiconductor industry. | ||
Smart industry Smart industry devices use real- time data analytics and machine- to-machine sensors to optimize processes, foresee bottlenecks, and prevent errors and injuries. |
Autonomous robotics | ||
A new generation of lightweight robots connected to a wide network and fitted with smart sensors enable humans and machines to safely and efficiently work side by side. | ||
Predictive healthcare Predictive analysis of health data from multiple sources combined with machine learning and AI is being harnessed to improve healthcare services and patient outcomes. |
Global connectivity 5G enables a new kind of network that is designed to connect almost everyone and everything around the world, including machines, objects and devices. | ||
Smart cities Smart cities use technology and digital networks to integrate transportation and infrastructure, connectivity, energy and lighting, and other public services. |
Mixed reality | ||
Augmented reality and virtual reality technology can combine to bring the real world and digital elements together (so that physical and digital objects coexist and interact in real time) to create the next-level user experience. | ||
Wearables | ||
Wearable devices (such as fitness trackers smart watches, smart rings, jewelry or glasses) are able to connect to the internet and continuously monitor, track and transmit personal data. |
Artificial intelligence | ||
Artificial intelligence (AI) is about developing systems that have the intellectual processes characteristic of humans, such as the ability to reason, discover meaning, generalize or learn from past experience. Due to the exponential growth in computation, along with the availability of massive data sets and improved algorithms, AI has made huge advancements over a short period of time. Today, AI not only matches, but also beats human performance in many areas. |
Smart home Smart home devices, such as thermostats, lights and smart TVs, learn a user’s habits to provide automated support for everyday tasks. |
Energy transition The energy transition is expected to be a key market driver, with semiconductors enabling the global shift from fossil- based energy production to renewable sources like wind and solar. Semi- conductors are crucial in the generation, storage, distribution and consumption of electrical energy. The energy transition also drives the need for more intelligent infrastructure and end devices. |
4. Semiconductor industry market | ||||||||||||||||||||||||
Semiconductor technology plays a crucial role in shaping the interconnected and intelligent network future. As a result, end markets continue to grow. This overview provides an outlook on current market size and opportunity for the entire industry, based on external research. The historical market compound annual growth rate (CAGR) from 2012 to 2022 was 7%. In 2022, almost 1.1 trillion chips were manufactured around the world, feeding a $0.6 trillion industry. 2023 was a correction year, as consumer markets like PC slowed following the peak in working-from-home triggered by COVID-19. At the same time, the supply chain continued to build safety buffers in 2022 to increase resilience against future supply chain disruptions, and these needed to be corrected given lower demand. Industry sources project that the chip market (worldwide semiconductor revenues) will resume growth after 2023 in line with historical growth rates. The longer- term market outlook is not expected to be materially impacted by the 2023 downturn. With an expected global annual wafer capacity growth of over 780,000 wafer starts per month per year, we plan to increase our annual capacity to 90 EUV 0.33 NA and 600 DUV systems (2025-2026), while ramping up EUV 0.55 NA (High NA) capacity to 20 systems per year (2027-2028). | Smartphone | Personal computing | Consumer electronics | Automotive | Industrial electronics | Wired and wireless infrastructure | Servers, data centers and storage | |||||||||||||||||
Key driver | ||||||||||||||||||||||||
Continued refresh of all semiconductor content including image sensors and edge AI processors | High-end compute and Memory, fast conversion to solid- state drive (SSD), edge AI processors | Both low-power and high-bandwidth connectivity, sensors | Strong IC content growth: graphics processing unit (GPU), sensors, vehicle-to-everything (V2X) communication sensing | Connectivity, edge processors, sensors | High-bandwidth connectivity, edge processors | High processor and Memory growth, hardware accelerations including GPU for AI applications | ||||||||||||||||||
2020 market size ($bn) | Total | |||||||||||||||||||||||
117 | 100 | 50 | 40 | 51 | 38 | 76 | 471 | |||||||||||||||||
2023 market size ($bn) | ||||||||||||||||||||||||
104 | 89 | 60 | 79 | 74 | 50 | 78 | 534 | |||||||||||||||||
2025 market opportunity ($bn) | ||||||||||||||||||||||||
146 | 107 | 74 | 104 | 94 | 60 | 136 | 721 | |||||||||||||||||
Outlook CAGR 2020-2025 (%) | ||||||||||||||||||||||||
5% | 2% | 8% | 21% | 14% | 10% | 12% | 9% | |||||||||||||||||
Source: Based on external market research firms | ||||||||||||||||||||||||
ASML ANNUAL REPORT 2023 | MARKETPLACE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 28 | |
The world around us (continued) |
Logic and Memory chips | ||||||||
Logic chips are the ‘brains’ that process information in electronic devices. They are produced by two groups of manufacturers: integrated device manufacturers (IDMs), which design and manufacture Logic chips, and contract manufacturers, known as foundries. Foundry manufacturers produce chips for ‘fabless’ companies that focus on chip design and distribution but do not manufacture microchips themselves. Memory chips can store large amounts 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 chips typically made in dedicated Memory-chip factories: NAND chips that can store data even when a device is powered off and DRAM Memory chips that are used to efficiently provide data to the processor. | Logic and Memory chips can vary greatly in complexity and capability. For example, the most advanced chips power leading-edge technology, in AI, big data and automotive technology, while simpler low-cost chips integrate sensing capabilities into everyday technology to create a vast network of connected devices, the loT. During 2023 generative AI got a lot of traction, which resulted in strong demand for GPU chips (Logic) and High-Bandwidth Memory (HBM) at our customers. Both products are still a small portion of the overall Logic and Memory market. | |||||||
ASML ANNUAL REPORT 2023 | MARKETPLACE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 29 | |
The world around us (continued) |
Our strategy is to | ||
1 | Grow our holistic lithography business | |
2 | Secure unique supply chain capabilities to ensure business continuity | |
3 | Move toward adjacent business opportunities | |
4 | Deliver on our ESG sustainability commitments |
1. Grow our holistic lithography business |
2025 | 2030 | ||||
€30-40bn | €44-60bn | ||||
Annual revenue | Annual revenue | ||||
54-56% | 56-60% | ||||
Gross margin | Gross margin | ||||
Our five priorities are: | ||||||
Strengthen customer trust | Enhance the value of EUV 0.33 NA for manufacturing | |||||
Enhance our innovation and operational excellence capabilities to deliver on our roadmap for new product introductions and system deliveries, on time and with the highest quality, to address the needs of our customers. Increase our focus on sustainability through parts commonality and reuse, and drive improvements in the performance and energy efficiency of our products to reduce costs and waste. | Secure high-volume manufacturing performance and enhance the value of EUV technology by extending our product portfolio for future nodes. Improve cost effectiveness for our customers by improving system performance and energy efficiency. | |||||
Build a winning position in holistic lithography | Insert EUV 0.55 NA into high-volume manufacturing | |||||
Build a winning position in edge placement metrology and process control to support customer needs. Integrate our complete product portfolio into a holistic lithography solution to optimize and control lithography performance. | Insert EUV 0.55 NA (High NA) in Logic and DRAM for high-volume manufacturing from 2025 onward to support customer roadmaps by simplifying patterning schemes and decreasing defect density. | |||||
Continue innovation leadership in DUV | ||||||
Continue our innovation leadership, enabling execution of customer roadmaps by driving DUV to the highest level of performance while remaining cost- competitive. Expand our installed base and support customer needs. | Toward the end of 2023 and in light of our expectation that 2024 would be a year of transition, we reviewed our strategic business priorities, adding operational excellence and people empowerment as supplementary focus points. | |||||
ASML ANNUAL REPORT 2023 | OUR BUSINESS STRATEGY | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 30 | |
Focused on sustainable long-term value creation |
2. Secure unique supply chain capabilities | 4. Deliver on our ESG sustainability commitments | ||||||||||||||
We believe digital technologies can have a positive impact on the world – supporting society to make progress and addressing environmental and social challenges. Enabled by microchips, these technologies are fueling a digital transformation that is helping to address global challenges, such as tackling climate change by reducing energy consumption and GHG emissions. We recognize that new technology comes with new challenges – and we’re committed to using our innovations to enable the semiconductor industry to reduce its footprint. We aim to help our customers minimize the materials and energy required to produce advanced microchips. Within our own operations, including our supply chain, we aim to minimize our environmental impact while having a positive role in society for our employees, the communities around us and everyone involved in our innovation ecosystem. | Our ESG sustainability strategy Our aim is to create long-term sustainable value for our stakeholders, while also contributing to the United Nations’ Sustainable Development Goals (SDGs). Our ESG sustainability strategy is based on a materiality assessment that helps us identify and focus on the ESG sustainability topics where we can have the biggest impact. Environmental We want to continue to expand computing power but with minimal waste, energy use and emissions. That's why we focus on energy efficiency and climate action, and a circular economy. Social We want to ensure that responsible growth benefits all our stakeholders – we aim to offer an attractive workplace for all, to build and maintain a responsible supply chain, to fuel innovation in our ecosystem and to be a valued partner in our communities. | Governance We act on our responsibilities and aim to fully anchor them in the way we do business through our focus on integrated governance, engaged stakeholders and transparent reporting. | |||||||||||||
In order to deliver on our growth aspirations, we need to secure innovation, scale-up and continuity, while preserving sound business conditions and a constructive collaboration model with our unique technology suppliers. Our supply chain is a critical enabler of our ambition to grow our core business. Therefore, we are proactively assessing our supply base for projected demand and control of future roadmap-enabling capabilities. | |||||||||||||||
See how we're delivering on our ESG sustainability commitments | |||||||||||||||
3. Move toward adjacent business opportunities | |||||||||||||||
Once core growth is secured, we can move into adjacent business opportunities representing additional growth opportunities. We aim to do this by focusing on synergetic opportunities at the forefront of holistic transistor scaling to best serve our customers. This includes leveraging product and technology synergies, and tapping into different future semiconductor scaling engines. | |||||||||||||||
Read more in ESG - Our material ESG sustainability | |||||||||||||||
ASML ANNUAL REPORT 2023 | OUR BUSINESS STRATEGY CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 31 | |
Focused on sustainable long-term value creation (continued) |
People and culture | Manufacturing facilities | Ecosystem of innovation partners | ||||||||||
We depend on more than 42,400 talented, dedicated and highly motivated employees who live our values of challenge, collaborate and care. Every day, our colleagues in R&D, manufacturing, customer support, sourcing and supply chain, and support functions take on the exciting challenge of building and maintaining the most advanced lithography, metrology and inspection systems in the world. | We have eight manufacturing sites in the EU, US and Asia that provide high-precision, highly controlled environments where we assemble, test and deliver our complex lithography and metrology and inspection portfolio, from prototype to final product. | |||||||||||
Our lithography solutions are the result of strong partnerships based on trust, respect, and shared risks and incentives to compete and drive innovation. | ||||||||||||
C a p i t a l | Capital | Innovation | Customers We believe a true partnership with our customers is vitally important, to ensure we share the risks and rewards of what we do. | Research partners We co-develop R&D expertise within a wide network of technology partners, such as universities and research institutions – accelerating innovation and giving us access to a large leading-edge knowledge base across a wide range of technologies. | ||||||||||
We have strong capital reserves, underpinned by a robust balance sheet. Total shareholders' equity at the end of 2023 amounts to €13.5 billion on a consolidated balance sheet total of €40.0 billion and net cash provided by operating activities of €5.4 billion in 2023. | In 2023, we spent a total of €4.0 billion on R&D. We do not innovate alone – our more than 15,500 R&D employees collaborate closely within an innovation ecosystem of key partners in the value chain. | |||||||||||||
Suppliers | Peers | |||||||||||||
Our lithography systems comprise thousands of parts, with most of them co-designed with and made by our suppliers. Early involvement of our suppliers has always been a key part of our business model. | Our semiconductor industry peers optimize the total manufacturing process by delivering complementary process equipment, critical materials, essential data and new processing steps. | |||||||||||||
ASML ANNUAL REPORT 2023 | OUR BUSINESS MODEL | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 32 | |||
What we need to create sustainable long-term value | ||||||||
The depth and breadth of our resources and the relationships we build are key to our continued success in growing a sustainable holistic lithography business. |
ASML ANNUAL REPORT 2023 | OUR BUSINESS MODEL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 33 | ||
Creating sustainable long-term value through holistic lithography | |||||||
Our holistic approach is based on the intelligent integration of computational lithography, lithography systems, and metrology and inspection. |
Customers | Employees | Suppliers | Shareholders | Society | |||||||||||||||||||
Our world-leading lithographic systems enable our customers to develop ever more powerful and energy-efficient chips for new applications and devices. At the same time, we help our customers reduce costs and their environmental footprint. | ASML is a growth business providing employment opportunities around the world. We invest in people’s career development and well-being, and provide a diverse and inclusive environment where people can achieve their full potential. | We innovate together with our strategic partners, sharing knowledge and tapping into each other’s technology expertise to drive ever higher levels of complexity and capability. Long- term relationships, close collaboration, transparency and a commitment to sustainability with our suppliers are key to our success. | The effective and disciplined investment of free cash flow drives the profitable growth of our company, and delivers solid financial performance and a healthy financial position. This underpins our cash return policy through share buybacks and dividends. | We play an active role in the communities where we operate, recognizing that when the community thrives, we thrive. And our collaborative ecosystem nurtures innovation and benefits society. For example, we share our expertise with universities and | research institutes, support young tech companies and promote science, technology, engineering and mathematics (STEM) education worldwide. We are also committed to creating sustainable value by reducing our environmental footprint, both from our operations and during the use of our products and services. | ||||||||||||||||||
€27.6bn | 80.3% | €15.5bn | €3.2bn | €413 | 88% | ||||||||||||||||||
Total net sales | Employee engagement score | Total sourcing spend | Free cash flow1 | Community partnership program: amount invested per employee | % Reuse rate of parts returned from field and factory | ||||||||||||||||||
600 | 27% | 5,100 | €6.10 | €16.4m | 35.1 kt | ||||||||||||||||||
Net system sales (in units) | Gender diversity – % inflow of women | Number of suppliers | Proposed annualized dividend per share | Contribution to EU research projects | Emissions from manufacturing and building (scope 1 and 2) | ||||||||||||||||||
#2 | 3.6% | 57% | €1.0bn | 95% | 15.0 Mt | ||||||||||||||||||
TechInsights customer satisfaction ranking | Attrition rate | % supplier spend covered by commitment to sustainability via Letter of Intent (LOI) | Share buyback | % of systems sold in the past 30 years still active in the field | Indirect emissions from total value change (scope 3) | ||||||||||||||||||
Read more in Engaging with our stakeholders – Customers | Read more in Engaging with our stakeholders – Employees | Read more in Engaging with our stakeholders – Suppliers | Read more in Engaging with our stakeholders – Shareholders | Read more in Engaging with our stakeholders – Society |
ASML ANNUAL REPORT 2023 | OUR BUSINESS MODEL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 34 | ||
The sustainable long-term value we created for our stakeholders in 2023 | |||||||
Our success depends on strong, sustainable relationships with all stakeholders in the value chain. We aim to create sustainable value for them, and to use their input to develop our strategy, products and services. |
My new role will help us safeguard our innovation power as we evolve to support future growth.” | ||
Ron Kool | ||
Head of Business Performance Improvement | ||
26 years at ASML |
Embracing change, driving innovation | |
Ron Kool spent over 25 years in various product-related roles within ASML, most recently leading our deep ultraviolet (DUV) lithography business. In 2023, he changed direction to use the experience he has gained in improving our technology to help us improve our business processes. |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 35 |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 36 | |
We engage with our stakeholders on an ongoing basis, working hard to understand how we impact them and how we can best meet their needs. This approach plays a key role in our ability to build stakeholder relationships based on mutual trust. | ||
A new Stakeholder Engagement Policy has been published. Read more at asml.com | ||
Our stakeholders – customers, employees, suppliers, shareholders and society – can affect or be affected by our business, and we embrace continuous open dialogue and knowledge-sharing for the benefit of all parties. |
At each stage of the customer relationship, we aim to foster trust, advocacy and continuous engagement, with the goal of achieving complete customer satisfaction and loyalty. As customer requirements become more complex, it takes longer to align with a shared vision, so we seek to start earlier in the process. Transparency is key, and our customer intimacy strategy helps us to leverage our innovations and develop even more sophisticated solutions with our customers. | |||||||
Customers | |||||||
What’s happening in their world | |||||||
Macroeconomic uncertainty across different market segments led our customers to more carefully control capital expenditure and cash flow. In 2023, the market continued to be influenced by governments focusing on incentives to encourage the construction of semiconductor manufacturing facilities in their respective countries through chips acts. This led our customers to look into expanding their manufacturing in these new geographical locations. However, the readiness of these 'off-shore' facilities has been impacted due to a shortage of experienced staff in these new locations. In addition, new regulations were announced and imposed by the Dutch, US and Japanese governments regarding the export control of advanced semiconductor equipment impacting the customers in China that are using advanced lithography tools. | We have deployed improvement actions identified in our 2022 customer survey. This has helped us focus on truly understanding what customers need from us, and validating that we are on the right track with the right improvements. We have updated our customers regularly on the progress being made, and in September 2023 we sent out our latest survey, including a new set of questions to measure customer trust. Survey results reveal that our customers have high levels of trust in us, mainly driven by our transparency and commitment to fairness in driving mutual success. They ask us to listen closely to their feedback, resolve issues in a timely manner, provide them with shorter delivery times for good-quality products and continue pushing the technology forward to meet their current and future needs. | ||||||
How we respond | How we engage | ||||||
We had delivery challenges for our DUV systems (in light of the heightened demand) and we kept our customers informed about shipment status and progress in our capacity plans. To respond to their demand faster, we implemented the fast shipment solution as a standard way of working in 2023. We continued to closely collaborate with our customers to support them in settling in to their new manufacturing locations by providing them with operational flexibility where needed. We worked with governments and our customers to minimize the potential impact of new regulations on our customers’ deliveries. In new product design, we are increasing our focus on reducing energy consumption of our systems. | •Regular meetings with our key customers •Technology Review Meetings where our senior technology experts, our Chief Technology Officer (CTO) and our Chief Business Officer (CBO) discuss technology roadmaps and requirements with customers •Executive Review Meetings where members of our senior management team and Board of Management discuss business and strategies with customers •Operational Review Meetings where we review topics related to our customers’ operational activities •Annual customer feedback survey •Voice of the Customer program, which provides firsthand feedback about our customers’ needs and challenges for employees without direct access to customers •Various technology symposia and special events | ||||||
ASML ANNUAL REPORT 2023 | OUR BUSINESS MODEL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 37 | |
Engaging with our stakeholders |
We strive for engaged employees who are proud to work for ASML and deliver jointly our vision and our ambitions as a company. | |||||||
Employees | |||||||
What’s happening in their world | How we engage | ||||||
Our growth in recent years has been accompanied by a large increase in our workforce. This has brought benefits – such as a more diverse employee base – as well as challenges. As the organization becomes more complex, and the expectations of our customers and stakeholders increase, the need to engage all our employees becomes even more crucial. Our employees feel respected and have trust in each other. They continue to raise suggestions to improve processes, and they like to have more opportunities to participate in sustainability initiatives. | •Employee engagement survey •Training and development programs, including employee evaluation and feedback •ASML's Speak Up service •Works Council/Unions •Employee networks, such as Next, Women/WAVES, Seniors, Parents, Veterans, Green ASML, Atypical, SHADES and Proud •ASML Ambassadors community, aiming to attract and inspire talent, engage colleagues and show the community our appreciation •Internal communication and awareness, for example through the intranet, our Ethics program, department employee meetings and interactive lunch sessions with Board members •Onboarding program for new employees •All-employee meeting and senior management meetings | ||||||
How we respond | |||||||
Since the pandemic, employee expectations have continued to change, especially around work-life balance, hybrid working and well-being. Staying on top of these trends and understanding how the world of work and expectations is evolving is a key part of our strategy to attract and retain talent. Inclusion, well-being and job enablement are the key themes we will focus on to further increase our engagement. Cross-collaboration and sharing knowledge across teams also remain subjects for improvement. | |||||||
We engage with our suppliers to help deliver our innovations. They are critical to our value chain and our ambition to be a sustainable leader in the semiconductor industry. | ||||||
Suppliers | ||||||
What’s happening in their world | How we engage | |||||
Over recent years, the world of our suppliers has been quite turbulent. First of all, geopolitical uncertainties led to disruptions in our supply chain due to less availability of materials as well as increased price levels. Furthermore, on a broader scale, the inflationary pressure has hit our suppliers, mainly in areas of raw materials, energy and wages. And finally, throughout all those challenges, ASML continued to grow, and despite short-term market uncertainties was still requiring suppliers to build up further capacity for future growth while putting pressure on cost and quality performance. The future growth in demand of ASML’s customers can only be met if our suppliers are capable and willing to keep up. | •ASML’s Suppliers' Day •Direct interactions via supplier account teams / sourcing account leaders •Supplier audits •Site visits •Newsletter •Responsible Business Alliance (RBA) self- assessment questionnaire (SAQ) •ASML's Speak Up service •Knowledge sessions on ESG sustainability | |||||
How we respond | ||||||
Our commitment to our suppliers is that we want to maintain and build a strong business relationship based on mutual trust. We listen to our suppliers when they openly share their pain points and challenges. We are implementing improvements relating to quality issues, early supplier involvement during the industrialization phase of new product introductions, reducing cycle time and cost, planning with our suppliers and ESG sustainability. | ||||||
ASML ANNUAL REPORT 2023 | OUR BUSINESS MODEL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 38 | |
Engaging with our stakeholders (continued) |
We aim to help shareholders – as well as financial and ESG sustainability analysts – to understand our long-term investment opportunities. We communicate with them about our financial growth strategies and opportunities, financial and ESG sustainability performance, and our outlook and shareholder returns. | ||||||
Shareholders | ||||||
What’s happening in their world | How we engage | |||||
For investors in the semiconductor industry, 2023 was an interesting, highly dynamic year in which ASML showed impressive sales growth while overall semiconductor sales went down. Key focus areas for investors were to get a better sense of when the industry will recover from its short-term cyclical downturn in order to understand how 2024 will shape up. There were also positive developments of (generative) AI gaining strong traction. In addition to uncertainties around a potential recession, inflationary costs, the Russia-Ukraine war and the conflict in the Middle East, the Dutch and US governments published new regulations in 2023 regarding the export controls of semiconductor equipment. | •AGM •Investor calls and Investor Days •Company quarterly results presentations and press releases •Various (ESG) investor conferences and roadshows •Various sustainability questionnaires, assessments and survey feedback •Direct personal interactions in line with our Bilateral Contacts Policy as published on our website | |||||
How we respond | ||||||
During the year, ASML’s management and Investor Relations team actively engaged with our investor community to discuss specific topics that are relevant to ASML’s equity story. We focus on being transparent, accessible, credible, reliable and responsive. We actively engage with the investor community via a large number of (ESG-related) conferences, roadshows and conference calls. We also encourage investors to visit our Veldhoven (NL) or Wilton (US) facilities to be able to discuss our capacity expansion plans as well as our technology challenges and opportunities in our ASML Experience Centers. | ||||||
We know that our actions and our activities have an impact beyond ASML – on the environment, for example, and on the world around us in its broadest sense, which is how we define society. We engage with organizations, communities and other bodies in society on a wide range of issues – from reducing our environmental footprint to regulatory matters and fulfilling our commitment to playing an active role in the communities where we operate. | |||||||
Society | |||||||
What’s happening in their world | How we engage | ||||||
Increasingly the local community feels the impact of the rapid development of our headquarters in the Brainport Eindhoven region, home to around half of ASML’s employees. Our community stakeholders expect ASML to take its fair share in keeping the region attractive and inclusive for all community members, with sufficient affordable housing, sustainable transportation, a strong (technology) education system for all and opportunities for the underserved. Meanwhile, our headquarter campus expansion should take into account the interests of our close neighbors. | With industry unions and associations •Member conferences and technical forums •Member consultation on standards •Brainport Eindhoven With governments and authorities •Dialogue with tax authorities •Relevant EU roundtable discussions •Compliance reporting •Proactive dialogue with government, authorities and municipalities With communities and other bodies •In the Veldhoven region, via regular dialogue at six- weekly intervals with local government representatives and local residents. In addition, we regularly hold information events, open house events, town halls and other opportunities for discussion, and also invite local input through the 'ASML Dichtbij' (ASML close by) section of our website. • At our site in Wilton in the US, we held information sessions during 2023 where local officials and neighbors could discuss our expansion plans • Quarterly surveys of a random sample of the 800,000 residents of the Brainport Eindhoven region • Regular discussion between the managers of our 17 community programs and various stakeholders and specialists • Through (social) media, conferences and other mass communication channels, we have an intensive communication plan to inform and engage with stakeholders around our communities | ||||||
How we respond | |||||||
Launched in collaboration with our ESG Sustainability team at the start of 2023, ASML’s Society & Community Engagement team focuses on four areas: boosting the attractiveness of the communities, aiming to keep these communities inclusive, promoting science and technology education, and supporting ESG innovation. Within these focus areas, we and our stakeholders have identified and formed 17 program strategies that we began to execute during 2023. | |||||||
Read more in Social - Valued partner in our communities | |||||||
Operating in an international industry with a global value chain where strong incentives to compete and drive innovation are key, we work with and collaborate with governments on all levels (national, regional and local) to ensure our growth and objectives are clear and can be supported. Read more in our ASML Government & External Affairs Report at asml.com | |||||||
ASML ANNUAL REPORT 2023 | OUR BUSINESS MODEL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 39 | |
Engaging with our stakeholders (continued) |
Q | Can you reflect on ASML's financial performance in 2023? |
ASML ANNUAL REPORT 2023 | Q&A WITH THE CFO | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 40 | |
Robust results in a challenging macro environment | ||||||
In conversation with our Executive Vice President and Chief Financial Officer | ||||||
Roger Dassen |
We delivered on our expectations in spite of the challenges.” |
Roger Dassen |
Executive Vice President and Chief Financial Officer |
1. Free cash flow is a non-GAAP measure and is defined as net cash provided by operating activities (2023: €5,443.4 million and 2022: €8,486.8 million) minus purchase of property, plant and equipment (2023: €2,155.6 million and 2022: €1,281.8 million) and purchase of intangible assets (2023: €40.6 million and 2022: €37.5 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. |
Q | What were the main drivers for that performance? |
Q | How do you manage industry cyclicality? |
Q | What other matters have required focus during 2023? |
ASML ANNUAL REPORT 2023 | Q&A WITH THE CFO CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 41 | |
Robust results in a challenging macro environment (continued) | ||||||
In conversation with our Executive Vice President and Chief Financial Officer | ||||||
Roger Dassen |
We believe that the years ahead will see a significant uptick in the market.” |
Roger Dassen |
Executive Vice President and Chief Financial Officer |
€27.6bn |
Total net sales |
51.3% |
Gross margin |
€3.3bn |
Returned to shareholder |
Q | What’s the outlook for 2024 and beyond? |
ASML ANNUAL REPORT 2023 | Q&A WITH THE CFO CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 42 | |
Robust results in a challenging macro environment (continued) | ||||||
In conversation with our Executive Vice President and Chief Financial Officer | ||||||
Roger Dassen |
For 2024, we envisage a transition year with revenue broadly similar to 2023.” |
Roger Dassen |
Executive Vice President and Chief Financial Officer |
Sales | Profitability | Liquidity | |||||
Total net sales | Gross profit | % of total net sales | Cash and cash equivalents & short-term investments (year-end) | ||||
€27.6bn | €14.1bn | 51.3% | €7.0bn | ||||
2022: €21.2bn | 2022: €10.7bn | 50.5% | 2022: €7.4bn | ||||
Net system sales | Income from operations | Net cash provided by operating activities | |||||
€21.9bn | €9.0bn | 32.8% | €5.4bn | ||||
2022: €15.4bn | 2022: €6.5bn | 30.7% | 2022: €8.5bn | ||||
Net service and field option sales | Net income | Free cash flow2 | |||||
€5.6bn | €7.8bn | 28.4% | €3.2bn | ||||
2022: €5.7bn | 2022: €5.6bn | 26.6% | 2022: €7.2bn | ||||
Sales of lithography systems (in units)1 | Earnings per share | ||||||
449 | €19.91 | ||||||
2022: 345 | 2022: €14.14 | ||||||
EUV systems recognized (in units) | |||||||
53 | |||||||
2022: 40 | 1.Lithography systems do not include metrology and inspection systems. | ||||||
2. Free cash flow is a non-GAAP measure and is defined as net cash provided by operating activities (2023: €5,443.4 million and 2022: €8,486.8 million) minus purchase of property, plant and equipment (2023: €2,155.6 million and 2022: €1,281.8 million) and purchase of intangible assets (2023: €40.6 million and 2022: €37.5 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. | |||||||
ASML ANNUAL REPORT 2023 | FINANCIAL PERFORMANCE | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 43 | |
Performance KPIs | ||||||
Operating results of 2023 compared to 2022 |
Year ended December 31 (€, in millions) | 2022 | %1 | 2023 | %1 | % Change |
Net system sales | 15,430.3 | 72.9 | 21,938.6 | 79.6 | 42.2 |
Net service and field option sales | 5,743.1 | 27.1 | 5,619.9 | 20.4 | (2.1) |
Total net sales | 21,173.4 | 100.0 | 27,558.5 | 100.0 | 30.2 |
Cost of system sales | (7,582.3) | (35.8) | (10,151.0) | (36.8) | 33.9 |
Cost of service and field option sales | (2,891.0) | (13.7) | (3,271.4) | (11.9) | 13.2 |
Total cost of sales | (10,473.3) | (49.5) | (13,422.4) | (48.7) | 28.2 |
Gross profit | 10,700.1 | 50.5 | 14,136.1 | 51.3 | 32.1 |
Research and development costs | (3,253.5) | (15.4) | (3,980.6) | (14.4) | 22.3 |
Selling, general and administrative costs | (945.9) | (4.5) | (1,113.2) | (4.0) | 17.7 |
Income from operations | 6,500.7 | 30.7 | 9,042.3 | 32.8 | 39.1 |
Interest and other, net | (44.6) | (0.2) | 41.2 | 0.1 | (192.4) |
Income before income taxes | 6,456.1 | 30.5 | 9,083.5 | 33.0 | 40.7 |
Income tax expense | (969.9) | (4.6) | (1,435.8) | (5.2) | 48.0 |
Income after income taxes | 5,486.2 | 25.9 | 7,647.7 | 27.8 | 39.4 |
Profit from equity method investments | 138.0 | 0.7 | 191.3 | 0.7 | 38.6 |
Net income | 5,624.2 | 26.6 | 7,839.0 | 28.4 | 39.4 |
For a comparison of ASML’s operating results for the year ended December 31, 2022, with the year ended December 31, 2021, please see Our performance in 2022 – Financial – Financial performance – Operating results of 2022 compared with 2021 of ASML’s annual report on Form 20-F for the year ended December 31, 2022. The preparation of our Consolidated Financial Statements in conformity with US GAAP requires management to make estimates and assumptions. Reference is made to Note 1 General information / summary of general accounting policies to the Consolidated Financial Statements for detailed information on critical accounting estimates. |
Revenue growth from Logic and Memory markets |
(in millions) |
30.2% |
Net sales |
42.2% |
Net system sales |
(2.1)% |
Net service and field option sales |
ASML ANNUAL REPORT 2023 | FINANCIAL PERFORMANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 44 | |
Performance KPIs (continued) | ||||||
Increase in net sales driven by growth in NXE and DUV immersion |
(in millions) |
Gross profit |
(in millions) |
Research and development costs |
(in millions) |
ASML ANNUAL REPORT 2023 | FINANCIAL PERFORMANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 45 | |
Performance KPIs (continued) | ||||||
Selling, general and administrative costs |
Income taxes |
Net income |
ASML ANNUAL REPORT 2023 | FINANCIAL PERFORMANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 46 | |
Performance KPIs (continued) | ||||||
Year ended December 31 (€, in millions) | 2022 | 2023 |
Cash and cash equivalents, beginning of period | 6,951.8 | 7,268.3 |
Net cash provided by (used in) operating activities | 8,486.8 | 5,443.4 |
Net cash provided by (used in) investing activities | (1,028.9) | (2,689.3) |
Net cash provided by (used in) financing activities | (7,138.3) | (3,003.9) |
Effect of changes in exchange rates on cash | (3.1) | (13.8) |
Net increase (decrease) in cash and cash equivalents | 316.5 | (263.6) |
Cash and cash equivalents, end of period | 7,268.3 | 7,004.7 |
Short-term investments, end of period | 107.7 | 5.4 |
Cash and cash equivalents and short-term investments | 7,376.0 | 7,010.1 |
Purchases of property, plant and equipment and intangible assets | (1,319.3) | (2,196.2) |
Free cash flow1 | 7,167.5 | 3,247.2 |
ASML ANNUAL REPORT 2023 | FINANCIAL PERFORMANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 47 | |
Performance KPIs (continued) | ||||||
ASML ANNUAL REPORT 2023 | FINANCIAL PERFORMANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 48 | |
Long-term growth opportunities | ||||||
Long-term models as presented at CMD2022 | ||||||||||
Market | System units | Total sales opportunity (in €bn) | ||||||||
High | CMD 2022 Units ASML | CMD 2022 Units ASML | CMD 2022 Sales | CMD 2022 Sales | ||||||
2025 | 2030 | 2025 | 2030 | |||||||
EUV High NA 0.55 | 5 | 30 | Systems (Lithography & M&I1) | 32 | 47 | |||||
EUV Low NA 0.33 | 80 | 80 | ||||||||
ArFi (immersion) | 105 | 115 | Installed Base Management2 | 8 | 13 | |||||
Dry | 385 | 425 | ||||||||
Total | 575 | 650 | Total | 40 | 60 | |||||
Low | CMD 2022 Units ASML | CMD 2022 Units ASML | CMD 2022 Sales | CMD 2022 Sales | ||||||
2025 | 2030 | 2025 | 2030 | |||||||
EUV High NA 0.55 | 5 | 15 | Systems (Lithography & M&I1) | 23 | 33 | |||||
EUV Low NA 0.33 | 65 | 65 | ||||||||
ArFi (immersion) | 75 | 85 | Installed Base Management2 | 7 | 11 | |||||
Dry | 180 | 250 | ||||||||
Total | 325 | 415 | Total | 30 | 44 | |||||
1. M&I: Metrology and inspection. 2. Installed Base Management equals our net service and field option sales. | ||||||||||
ASML ANNUAL REPORT 2023 | FINANCIAL PERFORMANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 49 | |
Long-term growth opportunities (continued) | ||||||
The purpose of risk management is to maximize the probability of achieving business objectives responsibly.” |
Geert Beullens |
Head of Risk and Business Assurance |
Risk management governance structure | |||||||||
Supervisory Board | Audit Committee | ||||||||
Request to investigate specific risk topics | •Bi-annual risk review •Risk topics feedback | •Assertion on control effectiveness •Quarterly progress reporting | |||||||
Board of Management | |||||||||
Corporate Risk Committee (CRC) Risk oversight | Disclosure Committee Internal Control Committee | ||||||||
•Risk appetite •Risk management policy •CRC sub committees (governance) | •Risk assessment results •Risk response progress •Incidents | •Control effectiveness | |||||||
Risk owners | |||||||||
ASML ANNUAL REPORT 2023 | RISK | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 50 | ||
How we manage risk | |||||||
We use a robust enterprise risk management (ERM) framework to embed risk management into our daily business activities and strategic planning. |
ASML's risk management process provides direction for adequate risk and control measures for key risks.” |
Roel Verstegen |
Risk manager |
ASML risk universe | |||||||||
Strategy and products | |||||||||
•Industry cycle risk •Geopolitical risk •Climate change risk | •Business model risk •Merger and acquisition risk | •Competition risk •Innovation risk •Product stewardship risk | •Product roadmap execution risk •Intellectual property rights risk | ||||||
Finance and reporting | Partners | People | Operations | ||||||
•Business planning risk •Financial risk •Shareholder activism risk •Disclosure/external reporting risk •Tax and customs risk | •Customer dependency risk •Product/service quality risk •Supplier strategy and performance risk •Supply chain disruption risk | •Knowledge management risk •Organizational effectiveness risk •Human resource risk | •Product industrialization risk •Process effectiveness and efficiency risk •Environment, health and safety risk •Continuity of own operation risk •Security risk •Information technology risk •Manufacturing and install risk | ||||||
Legal and compliance | |||||||||
•Contractual liability risk | •Violation of laws and regulations risk | •Violation of internal policies risk | |||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 51 | ||
How we manage risk (continued) |
Risk assessment | Risk response | |||||||||||
Top-down risk assessment | Coordination and follow-up | |||||||||||
Corporate Risk Committee/Risk owners/Emerging risks | Risk owners | |||||||||||
Risk identification | Risk landscape | Risk appetite | ||||||||||
Risk analysis | ||||||||||||
Risk evaluation | Risk treatment | |||||||||||
Bottom-up risk assessment | Execution | |||||||||||
Country/Sector | Action owners | |||||||||||
Risk appetite levels | |||||||||||||||||
Risk type | Averse | Prudent | Moderate | High | Extensive | ||||||||||||
Strategy and products | |||||||||||||||||
Partners | |||||||||||||||||
People | |||||||||||||||||
Operations | |||||||||||||||||
Finance and reporting | |||||||||||||||||
Legal and compliance | |||||||||||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 52 | ||
How we manage risk (continued) |
Grow our holistic lithography business | ||||||||||||||
Risk development | Risk trend | Risk universe reference | Risk response | |||||||||||
Geopolitical tensions | •Geopolitical •Competition •Supply chain disruption •Continuity of own operations •Business model | •Violation of laws and regulations •Security •IP rights •HR | •Active engagement with authorities and governments •Scenario planning •Collaborate with peers in global advocacy •Optimize industrial footprint •Apply for export licenses •Comply with applicable regulations | |||||||||||
Geopolitical tensions and the strive for technological sovereignty may lead to a decoupled ecosystem and – in longer term – overcapacity. Additional export restrictions have been imposed during 2023. There is a risk that future trade restrictions (e.g. raw materials, technology, systems, investments) further limit our ability to source parts and/or sell and service systems to certain customers. | ||||||||||||||
Uncertain global economy | •Industry cycle •Business model •Financial | •Competition •Supply chain disruption | •Cost control •Maintain flexibility •Scenario planning | |||||||||||
Global economic conditions lead to uncertainty for semiconductor demand and therefore demand for our products. We have experienced order push-outs. The macroeconomic weakness continues into 2024 and duration is uncertain. | ||||||||||||||
Pressure on innovation in ecosystem | •Innovation •Product roadmap •Supplier strategy and performance | •IP rights •Competition •Security | •Open innovation – sharing risk and reward •Intellectual property portfolio management •Patents and relevant technical publications monitoring •Substantial investments in security •Awareness and training programs •Cyber defense capabilities | |||||||||||
ASML’s strengths are based on the innovation power in our ecosystem and the ability to protect our IP. There is a risk that we are not able to deliver on our technology roadmap. In addition, there is significant pressure on know-how and IP protection for ASML and its open innovation partners. We and our partners experience cyberattacks and other security threats. | ||||||||||||||
Growth challenges | •Manufacturing and install •Supplier strategy and performance •HR | •Product industrialization •Process effectiveness •Product/service quality | •Increase of manufacturing capabilities •Cycle time reduction •Fast shipments •Supplier move rate support •Secure unique supply chain capabilities •Onboarding, retention and well-being program •Shorten time to knowledge | |||||||||||
The increasing demand in recent years is an opportunity for us that also brings challenges. While we are now facing uncertainty in customer demand outlook, we face challenges to increase production capacity in our end-to-end supply chain to meet future demand. This is amplified by supply chain constraints. In addition, hiring, onboarding and retaining our workforce in the competitive market is challenging. Our ability to attract people also depends on the government to accommodate them, e.g. by income tax policies and investments in appropriate infrastructure. |
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 53 | ||
How we manage risk (continued) |
Deliver on our ESG sustainability commitments | ||||||||||||||
Risk development | Risk trend | Risk universe reference | Risk response | |||||||||||
Strengthening ESG regulations and increasing stakeholder expectations | •Product stewardship •EHS •Climate change | •Human resource •Violation of laws and regulations | •Stakeholder engagement and disclosures •Deployment of ESG strategy in ASML & value chain •Non-financial reporting in accordance with the Global Reporting Initiative (GRI) •Preparing for CSRD reporting requirements | |||||||||||
Stakeholders are increasingly focused on our contribution to society and expect us to minimize the environmental and social impact of our products throughout all life-cycle stages. There is a risk that we fail in achieving our ESG objectives. In addition, we are faced with increasing regulations and disclosure requirements (e.g. CSRD). | ||||||||||||||
Climate change fueling extreme weather | •Continuity of own operations •Supply chain disruption | •Deployment of business continuity plans •Include extreme weather aspects in building upgrades and new designs | ||||||||||||
Climate change contributes to increasing severity and frequency of extreme weather events (such as cyclones, flood, fire stress, drought, excessive heat and precipitation, rising sea levels) that can impact continuity of our operations and/or our supply chain. |
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 54 | ||
How we manage risk (continued) |
The risk factors in this section are classified under these six risk types. Any of these risks and the related events or circumstances described therein may have a material adverse effect on our business, financial condition, results of operations and reputation. These risks are not the only ones that we face. Some risks may not yet be known to us, and certain risks that we do not currently believe to be material could become material in the future. Many risks may be intensified by global events such as interstate conflicts, geopolitical tensions, inflation, industry downturn, global measures (including new regulations) taken in response to these events and/or any worsening of the associated global business and economic conditions. | 1. Strategy and products | |||||||||
Our future success depends on our ability to respond timely to commercial and technological developments in the semiconductor industry | The success of new product introductions is uncertain and depends on our ability to successfully execute our R&D programs | |||||||||
Risk category: | Risk category: | |||||||||
Business model, Innovation | Product roadmap execution, Innovation | |||||||||
Our success in developing new and enhancing existing technologies, products and services, depends on a variety of factors. These include the success of our and our suppliers’ R&D programs and the timely, cost-effective and successful completion of product development and design relative to competitors. Our business will suffer if the technologies we pursue to assist our customers in producing smaller and more energy-efficient chips are not as effective as, or are more costly than, those developed by competitors. Our business will also suffer if our customers do not adopt technologies that we develop, or if they adopt new technological architectures that are less focused on lithography products. The success of our EUV 0.55 NA (High NA) technology, which we believe is critical for keeping pace with Moore’s Law, depends on continuing technical advances by us and our suppliers. We invest considerable financial resources to develop and introduce new and enhanced technologies, products and service offerings. If we are unsuccessful in developing (or if our customers do not adopt) these technologies, products and service offerings such as EUV 0.55 NA and multibeam inspection, or if alternative technologies or processes are successfully introduced by others, our competitive position and business may suffer. | We make significant investments in developing new products and product enhancements and we may be unable to recoup some or all of these investments. We may incur impairment charges on capitalized technology including prototypes or incur costs related to inventory obsolescence, as a result of technological changes. Such costs may increase as the complexity of technology increases. Due to the highly complex nature and costs of our systems, including newer technologies, our customers may purchase existing technology systems rather than new leading-edge systems, or they may delay their investment in new technology systems to the extent that such investment is not economical or required, given their product cycles. Global economic conditions affect our customers’ investment decisions and lead to uncertainties in the timing around the introduction of and demand for new leading-edge systems. Some of our customers have experienced and may continue to experience delays in implementing their product roadmaps. This increases the risk of slowing down the overall transition period (or cadence) for the introduction of new nodes, and therefore new systems. We also depend on our suppliers to maintain their development roadmaps to enable us to introduce new technologies in a timely manner. If they are unable to keep pace, whether due to technological factors, lack of financial resources or otherwise, we may not meet our development roadmaps. | As our lithography systems and applications have become increasingly complex, the cost and time to develop new products and technologies have increased and we expect this trend to continue. In particular, developing new technology, such as EUV 0.55 NA (High NA) and multibeam, requires significant R&D investments by us and our suppliers. Our suppliers may not be able or willing to invest the resources necessary to continue the (co-) development of new technologies to the extent that such investments are necessary. This has resulted and may continue to result in ASML contributing funds to such R&D programs or limiting the R&D investments that we can undertake. Furthermore, if our R&D programs are not successful in developing the desired new technology on time or at all, we may be unsuccessful in introducing new products and unable to recoup our R&D investments. In case of high levels of customer demand, we may prioritize our resources toward increasing production over R&D programs. | ||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 55 | ||
Risk factors | |||||||
Many risks have the potential to impact our business. It is important to understand the nature of these risks. We assess risks by using the ASML risk universe which comprises six risk types (Strategy and products, Finance and reporting, Partners, People, Operations, Legal and compliance). |
1. Strategy and products (continued) | ||||||||||||
We face intense competition | The semiconductor industry can be cyclical and we may be adversely affected by any downturn | We derive most of our revenues from the sale of a relatively small number of products | ||||||||||
Risk category: | Risk category: | Risk category: | ||||||||||
Competition | Industry cycle risk | Business model | ||||||||||
The semiconductor equipment industry is highly competitive. Our competitiveness depends on our ability to develop new and enhanced lithography equipment, related applications and services that bring value to our customers and are competitively priced and introduced on a timely basis – as well as our ability to protect and defend our intellectual property, trade secrets or other proprietary information. We compete primarily with Canon and Nikon in respect of DUV systems. Both Canon and Nikon have substantial financial resources and broad patent portfolios. Each continues to offer products that compete directly with our DUV systems, which may impact our sales or business. In addition, adverse market conditions, long-term overcapacity or a decrease in the value of the Japanese yen in relation to the euro could increase price-based competition, resulting in lower prices and lower sales and margins. We also face competition from new competitors with substantial financial resources, as well as from competitors driven by the ambition of self-sufficiency in the geopolitical context. Furthermore, we face competition from alternative technological solutions or semiconductor manufacturing processes. We also compete with providers of applications that support or enhance complex patterning solutions, such as Applied Materials Inc. and KLA-Tencor Corporation. These applications effectively compete with our Applications offering, which is a significant part of our business. | The semiconductor industry has historically been cyclical. As a supplier to the global semiconductor industry, we are subject to the industry’s business cycles. The timing, duration and volatility are difficult to predict and can have a significant impact on semiconductor manufacturers including ASML. Newer entrants to the industry, including Chinese semiconductor manufacturers, could increase the risk of cyclicality in the future. Certain key end-market customers – Logic and Memory – exhibit different levels of cyclicality and different business cycles. Cyclicality may be worsened by the geopolitical situation if countries increase semiconductor capacity for higher levels of self-sufficiency, thereby creating global overcapacity. Sales of our lithography systems, services and other holistic lithography products depend in large part on the level of capital expenditures by semiconductor manufacturers. These in turn are influenced by industry cycles, the drive for technological sovereignty and a range of competitive and market factors, including semiconductor industry conditions and prospects. The timing and magnitude of capital expenditures of our customers also impact the available production capacity of the industry to produce chips, which can lead to imbalances in the supply and demand of chips. Reductions or delays in capital expenditures by our customers, or incorrect assumptions by us about our customers’ capital expenditures, could adversely impact our business. | In addition, industry trends that are positively impacting our business, such as increasing capital expenditures by our customers, may not continue. We have experienced changes in timing of orders from certain customers, and while we currently have significant backlog and therefore such timing changes have not impacted sales, we are subject to uncertainty in future customer demand. The current global economic environment, including inflation and high interest rates, contribute to this uncertainty. Our ability to maintain profitability in an industry downturn will depend substantially on whether we are able to lower our costs to break-even level. If sales decrease significantly as a result of an industry downturn and we are unable to adjust our costs over the same period, and if down payments need to be returned, our net income may decline significantly or we may suffer losses. As we have significantly increased our organization in terms of employees, infrastructure, manufacturing capacity and other areas, we may not be able to adjust our costs adequately in a timely manner in the event of an industry downturn. An uncertain global economy frequently leads to reduced consumer and business spending, and could cause our customers to decrease, cancel or delay their orders. High interest rates and volatility in financial markets could make it more difficult for our customers to raise capital, whether debt or equity, to finance their purchases of equipment, including the products we sell. The foregoing could lead to reduced demand, which may adversely affect our product sales and revenues and may harm our business and operating results. If we are unable to adapt appropriately and in a timely manner to changes resulting from difficult macroeconomic conditions, our business, financial condition or results of operations may be materially and adversely affected. | We derive most of our revenues from the sale of a relatively small number of lithography systems (449 units in 2023 and 345 units in 2022). As a result, the timing of shipments, including any delays, and recognition of system sales for a particular reporting period from a small number of systems, with an increase in sales prices, may have a material adverse effect on our business, financial condition and results of operations in that period. In recent years, we have used fast shipments for some customers, which allows us to deliver systems more quickly to customers by having some final testing and formal acceptance carried out on customer sites instead of at our own facilities. In general, this leads to a delay of revenue recognition for those shipments until formal customer acceptance, which can impact comparability of our results of operations from quarter to quarter. In addition, we may not be able to increase installed base revenues to the extent we planned, as, for example, customers may perform more of these services themselves, find other third-party suppliers to provide them or we may be limited by national security restrictions. | |||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 56 | ||
Risk factors (continued) |
1. Strategy and products (continued) | |||||||||||||
Failure to adequately protect intellectual property could harm our business | Defending against intellectual property claims brought by others could harm our business | ||||||||||||
Risk category: | Risk category: | ||||||||||||
Intellectual property rights | Intellectual property rights | ||||||||||||
We rely on intellectual property (IP) rights such as patents and copyrights to protect our proprietary technology. However, we face the risk that such protective measures could prove inadequate and we could suffer material harm because, among other matters: •IP laws may not sufficiently support our proprietary rights or may change adversely in the future. •Our agreements (e.g. confidentiality, licensing) with our customers, employees and technology development partners and others to protect our IP may not be sufficient or may be breached or terminated. •Patent rights may not be granted or interpreted as we expect; •Patent rights will expire, which may result in key technology becoming widely available that may harm our competitive position. •The steps we take to prevent misappropriation or infringement of our proprietary rights may not be successful. •IP rights and trade secrets are difficult to enforce in countries where the application and enforcement of the laws governing such rights may not have reached the same level compared with other jurisdictions where we operate. •Third parties may be able to develop or obtain patents for our own or for similar competing technology. | Legal proceedings may be necessary to enforce our IP rights and the validity and scope may be challenged by others. Any such proceedings may result in substantial costs and diversion of management resources, and, if unfavorable decisions are made, could result in significant costs or have a significant impact on our business. We have experienced and may in the future experience misappropriation attacks by third parties or our employees, including theft of intellectual property. Such incidents may result in third parties or others, without authorization, obtaining, copying, using or disclosing our intellectual property, despite our efforts to protect them. | In the course of our business, we have been and are subject to claims by third parties alleging that our products or processes infringe upon their IP. If successful, such claims could limit or prohibit us from developing our technology, manufacturing and selling our products. Our customers or suppliers may also be subject to claims of infringement from third parties, including patent holder companies, alleging that our products used by such customers in the manufacturing of semiconductor products and/or the processes relating to the use of our products infringe on one or more patents issued to such third parties. If such claims are successful, we could be required to indemnify our customers for some or all of any losses incurred or damages assessed against them as a result of such infringement. | We may incur substantial licensing or settlement costs to settle claims or to potentially strengthen or expand our IP rights or limit our exposure to IP claims of third parties. Patent litigation is complex and may extend for a protracted period of time, giving rise to the potential for substantial costs and diverting the attention of key management and technical personnel. Potential adverse outcomes from patent litigation may include payment of significant monetary damages, injunctive relief prohibiting our manufacturing, exporting or selling of products, reputational damage and/or settlement involving significant costs to be paid by us. | ||||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 57 | ||
Risk factors (continued) |
1. Strategy and products (continued) | ||||||||||||||
We are exposed to economic, geopolitical and other developments in our international operations | We may be unable to make desirable acquisitions or to integrate successfully any businesses we acquire | |||||||||||||
Risk category: | Risk category: | |||||||||||||
Geopolitical | Mergers and acquisitions | |||||||||||||
Geopolitical tensions may result in export control restrictions, trade sanctions, tariffs and more generally international trade regulations which may impact our ability to deliver our systems, technology, and services. Our ability to deliver technology in certain countries such as China has been and continues to be impacted by our ability to obtain required licenses and approvals. Our business involves the sale of systems and services to customers in a number of countries, including China, and includes technologies that may be the subject of increased export regulations or policies. We are required under Dutch regulations and other applicable legislation to obtain licenses for the export of certain technologies. In some cases, such licenses have not been granted or renewed. For example, at the end of 2023, the Dutch government partially revoked a license for shipment of NXT:2050i and NXT:2100i systems, impacting a small number of customers in China. Following recent changes in the Dutch regulations, advanced DUV-immersion is also now subject to license requirement. The US government has enacted trade measures, including national security regulations and restrictions on conducting business with certain Chinese entities, restricting our ability to provide certain products and services to such entities without a license. The list of Chinese entities impacted by export control restrictions has increased since 2022, with the recently updated additional export controls on semiconductor manufacturing items imposing license requirements on the sale / transfer of US origin items as well as on the support by US persons on non-US origin items destined for certain fabs in China working on advanced node ICs. The list of restricted customers and the scope of the restrictions are subject to change. These and further developments in multilateral and bilateral treaties, national regulation, and trade, national security and investment policies and practices have affected and may further affect our business, and the businesses of our suppliers and customers. For example, the ability to obtain US licenses to authorize employees | with foreign nationalities to work in programs that include controlled US items has been reduced over the last couple of years. Such developments, including the drive for technological sovereignty, could also lead to long-term changes in global trade, competition and technology supply chains, which could adversely affect our business and growth prospects. Customers in China represented 26.3% of our 2023 total net sales. The semiconductor industry makes use of (raw) materials that are controlled by certain countries. In the current geopolitical context, we see an increasing risk exposure that these materials may become unavailable or restricted, which could impact our suppliers, our customers and ASML. Interstate conflicts and/or nationalization of ASML assets can also impact our business. For example, some of our facilities and supply chain and customers are located in Taiwan. Customers in Taiwan represented 29.3% of our 2023 total net sales and 38.2% of our 2022 total net sales. Taiwan has a unique international political status. Changes in relations between Taiwan and China, Taiwanese government policies and other factors affecting Taiwan’s political, economic or social environment could, for example, impact our ability to service our customers in Taiwan. Furthermore, certain of our facilities as well as our supply chain and customers are located in South Korea. Customers in South Korea represented 25.2% of our 2023 total net sales and 28.6% of our 2022 total net sales. In addition, there are tensions with the Democratic People’s Republic of Korea (North Korea). A worsening of relations between those countries or the outbreak of war on the Korean Peninsula could impact our ability to service customers. A small percentage of our suppliers and customers as well as our customer support organization is based in Israel. There are tensions in this region that have resulted and may continue to result in violence and/or the outbreak of war that could impact our business. | From time to time, we may acquire businesses or technologies to complement, enhance or expand our current business or products or that might offer us growth opportunities. Any such acquisitions could lead to failure to achieve our financial or strategic objectives or our ability to perform as we plan or disrupt our ongoing business and adversely impact our results of operations. Our ability to complete such transactions may be hindered by a number of factors, including potential difficulties in obtaining government approvals, for example, anti-trust and/or inbound and outbound foreign direct investment approval processes. Any acquisition could pose risks related to the integration of the new business or technology with our existing business and organization. We may not be able to achieve the benefits we expect from an acquisition investment. Such transactions may also strain our managerial and operational resources and the challenge of managing new operations may divert our management from day-to- day operations. Furthermore, we may be unable to retain key personnel from acquired businesses or we may have difficulty integrating employees, business systems and technology. The controls, processes and procedures of acquired businesses may also not adequately ensure compliance with laws and regulations, and we may fail to identify compliance issues or liabilities. | In connection with acquisitions, antitrust and national security regulators have and may in the future impose conditions, including requirements to divest assets or other conditions that could make it difficult for us to integrate the businesses that we acquire. Furthermore, we may have difficulty in obtaining, or be unable to obtain, antitrust and national security clearances, which could inhibit future desired acquisitions. As a result of acquisitions, we have recorded a significant amount of goodwill and intangible assets. Accounting standards require periodic review of these assets for indicators of impairment. If one or more indicators of impairment are found to exist, then valuation of the related asset could change and may incur impairment charges. | |||||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 58 | ||
Risk factors (continued) |
1. Strategy and products (continued) | ||||||||||||||
We may not be able to achieve our ESG objectives or adapt and respond timely to emerging ESG expectations and regulations | ||||||||||||||
Risk category: | ||||||||||||||
Climate change, Product stewardship | ||||||||||||||
Companies across all industries are facing increasing scrutiny of their ESG policies and practices. Investors, capital providers, shareholder advocacy groups, market participants, customers and other stakeholders are increasingly focused on ESG practices and ESG matters. In particular, within the semiconductor industry, there is a focus on contribution to society and minimizing environmental and social impacts of products throughout all life-cycle stages. Failure to achieve our ESG objectives, meet the emerging ESG expectations of our stakeholders and/or respond in a timely way to enhanced regulations, reporting and disclosure obligations could negatively affect our brand and reputation and impede our ability to recruit or retain employees, which may adversely affect our operations. | Climate change contributes to increasing severity and frequency of extreme weather events, rising sea levels and droughts that can impact continuity of our operations and/or our supply chain. Climate change concerns and the potential environmental impact of climate change have and may result in new laws and regulations that affect us, our suppliers and our customers. Such laws or regulations could cause us to incur additional direct costs for compliance, as well as increased indirect costs resulting from our value chain. Furthermore, the ability to improve our product-related environmental performance (such as energy efficiency) may be affected by the complexity of our technology and products. In order to meet our ESG goals and requirements, we are dependent on our suppliers and their ability to reduce their ecological footprints. In addition, we are dependent on our customers and/or our customers may not be satisfied with our progress, which can impact demand. | A global trend to transition to a lower-carbon economy has resulted in increased regulations that could lead to technology restrictions, modification of product designs, an increase in energy prices and energy or carbon taxes, restrictions on pollution, remediation measures, or other requirements that could impact our business and increase our costs. A variety of regulatory developments have been introduced that focus on restricting or managing carbon and GHG emissions. This could result in a need to redesign products and/or purchase at higher costs new equipment or materials with lower carbon footprints. We publish disclosures on ESG matters relating to our business and our partners as required by applicable regulations and guidance and other data which may not be required but which we nonetheless elect to disclose. | Such disclosures include statements based on our ESG goals, expectations and assumptions, including forecasts about costs and future circumstances, which may prove to be incorrect. In addition, our ESG sustainability strategy may not deliver the intended results, and our estimates concerning feasibility, timing and cost of meeting stated goals are subject to risks and uncertainties. This could result in us not meeting our goals on expected timing or at all. ESG disclosure requirements are increasing and authorities have proposed disclosure requirements on ESG matters which differ from the requirements that we are currently subject to. We face risks in complying with such regulations, including the risk of complying with requirements in different jurisdictions, costs associated with such compliance and potential liability in the event that our ESG disclosures prove incorrect. | |||||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 59 | ||
Risk factors (continued) |
2. Finance and reporting | ||||||||||||||
We are exposed to financial risks including liquidity risk, interest rate risk, credit risk, foreign exchange risk and inflation | ||||||||||||||
Risk category: | ||||||||||||||
Financial | ||||||||||||||
As a global company, we are exposed to a variety of financial risks, including those related to liquidity, interest rates, credit, foreign exchange and inflation. Liquidity risk Negative developments in our business or global capital markets could affect our ability to meet our financial obligations or to raise or refinance debt in the capital or loan markets. In addition, we might be unable to repatriate cash from a country when needed for use elsewhere due to legal restrictions or required formalities. | Interest rate risk | Currency risk Our Financial Statements are expressed in euros. Accordingly, our results of operations are exposed to fluctuations in exchange rates between the euro and other currencies. Changes in currency exchange rates can result in losses in our Financial Statements. We are particularly exposed to fluctuations in the exchange rates between the US dollar and the euro, and to a lesser extent to the Japanese yen, the South Korean won, the Taiwanese dollar and the Chinese yuan, in relation to the euro. We incur costs of sales predominantly in euros, with portions also denominated in US and Taiwanese dollars. A small portion of our operating results are driven by movements in currencies other than the euro, US dollar, Japanese yen, South Korean won, Taiwanese dollar or Chinese yuan. | Inflation risk We are exposed to increases in costs due to inflation for costs of goods, transportation and wages, which may impact our profitability. We are experiencing higher-than-normal inflation, which impacts our costs and margins to the extent that we are not able to pass on increased costs in our prices. | |||||||||||
Our Eurobonds bear interest at fixed rates. Our cash, investments and credit facilities bear interest at a floating rate. Failure to effectively hedge this risk could impact our financial condition and results of operation. In addition, we could experience an increase in borrowing costs due to a ratings downgrade (or the expectation of a downgrade), developments in capital and lending markets or developments in our businesses. | ||||||||||||||
Counterparty credit risk | ||||||||||||||
We are exposed to credit risk, particularly with respect to financial counterparties with whom we hold our cash and investments as well as our customers. As a result of our limited number of customers, credit risk on our receivables is concentrated. Our three largest customers (based on total net sales) accounted for €3,718.8 million, or 64.4% of accounts receivable and finance receivables at December 31, 2023 compared with €5,252.8 million, or 78.6%, at December 31, 2022. Accordingly, business failure or insolvency of one of our main customers could result in significant credit losses. | ||||||||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 60 | ||
Risk factors (continued) |
3. Partners | ||||||||||||||
Our success is highly dependent on the performance of a limited number of critical suppliers of single-source key components | ||||||||||||||
Risk category: | ||||||||||||||
Supply chain disruption, Supplier strategy and performance | ||||||||||||||
We rely on outside vendors for components and subassemblies used in our systems, including the design thereof. These components and subassemblies are obtained from a single supplier or a limited number of suppliers. As our business has grown, our dependence on single suppliers or a limited number of suppliers has grown. The highly specialized nature of many of our components, particularly for EUV systems, means it is not economical to source from more than one supplier. In many cases, our sourcing strategy prescribes ‘single sourcing, dual competence’. Our reliance on a limited group of suppliers involves several risks, including a potential inability to obtain an adequate supply of required components or subassemblies in time and at acceptable costs, and reduced control over pricing and quality. Delays in supply of these components and subassemblies could occur due to disruptions experienced by our suppliers for reasons including work stoppages, fire, energy shortages, pandemic outbreaks, flooding, cyberattacks, blockades, sabotage or other disasters, natural or otherwise. This could lead to delays in delivery of our products, which could impact our business. For example, certain of our suppliers experienced disruptions in their operations as a result of material shortages and cyberattacks. Consistent delays or prolonged inability to obtain adequate deliveries of components or subassemblies, or any other circumstance that requires us to seek alternative sources of supply, could significantly hinder our ability to deliver our products in a timely manner. This could damage relationships with our customers and materially impact our business. | The number of lithography systems we are able to produce is limited by the production capacity of one of our key suppliers, Carl Zeiss SMT, is our sole supplier of lenses, mirrors, illuminators, collectors and other critical optical components (which we refer to as optics). We have an exclusive arrangement with Carl Zeiss SMT. If this supplier became unable to maintain and increase production levels, we could be unable to fulfill orders. This could have a material impact on our business and damage relationships with our customers. Furthermore, if Carl Zeiss SMT were to terminate its supply relationship with us or be unable to maintain production of optics over a prolonged period, we would effectively cease to be able to conduct our business. From time to time, we experience supply constraints which can impact our production. In 2023, we were impacted by delays and shortages in our supply chain, resulting in a late start on the assembly of a number of systems. We and our suppliers are investing in additional capacity to meet the demand. However, increasing capacity takes time, and we may be unable to meet the full demand of our customers for a few years. Further, we face the risk that demand may decrease, which could result in overcapacity and loss of investment in increasing capacity. In addition, most of our key suppliers, including Carl Zeiss SMT, have a limited number of manufacturing facilities, the disruption of which may significantly and adversely affect our production capacity. | Lead times in obtaining components have increased as our products have become more complex. A failure by us to adequately predict demand for our systems, or any delays in the shipment of components, can result in insufficient supply of components. This could lead to delays in delivery of our systems and could limit our ability to react quickly to changing market conditions. Conversely, a failure to predict demand could lead to excess and obsolete inventory. | We are also dependent on suppliers to develop new models and products to meet our development roadmaps. If our suppliers do not meet our requirements or timetable in product development, our business could suffer. | |||||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 61 | ||
Risk factors (continued) |
3. Partners (continued) | 4. People | |||||||||||
A high percentage of net sales is derived from a few customers | Our business and future success depend on our ability to manage the growth of our organization and attract and retain a sufficient number of adequately educated and skilled employees | |||||||||||
Risk category: | Risk category: | |||||||||||
Customer dependency | Human resources, Knowledge management, Organizational effectiveness | |||||||||||
Historically, we have sold a substantial number of lithography systems to a limited number of customers. Customer concentration can increase because of continuing consolidation in the semiconductor manufacturing industry. In addition, although the applications part of our holistic lithography solutions constitutes an increasing portion of our revenue, a significant portion of those customers are the same customers as those for our systems. Consequently, while the identity of our largest customers may vary from year to year, sales may remain concentrated among relatively few customers in any particular year. The recognized total net sales to our largest customer amounted to €8,772.9 million, or 31.8% of total net sales in 2023, compared with 7,046.9 million, or 33.3% of total net sales in 2022. In 2023, 53.9% of total net sales were made to two customers. The loss of any significant customer or any significant reduction or delay in orders by such a customer may have a material adverse effect on our business, financial condition and results of operations. | Our business success depends significantly on our ability to attract and retain employees, including a large number of highly qualified professionals. Competition for talent is intense and has intensified in recent years. Continuing to attract sufficient numbers of qualified employees to meet our growing needs will remain a challenge. Our business has grown significantly and the risk of not being able to attract, onboard and retain qualified personnel increases as our business grows. Our R&D programs require a large number of qualified employees. If we are unable to attract sufficient numbers of such employees, this could affect our ability to conduct R&D on a timely basis. The loss of key employees for unexpected reasons such as resignation or long- term illness is also a risk. | As a result of the uniqueness and complexity of our technology, qualified engineers capable of working on our systems are scarce and generally not available from other industries or companies. We invest a significant amount in educating and training our employees to work on our systems and their retention is a critical success factor for us. The increasing complexity of our products results in a longer learning curve for new and existing employees and suppliers. Our suppliers face similar risks in attracting and retaining qualified employees, including those in connection with programs that will support our R&D programs and technology developments. If our suppliers are unable to attract and retain qualified employees, this could impact our R&D programs or delivery of components to us. | Our organization has grown significantly in recent years. We may be unable to effectively manage, monitor and control our employees, facilities, operations and other resources. Our rapid growth driven by strong customer demand has put pressure on our organization and employee well-being. This may negatively impact the efficiency of our operations, our ability to comply with laws and regulations and our reputation as an employer. | |||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 62 | ||
Risk factors (continued) |
5. Operations | ||||||||||||||
We may face challenges in managing the industrialization of our products and bringing them to high-volume production | We are dependent on the continued operation of a limited number of manufacturing facilities | |||||||||||||
Risk category: | Risk category: | |||||||||||||
Product industrialization | Continuity of own operation | |||||||||||||
Bringing our products to high-volume production at a value-based price and in a cost-effective manner depends on our ability to manage the industrialization of our products and to manage costs. Customer adoption of our products depends on the performance of our products in the field. As our products become more complex, we face an increasing risk that products may not meet development milestones or specifications and may not perform according to specifications, including quality standards. If our products do not perform according to specifications and performance criteria, or if quality or performance issues arise, this may result in additional costs and reduced demand for our products. Our customers may not be able to meet planned wafer capacity. Transitioning newly developed products to full-scale production requires the expansion of infrastructure, including enhancing manufacturing capabilities, increasing the supply of components and training qualified personnel. It may also require our suppliers to expand their infrastructure capabilities. If we or our suppliers are unable to expand infrastructure as necessary, we may be unable to introduce new technologies, products or product enhancements, or to reach high-volume production of newly developed products on a timely basis or at all. | When we are successful in industrializing new products, it can take years to reach profitable margins. New technologies might not have the same margins as existing technologies, and we might not be able to adjust value-based pricing and/or cost in an effective manner. In addition, the introduction of new technologies, products or product enhancements also impacts ASML’s liquidity. New products may have higher cycle times, resulting in increased working capital needs. As our products become more complex, the investments needed before new product introduction and the timing of revenue recognition of these products may have a significant negative effect on our cost structure and margins. The capability, capacity and costs associated with providing the required customer support to cover the increasing number of shipments and service a growing number of EUV systems that are operational in the field could affect the timing of shipments. It could also impact the efficient execution of maintenance, servicing and upgrades, which are key to our systems continuing to achieve the required productivity. | All of our manufacturing activities, including subassembly, final assembly and system testing, take place in (cleanroom) facilities in Veldhoven, Oirschot (the Netherlands), Berlin (Germany), Wilton, San Diego (US), Pyeongtaek (South Korea), and Linkou and Tainan (Taiwan). These facilities may be subject to disruption for reasons including work stoppages, fire, energy shortages, pandemic outbreaks, flooding, cyberattacks, blockages, sabotage or other disasters, natural or otherwise. We cannot be sure that alternative production capacity would be available if a major disruption were to occur. | We are not able to fully insure our risk exposure and not all disasters are insurable. As a result, we may be subject to the financial impact of uninsured losses, which could have an adverse impact on our financial condition and results of operations. | |||||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 63 | ||
Risk factors (continued) |
5. Operations (continued) | ||||||||||||||
We face challenges to meet demand | Our operations expose us to health, safety and environment risks | |||||||||||||
Risk category: | Risk category: | |||||||||||||
Manufacturing and install, Human resources, Supplier strategy and performance | Environment, health and safety | |||||||||||||
In recent years, we have experienced significant demand across all our market segments and product portfolio. This high level of demand brings challenges. We have and are continuing to increase production capacity in our end-to-end supply chain to meet demand, but we face challenges in increasing capacity. For example, we depend on our suppliers increasing their capacity and their ability to invest, and it takes time to build the production space and equipment required for expansion. We and our supply chain also need to obtain permits to make expansion possible, and the time it takes for these to be granted may cause delays. | It is a challenge for ASML and its suppliers to hire and retain employees to support expansion. Our processes and systems and that of our supply chain may also not be able to adequately support our growth. If we are not successful in increasing our capacity to meet demand, this could impact our relationships with customers and our competitive position. The increased demand and resultant supply constraints that we are continuing to experience lead to longer lead times for customers. This could result in customers changing their sourcing strategy to become less dependent on ASML, impacting our market share in certain product offerings. | Hazardous substances are used in the production and operation of our products and systems. Their use subjects us to a variety of governmental regulations relating to environmental protection and employee and product health and safety. This includes the transport, use, storage, discharge, handling, emission, generation, and disposal of toxic or other hazardous substances. In addition, operating our systems (which use lasers and other potentially hazardous systems) can be dangerous and can result in injury. Failure to comply with regulations could result in harm to people and environment. Substantial fines could be imposed on us, as well as suspension of production, alteration of our manufacturing and assembly and test processes, damage to our reputation and/or restrictions on our operations or sale or other adverse consequences. | Additionally, our products have become increasingly complex. This requires us to invest in ongoing risk assessments and development of appropriate preventative and protective measures for health and safety for both our employees (in connection with the production and installation of our systems and field options and performance of our services) and our customers’ employees (in connection with the operation of our systems). Our health and safety practices may not be effective in mitigating all health and safety risks. Failure to comply with applicable regulations, or the failure of our implemented practices for customer and employee health and safety, could subject us to significant liabilities. | |||||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 64 | ||
Risk factors (continued) |
5. Operations (continued) | ||||||||||||||
Cybersecurity and other security incidents, or disruptions in our processes or information technology systems, could materially adversely affect our business operations | ||||||||||||||
Risk category: | ||||||||||||||
Security, Information technology, Process effectiveness and efficiency | ||||||||||||||
We rely on the accuracy, availability and security of our information technology (IT) systems. Despite the measures that we have implemented, including those related to cybersecurity, our systems could be breached or damaged by malware and systems attacks, natural or man-made incidents, disasters or unauthorized physical or electronic access. We have experienced some of these incidents in the past. We are experiencing an increasing number of cyberattacks on our IT systems as well as the IT systems of our suppliers, customers and other service providers, whose systems we do not control. These attacks include malicious software (malware), attempts and acts to gain unauthorized access to data, and other electronic and physical security breaches of our IT systems. They also include the IT systems of our suppliers, customers and other service providers that have led and could lead to disruptions in critical systems, unauthorized release, misappropriation, corruption, or loss of data or confidential information (including confidential information relating to our customers, employees and suppliers). | Further, we depend on our employees and the employees of our suppliers to appropriately handle confidential and sensitive data and deploy our IT resources in a safe and secure manner that does not expose our network systems to security breaches or the loss of data. Inadvertent disclosure, actions or malfeasance by our employees, those of our suppliers or other third parties have resulted and may in the future result in a loss or misappropriation of data or a breach or interruption of our IT systems. This could result in competitive harm and violate export controls and other laws and regulations which could result in fines and penalties, business disruption, reputational harm and additional regulatory scrutiny or export control measures. Any system failure, accident or security breach could result in business disruption, theft of our intellectual property or trade secrets, unauthorized access to, or disclosure of, customer, personnel, supplier or other confidential information, corruption of our data or of our systems, reputational damage or litigation and violation of applicable laws. | Furthermore, malware may harm our systems and software and could be inadvertently transmitted to our customers’ systems and operations. This could result in loss of customers, litigation, regulatory investigation and proceedings that could expose us to civil or criminal liabilities and diversion of significant management attention and resources to remedy the damages that result. We may also incur significant costs to protect against or repair the damage caused by these disruptions or security breaches, including, for example, rebuilding internal systems, implementing additional threat protection measures, providing modifications to our products and services, defending against litigation, responding to regulatory inquiries or actions, paying damages, or taking other remedial steps with respect to third parties. Further, remediation efforts may not be successful and could result in interruptions, delays or cessation of service, unfavorable publicity, damage to our reputation, customer allegations of breach-of-contract, possible litigation and loss of existing or potential customers that may impede our sales or other critical functions. Cybersecurity threats are constantly evolving. We remain potentially vulnerable to additional known or as yet unknown threats, as in some instances, we and our customers, partners and suppliers may be unaware of an incident or its magnitude and effects. | We also face the risk that we could unintentionally expose our customers to cybersecurity attacks through the systems we deliver to them, including in the form of malware or other types of attacks, which could harm our customers. Overall, cybersecurity incidents have not had a material impact on our results of operations. However, ASML’s visibility and importance for the semiconductor industry continues to increase. There is a risk that this may lead to actions that may adversely impact the security of ASML or the safety of its employees. In addition, processes and systems may not be able to adequately support the growth that we have experienced in recent years and continue to experience. From time to time, we implement updates to our IT systems and software which can disrupt or shut down our IT systems. We may not be able to successfully launch and integrate IT systems as planned without disruption to our operations. | |||||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 65 | ||
Risk factors (continued) |
6. Legal and compliance | ||||||||||||||
We are subject to regulatory and compliance obligations in the various countries where we operate and as our business grows ensuring compliance becomes more challenging | Changes in taxation could affect our future profitability | |||||||||||||
Risk category: | Risk category: | |||||||||||||
Violation of laws and regulations | Tax and customs | |||||||||||||
We are subject to a variety of laws and regulations across the jurisdictions where we operate, including those relating to trade, national security, tax, export controls, reporting, product compliance, anti-corruption, antitrust, ESG, human rights, data protection, spatial planning and environmental matters. With the significant growth of our business in recent years, including an increase in our sales, operations, workforce and infrastructure, ensuring compliance with laws and regulations and our internal policies across our continually expanding organization has become more challenging. We face the risk that, despite our significant efforts and proactive approach to compliance, we may fail to comply with such laws, regulations or policies. As a result of our expanding international operations, we operate in a significant and growing number of countries in the world, and we are therefore subject to numerous and differing, and sometimes competing, regulatory frameworks, which can impact how we operate our business. In particular, the trade and national security regulatory environment has become increasingly restrictive, and as a result, our ability to sell some of our products and services to certain customers has been subject to restrictions, delays in shipments due to a requirement to obtain permits, and a prohibition on shipments of products to certain customers. | Laws and regulations that impact our business are regularly amended and we are subject to new laws and regulations, including in response to changing global geopolitical dynamics. We are also subject to the changing interpretations and positioning of regulators, including in the granting of required licenses to ship products as well as in investigations and enforcement. Additional or amended regulations or changes in policies of governments and regulators could increase compliance costs and risks associated with non- compliance or further limit our ability to sell our products and services in certain jurisdictions. We are subject to investigations, audits and reviews by regulatory authorities in the various jurisdictions where we operate regarding compliance with laws and regulations, including tax laws. These may arise due to misunderstandings, disputes, or suspicions of non-compliance or otherwise, and can be resource-intensive and have reputational and financial implications for us. Despite our efforts and proactive compliance program, we may be found to be non-compliant with applicable regulations. Compliance with existing and new regulations can result in compliance costs, increased risk of non-compliance and limitations on our business which can impact our results of operations. The consequences of non-compliance include fines, penalties and litigation, as well as business disruption, the loss of trade or export privileges, reputational harm, additional regulatory scrutiny measures and the erosion of stakeholder trust, which could have a material adverse impact on our business and results of operations. | We are subject to income taxes in the Netherlands and other countries in which we are active. Our effective tax rate has fluctuated in the past and may fluctuate in the future. Changes in our business environment can affect our effective tax rate. The same applies to changes in tax legislation in the countries where we operate, together with developments driven by global organizations such as the Organization for Economic Co-operation and Development (OECD), as well as any change in approach to tax by tax authorities. These initiatives have already resulted in and may result in further increased compliance obligations for ASML. Additionally, this may result in an increase in our effective tax rate in future years. | Changes in tax legislation may adversely impact our tax position and consequently our net income. Our worldwide effective tax rate is heavily impacted by R&D incentives included in tax laws and regulations in the countries where we operate. Examples include the so-called innovation box in the Netherlands and the R&D credits we obtain in the US. If jurisdictions alter their tax policies/ laws in this respect, it may have an adverse effect on our worldwide effective tax rate. In addition, jurisdictions levy corporate income tax at different rates. The mix of our sales over the various jurisdictions in which we operate may vary from year to year, resulting in a different mix of corporate income tax rates applicable to our profits. This can also affect our worldwide effective tax rate and impact our net income. | |||||||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 66 | ||
Risk factors (continued) |
7. Other risk factors | ||||||||
Restrictions on shareholder rights may dilute voting power | We may not declare cash dividends, conduct share buyback programs or cancel shares at all or in any particular amounts in any given year | |||||||
ASML's Articles of Association provide that it is subject to the provisions of Dutch law applicable to large corporations, called ‘structuurregime’. These provisions concentrate control of certain corporate decisions and transactions in the hands of the Supervisory Board. As a result, holders of ordinary shares may have more difficulty in protecting their interests in the face of actions by members of the Supervisory Board than if we were not subject to the ‘structuurregime’. Our authorized share capital includes a class of cumulative preference shares. We have granted our preference shares foundation (Stichting Preferente Aandelen ASML), an option to acquire, at the nominal value of €0.09 per share, such cumulative preference shares. Exercise of the preference share option would effectively dilute the voting power of our outstanding ordinary shares by one-half, which may discourage or significantly impede a third party from acquiring a majority of our voting shares. | We aim to pay a quarterly dividend that is growing (on an annualized basis) over time, and we conduct share buybacks from time to time. The dividend proposal, amount of share buybacks and cancellation of shares in any given year is subject to the availability of distributable profits, retained earnings and cash. It may also be affected by, among other factors, the Board of Management’s views on our potential future liquidity requirements, including for investments in production capacity and working capital requirements, the funding of our R&D programs and for acquisition opportunities that may arise from time to time, and by future changes in applicable tax and corporate laws (for example plans of the Dutch government to tax share buy backs). | The Board of Management may decide not to pay a dividend or to pay a lower dividend and may suspend, adjust the amount of or discontinue share buyback programs, or we may otherwise fail to complete buyback programs. | ||||||
ASML ANNUAL REPORT 2023 | RISK CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 67 | ||
Risk factors (continued) |
Q | Why is ESG sustainability such an important topic for ASML? |
Q | What are the main aims of the ESG sustainability strategy? |
Q | Where are ASML’s greatest ESG challenges? |
ASML ANNUAL REPORT 2023 | Q&A WITH THE CBO | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 68 | |
Developing our competitive advantage | ||||||
In conversation with our Executive Vice President and Chief Business Officer | ||||||
Christophe D. Fouquet on his responsibility for the ESG sustainability strategy |
For us, ESG sustainability is a real competitive advantage and we embrace it wholeheartedly.” |
Christophe D. Fouquet |
Executive Vice President and Chief Business Officer |
On November 30, 2023, the Supervisory Board of ASML announced its intention to appoint Christophe Fouquet, currently ASML’s Chief Business Officer and member of the Board of Management, as the company’s next President and Chief Executive Officer. The appointment is subject to notification of the Annual General Meeting of shareholders on April 24, 2024. | ||
Our success springs from innovation and teamwork delivered by very effective, high-performing people.” | |
Christophe D. Fouquet | |
Executive Vice President and Chief Business Officer |
Q | Does the semiconductor industry have a positive or negative influence on the environment? |
Q | How important are ASML’s people to the company’s success? |
Q | How would you sum up ASML’s commitment to ESG sustainability? |
ASML ANNUAL REPORT 2023 | Q&A WITH THE CBO CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 69 | |
Developing our competitive advantage (continued) | ||||||
In conversation with our Executive Vice President and Chief Business Officer | ||||||
Christophe D. Fouquet on his responsibility for the ESG sustainability strategy |
Our contribution to a digital, sustainable future Increasing digitalization can pave the way to a society that is more environmentally and socially sustainable for everyone. The large-scale digitalization that is required to achieve a sustainable future relies on the semiconductor industry’s ability to produce faster, more powerful microchips that are energy-efficient and affordable. Together with our partners, we provide the patterning solutions that can help make this possible. The benefits our industry brings come at a cost, including energy and resource use. We are committed to innovating and investing to enable our company and the industry as a whole to reduce these and other negative impacts. | Our vision is to enable ground-breaking technology that solves some of humanity’s toughest challenges | ||||||||||||||||||||||||||||||||||||||||
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1 | Grow our holistic lithography business | 2 | Secure unique supply chain capabilities to ensure business continuity | 3 | Move toward adjacent business opportunities | 4 | Deliver on our ESG sustainability commitments | ||||||||||||||||||||||||||||||||||
Environmental | Social | Governance | |||||||||||||||||||||||||||||||||||||||
We want to help drive expanding computing power while minimizing waste, energy use and emissions. Our focus on energy efficiency and climate action, and the circular economy, is fundamental to achieving this goal. | We also want to deliver responsible growth that benefits all our stakeholders – to provide an attractive workplace for all, build a responsible supply chain, fuel innovation in our ecosystem and be a valued partner to communities. | As a foundation, we commit to act on our responsibilities and anchor them across our entire business through integrated governance, engaged stakeholders and transparent reporting. | |||||||||||||||||||||||||||||||||||||||
Circular economy | Responsible supply chain | ||||||||||||||||||||||||||||||||||||||||
Innovation ecosystem | Transparent reporting | ||||||||||||||||||||||||||||||||||||||||
Our ESG sustainability strategy is underpinned by targets which are detailed across the following pages |
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ESG at a glance | ||||||
To be a sustainability leader, we must drive progress toward a sustainable society. This means enabling ground-breaking technology that solves some of humanity’s toughest challenges. |
Why it matters |
How we’re managing our impact |
Environmental – We want to continue to expand computing power but with minimal waste, energy use and emissions. Our focus is on energy efficiency and climate action, and the transition to a circular economy. | |
Social – We want to ensure responsible growth that benefits all stakeholders – to provide an attractive workplace for all, build a responsible supply chain, fuel innovation in our ecosystems and be a valued partner to communities. | |
Governance – We want to anchor our responsibilities in the way we do business through integrated governance, engaged stakeholders and transparent reporting. | |
How we identified our material topics | ||||
Step 1: Understand the context | Step 2: Identify sustainability matters and impacts | |||
Identifying affected stakeholders and users of sustainability information is the foundation of our materiality assessment process. We identify five relevant stakeholder groups: customers, employees, suppliers, shareholders and society. We continually engage with these groups to understand their concerns and how their interests may be impacted. This engagement informs improvement actions and feedback on performance and progress. | We use the insights gained from stakeholder engagement and other relevant sources to identify sustainability matters and impacts that are relevant to us. This results in an overview that includes positive and negative, actual and potential, and short-, medium- and long-term impacts. The aim of the overview is to cover all impacts that might be material, considering our business activities and relationships across our value chain. | |||
Read more in Our business model - Engaging with our stakeholders | ||||
Step 3: Assess the significance of the impacts | Step 4: Prioritize the most significant impacts | |||
ASML subject matter experts assess the materiality of negative impacts based on scale, scope and irremediable character, also referred to as severity. In case of potential impacts, likelihood is considered. The materiality of positive impacts is assessed based on scale and scope, and, in case of potential impacts, likelihood. For potential negative human-rights-related impacts, severity takes precedence over likelihood. | The assessment results in a materiality score for each impact, and we use these materiality scores to determine thresholds for materiality. Thresholds are determined separately for negative impacts and positive impacts, as these cannot always be compared. Impacts that meet the materiality threshold are clustered into material sustainability matters. The outcomes of the materiality assessment are used to shape our strategy and targets, with the aim of sustainable long-term value creation for all our stakeholders. The Board of Management sets this strategy. |
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Our material ESG sustainability topics | ||||||
To create long-term value for our stakeholders, we focus our strategy on the sustainability topics where we can have the greatest impact. |
Material topics (positive or negative, actual or potential) which are considered material for 2023 based on the materiality assessment | ||||||||
Material topic name | Material impacts | Positive or negative impact | Actual or potential impact | Impact area value chain | Please read more in | |||
Energy management & carbon footprint – Operations | Impact on climate change through energy use and GHG emissions from manufacturing, buildings, business travel and employee commuting | Negative | Actual | Own operations | Energy efficiency and climate action – Emissions from our own operations – Manufacturing and buildings and Business travel and commuting | |||
Energy management & carbon footprint – Supply chain | Impact on climate change through energy use and GHG emissions from purchased goods and services and logistics | Negative | Actual | Upstream – suppliers | Energy efficiency and climate action – Emissions from our supply chain (including logistics) | |||
Energy management & carbon footprint – Product use | Impact on climate change through energy use and GHG emissions from use of our products at our customers | Negative | Actual | Downstream – customers | Energy efficiency and climate action – Emissions from product use at our customers | |||
Energy management & carbon footprint – Downstream impact | Impacts in the ICT industry and society through the use of our customers' products in all kinds of applications that contribute to climate change or support climate change mitigation and adaptation | Positive and negative | Actual | Downstream – beyond customers | Energy efficiency and climate action | |||
Pollution of air | Impacts on the environment through emission of nitrogen oxides (NOx), non-methane volatile organic compounds (NMVOC) and hydrogen (H2) from manufacturing | Negative | Actual | Own operations | Energy efficiency and climate action – Emissions from our own operations – Manufacturing and buildings | |||
Circular economy | Impacts on the environment through resource use and waste related to systems, parts, tools, packaging, real estate and non-product-related activities | Negative | Actual | Own operations & customers | Circular economy | |||
Circular economy | Impact on the transition to a regenerative and circular economy through the use of our customers' products in all kinds of applications | Positive and negative | Actual | Downstream – beyond customers | Circular economy | |||
Diversity and inclusion | Impact on employees by providing equal opportunities for all, including gender equality, fair remuneration, measures against discrimination and harassment, and promotion of diversity and inclusion | Positive | Actual | Own operations | Attractive workplace for all – Inspiring a unified culture |
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Our material ESG sustainability topics (continued) |
Material topics (positive or negative, actual or potential) which are considered material for 2023 based on the materiality assessment (continued) | ||||||||
Material topic name | Material impacts | Positive or negative impact | Actual or potential impact | Impact area value chain | Please read more in | |||
Talent attraction, employee engagement and retention | Impact on employees' well-being through labor conditions, including social protection, fair remuneration practices, freedom of association and collective bargaining, and existence of works councils | Positive | Actual | Own operations | Attractive workplace – Providing the best employee experience | |||
Training and skills development | Impact on employees’ well-being and careers by providing training and development opportunities | Positive | Actual | Own operations | Attractive workplace – Providing the best employee experience | |||
Occupational health and safety | Impacts on employee health, safety and well-being in case of incidents with hazardous substances or systems and work-related pressure on physical and mental health | Negative | Potential | Own operations | Attractive workplace – Ensuring employee health and safety and Providing the best employee experience | |||
Responsible supply chain and product stewardship | Potential impacts on the environment and workers in the supply chain, including labor conditions, forced and child labor, and management of those impacts through product stewardship and supply chain due diligence | Positive and negative | Potential | Upstream – suppliers | Responsible supply chain | |||
Innovation ecosystem | Impacts in society through supporting the innovation ecosystem and contributing to R&D, public – private partnerships, academic, industry and other research, STEM education and ESG innovation | Positive | Actual | Downstream – beyond customers | Innovation ecosystem and Valued partner in our communities | |||
Community engagement | Impacts on local communities through job creation and pressure on housing, infrastructure, social cohesion and access to talent | Positive and negative | Actual | Own operations | Valued partner in our communities | |||
Quality of life | Impacts on people’s well-being, health, safety and human rights through the use of technology in all kinds of applications that affect quality of life | Positive and negative | Actual | Downstream – beyond customers | Responsible supply chain | |||
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Our material ESG sustainability topics (continued) |
Why it matters The UN’s Sustainable Development Goals (SDGs) represent the global sustainable development agenda and inform public policy. As a responsible business, we support the SDGs, and it is critical that we accelerate action to play our part. Our ESG sustainability strategy supports this ambition, focusing on the six SDGs where we can contribute most. We also became a signatory to the UN Global Compact in 2023. How we’re managing our contribution We contribute to SDG 4 (Quality education) by developing our people and promoting lifelong learning opportunities for the communities where we operate. SDG 8 (Decent work and economic growth) is covered by our commitment to provide an attractive workplace that promotes sustained, inclusive growth, full and productive employment, and decent work for all throughout our supply chain, including protecting labor rights and promoting a safe and secure working environment for everyone. Our contribution to SDG 9 (Industry, innovation and infrastructure) is demonstrated by our work to build a resilient ecosystem that fosters innovation while promoting inclusive and sustainable industrialization. We contribute to SDG 11 (Sustainable cities and communities) by working with our community outreach partners to make cities and human settlements inclusive, safe, resilient and sustainable. We contribute to SDG 12 (Responsible consumption and production) via our circular economy work and our work to achieve environmentally sound management of chemicals and all wastes throughout their life cycles, in accordance with agreed international frameworks. We contribute to SDG 13 (Climate action) by promoting energy efficiency and climate action across our value chain. | ||||||||||
SDG 4 | SDG 11 | |||||||||
Quality education | Sustainable cities and communities | |||||||||
Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all | Make cities and human settlements inclusive, safe, resilient and sustainable | |||||||||
Our contribution | Our contribution | |||||||||
SDG 8 | SDG 12 | |||||||||
Decent work and economic growth | Responsible consumption and production | |||||||||
Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all | Ensure sustainable consumption and production patterns | |||||||||
Our contribution | Our contribution | |||||||||
SDG 9 | SDG 13 | |||||||||
Industry, innovation and infrastructure | Climate action | |||||||||
Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation | Take urgent action to combat climate change and its impacts by regulating emissions and promoting developments in renewable energy | |||||||||
Our contribution | Our contribution | |||||||||
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Contributing to the UN's Sustainable Development Goals | ||||||
The UN’s 2030 Agenda for Sustainable Development provides a shared blueprint for peace and prosperity, for people and planet, now and in the future. |
ENVIRONMENTAL | ||
Energy efficiency and climate action | ||
Scope 1 and 2 emissions from our own operations – Manufacturing and buildings | ||
Scope 3 emissions from our own operations – Business travel and commuting | ||
Scope 3 emissions from our supply chain (including logistics) | ||
Scope 3 emissions from product use at our customers | ||
Circular economy | ||
Prevent waste | ||
Extend the lifetime of our products | ||
Reuse resources | ||
Recycle materials | ||
Water management |
Energy efficiency and climate action | |
We are working to reduce our carbon footprint to achieve net zero emissions across our value chain by 2040. | |
Broadening energy efficiency efforts across our product portfolio. |
Circular economy | |
We aim to maximize the value of our systems, reusing resources as much as possible, while minimizing waste, decoupling our growth from resource consumption, and recycling materials. | |
Aiming for zero waste from operations to landfill or incineration by 2030. |
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Environmental at a glance | ||||||
We are committed to reducing the environmental footprint of our operations and supply chain as well as the environmental impacts of our products and services. |
IN THIS SECTION | ||
Our overall performance in 2023 | ||
Scope 1 and 2 emissions from our own operations – Manufacturing and buildings | ||
Scope 3 emissions from our own operations – Business travel and commuting | ||
Scope 3 emissions from our supply chain (including logistics) | ||
Scope 3 emissions from product use at our customers | ||
Why it matters |
35.1 kt | 15.0 Mt | 1.06 kt | 0.55 kt | 7.7 kWh | |||||
Scope 1 and 2 CO2e emissions (2025 target: net zero) | Scope 3 CO2e emissions (2040 target: net zero) | Scope 3 CO2e emissions intensity (per €m gross profit) (2025 target: 1.016) | Net scope 3 CO2e emissions intensity (per €m revenue) | NXE energy use per wafer pass (NXE:3600D, measured in 2023) (2025 target: 5.1 kWh) |
How we’re managing our impact |
We measure our performance in the following ways: | |
•Scope 1 and 2 CO2e emissions •Scope 3 CO2e emissions •Scope 3 CO2e emissions intensity (per €m gross profit) •Scope 3 CO2e emissions intensity (per €m revenue) •NXE energy use per exposed wafer | |
Our environmental management system | ||
We have implemented an environmental management system (EMS) to monitor energy use and emissions and improve performance and enhance efficiency across our global operations. The EMS is integrated into the overall environmental, health and safety (EHS) management system operated by all ASML facilities. This system was recertified for ISO 14001 (the standard for environmental management systems) in 2023 and structured in accordance with ISO 45001 (the standard for occupational health and safety management systems) requirements. | ||
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Energy efficiency and climate action | ||||||
We are working to reduce our carbon footprint to achieve net zero emissions across our value chain by 2040. |
1 | Reduce energy use and innovate to achieve greater energy efficiency by redesigning our assets, products and processes. | |
2 | Aim to lead the shift toward 100% credible, renewable energy. | |
3 | Compensate for residual emissions if no reasonable other improvement actions are available. | |
The diagram below illustrates our journey to net zero emissions in our value chain: | |
2025 | Net zero scope 1 and 2 emissions from manufacturing and buildings | |
We use natural gas resulting in direct emissions (scope 1). In some parts of the world, we have been unable as of yet to buy green electricity. This results in local emissions caused by fossil power plants (scope 2). | ||
2025 | Net zero scope 3 emissions from business travel and commuting | |
Emissions from employees traveling to our customers, suppliers and other parts of ASML, and from employees traveling to and from work. | ||
2030 | Net zero scope 3 emissions from our supply chain (including logistics) | |
A significant portion of our GHG emissions are generated indirectly in our supply chain, as we mainly assemble modules that we source from suppliers. Parts and modules have to be transported to us or our customers directly, and our assembled systems are shipped from ASML premises to customers. As today’s freight logistics, especially air transportation, are still carbon-intensive, a significant part of our supply chain emissions stem from logistics (operated by our logistics suppliers). | ||
2040 | Net zero scope 3 emissions from product use at our customers | |
The largest portion of our indirect emissions arises during use of our systems at customers’ factories. Our customers are not always able to use 100% renewable electricity to run their business. |
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Energy efficiency and climate action (continued) |
How semiconductors support climate action | |||||
While we measure and aim to reduce the impacts of our operations, supply chain and product use, ASML’s climate impacts extend far beyond these areas to include the benefits and risks that our technology brings to society. The technology pioneered by our R&D teams and partners sits at the heart of global digitalization and has the potential to transform how we all live and work. We enable our customers to innovate the semiconductor technologies that can help humanity manage its challenges and seize opportunities by facilitating sustainable living and mobility, accessible healthcare, food security and the transition to renewable energy. For example, semiconductors are harnessing, converting, transferring and storing energy from sources such as solar and wind power as electricity and helping to ensure that national power grids are both responsive and robust. | Mitigating climate change means reducing energy demand by developing end-use applications that are as energy efficient as possible. Digital technology can help businesses and citizens cut energy consumption and save money. Smart sensors can detect room occupancy, allowing lights and heating to be switched off and on automatically. Smartphone applications make it possible for people to remotely control their appliances or get from A to B through car-sharing, ride-sharing or other demand-driven, flexible ways of transportation. And as we transition away from fossil fuels, electric vehicles will become the norm and will require new, potentially diverse electronic solutions. On the adverse side, we acknowledge the effects of digital technologies that increase energy demand, such as AI, IoT, blockchain and cryptocurrency mining. | ||||
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Energy efficiency and climate action (continued) |
Progress tracking | ||||||||||
Topic | Target 2025 | Performance indicator | 2021 | 2022 | 2023 | Status | ||||
Climate action | Net zero | Scope 1 – Direct emissions from fossil fuels in our operations (kt) | 19.3 | 17.3 | 19.2 | • | ||||
Net zero | Scope 2 – Indirect emissions from energy consumption (kt) [market-based]2 | 20.1 | 20.8 | 15.9 | • | |||||
Net zero (2040) | Scope 3 – Indirect emissions from total value chain (kt)3 | 11,426.2 | 11,936.3 | 15,025.2 | n | |||||
Total footprint (in kt)1 | 11,465.6 | 11,974.4 | 15,060.3 | n | ||||||
No target | Scope 3 CO2e emissions intensity (per €m revenue)3 | 0.61 | 0.56 | 0.55 | n/a | |||||
1.016 | Scope 3 CO2e emissions intensity (per €m gross profit)3 | 1.165 | 1.116 | 1.060 | • | |||||
No target | Reduction in GHG emissions from projects (kt) | n/a | 2.6 | 1.6 | n/a | |||||
Energy efficiency | 5.1 | Products – NXE energy use per wafer pass (in kWh) | 8.3 (NXE:3600D) | 8.3 (NXE:3600D) | 7.7 (NXE:3600D) | n | ||||
No target | Products – NXT energy use per wafer pass (in kWh)4 | 0.56 (NXT:1980Ei) | 0.55 (NXT:2100i) | 0.52 (NXT:1980Fi) | n/a | |||||
No target | Energy consumption (in TJ) | 1,689 | 1,633 | 1,729 | n/a | |||||
100 TJ | Energy savings worldwide through projects (in TJ)5 | 12.7 | 31.7 | 47.3 | • | |||||
100% | Renewable electricity (of total electricity purchased) | 92% | 91% | 91% | n | |||||
(10)% | Energy consumption (NXE) (reduction in % of baseline 2018 1.4 MW) | (6)% (NXE:3600D) | (6)% (NXE:3600D) | (12)% (NXE:3600D) | n | |||||
No target | Throughput (in wph) (NXE) | 160 (NXE:3600D) | 160 (NXE:3600D) | 160 (NXE:3600D) | n/a | |||||
(60)% | Energy use per wafer pass (NXE) (reduction in % of baseline 2018)6 | (35)% (NXE:3600D) | (35)% (NXE:3600D) | (40)% (NXE:3600D) | n |
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Energy efficiency and climate action (continued) | ||||||
On track • Ongoing focus area n |
How we’re managing our impact |
1 | Reducing energy consumption | |
2 | Using renewable energy | |
3 | Compensating CO2 emissions | |
Our targets and performance in 2023 |
Our actions in 2023 |
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Energy efficiency and climate action (continued) | ||||||
Scope 1 and 2 emissions from our own operations – Manufacturing and buildings |
Key projects in 2023 | |
In 2023, as part of our energy savings master plan, we executed key projects in the Netherlands, the US and Taiwan which resulted in around 16 TJ annual energy savings. The total energy savings delivered by projects executed between 2021 and 2023 amounted to 47 TJ. In 2023, if we include part of the savings realized by projects started in 2022 and not accounted for in 2022, we realized savings of: | |
•11 TJ per year through operationalizing systems of the energy grid and implementing H2 venting in two manufacturing buildings in Veldhoven •3 TJ per year in Wilton by installing sand filters on cooling towers •1 TJ in San Diego through the installation of solar panels •1 TJ in Taiwan factories by optimizing the operation of cooling installations and replacing ventilation systems | |
The remaining 31 TJ is from savings realized by projects executed in 2021 and 2022. | |
100% | |
of the electricity used in the EU, US and China was from renewable sources |
Promoting industry-wide collaboration to reduce GHG emissions across the value chain | ||||||
Established in November 2022 with ASML as a founding member, the Semiconductor Climate Consortium aims to address the challenges of climate change and speed up the industry’s efforts to reduce GHG emissions throughout the value chain. Founding members have affirmed their support of the Paris Agreement and related accords driving the 1.5⁰C pathway. The consortium’s members are committed to working toward the following pillars and objectives: | by reducing the carbon footprint stemming from electricity usage for semiconductor manufacturing and for powering chips in electronics devices. 3.Investment and innovation to solve remaining 16%: Reducing emissions from the supply chain and from manufacturing process gases will require considerable R&D, necessitating investments now. 4.Future manufacturing emissions scenarios: Current government and company commitments will substantially reduce manufacturing emissions, but they are still forecasted to overshoot the carbon budget for the 1.5°C pathway. 5.Dilemma of value chain emissions: Digital technologies that require semiconductors play a crucial role in reducing energy use and emissions across industries while simultaneously adding to the overall carbon footprint. Read more at the Semiconductor Climate Consortium (SCC) website | |||||
Transparency – Publicly report progress and scope 1, 2 and 3 emissions annually | ||||||
Ambition – Set near- and long-term decarbonization targets with the aim of reaching net zero emissions by 2040 | ||||||
Collaboration – Align on common approaches, technology innovations and communication channels to continuously reduce GHG emissions | ||||||
On September 20, 2023, the SCC published its first report providing an in-depth analysis of the semiconductor value chain’s carbon footprint and priority-ranked carbon emission sources for the industry to address. The main takeaways include: 1.Baseline of value chain emissions: Semiconductor devices produced in 2021 have a lifetime CO2e footprint of 500 Mt – 16% from supply chain, 21% from manufacturing and 63% from device use. 2.Low-carbon energy is a key lever: Bold and decisive investments in low-carbon energy sources can address more than 80% of industry emissions primarily | ||||||
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Energy efficiency and climate action (continued) | ||||||
Scope 1 and 2 emissions from our own operations – Manufacturing and buildings (continued) |
Looking ahead |
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Energy efficiency and climate action (continued) | ||||||
Scope 1 and 2 emissions from our own operations – Manufacturing and buildings (continued) |
Reducing upstream and downstream scope 3 emissions |
Our overall target for 2025 is to reduce the intensity of scope 3 emissions to 1,016 tonnes CO2e per € million gross profit, in line with our SBTi commitment. |
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Energy efficiency and climate action (continued) | ||||||
Scope 3 emissions: An introduction |
How we’re managing our impact |
Our targets and performance in 2023 |
Our actions in 2023 |
Looking ahead |
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Energy efficiency and climate action (continued) | ||||||
Scope 3 emissions from our own operations – Business travel and commuting |
How we’re managing our impact |
Our targets and performance in 2023 |
Our actions in 2023 |
Looking ahead |
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Energy efficiency and climate action (continued) | ||||||
Scope 3 emissions from our supply chain (including logistics) |
How we’re managing our impact |
Reducing energy consumption by introducing sleep mode in our lithography systems | ||||||
Semiconductor manufacturing processes are designed to maximize the utilization of the critical lithography systems. However, there will be times when a system is not in use. Up to now, the lithography system has remained fully powered on to ensure the system is perfectly conditioned at all times to deliver nanometer- accurate performance. In order to reduce energy consumption of our systems, we have introduced a sleep mode, which allows for powering down of subsystems to conserve energy. This does affect thermal conditioning of the system, which requires a few minutes of reconditioning to get the system fully production-ready again. | The key here is to give our customers control over a system's state. The customer has insight into when these idle periods occur, which enables them to put the lithography system into sleep mode without impacting wafer output. Triggered by a command from the fab automation system, the lithography system temporarily powers down some subsystems and then, again triggered by fab automation, returns them back to production mode in time for the next lot. | Most of the energy of an EUV lithography system is used by the CO2 drive laser, so this is a prime candidate for introducing our sleep mode solution. In the drive laser, CO2 gas is compressed and subsequently exited (via nitrogen) by radio frequency (RF) generators. A seed laser is used to trigger stimulated emission of infrared light, which is subsequently used to generate EUV light. We will soon introduce sleep mode for the RF generators. We have developed a software interface that allows our customers to send sleep and wake-up commands to the system, which power down the RF generators via internal control software. This RF sleep mode has been tested in-house, confirming the energy-saving potential as well as fully meeting system specifications immediately after the reconditioning sequence. RF sleep mode has the potential to reduce EUV system energy consumption by approximately 2.5%, averaged over time, when utilized in high-volume manufacturing at our customers' sites. The sleep mode interface will also act as a foundation for implementing sleep mode in other sub-modules, further increasing the energy-saving potential. | ||||
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Energy efficiency and climate action (continued) | ||||||
Scope 3 emissions from product use at our customers |
Our targets and performance in 2023 |
The table below provides an overview of our systems' energy use, acceptance test protocol (ATP) throughput and energy efficiency. | ||||||||||
Platform | DUV immersion1 | |||||||||
System type | NXT:1980Di | NXT:2000i | NXT:2050i | NXT:1980Ei | NXT:1960B i + PEP-B | NXT:2100i | NXT:1980Fi | |||
Year of energy measurement | 2015 | 2017 | 2020 | 2021 | 2021 | 2022 | 2023 | |||
Energy consumption (in MW) | 0.16 | 0.15 | 0.16 | 0.16 | 0.15 | 0.16 | 0.17 | |||
ATP throughput (in wph) | 275 | 275 | 295 | 295 | 250 | 295 | 330 | |||
Energy use per wafer pass (in kWh) | 0.59 | 0.56 | 0.54 | 0.56 | 0.60 | 0.55 | 0.52 | |||
Platform | DUV dry1 | YieldStar | HMI | ||||||||||
System type | XT:860M | XT:1460 | NXT:1470 | XT:860N | NXT:870 | XT:400M | YS350E | YS375F | YS-380 | YS385 | eScan 1100 | ||
Year of energy measurement | 2017 | 2020 | 2020 | 2022 | 2022 | 2023 | 2017 | 2019 | 2020 | 2023 | 2023 | ||
Energy consumption (in MW) | 0.07 | 0.07 | 0.13 | 0.07 | 0.13 | 0.07 | 0.01 | 0.01 | 0.01 | 0.01 | 0.06 | ||
ATP throughput (in wph) | 240 | 209 | 277 | 260 | 330 | 250 | n/a | n/a | n/a | n/a | n/a | ||
Energy use per wafer pass (in kWh) | 0.31 | 0.34 | 0.47 | 0.27 | 0.38 | 0.30 | n/a | n/a | n/a | n/a | n/a | ||
Platform | EUV 20 mJ/cm2 dose | EUV 30 mJ/cm2 dose | ||||||
System type | NXE:3350B | NXE:3400B | NXE:3400C | NXE:3600D | NXE:3600D | |||
Year of energy measurement | 2015 | 2018 | 2020 | 2021 | 2023 | |||
Energy consumption (in MW) | 1.2 | 1.4 | 1.3 | 1.3 | 1.2 | |||
ATP throughput (in wph) | 59 | 107 | 136 | 160 | 160 | |||
Energy use per wafer pass (in kWh)2 | 19.5 | 12.8 | 9.6 | 8.3 | 7.7 | |||
1.Since 2023, when we measure the energy efficiency of our DUV immersion and DUV dry systems, the laser is included within the measurement. The comparative figures have been revised. 2.The baseline figure of the NXE:3400B energy use per exposed wafer pass has been corrected, from 13.08 kWh to 12.8 kWh, due to an incorrect rounding being used in the past. |
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 87 | |
Energy efficiency and climate action (continued) | ||||||
Scope 3 emissions from product use at our customers (continued) |
Our actions in 2023 |
Looking ahead |
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 88 | |
Energy efficiency and climate action (continued) | ||||||
Scope 3 emissions from product use at our customers (continued) |
Sustainability is a design challenge that must be solved in parallel with system cost and performance – that’s how we will make the biggest difference.” | ||
Ton van der Net | ||
Principal Architect, D&E | ||
25 years at ASML |
A sustainability mindset | |
Ton van der Net specializes in improving the energy efficiency and overall sustainability of lithography systems. He has been at the forefront of ASML’s sustainability efforts as they have grown from a team-led initiative to a corporate-level commitment that is becoming integral to how we develop our systems. |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 89 |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 90 | |
Why it matters |
Our circular economy strategy is based on the following four principles: •Prevent waste •Extend lifetime •Reuse resources •Recycle materials | ||
How we’re managing our impact |
95% | 88% | 8,279 t | 300 kg | 55% | ||||
Systems sold in the past 30 years still active in the field | Reuse rate of parts returned from field and factory | Total waste from operations | Waste generated per €m revenue | Recycling rate | ||||
(2025 target: >95%) | (2025 target: 95%) | (excl. construction) | (2025 target: 209 kg) | (excl. construction) | ||||
(2025 target: 90%) |
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 91 | |
Circular economy | ||||||
We aim to maximize the value of our systems, reusing resources as much as possible, while minimizing waste, decoupling our growth from resource consumption, and recycling materials. |
By 2030, we aim to send zero waste from operations to landfill or incineration1. | ||
We have therefore developed a strategy which includes the following principles: •Prevent waste from our assets, systems and processes by redesigning them, in collaboration with our suppliers and customers, to limit their environmental impact •Extend the lifetime and productivity of our systems and assets to maximize their usage throughout their life cycles •Reuse resources, parts, tools, packaging and goods across the value chain •Recycle materials if we can no longer apply any of the previous principles, avoiding incineration and landfill | |
Our different types of waste | ||
We measure our impact in tonnes of waste, by category (hazardous and non-hazardous) and by material type (such as plastics, paper, wood and hazardous liquids). We include data on the CO2e impact of processing our waste in our scope 3 emissions. Within our operations, we divide our waste into two broad categories: 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 from building activities – the amount of construction waste tends to fluctuate over the years. Hazardous waste, such as the chemicals we use in our manufacturing processes. This can include everything from lamps, batteries and liquids to cleaning wipes and filters. Most of our hazardous waste is in the form of liquids, including acetone and piranha acid. | ||
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 92 | |
Circular economy (continued) |
Our circular economy approach |
Progress tracking | ||||||||||
Topic | Target 2025 | Performance indicator | 2021 | 2022 | 2023 | Status | ||||
Circular economy | >95% | % of lithography systems sold in the past 30 years still active in the field | 94% | 95% | 95% | • | ||||
95% | Reuse rate of parts returned from field and factory | 85% | 87% | 88% | • | |||||
No target | Savings from reused parts (€, in millions) | 686 | 781 | 1,311 | n/a | |||||
No target | Value of scrapped parts (€, in millions)1 | 269 | 146 | 206 | n/a | |||||
209 kg/€m | Total waste from operations (excl. construction2) normalized to revenue | 305 | 315 | 300 | n | |||||
90% | Recycling rate (excl. construction2) | 77% | 75% | 55% | n | |||||
No target | Total waste from operations (excl. construction2) (in tonnes) | 5,679 | 6,675 | 8,279 | n/a |
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 93 | |
Circular economy (continued) | ||||||
On track • Ongoing focus area n |
How we’re managing our impact |
Our targets and performance in 2023 |
Our actions in 2023 |
Looking ahead |
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 94 | |
Circular economy (continued) | ||||||
Prevent waste |
How we’re managing our impact |
Our targets and performance in 2023 |
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 95 | |
Circular economy (continued) | ||||||
Extend the lifetime of our products |
Our actions in 2023 |
95% of all lithography systems sold in the past 30 years still active in the field | ||
Looking ahead |
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 96 | |
Circular economy (continued) | ||||||
Extend the lifetime of our products (continued) |
How we’re managing our impact |
88% | |
reuse rate of defective parts, up from 87% in 2022 |
Key improvement areas | |
We focus on the following key improvement areas: •Repair centers: Repair close to where parts are needed to improve parts repair yields by reducing cycle time of root-cause analysis and repairs. •Predictable external repair flow: Simplify and standardize return and repair flows to enable us to scale activities. •Circular supplier collaboration: Incentivize suppliers to prioritize reuse over new materials. •Return quality: Ensure that parts are returned with reuse in mind – quality returns lead to quality repairs. •Packaging and transportation tools: Increase reuse of packaging, which is the main contributor to our waste (from operations). | |
Our targets and performance in 2023 |
Our actions in 2023 |
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 97 | |
Circular economy (continued) | ||||||
Reuse resources |
Circular Innovation Program | ||
The circular innovation program (CIP) is a collaboration with ImpactX and Brainport Industries. It is a four-day tailor-made program focusing on building a stronger relationship with our supply base by creating circular competencies. In 2023, we consolidated CIP with the participation of eight suppliers divided into two cohorts. We run two cohorts per year and four suppliers are invited each time. Through the program we are able to close business loops, boost supplier impact and strengthen collaboration overall. The benefits are the creation of a shared vision on the circular economy, peer learning, and the joint building of competencies and knowledge around reusing products, parts and materials in the value chain. The participants invited so far are first-tier suppliers; however, we want to extend the program to other tiers as well. Additionally, we have the ambition to expand CIP beyond the Brainport Eindhoven region in the Netherlands, to other locations around the world. | ||
Looking ahead |
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 98 | |
Circular economy (continued) | ||||||
Reuse resources (continued) |
How we’re managing our impact |
Understanding and managing our waste flows and impacts |
Distribution of waste streams | |
(Total: 8,932 tonnes) |
Non-hazardous waste recycling | 53% | |||
Non-hazardous waste disposed of | 42% | |||
Hazardous waste recycling | 4% | |||
Hazardous waste disposed of | 1% | |||
Distribution of non-hazardous waste | |
(Total: 8,474 tonnes) |
Wood | 29% | ||
General waste | 28% | ||
Paper and cardboard | 11% | ||
Electronics | 2% | ||
Metals | 11% | ||
Other non-hazardous waste | 1% | ||
Plastic | 6% | ||
Organic waste | 4% | ||
Construction waste | 8% | ||
Distribution of hazardous waste | |
(Total: 458 tonnes) |
Hazardous liquids | 83% | ||
Other hazardous waste (e.g. packaging, filters, lamps, etc.) | 12% | ||
Cleaning wipes | 4% | ||
Batteries | 1% | ||
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 99 | |
Circular economy (continued) | ||||||
Recycle materials |
Our targets and performance in 2023 |
Our actions in 2023 |
The full program, which covers plans for both hazardous and non-hazardous waste, includes: •Identifying where the waste comes from (inbound versus operations) by organizing Gemba Walks (opportunities for staff to walk the work floor) to see the waste in the warehouse, factory and offices, and also by visiting our waste haulers to understand how our waste is processed •Examining what the waste consists of through a detailed sorting test (performed by one of our waste haulers) •Assessing the quantity of hazardous and non- hazardous waste •Identifying potentially large waste flows. The Veldhoven campus non-product-related waste flows are shown in the diagram on the next page •Proposing actions and process optimizations to achieve our targets | ||
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 100 | |
Circular economy (continued) | ||||||
Recycle materials (continued) |
Veldhoven 2023 insight current non-product-related (NPR) campus waste flows |
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 101 | |
Circular economy (continued) | ||||||
Recycle materials (continued) |
Looking ahead |
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 102 | |
Circular economy (continued) | ||||||
Recycle materials (continued) |
Why it matters |
How we’re managing our impact |
ASML ANNUAL REPORT 2023 | ENVIRONMENTAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 103 | |
Water management | ||||||
SOCIAL | Responsible supply chain | ||||||||
Attractive workplace for all Inspiring a unified culture Providing the best employee experience Enabling strong leadership Ensuring employee health and safety Responsible supply chain Managing supplier capabilities Innovation ecosystem Partnerships for research and development Supporting startups and scaleups Valued partner in our communities Attractive communities Inclusive communities Investing in STEM education | |||||||||
We depend on our suppliers to help deliver our innovations. They are critical to our value chain and our ambition to be a sustainable leader in the semiconductor industry. | |||||||||
57% | |||||||||
% supplier spend covered with a commitment to sustainability | |||||||||
Attractive workplace for all | |||||||||
We need to empower our employees to deliver our vision by ensuring they are proud to be part of ASML and engaged with our ambitions as a company. | |||||||||
80.3% | |||||||||
employee engagement score | |||||||||
Valued partner in our communities | ||||||||
We play an active role in the communities where we operate, recognizing that when the community thrives, we thrive. | ||||||||
€413 | ||||||||
Community partnership program and amount invested per employee | ||||||||
Innovation ecosystem | ||||||||
We never innovate in isolation because developing technology in collaboration with partners across the innovation ecosystem maximizes our collective impact. | ||||||||
€4.0bn | ||||||||
R&D investments | ||||||||
ASML ANNUAL REPORT 2023 | SOCIAL | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 104 | |
Social at a glance | ||||||
We aim to have a positive social impact by providing an attractive workplace, ensuring a responsible supply chain, supporting an innovation ecosystem and being a valued partner in our communities. |
ASML’s focus on technology and its supportive culture mean you can go wherever your talent and ambition take you.” | ||
Anya Kish | ||
Program Director, EUV Source | ||
8 years at ASML |
Making a difference | |
Anya Kish moved from Russia to the US for her graduate studies in plasma physics. That willingness to take opportunities however they present themselves has seen her build a career at ASML as a problem solver who thrives under pressure. She now works as project manager for the light source for our next extreme ultraviolet lithography system. |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 105 |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 106 | |
Why it matters |
How we’re managing our impact |
42,416 | 27% | 80.3% | 3.6% | ||||
Total employees (FTE) | Gender diversity | Employee engagement score | Attrition rate | ||||
40,747 FTE excluding Berliner Glas (ASML Berlin GmbH) (basis for the non-financial reporting) | (% inflow of women) | (2025 target: -2% vs. top 25% performing companies. Employee engagement score against benchmark 2023 (1.3)%) | (2025 target: <7%) | ||||
(EMEA: 23,413 | Asia: 9,111 | US: 8,223) | (2025 target: 24%) |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 107 | |
Attractive workplace for all | ||||||
We need to empower our employees to deliver our vision by ensuring they are proud to be part of ASML and engaged with our ambitions as a company. |
Our people strategy | |||||||||
Our people strategy is our pathway to stay successful and meet our future goals | |||||||||
Inspiring a unified culture Our values – challenge, collaborate and care – guide our decisions and behavior to deliver on our strategy. | Providing the best possible employee experience This will enable us to attract, develop and retain the best talent. | Enabling our leadership to bring out the best in people We aim to lead through trust, empowerment and accountability. | |||||||
We empower each other to thrive, fueling our growth, happiness and business success. |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 108 | |
Attractive workplace for all (continued) |
Progress tracking | ||||||||||
Topic | Target 20256 | Performance indicator | 2021 | 2022 | 2023 | Status | ||||
Attractive workplace for all | 24% | Gender diversity – % inflow of women | 21% | 24% | 27% | • | ||||
24% | Gender diversity – % inflow of women to job grade 9+1 | n/a | n/a | 25% | • | |||||
20% (2024) | Gender diversity – % inflow of women to job grade 13+1 | 12% | 35% | 12% | n | |||||
12% (2024) | Gender diversity – % representation of women in job grade 13+ | 8% | 10% | 11% | • | |||||
Target is relative to the score of the top 25% of performing companies by +/-3%) (2024) | Inclusion index | 83.0% | 85.2% | 81.8% | • | |||||
NL top 5 Taiwan top 5 US top 75 China top 150 | Attractiveness to talent (employer brand score)2 | NL 6 Taiwan 6 S Korea3 14 US 177 China 148 | NL 4 Taiwan 6 S Korea n/a US 159 China 188 | NL 1 Taiwan 5 S Korea n/a US 167 China 189 | n | |||||
2% below benchmark of top 25% performing companies | Employee engagement score | 78.0% | 77.9% | 80.3% | • | |||||
n/a | (2.9)%4 | (1.3)% | ||||||||
<7% | Attrition rate | 5.4% | 6.0% | 3.6% | • | |||||
0.16 | Recordable incident rate5 | 0.17 | 0.18 | 0.21 | n |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 109 | |
Attractive workplace for all (continued) | ||||||
On track • Ongoing focus area n | ||||||
1. The 2020 to 2023 FTEs in the chart above do not include the FTEs acquired through the acquisition of Berliner Glas (ASML Berlin GmbH). |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 110 | |
Attractive workplace for all (continued) | ||||||
How we’re managing our impact |
Our D&I approach | ||||||
Our D&I approach is integrated in our people strategy and focuses on three key areas, as shown in the diagram below: | ||||||
Talent We aim to increase the representation of under- represented groups by addressing our systems and end-to-end people processes, including talent acquisition, and by providing career advancement programs, that positively impact under-represented groups. | Leadership We are developing inclusive leadership programs and starting to build accountability into our performance and development processes. We engage leaders to foster their commitment to creating an inclusive culture and building a diverse workforce. | |||||
Culture We strive to create an inclusive culture for all in line with ASML's values by increasing the capabilities of employees and leaders to act inclusively and by empowering our employee networks to expand their impact and reach. | ||||||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 111 | |
Attractive workplace for all (continued) | ||||||
Inspiring a unified culture |
Our targets and performance in 2023 |
1 | Reach 24% women new hires by 2025 | |
2 | Reach 24% inflow of women to leadership levels (job grade 9+) by 2025 | |
3 | Reach 20% inflow of women to leadership levels (job grade 13+) by 2024 | |
4 | Reach 12% women at leadership levels (job grade 13+) by 2024 | |
5 | Score on par +/- 3 percentage points for inclusion, against the top 25% of top-performing global companies | |
We are highly motivated to see more women pursuing careers in engineering and science. |
Women new hires | |||||
Reach | |||||
24% | |||||
women new hires by 2025 | |||||
We aim to create an inclusive environment by proactively seeking out talented women from various backgrounds and experiences to bring in fresh perspectives and innovative approaches while fostering a dynamic organizational culture. In 2023, we increased the percentage of new women hires to 27%, up by three percentage points over 2022. We are highly motivated to see more women pursuing careers in engineering and science to further diversify the workforce at the heart of ASML. This requires a variety of approaches, and the highly specialized nature of our work means it will be a long- term process. We acknowledge that the global science, technology, engineering, and math (STEM) talent pool is thinly populated with women. At the same time, almost 90% of our job positions are STEM-related. Therefore, taking a multifaceted approach is crucial if we are to achieve our target of 24% in 2025. We believe we are well on track to meet this target. | |||||
Women and inflow at leadership levels | |||||
Reach | |||||
12% | |||||
women at leadership levels (job grade 13+) by 2024 | |||||
The representation of women at leadership levels plays a pivotal role in our commitment to D&I. We recognize the importance that exemplary role models have for our entire workforce and beyond, because they inspire others to follow the same path. In line with this target, we continue to support the development and advancement of women within ASML. This includes mentorship programs, leadership training, as well as reviewing performance and succession plans to ensure equal treatment and unbiased decision-making. Current representation of women at leadership level is 11%, while our ambition is to reach 12% by 2024. Achieving our ambition will require a significant inflow throughout our entire leadership pipeline, starting with job grade 9+ and the more senior level of 13+. We have significant gaps at the 13+ level, so we need to strengthen our efforts throughout the entire pipeline to meet this ambition of 20% inflow of women at leadership levels (job grade 13+) – we are working on specific plans to achieve this. In 2023, there was an 25% inflow of women to job grade 9+ (2025 target of 24%) and a 12% inflow of women to job grade 13+. | |||||
Inclusion index | |||||
Score on par | |||||
+/- 3 | |||||
percentage points for inclusion, against the top 25% of top-performing global companies | |||||
We are dedicated to creating a global workplace where every individual feels valued, respected, and empowered, regardless of their background. By comparing our inclusion score with the top- performing global companies, we aim to drive continuous progress. In 2023, our inclusion score was 82% (women: 80% and men: 83%), in line with the benchmark of top- performing global companies (82%). In 2023, we added additional questions to the Inclusion Index portion of the we@ASML engagement survey in order to better understand each employee's experience and garner a sense of their level of belonging. Therefore, this year's results cannot be compared directly to the 2022 results. Overall, we were pleased to see feedback from employees and gained insight on areas of opportunity. Our goal is to meet or increase this level of inclusion among our employees on an ongoing basis. | |||||
Read more in Corporate Governance - Other Board-related | |||||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 112 | |
Attractive workplace for all (continued) | ||||||
Inspiring a unified culture (continued) |
Our actions in 2023 | ||
Women new hires | ||
•Engaged actively with educational programs to grow the talent pipeline, deploying multiple initiatives to promote STEM education among the future female talent pool •Collaborated with universities and organizations dedicated to building diversity and creating opportunities for professional development and engagement. ASML is a sponsor of the GEM Fellowship Program in the US, which provides funding for graduate education through corporate sponsorships and a partnership with universities. Students selected for the GEM Fellowship Program are required to complete a corporate internship during the summer and attend graduate school during the fall and spring semesters. In 2023, we had seven GEM engineering Fellows on campus in the US. •Provided financial support to six young women pursuing engineering or computer science degrees | ||
Women and inflow at leadership levels | ||
•Launched a global sponsorship program for ASML women, as well as a program to empower women to amplify their unique style and voice •Engaged new specialized recruiting agencies focusing on recruiting senior leaders •Sponsored the European Women in Tech Conference for the first time, with women from our technology employee network speaking on the main stage •Organized and participated in global and regional events to attract diverse technical profiles and promote ASML as an attractive employer, especially to increase women leadership inflow | ||
Inclusion index | ||
•Added a module on inclusive leadership to all our leadership programs and worked to ensure inclusive language in all programs •Organized a global D&I month consisting of numerous panels and events •Continued to build our D&I curriculum by delivering awareness sessions and incorporating D&I in our global and sector onboarding programs •Continued to grow our employee networks, establishing additional chapters in the US (Atypical, Women @ CS Sites) and Germany (Green, Next) Listening to our female workforce After input and feedback from female employees, we organized several female listening sessions to have an open dialogue within the company on any issues and concerns related to inclusion of female employees. Based on the feedback that we received in those sessions, we will follow up on those aspects to ensure that we safeguard and improve the inclusion of female employees from a behavioral perspective and in our processes. | ||
Looking ahead |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 113 | |
Attractive workplace for all (continued) | ||||||
Inspiring a unified culture (continued) |
How we’re managing our impact |
Our targets and performance in 2023 |
1 | Employer brand score – By 2025, maintain our position in the Netherlands and Taiwan top 5, US top 75 and China top 150 | |
2 | By 2025 have an attrition rate (the percentage of employees leaving our company) of < 7% | |
We have defined 2025 targets for our ranking in our different local labor markets: | ||||||
Country | Target 2025 | 2022 Ranking | 2023 Ranking | |||
The Netherlands | Top 5 | 4 | 1 | |||
Germany | N/A | N/A | N/A | |||
Taiwan | Top 5 | 6 | 5 | |||
South Korea | N/A | N/A | N/A | |||
US | Top 75 | 159 | 167 | |||
China | Top 150 | 188 | 189 | |||
87% | |
of new hires indicated that they had a positive onboarding experience in 2023, with good support from their managers. |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 114 | |
Attractive workplace for all (continued) | ||||||
Providing the best employee experience - Talent attraction and retention |
Our actions in 2023 |
Looking ahead |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 115 | |
Attractive workplace for all (continued) | ||||||
Providing the best employee experience - Talent attraction and retention (continued) |
How we’re managing our impact |
Onboarding and developing our people | ||||||||
A positive onboarding experience is vital to building a sense of connection, and helping our employees add value and quickly feel at home. Right from the start, we want to unlock the potential of people and society by pushing technology to new limits. We measure the quality of our onboarding experience through pulse surveys. On average, 87% of new colleagues indicated that they had a positive experience in 2023, with good support from their managers. 9% of new colleagues had a neutral experience, while 4% indicated that there is room for improvement in the onboarding experience, particularly in the areas of | training and access to relevant tools and information. We use learning solutions and knowledge management to unlock people’s potential and foster a culture of learning. Once employees are on board, we continuously invest in them in response to evolving business requirements and developments in the labor market. Enabling employees to identify and pursue opportunities for professional development is central to our approach, and we offer a wide range of career paths and tools to support our employees’ career navigation. | The ASML Academy unites all learning and knowledge management within ASML, enabling our employees to easily access the knowledge, skills and expertise they need to perform well in their roles. The new Learning eXperience Platform (LXP) further enables people to drive their own development and learn from each other, and intuitively connects them to best-in-class learning content created by ASML and external providers. We aim to provide the best possible employee experience by enabling learning and knowledge management to take place on the job, guided by the 70-20-10 approach for learning: 70% on-the-job learning, 20% coaching and 10% training courses. We are also focused on providing performance support to employees when they need to learn while performing on their job. Compared to 2022, the growth of our workforce slowed significantly in 2023, and in some areas we did not have nearly as many new roles as in the previous year. We therefore shifted our focus toward creating awareness and engagement. This also allowed us to concentrate resources on supporting programs and communications related to internal mobility and development, and onboarding the large number of people we hired in 2022 and 2023. | ||||||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 116 | |
Attractive workplace for all (continued) | ||||||
Providing the best employee experience - Employee engagement and development |
Our targets and performance in 2023 |
1 | Employee engagement score – By 2025 to be within a 2% range of the top 25% performing companies benchmark for our we@ASML employee engagement survey | |
2 | Achieve 78% for well-being in our engagement survey in 2023 | |
Social protection and fair labor conditions and remuneration for our employees | ||||
Working practices and remuneration ASML is committed to providing fair labor conditions and social protection for all its employees, regardless of their location and whether they are on fixed or temporary contracts. We support the principles of the International Labour Organization (ILO) and 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. Freedom of association We have no indication that we operate in countries where the freedom of association and collective bargaining for ASML employees is restricted. We strive to comply with the relevant legislation in every country where we operate. In those countries where we have employee representation, we engage in regular dialogue with the different organizations representing our employees. Topics are put forward and discussed by both the company and the employee representatives. The working conditions and terms of employment of employees not directly covered by collective bargaining agreements are influenced or determined based on other collective bargaining agreements, labor market developments and usage and habits in the specific country. | Fair remuneration Our approach to remuneration is to be fair and balanced. In our Remuneration Policy, we are committed to gender equality and we strive for global consistency while respecting common practice in local markets. We continuously review how our remuneration compares with the market benchmark for technology professionals in each region where we operate and, where necessary, make changes to our remuneration policies and levels. ASML is committed to meeting adequate living-wage requirements. This means that employees earn salaries that meet their and their families’ basic needs to maintain an adequate standard of life in the circumstances of each country where we operate, and we also provide some discretionary income. Our company has a predominantly highly educated workforce with relatively high levels of remuneration and, on average, our salaries are significantly above the local living wage. In 2022, as part of a two-year cycle, we conducted an analysis of how our lowest base salary compared with the local minimum wage and local ‘living wage’ in the countries and regions where we operate. We did not detect any gaps. We also analyze paid salaries for gender disparity annually. In 2023, as in previous years, we found no major differences in these salaries. However, we would like to further investigate this domain in the future, to ensure that we do not have any major challenges. | |||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 117 | |
Attractive workplace for all (continued) | ||||||
Providing the best employee experience - Employee engagement and development (continued) |
2019 | 2020 | 2021 | 2022 | 2023 | |
Well-being | 74% | 77% | 69% | 77% | 81% |
~300 | |
well-being ambassadors |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 118 | |
Attractive workplace for all (continued) | ||||||
Providing the best employee experience - Employee engagement and development (continued) |
We focus on four well- being dimensions – mental, physical, social and financial |
Our actions in 2023 |
Looking ahead |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 119 | |
Attractive workplace for all (continued) | ||||||
Providing the best employee experience - Employee engagement and development (continued) |
How we’re managing our impact |
Leadership development | ||
In 2023, we evaluated our leadership development curriculum with the aim to: •Support our leaders with easier access to development opportunities •Increase the scalability of our leadership curriculum •Improve the quality of our leadership program materials •Improve how we measure the impact (ROI methodology) of the leadership training programs •Improve the content of and the relationship between our leadership programs | ||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 120 | |
Attractive workplace for all (continued) | ||||||
Enabling strong leadership |
Our targets and performance in 2023 |
Our actions in 2023 |
Looking ahead |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 121 | |
Attractive workplace for all (continued) | ||||||
Enabling strong leadership (continued) |
How we’re managing our impact |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 122 | |
Attractive workplace for all (continued) | ||||||
Ensuring employee health and safety |
Our targets and performance in 2023 |
Our actions in 2023 |
Looking ahead |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 123 | |
Attractive workplace for all (continued) | ||||||
Ensuring employee health and safety (continued) |
Managing expansion in high-stress situations means focusing on your people and their well-being.” | ||
Mark Bergkotte | ||
Director, Logistics Operations | ||
13 years at ASML |
Helping our teams thrive | |
Mark Bergkotte has worked at ASML for 13 years managing our supply chain and logistics in various roles. As Director Logistics Operations, he oversaw the ramp-up of our logistics to meet increased customer demand in the face of formidable internal and external pressures. |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 124 |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 125 | |
€15.5bn | 5,100 | 57% | ||||
Total sourcing spend1 | Total suppliers | % supplier spend covered by commitment to sustainability | ||||
(Netherlands: 40% | EMEA (excl. NL): 40% North America: 13% | Asia:7%) | (Netherlands: 1,600 | EMEA (excl. NL): 750 North America: 1,350 | Asia: 1,400) | |||||
1 Reported for non-financial (GRI) reporting purposes | (2025 target: 80%) |
Why it matters |
Building strong relationships with suppliers | ||
With around 5,100 suppliers in our total supplier base, we aim to develop and maintain strong, collaborative and transparent relationships. We distinguish between two types of suppliers: product-related and non- product-related. | ||
Product-related suppliers provide materials, equipment, parts and tools used directly to produce our systems. This category comprises approximately 800 suppliers and represents the highest percentage (69%) of our procurement volume. We define around 280 of these suppliers as ‘critical suppliers’, accounting for roughly 94% of the product-related spend. Critical suppliers are responsible for delivering a unique part and/or are single sourced, involve a switching time to an alternative supplier of more than 12 weeks, or supply parts with long production times. | ||
Non-product-related suppliers are goods and services suppliers, providing the products and services that support our operations, from temporary labor to logistics, and from cafeteria services to IT services. With around 4,300 suppliers, this group represents 84% of our total supplier base. | ||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 126 | |
Responsible supply chain | ||||||
We depend on our suppliers to help deliver our innovations. They are critical to our value chain and our ambition to be a sustainable leader in the semiconductor industry. |
How we’re managing our impact |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 127 | |
Responsible supply chain (continued) | ||||||
1 | Determine inherent risk level by screening our full supplier base on ethics, labor, health and safety and environmental practices and management systems using the RBA Risk Assessment Platform |
2 | Apply supplier risk profiling to critical suppliers. For these suppliers we conduct risk assessment of GQLTCS capability elements |
3 | Apply an RBA SAQ to major product-related and non- product-related suppliers, labor agents and onsite service providers, in which we consider the type and geographical location of the supplier, as well as our leverage over them. We focus on our product-related suppliers, covering 80% of our product-related annual spend, business-critical suppliers including non- product-related suppliers, labor agents and on-site service providers, and suppliers deemed high risk from our annual RBA risk screening |
We work with our world- class supplier network to ensure our sustainability principles are upheld throughout the value chain. |
Conflict minerals | ||||
Our products contain minerals and metals necessary to the functionality or production of our products. Such minerals and metals include tantalum, tungsten, tin and gold. These are 3TG minerals, or so-called ‘conflict minerals’. While we do not use a significant amount of these in the manufacturing of our products, certain 3TG minerals are necessary. Gold, for example, is used in coating critical electronic connectors and tin is used for welding electronic components and creating EUV light. We have a conflict minerals policy for responsible sourcing of materials in our supply chain. We support international efforts to ensure the mining and trading of 3TG minerals from high-risk locations does not contribute to conditions of armed conflict and/or serious human rights abuses. We have adopted a series of compliance measures based on the legal requirements and guidelines of the five-step framework set out by the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. As part of our responsible sourcing program, we implement a reasonable country of origin inquiry focusing on five areas: a robust management system; risk identification; risk mitigation; industry collaboration with the Responsible Minerals Initiative (RMI); and public reporting. Despite our continuous efforts, we are unable to determine the precise origin of the 3TG minerals included in all our products. | This is due to several reasons: 3TG supply chain complexity, the number of tiers of suppliers to trace the source and the limited number of certified conflict- free smelters for all conflict minerals. Obtaining correct data from our supply chain is a challenge, and we continue to encourage our suppliers to trace the origins of the 3TG minerals within their supply chain in accordance with applicable conflict minerals rules and regulations. We also request our suppliers to report smelters who are not listed or identified on the RMI smelters list to the Responsible Minerals Assurance Process (RMAP) audit for smelters. In 2022, we expanded the scope of our conflict minerals survey to global, reaching 319 suppliers in total, with no non-compliances being recorded. We received confirmation from 185 suppliers that their sourced minerals were conflict-free, while 67 suppliers confirmed there were no 3TGs in their product and 67 suppliers did not respond to the survey. | |||
Read more in our Conflict Minerals report available at asml.com | ||||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 128 | |
Responsible supply chain (continued) | ||||||
Progress tracking | ||||||||||
Topic | Target 2025 | Performance indicator | 2021 | 2022 | 2023 | Status | ||||
Our supply chain | 80% | % supplier spend covered by commitment to sustainability (LOI) | n/a | 59% | 57% | n | ||||
90% | RBA self-assessment completed (in %) | 89% | 93% | 90% | • | |||||
100% | Suppliers with high risk on sustainability elements evaluated and follow-up agreed (in %) | 100% | 100% | 98% | • |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 129 | |
Responsible supply chain (continued) | ||||||
On track • Ongoing focus area n |
How we’re managing our impact |
We work with our suppliers to minimize adverse environmental and social impact in the supply chain. |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 130 | |
Responsible supply chain (continued) | ||||||
Managing supplier capabilities |
Our targets and performance in 2023 |
1 | To have 80% of our top 60 suppliers (based on spend) covered with a commitment to sustainability (via LOI or by providing us with their scope 1, 2 and 3 CO2e emissions data by 2025 | |
2 | For 90% of all suppliers in scope of the RBA self- assessment to have completed it by 2025 | |
3 | For 100% of our suppliers identified by the RBA self- assessment as having high-risk sustainability elements to be evaluated and follow-up action agreed by 2025 | |
Performance-driven scenarios | ||||||||
Total supplier base | ||||||||
€15.5bn | ||||||||
Total spend | ||||||||
% of total spend | ||||||||
800 Product-related suppliers | 69% | |||||||
4,300 Non-product-related suppliers | 31% | |||||||
2025 LOI target is 80% | ||||||||
suppliers | ||||||||
2023 | ||||||||
In 2023, 57% of the top 60 supplier spend was covered with the LOI commitment to sustainability | ||||||||
We apply due diligence screening to the total supplier base using the RBA Risk Assessment Platform. Suppliers in scope are determined by prior year total spend. | ||||||||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 131 | |
Responsible supply chain (continued) | ||||||
Managing supplier capabilities (continued) |
ASML suppliers |
5,100 | |
Suppliers | |
€15.5bn | |
Total spend |
Supplier base geographic split by percent spend | |||||||||
1,600 suppliers | 750 suppliers | 1,350 suppliers | 1,400 suppliers | ||||||
40% | 40% | 13% | 7% | ||||||
The Netherlands | EMEA (excl. the Netherlands) | North America | Asia |
Supplier risk profiles, created for business-critical, strategically important suppliers* | ||||||
€10.6bn | ||||||
249 suppliers represent 94% of this spend | ||||||
€4.9bn | ||||||
29 suppliers represent 19% of this spend | ||||||
Product-related spend | Non-product-related spend |
1 Major suppliers are those that account for 80% of PR spend and any business-critical NPR suppliers. Suppliers in scope are determined by prior year total spend. |
The Responsible Business Alliance (RBA) self-assessment questionnaire completed by major suppliers1 | ||||||
€10.6bn | ||||||
71 suppliers represent 90% of this spend | ||||||
€4.9bn | ||||||
57 suppliers represent 42% of this spend | ||||||
Product-related spend | Non-product-related spend |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 132 | |
Responsible supply chain (continued) | ||||||
Managing supplier capabilities (continued) |
Number of high risks identified from RBA SAQ | |||||
Standard | RBA commitment | 2021 | 2022 | 20231 | Main findings 2023 |
Labor | To uphold the human rights of all workers (direct and indirect), and to treat them with dignity and respect as understood by the international community, including the International Labour Organization’s (ILO) eight fundamental conventions | 0 | 0 | 0 | |
Health and safety | To minimize the incidence of work-related injury and illness and to ensure a safe and healthy working environment. Communication and education are essential to identifying and solving health and safety issues in the workplace | 0 | 1 | 1 | Related to one supplier that is missing a Health and Safety and Environmental policy and missing guidelines/ Code of Conduct related to Health and Safety towards their suppliers. |
Environment | Environmental responsibility is integral to producing world-class products and services. Adverse effects on the community, environment and natural resources are to be minimized while safeguarding the health and safety of the public | 0 | 3 | 1 | Related to one supplier that is missing a Health and Safety and Environmental policy and missing guidelines/ Code of Conduct related to Health and Safety towards their suppliers. |
Ethics | To meet social responsibilities and to achieve success in the industry, the highest standards of ethics should be upheld, including but not limited to business integrity, anti-bribery and corruption, antitrust and competition, protecting privacy | 0 | 1 | 0 | |
Members and participants are committed to establishing a management system to ensure: | |||||
•Compliance with applicable laws, regulations and customer requirements •Conformance with the code standards •Identification and mitigation of operational risks •Facilitation of continuous improvement |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 133 | |
Responsible supply chain (continued) | ||||||
Managing supplier capabilities (continued) |
Our actions in 2023 |
Looking ahead |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 134 | |
Responsible supply chain (continued) | ||||||
Managing supplier capabilities (continued) |
The interaction among supply chain partners helps us all improve to support faster growth.” | ||
Manon Hendriks | ||
Senior Director, Sourcing & Procurement | ||
16 years at ASML |
Working together, growing together | |
In 2023, after 15 years in finance at ASML, Manon Hendriks stepped into a new commercial role as Senior Director Sourcing & Procurement. The experience in building relationships that she developed in her finance career is now not only underpinning the success of ASML, but also of one of our key suppliers. |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 135 |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 136 | |
€4.0bn | 102% | €16.4m | €1.2m | |||||
R&D investments | R&D spend as % growth from 2019 base year | Contribution to EU research projects | Value startups and scaleups in-kind support | |||||
(2025 target: >4bn euro) | (2025 target: >100%) |
Why it matters |
How we’re managing our impact |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 137 | |
Innovation ecosystem | ||||||
We never innovate in isolation because developing technology in collaboration with partners across the innovation ecosystem maximizes our collective impact. |
Progress tracking | ||||||||||
Topic | Target 2025 | Performance indicator | 2021 | 2022 | 2023 | Status | ||||
Innovation ecosystem | >4bn euro | R&D investments | €2.5bn | €3.3bn | €4.0bn | • | ||||
>100% | R&D spend as % growth from 2019 base year | 25% | 63% | 102% | • | |||||
>20% | Startups reached Star level from total startups (in %) | 15% | 12% | 12% | n | |||||
14 | Number of scaleup companies supported (cumulative in numbers) | 7 | 10 | 13 | • | |||||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 138 | |
Innovation ecosystem (continued) | ||||||
On track • Ongoing focus area n |
How we’re managing our impact |
Our targets and performance in 2023 |
1 | Reach more than €4 billion R&D investments by 2025 | |
2 | Grow R&D spend over 100% from 2019 base year | |
Pushing the boundaries of physics and chemistry | ||||||
We continue to strengthen our collaboration with ARCNL, which conducts fundamental research focused on the physics and chemistry that are important in current and future technologies within nanolithography, and its application within the semiconductor industry. In recent years, we have established a unique collaboration model in which scientists from ARCNL can explore the research questions they would like to focus on and, at the same time, create value for ASML. Our joint interest in the areas of EUV source, metrology and materials is well established and our work is yielding results. Examples include new insights into optimal drive laser wavelengths for EUV plasma generation, interferometric metrology techniques for improved wafer analysis and detailed understanding of tribology for wear-resistant coatings on wafer tables. Experimental data with higher resolution provided by ARCNL in non- product-like configurations with higher optical NA yields new insights and influences design and model development of the next generation of scanners. In 2023, the fundamental understanding of the future challenges connected to the relentless enabling of Moore’s Law led to new joint projects in the areas of new light sources for lithography and metrology, and growth and patterning of 2D materials for semiconductor applications. In particular, it led to a better understanding of the interaction of plasma with surfaces, and of corrosion effects, giving new insights in coating designs of wafer tables. | ||||||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 139 | |
Innovation ecosystem (continued) | ||||||
Partnerships for research and development |
Developing the next generation of lithography technology | ||||
Our longstanding and extensive technical collaboration with imec aims to identify and mitigate challenges in introducing High NA EUV for our customers. These include choices of resist and their stochastic (randomly variable) effects, reticle absorber materials and the necessary metrology and inspection tools to examine the quality of the printed features on a chip. As an indication of the impact of our collaboration, more than 30% of the oral paper presentations we submitted to the 2023 international society for optics and photonics (SPIE) Advanced Lithography and Patterning conference (SPIE ALP 2023) were derived from our collaboration with imec. Using 0.33 NA EUV systems, imec and ASML have had an intense technical collaboration to prepare for the introduction of High NA lithography (see Phase 1 in the infographic on the right). The collaboration identified the critical device layers on a customer's roadmap most in need of the introduction of High NA. Studies were undertaken to understand and mitigate High NA scanner-related foreseen challenges, for example through studies on depth of focus and field stitching. Parallel studies addressed the ecosystem challenges, such as choices of resist and their stochastic effects, reticle absorber materials, and required massive metrology. Phase 2 started in 2022 by creating the infrastructure of the joint High NA Lab using the first High NA EUV scanner (TWINSCAN EXE:5000). Metrology equipment and wafer processing equipment were installed and logistical wafer flow was tested. In addition, the IT infrastructure to enable imec, ASML and volume- manufacturing customers to use the lab while protecting their respective IP and data was implemented. The EU has provided approval for the state aid requested by ASML for the continuation of the High NA collaboration with imec. | In June 2023, we strengthened the collaboration by agreeing a Memorandum of Understanding with imec. Together, we aim to develop (see Phase 3 in the infographic on the right) a state-of- the-art High NA EUV lithography pilot line at imec in Leuven (TWINSCAN EXE:5200). In addition to these activities, collaboration with imec is ongoing on edge placement error (EPE) measurements and control, supporting the fundamental developments of new metrology concepts, 3D advanced packaging, and micro-electromechanical systems (MEMS) technology. In general, imec’s input on the device roadmap has become an integral part of the ASML roadmap process. Our intensified collaboration is in line with the ambitions and plans of the European Commission and its member states (e.g., European Chips Act, Important Projects of Common European Interest – IPCEI) in order to strengthen innovation to tackle societal challenges. Part of the collaboration between imec and ASML is therefore captured in an IPCEI proposal which is currently under review by the Dutch government. | |||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 140 | |
Innovation ecosystem (continued) | ||||||
Partnerships for research and development (continued) |
Our actions in 2023 |
Looking ahead |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 141 | |
Innovation ecosystem (continued) | ||||||
Partnerships for research and development (continued) |
How we’re managing our impact |
Strategic support platforms for startups and scaleups | ||||
We invest in three strategic platforms providing startup and scaleup companies with access to highly qualified resources, technologies, licenses, supply chain partners and co-investors. Make Next Platform ASML founded the Make Next Platform (MNP) in 2016 together with Huisman, Vanderlande and the non-profit Stichting Technology Rating (STR) to support young innovative high-tech scaleups. Thales NL joined as a co-founder in 2019. MNP supports emerging high-tech ventures that have moved beyond the startup phase and are ready to expand. Through the exchange of best practices, business experience and coaching from senior corporate experts, MNP partners support scaleup companies to become global players by giving them access to their internal and external networks. | HighTechXL ASML is one of the main shareholders of HighTechXL, together with other tech-minded partners such as Philips, research institute TNO, Brabantse Ontwikkelings Maatschappij (BOM) and High Tech Campus Eindhoven. Through HighTechXL, we build and accelerate impactful startups by combining high- tech entrepreneurial talent and relevant technologies from reputable tech partners such as ESA, CERN, Fraunhofer, imec and TNO, with the goal of solving major global societal challenges. ASML talents join selected startups for 30% of their time for a period of three months. They define their learning goals and benefit from the development of enriched skills and mindsets through this unique entrepreneurial experience. DeepTechXL In 2022, we became a strategic investor and co- initiator in DeepTechXL Fund I, a new Dutch deep- tech fund of €85 million as a follow-up to HighTechXL. Together with other strategic investors and co- initiators – Philips, Brabantse Ontwikkelings Maatschappij (BOM), research institute TNO, PME Pension Fund and Invest-NL – the fund provides deep-tech startups and scaleups with access to knowledge, network, technology, licenses and business development support. | |||
Our targets and performance in 2023 |
1 | More than 20% of startups to reach Star level by 2025 | |
2 | Support (at least) 14 scaleup companies by 2025 | |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 142 | |
Innovation ecosystem (continued) | ||||||
Supporting startups and scaleups |
Our actions in 2023 |
Looking ahead |
VSParticle – Accelerating innovations to market through dry deposition of pure nanomaterials | ||||||
VSParticle (VSP) was founded in 2014 as a spin-off from Delft University of Technology, with the mission to unlock an unprecedented amount of new high-tech materials. Why? Because today's society is transitioning from a fossil fuel base to a mineral-intensive one. All sustainable technologies such as solar, wind and electrical vehicles, which are needed to keep global warming below 1.5 degrees Celsius, are creating a demand for new materials that society has never seen before. The staggering amount of material innovation required in the next 10 years is equal to what the best material scientist could normally do in one hundred years. It would be beneficial if these energy applications could make use of solid thin-film materials, because thin-film deposition has been widely developed in the semiconductor industry. But the problem is that most of these energy applications require a unique nano-porous material, for which there is no fully developed manufacturing process. In the past eight years, VSP has developed a unique material synthesis and deposition process that is fully optimized for making these nano-porous materials. This technology is able to take any solid conducting bulk material and convert it to very small and pure nanoparticles. These nanoparticles are transported by a carrier gas to the deposition stage, where a new nano- porous material is constructed. | To unlock 100 years of material innovation in the next 10 years, VSP is introducing its technology into materials R&D activities at top universities and institutes around the world and industrial manufacturing. By doing this, VSP is able to reduce the overall development time from 15 years to one. Today, VSP has already sold close to 50 R&D systems globally and is accelerating the development of the production tools. To industrialize the core technology, VSP is able to leverage the unique supply chain of ASML. Following detailed investigation, VSP decided to first introduce its technology for the manufacturing of next-generation MEMS-based gas sensors and catalyst-coated membranes (CCMs) for the production of green hydrogen. In addition to these first two industrial markets, VSP sees plenty of opportunity for further growth. Less than 1% of all possible materials have been investigated so far, and VSP expects to unlock the other 99% within the next two generations. VSP had already grown to become a talented team of 40 by the end of the year. But establishing a new business of selling production tools will require more aggressive growth in the years to come. This growth, will present VSP with a multitude of challenges on different domains. To get the best support from leading original equipment manufacturer companies such as ASML, VSP joined the Virtual Accelerator of Make Next Platform in November 2022. | On a quarterly basis, the management team of VSP meets with Marco Wieland (Fellow at ASML) and Remko de Lange (VP strategy at Vanderlande) to improve the overarching strategy of the company. These meetings include a deep dive on topics such as how to apply scrum in hardware development and value-based pricing, for which various experts from ASML are invited to contribute. This support has successfully contributed to the growth of VSP. Benefiting from the right insights from leading companies such as ASML will be essential to the success of VSP in the coming years. | ||||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 143 | |
Innovation ecosystem (continued) | ||||||
Supporting startups and scaleups (continued) |
You can see the impact of our collaboration in the commercial results of ASML and our customers.” | ||
George Tao | ||
Director, Customer Support Applications | ||
16 years at ASML |
Impact through collaboration | |
As a director of customer service applications, George Tao works with one of ASML’s leading customers to bring the latest in chip technology to market fast. His team works with the customer and many other ASML teams to ramp up the output of wafers processed by our latest generations of lithography systems, so that our customers can meet their commitments to their own customers and that consumers can enjoy new products, features and performance. |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 144 |
ASML ANNUAL REPORT 2023 | SMALL PATTERNS. BIG IMPACT. CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 145 | |
€413 | 25,650 | 4,800 | €2.2m | ||||
Amount invested per employee | Time investment in volunteers – hrs community involvement | Time investment in volunteers – hrs technology promotion | Total cost of volunteering | ||||
(2025 target: €2,500 / employee) | |||||||
Why it matters |
How we’re managing our impact |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 146 | |
Valued partner in our communities | ||||||
We play an active role in the communities where we operate, recognizing that when the community thrives, we thrive. |
ASML’s community outreach | ||||||||
Our community outreach is fundamental to our ESG sustainability strategy. Just as we have set our ambition to reduce our environmental footprint to zero, we also aim to promote and improve access to local culture, support inclusive economic opportunity, create equitable access to education, and build a sustainable future through innovation. Developed and launched in 2023, our new Community Partnership Program identifies four key areas of investment and impact: •Attractive communities: Mitigate the negative impact of ASML’s growth and contribute to improvements and positive experiences in the community •Inclusive communities: Remove obstacles that hold back disadvantaged community members from reaching their potential and unlock the potential of, and create equal opportunities for, students •STEM education: Help increase the STEM/technical talent pool that society needs to solve some of its key challenges •ESG sustainability innovation: Support projects with great societal returns with our knowledge and expertise, and invest in ideation, startups and scaleups in our communities to retain a diverse innovation ecosystem that is attractive to the world’s top technical talent | We have a strict selection and prioritization process and projects have to primarily benefit ASML's community or society and be in line with one of our key focus areas. Within these areas, we have identified 17 potential programs, including access to affordable housing, access to basic needs for the underserved, providing opportunities for students from disadvantaged backgrounds and supporting community startups. In 2023, we started projects in the first three of the four areas – our ESG sustainability innovation area is still under development. Over the next few years, we will grow to reach our ambition of investing €2,500 annually per employee (amount invested per employee and employee contribution matching combined), totaling more than €100 million per year globally. ASML's commitment to being a valued partner in our communities, specifically through education, has also been reflected in the mission and work of the ASML Foundation for more than 20 years. In 2023, we initiated the process for dissolving the ASML Foundation – however, the scope of its activities will be adopted by the new Community Partnership Program. | |||||||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 147 | |
Valued partner in our communities (continued) | ||||||
Progress tracking | ||||||||||
Topic | Target 2025 | Performance indicator | 2021 | 2022 | 2023 | Status | ||||
Valued partner in our communities | 2,000 €/employee | Community partnership program: amount invested per employee | n/a | n/a | 319 | n | ||||
500 €/employee | Employee contribution matching | n/a | n/a | 94 | n | |||||
2,500 €/employee | Community partnership program: total amount invested per employee including contribution matching | n/a | n/a | 413 | ||||||
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 148 | |
Valued partner in our communities (continued) | ||||||
On track • Ongoing focus area n |
How we’re managing our impact |
Our targets and performance in 2023 |
Our actions in 2023 |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 149 | |
Valued partner in our communities (continued) | ||||||
Attractive communities |
Looking ahead |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 150 | |
Valued partner in our communities (continued) | ||||||
Attractive communities (continued) |
How we’re managing our impact |
Our targets and performance in 2023 |
Our actions in 2023 |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 151 | |
Valued partner in our communities (continued) | ||||||
Inclusive communities |
Looking ahead |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 152 | |
Valued partner in our communities (continued) | ||||||
Inclusive communities (continued) |
How we’re managing our impact |
Our targets and performance in 2023 |
Our actions in 2023 |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | GOVERNANCE | FINANCIALS | 153 | |
Valued partner in our communities (continued) | ||||||
Investing in STEM education |
Looking ahead |
ASML ANNUAL REPORT 2023 | SOCIAL CONTINUED | STRATEGIC REPORT | GOVERNANCE | FINANCIALS | 154 | |
Valued partner in our communities (continued) | ||||||
Investing in STEM education (continued) |
ESG integrated governance | |
ESG sustainability is important for our business and stakeholders, and we integrate ESG into our everyday decision-making, underpinned by responsible business conduct and risk management. | |
Transparent reporting | |
We are open and transparent, driving progress while building trust with our stakeholders. Our commitment to integrated reporting reflects our view that our ESG- related information is as important as our financial information. |
Engaged stakeholders | |
We depend on strong, sustainable relationships with stakeholders across the value chain. We aim to create sustainable value for all our stakeholders and benefit from their input. | |
Read more in Engaging with our stakeholders | |
ASML ANNUAL REPORT 2023 | GOVERNANCE | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 155 | |
Governance at a glance | ||||||
Strong corporate governance enables us to do business responsibly and meet the highest standards of integrity. This is essential to create value for our stakeholders and to secure the long-term success of our company. |
IN THIS SECTION | ||
ESG sustainability governance | ||
Business ethics and Code of Conduct | ||
Legal & Compliance | ||
• Anti-bribery and anti-corruption | ||
•Competition Law Compliance Policy | ||
Respecting human rights | ||
Information security | ||
•Privacy protection | ||
•Export control and sanctions | ||
•Intellectual property protection | ||
Product safety | ||
Why it matters |
How we’re managing our impact |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 156 | |
ESG integrated governance | ||||||
Integrated governance ensures a responsible ESG sustainability approach that considers the needs of our stakeholders. |
ESG sustainability governance |
Executive remuneration | ||
Performance against key sustainability topics forms part of the long-term incentive plans of the Board of Management and senior management. | ||
Read more in Remuneration Report | ||
Our ESG sustainability governance model |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 157 | |
ESG integrated governance (continued) | ||||||
ESG sustainability governance |
Business ethics and Code of Conduct |
RBA Code of Conduct | ||
As a member of the RBA, the world’s largest industry coalition dedicated to corporate social responsibility, we have adopted the RBA Code of Conduct. This international standard is intended to ensure that working conditions in the electronics industry and its supply chains are safe, that workers are treated with respect and dignity, and that business operations are environmentally responsible and conducted ethically. | ||
Read more in Social - Responsible supply chain |
Our principles | Our commitment | ||
We respect people | ASML is committed to maintaining a safe and healthy working environment, respecting human rights in line with international laws and regulations and industry standards such as the RBA Code of Conduct. Diversity of cultures, education and talent makes us a stronger, more creative and innovative company. By working together and using these values to guide us, we create an environment based on mutual respect – one that leads to better results than any of us can achieve alone. | ||
We operate with integrity | A strong culture of integrity and compliance underpins ASML’s business success. We define ‘integrity’ as acting with honesty, sincerity, care and reliability. Compliance not only means complying with laws and regulations, but also with our high ethical standards. Our reputation for integrity is a valuable asset. It is essential for us to demonstrate personal and business integrity at all times. | ||
We commit to safety and social responsibility | Technology reaches all parts of society. By helping to make chips more affordable, powerful and energy-efficient, ASML has an important role to play – not only by reputation and results, but also in relation to the environment. This is why ASML is committed to conducting business responsibly, enabling sustainable growth while fulfilling legal and moral obligations. We aim to achieve our business objectives in a caring and responsible manner, as outlined in the key principles. | ||
We protect our assets | ASML’s most valuable assets are its people and knowledge, both of which are highly valued and protected. Our assets include intellectual property, trade secrets or other proprietary information, which refers to intangible assets such as technical know- how, products data, business data and personal data, as well as physical assets such as products, tooling, funds and computers for conducting ASML business. Our company expects anyone entrusted with ASML assets to keep them safe from loss, damage, misuse or theft. | ||
We encourage you to communicate and speak up | To fulfill our commitment to upholding the high standards of integrity described in this Code, communication is key. We strive for a working environment that encourages open dialogue among employees, as well as between employees and third parties, where employees feel comfortable and respected, and that they can trust each other to do the right thing. If you observe or suspect a violation, we encourage you to speak up. | ||
Read more on our Code, which is available for all our stakeholders, at asml.com, our intranet and in our Employee app | |||
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 158 | |
ESG integrated governance (continued) | ||||||
Business ethics and Code of Conduct |
87% | |
of employees have completed Code of Conduct training |
Business ethics governance | ||||
Our ethics governance model comprises the following roles and responsibilities: 1.The Ethics Board is chaired by our CEO and reports to the Audit Committee and Board of Management. It is responsible for policymaking and supervision of ASML’s compliance with legal and ethical requirements. The Ethics Board meets at least quarterly to give guidance on relevant issues and approve the relevant policies. | 2.The Ethics Committee investigates significant notifications of potential breaches of ASML’s Code of Conduct worldwide. 3.The Ethics Office oversees and implements our Ethics program. All reports of a possible breach of ASML’s Code of Conduct are screened by one of the Ethics Officers and significant reports are discussed with the Ethics Committee. 4.The Ethics organization includes employees who act as Ethics Liaisons in the countries in which we operate. They serve as trusted representatives and are the first local point of contact for employees who have questions or concerns related to ethics. | |||
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 159 | |
ESG integrated governance (continued) | ||||||
Business ethics and Code of Conduct (continued) |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 160 | |
ESG integrated governance (continued) | ||||||
Business ethics and Code of Conduct (continued) |
Legal & Compliance |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 161 | |
ESG integrated governance (continued) | ||||||
Legal & Compliance |
Competition Law: Control measures in place | ||||
We have general and specific control measures in place to prevent, detect and disclose potential competition law issues, including: •Competition law compliance risk assessment: We regularly perform risk assessments of relevant competition law focus areas. This assessment identifies and considers risks that may be present from a competition law perspective, the controls that have been put in place, the remaining risks and measures to be taken to mitigate them. Assessments cover new legal developments such as the recent European Foreign Subsidies Regulation. •Policy review: Our Competition Law Compliance Policy demonstrates our commitment to ensuring compliance with applicable competition laws and our Code of Conduct. Any act of an employee or business partner contrary to this policy will be considered a significant breach of ASML’s Code of Conduct and may lead to disciplinary measures, including dismissal. We published a public version of the policy in 2020. ASML reviews this policy periodically and released an updated version of the internal policy in 2021. •Training and awareness: Competition law training consists of a combination of methods, including computer-based and in-person training sessions. The in-person sessions are provided on a regular basis by the Center of Excellence (CoE) Competition and Regulatory team and are tailored to each relevant stakeholder group. | Awareness of topics and issues relating to competition law is also promoted through different communication channels, such as presentations and articles on the intranet or email communications. The selection of topics is based on their relevance to the semiconductor industry and current legal developments and trends. •Contacts with business partners: We expect our business partners (such as customers, suppliers, consultants, contractors and intermediaries) to demonstrate high standards of ethical behavior consistent with our own. We will not engage in business or cooperate with business partners that resort to anti-competitive behavior or suggest entering into illegal conduct. We firmly condemn any anti-competitive behavior by our business partners. •Reporting and resolving an issue, violation or complaint: We support employees and business partners who refuse to enter into anti-competitive conduct or who report potential violations of our policy, as clearly stated in our Speak Up & Non- Retaliation Policy. We do not tolerate any form of retaliation or other forms of adverse consequences against employees who practice strict adherence to competition law rules or against those who speak up, even if we lose business as a result. We did not incur any fines for breaches of competition law in 2023. Read more in ASML’s public Competition Law Compliance Policy | |||
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 162 | |
ESG integrated governance (continued) | ||||||
Legal & Compliance (continued) |
Respecting human rights |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 163 | |
ESG integrated governance (continued) | ||||||
Respecting human rights |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | GOVERNANCE | FINANCIALS | 164 | |
ESG integrated governance (continued) | ||||||
Respecting human rights (continued) |
Information security |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 165 | |
ESG integrated governance (continued) | ||||||
Information security |
Information security resilience framework | Cyber defense center services | Services overview and value streams; includes (mapping of) ASML Security Strategy | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Our vision is that security, including cybersecurity, needs to be embedded in the DNA of our people, processes and technologies. We have accordingly created a dedicated security function to ensure that we manage security risks. The security risk assessment process, which includes cybersecurity, is part of ASML's ERM process and follows the governance structure, with Corporate Risk Committee (CRC) as oversight committee mandated by the Board of Management. The CRC monitors risk prevention, detection, mitigation and remediation related to cybersecurity on a regular basis. We believe each member of the CRC is qualified to advise on the oversight of cybersecurity risks through their employment experience and /or educational background in risk management. The CRC regularly reports to the Audit Committee of the Supervisory Board on prevention, detection, mitigation and remediation of cybersecurity threats and responses thereto as well as the internal processes. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Services | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Global security incident management | Digital forensics | Threat intelligence and reporting | Anomaly detection information access | Threat hunting | Security control management and engineering | Vulnerability identification | ||||||||||||||||||||||||||||||||||||||||||||||||
Capabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Incident response and investigation | Threat intelligence and reporting | Data science engineering and threat hunting | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Read more in How we manage risk | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threat detection | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Security response | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Threat intel and testing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Continuity and recovery management |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 166 | |
ESG integrated governance (continued) | ||||||
Information security (continued) |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 167 | |
ESG integrated governance (continued) | ||||||
Information security (continued) |
Development of key security threats | |||||||||||
Geopolitical tension | Increased external collaboration and reliance on suppliers | ||||||||||
Increased protectionism of local markets and stronger compliance requirements on IP protection | |||||||||||
Increased IP and business continuity risks due to less mature attention to security in our interconnected and digitized supply chain | |||||||||||
Given the growth of the company, and the complex and dynamic threat landscape, ASML requires a best-in-class security function with security competences, governance and capabilities in order to manage the security threats and risks. | |||||||||||
Ransomware | Stakeholder and customer compliance requirements | ||||||||||
Increased visibility and financial footprint makes ASML more attractive as a ransomware target for criminals | |||||||||||
Increasing demands to protect (customer) data and IP due to cascaded requirements along the supply/value chain | |||||||||||
Industrial espionage | Reverse engineering of IP | ||||||||||
Increased exposure to industrial espionage due to the growing geopolitical pressures and the position of our unique technology in the world | Increasing portfolio share from software development and commercialization of software increases the risk of reverse engineering of ASML IP | ||||||||||
Insider threats | Emerging technologies | ||||||||||
Risks of insiders maliciously or unintentionally abusing or leaking key company data | Increased use of emerging technologies such as cloud computing, virtual reality and big data analytics introduces new risks for ASML | ||||||||||
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 168 | |
ESG integrated governance (continued) | ||||||
Information security (continued) |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 169 | |
ESG integrated governance (continued) | ||||||
Information security (continued) |
Patent portfolio trend |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 170 | |
ESG integrated governance (continued) | ||||||
Information security (continued) |
Product safety |
Our product safety competences | ||||
The role of each of our D&E safety competence leads is to provide thorough knowledge about background legislation and standards applicable in their area, define design rules, provide training and act as consultants to mitigate specific safety hazards in our products. Electrical: Making an electrical design safe and protecting people from electrical shock. This involves making conductors carrying hazardous voltage inaccessible, ensuring that accessible conductors do not carry hazardous voltages and that inaccessible conductors are sufficiently insulated from accessible ones through compliance with corresponding regulations and standards. Pressure: Interpreting and explaining local legislation and standards, advising on testing and documentation and maintaining the manufacturing record book which is needed for a high-pressure permit in certain countries. Human factor engineering (including ergonomics): Incorporating a human-centered design approach to maintain access for maintenance and servicing by laying down rules for issues such as accessibility, posture, forces and the lifting of parts. Mechanical: Keeping track of safety factors and seismic requirements for our machines. Lifting: Advising on special requirements (such as the certification and training of crane operators) in countries where we use lifting tools, and when certification is needed. For example, in South Korea certification is required for weights of 500 kg or more. | Working at height: A new area of expertise required during the design of our EXE:5000 – our first EUV 0.55 NA (High NA) system – to guarantee good access to the various system areas and components. Radiation: Focusing mainly on lasers with intensities that go beyond standard, as well as considering the impacts of standard and special lamps and LEDs. Dangerous goods: Preventing shipments being stopped due to requirements for transport and the importation of hazardous substances such as chemicals, magnets and batteries. Safety in procedures: Supporting the creation of written safety procedures for complex operations. Thermal: The use of tin at high temperatures requires special precautions to protect people. Dangerous gases: The use of gases requires safety systems and procedures to protect machines and people. For example, nitrogen is an asphyxiation hazard and the use of hydrogen in EUV has additional applicable legislations and standards. Materials and substances: Monitoring worldwide legislation to check the legal status of all materials used on our products and ensuring that we do not use or introduce hazardous materials. | |||
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 171 | |
ESG integrated governance (continued) | ||||||
Product safety |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | GOVERNANCE | FINANCIALS | 172 | |
ESG integrated governance (continued) | ||||||
Product safety (continued) |
Making progress with EUV 0.55 NA (High NA) safety | ||
Our latest product, EUV 0.55 NA (High NA), is the next generation of EUV machines. The development of the system presented new challenges for product safety due to its larger overall size, height and weight of modules and more complex accessibility. To support the design, we placed extra focus on ergonomics and working at height. Our ergonomic experts use 3D simulations to enable people to practice in various situations, such as working in an awkward position for a longer period of time. The new system features built-in service platforms, which led to the new ‘working at height’ safety competence. Due to the complexity of the system, we split the EU Safety Directives and SEMI S2 review into an initial design review followed by a second inspection of the hardware. Having started the third-party safety design review in 2022, we continued with hardware reviews in 2023, leading up to a full review report by 2024. | ||
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | GOVERNANCE | FINANCIALS | 173 | |
ESG integrated governance (continued) | ||||||
Product safety (continued) |
Why it matters |
Reporting in a balanced way |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 174 | |
Transparent reporting | ||||||
To build vital relationships of trust with our stakeholders, we show our commitment to act on our responsibilities and progress toward achieving our goals in sustainable development via transparent reporting. |
Why it matters |
€2.6bn | 15.8% | |||
Income tax paid 2023 | Effective tax rate 2023 | |||
(€1.7bn in 2022) | (15.0% in 2022) | |||
How we’re managing our impact |
Income tax paid in our five most significant countries of operation |
1. Netherlands | €1,826m |
2. United States | €513m |
3. Taiwan | €88m |
4. South Korea | €44m |
5. China | €46m |
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 175 | |
Our approach to tax | ||||||
Openness and transparency about our approach to tax is important and is supported by our overall business and ESG sustainability strategy. |
Our tax principles | ||
The following principles guide us in how we report and pay tax in the countries where we operate. | ||
Compliance | ||
•We respect the tax laws applicable in each country. We are committed to act in accordance with the letter, intent and spirit of tax laws and regulations •We make tax disclosures in accordance with reporting requirements, US GAAP and IFRS •ASML’s profit allocation methods are based on internationally accepted standards as published by the OECD. We apply these consistently across our business, contingent on the relevant rules and regulations in the local jurisdictions we operate in | ||
Support tax systems | ||
•We report taxable income in a jurisdiction commensurate with the added value of the business activities in that jurisdiction •We do not use so-called tax havens (as defined by the European Commission’s ‘blacklist’) for tax avoidance | ||
Relationships with authorities | ||
•We pursue an open and constructive dialogue with the tax authorities, and other relevant authorities, in the jurisdictions we operate in, based on mutual respect, transparency and trust, disclosing all relevant facts and circumstances. We do not use tax structures intended for tax avoidance, nor will we engage in the artificial transfer of profits to low- tax jurisdictions | ||
Our tax strategy | |||||||||
ASML’s tax strategy is based on our tax principles and is closely aligned to our business strategy and our sustainability goals. The tax strategy is approved by the Board of Management. The tax strategy, tax principles and overall tax risk management apply to all group entities. | 1 | 2 | |||||||
Stakeholder management | The future of taxation | ||||||||
Externally, we communicate on a regular basis with tax authorities, regulators and investors, among others. Internally, we support our business in managing risks, staying in control and at the same time remaining efficient in its administrative procedures and way of working. We work in an integrated way with other experts within ASML. | We closely monitor the developments in ESG (including tax transparency) and tax technology in the world and continuously translate these into potential requirements or implications for ASML. | ||||||||
3 | 4 | 5 | |||||||
Compliance and control | Tax and customs organization | Projects | |||||||
We develop, implement and continuously monitor processes and controls for appropriate tax risk management and reporting purposes. Furthermore, we ensure timely and accurate fulfillment of tax compliance obligations in line with applicable tax laws and regulations, including the timely payment of taxes due. | In a fast-changing world, it is important to have a diverse team which can handle change and consists of more than just competent tax and customs experts. Communication, digital and project management skills have become increasingly important. We strive to work together and develop each other in line with ASML’s values – challenge, collaborate and care. | Our business and the regulatory environment in which we operate change constantly. We work on projects that deal with these changes to ensure the solutions implemented are compliant and efficient. Likewise, we continuously strive for simplification and review of existing business models to ensure we remain tax and customs compliant. | |||||||
ASML ANNUAL REPORT 2023 | GOVERNANCE CONTINUED | STRATEGIC REPORT | GOVERNANCE | FINANCIALS | 176 | |
Our approach to tax (continued) |
Overview | Corporate Governance | Supervisory Board Report | Remuneration Report | ||||||||||||||||||||||||||||
These pages provide an overview of and a brief introduction to the Corporate Governance section of our Annual Report. | |||||||||||||||||||||||||||||||
In our Corporate Governance section we report on ASML's corporate governance structure and the way ASML applies the principles and best practices of the Dutch Corporate Governance Code. | –Governance structure –Board of Management –Supervisory Board –Board-related matters –AGM and share capital –Financial reporting and audit –Compliance with governance requirements | This report outlines the activities of the Supervisory Board and its committees, as well as the key focus areas for 2023. | Here we explain the progress made during the year regarding our commitment to fair and balanced remuneration, including our work to increase the level of transparency around how we reward management in order to attract the right talent. | ||||||||||||||||||||||||||||
–Message from the Chair –Supervisory Board –Board focus in 2023 –Meetings and attendance –Composition, training and evaluation –Supervisory Board Committees –Audit committee –Technology committee –Selection and Nomination Committee | –Message from the Chair –Remuneration committee –Board of Management remuneration –Supervisory Board remuneration | ||||||||||||||||||||||||||||||
Our strategy | |||||||||||||||||||||||||||||||
1 | Grow our holistic lithography business | ||||||||||||||||||||||||||||||
2 | Secure unique supply chain capabilities to ensure business continuity | 3 | Move toward adjacent business opportunities | 4 | Deliver on our ESG sustainability commitments | ||||||||||||||||||||||||||
Message from the Chair of our Supervisory Board | Message from the Chair of Remuneration | ||||||||||||||||||||||||||||||
Our business model | Stakeholder engagement | ||||||||||||||||||||||||||||||
Customers Employees Suppliers Shareholders Society | |||||||||||||||||||||||||||||||
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 177 | |
Corporate Governance at a glance | ||||||
We champion integrated corporate governance to build a relationship of trust, respect and mutual benefit with our stakeholders. |
Sustainable long-term value creation | ||||||
Principles and best practice provisions | Reference | |||||
•In creating sustainable long-term value, the Board of Management takes into account the effects of the company’s operations on people and the environment, and has concrete sustainability targets. | ||||||
•Pays a fair share of tax to the countries in which it operates. | Page 175 | |||||
•The annual report explains the effects of its products, services and activities on people and the environment. How stakeholder interests have been taken into account, and whether targets set have been achieved. | ||||||
•The Supervisory Board oversees the above. | ||||||
Diversity & Inclusion | ||||||
Principles and best practice provisions | Reference | |||||
•ASML has adopted a D&I policy for the Board of Management, a D&I policy for the Supervisory Board, and a separate group D&I policy, applying to its workforce including senior management. As part thereof, ASML has set concrete, appropriate and ambitious goals on gender diversity and other relevant D&I aspects for the company with regard to the composition of Board of Management, Supervisory Board and senior management. | Page 185 | |||||
•The annual report explains the company’s D&I policy and application including results achieved in the reporting year, and includes insights about inflow, promotion and retention of employees to the extent relevant and possible. | Page 185 | |||||
Dialogue with stakeholders and ASML's stewardship | ||||||
Principles and best practice provisions | Reference | |||||
•The company adopts a policy for effective dialogue with relevant stakeholders to ensure the sustainability aspects of the strategy are taking their interests into consideration. | ||||||
•The company adopts an outline policy for bilateral contacts with stakeholders. | ||||||
•Both policies are put on the website. | ||||||
•The company is to facilitate the dialogue, but only where appropriate. | Page 37 | |||||
Other | ||||||
Principles and best practice provisions | Reference | |||||
•Supervisory Board report to set out the findings of the Board of Management and Supervisory Board evaluations. | Page 196 | |||||
•These evaluations are periodically required to take place under the guidance of an external expert. | Page 204 | |||||
•While the Code does not require a designated digital or sustainability director, every Board of Management and Supervisory Board member has close involvement with these topics, and it be a consideration in terms of composition and training. | ||||||
•New additions to the code emphasizing the role of the internal audit. | Page 194 | |||||
•The remuneration report should explain how the policy contributes to sustainability and sets out how the scenario analysis have been taken into consideration. | Page 219 | |||||
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 178 | |
Applying the 2022 Dutch Corporate Governance Code | ||||||
We have outlined the main changes of the new code in the table below and provided references to where in the annual report we are addressing the principles and best practices provisions. |
ASML corporate governance structure | ||||||||||||||||||||||
Shareholders | ||||||||||||||||||||||
Supervisory Board | ||||||||||||||||||||||
Audit committee | ESG committee | Remuneration committee | Selection and nomination committee | Technology committee | ||||||||||||||||||
Board of Management | ||||||||||||||||||||||
Business sectors | Business functions | Corporate functions | Employee support | |||||||||||||||||||
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 179 | |
Corporate Governance |
Our core strategy is to | ||
1 | Grow our holistic lithography business | |
2 | Secure unique supply chain capabilities to ensure business continuity | |
3 | Move toward adjacent business opportunities | |
4 | Deliver on our ESG sustainability commitments |
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 180 | |
Board of Management |
Martin A. van den Brink (1957, Dutch) | Christophe D. Fouquet (1973, French) | Frédéric J.M. Schneider- Maunoury (1961, French) | ||||||||||||||||||||
President, Chief Technology Officer and Vice Chair of Board of Management Term expires 2024 | Executive Vice President and Chief Business Officer Term expires 2026 | Executive Vice President and Chief Operations Officer Term expires 2026 | ||||||||||||||||||||
Christophe Fouquet was appointed Executive Vice President EUV and member of the Board of Management in 2018. In 2022, Christophe was appointed Executive Vice President and Chief Business Officer. Since joining ASML in 2008, he has held several positions, including Senior Director Marketing, Vice President Product Management, and Executive Vice President Applications, a position he held from 2013 until 2018. Prior to joining ASML, he worked for semiconductor equipment peers KLA- Tencor and Applied Materials. Christophe holds a master’s degree in Physics from the Institut Polytechnique de Grenoble. | Frédéric Schneider-Maunoury has been Executive Vice President and Chief Operations Officer since he joined ASML in 2009. He was appointed to the Board of Management in 2010. Prior to joining ASML, Frédéric was Vice President Thermal Products Manufacturing at power generation and rail transport equipment group Alstom, having previously served as General Manager of the worldwide Hydro Business of Alstom. Before joining Alstom, Frédéric held various positions at the French Ministry of Trade and Industry. He is a graduate of École polytechnique (1985) and École Nationale Supérieure des Mines (1988) in Paris. | |||||||||||||||||||||
Martin van den Brink has been President and CTO of ASML since 2013. He joined ASML at its founding in 1984, and for the next 11 years held various positions in engineering. In 1995, he became Vice President Technology, and in 1999 was appointed Executive Vice President Product & Technology and member of the Board of Management. Martin holds a degree in Electrical Engineering from HTS Arnhem (HAN University), as well as a degree in Physics (1984) from the University of Twente. In 2012, the University of Amsterdam awarded him an honorary doctorate in Physics. | ||||||||||||||||||||||
Peter T.F.M. Wennink (1957, Dutch) | Roger J.M. Dassen (1965, Dutch) | |||||||||||||||||||||
President, Chief Executive Officer and Chair of Board of Management Term expires 2024 | Executive Vice President and Chief Financial Officer Term expires 2026 | |||||||||||||||||||||
Peter Wennink became President and CEO in 2013, having served as Executive VP, CFO and member of the Board of Management since 1999. Peter was previously a partner at Deloitte Accountants, focusing on the semiconductor industry. He has an extensive background in finance and is a member of the Dutch Institute of Registered Accountants. Peter was a member of the Advisory Board of the Investment Committee of Stichting Pensioenfonds ABP until December 31, 2021. He serves as Vice Chair on the Board of the FME-CWM. Peter is also a member of the Board of Captains of Industry Eindhoven Region and is Chair of the Eindhovensche Fabrikantenkring and of the Supervisory Board of the Eindhoven University of Technology. Furthermore, Peter is council member of Topconsortium voor ‘Kennis en Innovatie’ TKI HTS&M, member of the Advisory Committee of the Dutch National Growth Fund and a member of the Circle of Influence of Startup Delta. | Roger Dassen joined ASML in June 2018 and was appointed Executive Vice President and CFO and member of the Board of Management at the AGM the same year. He previously served as Global Vice Chair and member of the Executive Board of Deloitte Touche Tohmatsu Limited, having been CEO of Deloitte Holding BV. Roger holds a master’s in Economics and Business Administration, a post-master’s in Auditing and a PhD in Business Administration, all from the University of Maastricht. He is Professor of Auditing at Vrije Universiteit Amsterdam, and sits on the Supervisory Board of the Dutch National Bank. He is also the Chair of the Supervisory Board of Maastricht University Medical Center+ and serves on the Board of the Stichting Brainport. | Wayne R. Allan (1967, American) | ||||||||||||||||||||
Executive Vice President and Chief Strategic Sourcing & Procurement Officer Term expires 2027 | ||||||||||||||||||||||
Wayne Allan was appointed Executive Vice President, Chief Strategic Sourcing & Procurement Officer and member of the Board of Management in 2023. Wayne joined ASML in 2018 as Executive Vice President of Customer Support. Before he joined ASML, Wayne served as Senior Vice President of Global Manufacturing Operations and as Vice President of Wafer Fabs at Micron Technology, Inc, the company where he began his career in 1987 as a production operator. He continued to move into operations roles of increasing leadership in engineering, planning and production. |
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 181 | |
Board of Management (continued) |
Stage 1 | Stage 2 | Stage 3 | Stage 4 | Stage 5 | ||||||
Recommendation right GM and Works Council | Announcement of nomination for appointment by SB | Works Council has the right to determine its position | Formal nomination for appointment by SB | Appointment SB member by GM | ||||||
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 182 | |
Supervisory Board |
Antoinette (Annet) P. Aris (1958, Dutch) | ||||||||||||||||||||||
Member of the Supervisory Board since 2015 (Third term expires in 2024) | ||||||||||||||||||||||
Vice Chair of the Supervisory Board, Member of the Remuneration Committee, the Selection and Nomination Committee and the Technology Committee | ||||||||||||||||||||||
Annet Aris has been a member of the Supervisory Board since 2015. She is Senior Affiliate Professor of Strategy at INSEAD business school, France, a position she has held since 2003. From 1994 to 2003, she was a partner at McKinsey & Company in Germany. Annet also sits on the supervisory boards of Jungheinrich AG and Randstad Holding NV. | Alexander F.M. Everke (1963, German) | |||||||||||||||||||||
Member of the Supervisory Board since 2022 (First term expires in 2026) | ||||||||||||||||||||||
Nils S. Andersen (1958, Danish) | Nils Andersen joined the Supervisory Board in 2023, and has been its Chair since his appointment. Nils also serves as non- Executive Director of Unilever Plc., a position he has held since 2015, having served as Unilever's Chair from November 2019 until December 1, 2023. Nils is also Chair of the Board of Scan Global Logistics A/S. From 2018 until April 2023, he was the Chair of the Supervisory Board of Akzo Nobel NV and, between 2007 and 2016, Group Chief Executive of A.P. Møller –Mærsk. From 2001 until 2007, Nils served as President and Chief Executive Officer of Carlsberg and Carlsberg Breweries. | Member of the ESG Committee and the Remuneration Committee | D. Mark Durcan (1961, American) | Mark Durcan was appointed as a member of the Supervisory Board in 2020. From 2012 to 2017, he was CEO of Micron Technology, Inc., having joined the company in 1984 and having held various management positions before being appointed as CEO. Furthermore, Mark was director at Freescale Semiconductor, MWI Veterinary Supply and Veoneer, Inc. Mark is a Non-Executive Director at Advanced Micro Devices, Inc., and Member of the Board and Lead Independent Director at Cencora. He is also a member of the Board of Trustees for Rice University (Texas), Director at St Luke’s Health System (Idaho) and Director at Natural Intelligence Systems CA private AI, Startup Company. | ||||||||||||||||||
Member of the Supervisory Board since 2023 (First term expires in 2027) | Alexander Everke joined the Supervisory Board in 2022. He is the former CEO of ams- OSRAM AG, a position he held from 2016 until April 2023, after having joined ams AG in October 2015. Prior to that, Alexander held a range of positions in the semiconductor industry including management roles at Siemens and Infineon and various leadership positions at NXP Semiconductors. | Member of the Supervisory Board since 2020 (First term expires in 2024) | ||||||||||||||||||||
Chair of the Supervisory Board, Chair of the Selection and Nomination Committee | Chair of the Technology Committee, member of the Selection and Nomination Committee | |||||||||||||||||||||
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 183 | |
Supervisory Board (continued) |
Terri L. Kelly (1961, American) | Birgit M. Conix (1965, Belgian) | Jack P. de Kreij (1959, Dutch) | Association of Listed Companies (VEUO). From 2003 to 2018, Jack was CFO and a member of the Executive Board of Royal Vopak NV, being the Vice Chair of the Executive Board of Royal Vopak NV since 2010. Prior to that, between 1986 and 2003 he worked at PricewaterhouseCoopers, where he held various management positions as (Senior) Partner and was amongst others Managing Partner & Territory Leader of the M&A focused Transaction Services practice in The Netherlands. Jack started his career in 1980 with the Dutch Ministry of Finance, where he worked until 1986. | ||||||||||||||||||||||
Member of the Supervisory Board since 2018 (Second term expires in 2026) | Member of the Supervisory Board since 2021 (First term expires in 2025) | Member of the Supervisory Board since 2023 (First term expires in 2027) | |||||||||||||||||||||||
Chair of the Remuneration Committee, member of the Selection and Nomination Committee | Chair of the ESG Committee and member of the Audit Committee | Chair of the Audit Committee and member of the Remuneration Committee | |||||||||||||||||||||||
Birgit Conix became a member of the Supervisory Board in 2021. She has been CFO and a member of the Management Board of Sonova Holding AG since June 2021. From 2018 until January 1, 2021, Birgit was a member of the Executive Board and CFO of TUI AG. She was previously the CFO of the Belgian media, cable and telecommunications company Telenet Group NV Prior to that, Birgit held various management positions in finance at Johnson & Johnson, Heineken, Tenneco and Reed Elsevier. | |||||||||||||||||||||||||
Terri Kelly has been a member of the Supervisory Board since 2018. Previously, she was President and CEO at W.L. Gore & Associates from 2005 until 2018, having worked at Gore since 1983 in various management roles. She also served on Gore’s Board of Directors through July 2018. Terri is a Trustee of the Alfred I. Dupont Charitable Trust, which provides oversight of the Nemours Foundation. She is the Chair of the Board of the University of Delaware and she is a member of the Board of Directors of United Rentals, Inc. | Jack de Kreij joined the Supervisory Board in 2023. Among other roles, he is currently the Vice Chair of the Supervisory Board and Chair of the Audit Committee at TomTom NV and Wolters Kluwer NV. Jack is also a member of the Supervisory Board, Chair of the Audit Committee and member of the ESG Committee at Royal Boskalis Westminster NV. In addition, he is the Chair of the Board of the Dutch | ||||||||||||||||||||||||
An L. Steegen (1971, Belgian) | |||||||||||||||||||||||||
Member of the Supervisory Board since 2022 (First term expires in 2026) | |||||||||||||||||||||||||
D. Warren A. East (1961, British) | Member of the ESG Committee and the Technology Committee | ||||||||||||||||||||||||
Member of the Supervisory Board since 2020 (First term expires in 2024) | An Steegen joined the Supervisory Board in 2022. She is co-CEO and member of the Board of Directors of Barco NV, a position she has held since October 2021. Prior to that, An was R&D director at IBM Semiconductor and Executive Vice President at the research institute imec in Belgium. Furthermore, An was CTO and Executive Vice President Electronic and Electro-Optical Materials at Umicore. | ||||||||||||||||||||||||
Member of the Audit Committee and the Technology Committee | |||||||||||||||||||||||||
Warren East became a member of the Supervisory Board in 2020 and is currently also a Non-Executive Board member at Tokamak Energy plc. Warren was CEO of Rolls-Royce Group Plc from 2015 until December 2022. He spent his early career at Texas Instruments Ltd from 1985 to 1994 before joining ARM Holdings, Plc, where he held various management positions and was appointed CEO from 2001 to 2013. | |||||||||||||||||||||||||
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 184 | |
Supervisory Board (continued) |
Board Diversity Matrix (status per December 31, 2023) | |||||||
Female | Male | Non-Binary | Did not Disclose | ||||
Part I: Gender Identity | |||||||
Directors | 4 (2022: 4) | 5 (2022: 5) | 0 (2022: 0) | 0 (2022: 0) | |||
Part II: Demographic Background | |||||||
Underrepresented Individual in Home Country Jurisdiction | 0 (2022: 0) | 0 (2022: 0) | 0 (2022: 0) | 0 (2022: 0) | |||
LGBTQI+ | 0 (2022: 0) | 0 (2022: 0) | 0 (2022: 0) | 0 (2022: 0) | |||
Did Not Disclose Demographic Background | 0 (2022: 0) | 0 (2022: 0) | 0 (2022: 0) | 0 (2022: 0) |
Country of Principal Executive Offices | The Netherlands |
Foreign Private Issuer | Yes |
Disclosure Prohibited under Home Country Law | No |
Total Number of Supervisory Board members | 9 (2022: 9) |
Supervisory Board gender diversity | Supervisory Board nationality | ||||||||||
55.6% | |||||||||||
Leadership level men | Dutch x2 | German x1 | American x2 | ||||||||
44.4% | |||||||||||
Leadership level women | British x1 | Belgian x2 | Danish x1 | ||||||||
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 185 | |
Other Board-related matters |
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 186 | |
Other Board-related matters (continued) |
12% | ||||
Target 2024 representation of women at leadership level | ||||
The key areas of our D&I approach are as follows: | ||||
•Leadership: we are developing inclusive leadership programs and starting to build accountability into our performance and development processes. We engage leaders to foster their commitment to creating an inclusive culture and building a diverse workforce | ||||
•Talent: we aim to increase the representation of underrepresented groups by addressing our systems and end-to-end people processes, including talent acquisition, and by providing career advancement programs, that positively impact under-represented groups. | ||||
•Culture: We strive to create an inclusive culture for all in line with ASML's values by increasing the capabilities of employees and leaders to act inclusively and by empowering our employee networks to expand their impact and reach. | ||||
25% | ||||
Inflow of female leaders in 2023 (9+) | ||||
ESG sustainability powers our innovation mindset because it underpins inclusivity and diversity.” |
Christophe Fouquet |
Executive Vice President, Chief Business Officer and member of the Board of Management |
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 187 | |
Other Board-related matters (continued) |
A General Meeting (AGM) is held at least once a year and generally takes place in Veldhoven, the Netherlands. In 2023, shareholders had the option to attend the 2023 AGM in person in Veldhoven or virtually. The agenda for the AGM typically includes the following topics: | |||
In 2023, we engaged with investors to obtain their perspectives and understand their expectations.” | |||
Item 1 Discussion of the management report and the adoption of the Financial Statements over the past financial year; Item 2 Discussion of the dividend policy and approval of any proposed dividends; Item 3 Advisory vote on the Remuneration Report over the past financial year; Item 4 The discharge from liability of the members of the Board of Management and the Supervisory Board for the performance of their responsibilities in the previous financial year; Item 5 The limited authorization for the Board of Management to issue (rights to) shares in ASML’s capital, and to exclude preemptive rights for such issuances, as well as to repurchase shares and to cancel shares; and Item 6 Any other topics proposed by the Board of Management, the Supervisory Board or shareholders in accordance with Dutch law and the Articles of Association. | |||
Nils Andersen | |||
Chair of the Supervisory Board | |||
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 188 | |
AGM and share capital |
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 189 | |
AGM and share capital (continued) |
ASML’s authorized share capital amounts to €126.0 million and is divided into: | |||||||
Type of shares | Number of shares | Nominal value | Votes per share | ||||
Cumulative preference shares | 700,000,000 | €0.09 per share | 1 | ||||
Ordinary shares | 700,000,000 | €0.09 per share | 1 | ||||
The issued and fully paid-up ordinary shares with a nominal value of €0.09 each were as follows: | |||||||
Year ended December 31 | 2021 | 2022 | 2023 | ||||
Issued ordinary shares with nominal value of €0.09 | 402,601,613 | 394,589,411 | 393,421,721 | ||||
Issued ordinary treasury shares with nominal value of €0.09 | 3,873,663 | 8,548,631 | 6,162,857 | ||||
Total issued ordinary shares with nominal value of €0.09 | 406,475,276 | 403,138,042 | 399,584,578 | ||||
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 190 | |
AGM and share capital (continued) |
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 191 | |
AGM and share capital (continued) |
Shares | % of Class4 | |
Capital Research and Management Company1 | 40,615,837 | 10.32% |
BlackRock Inc.2 | 31,259,169 | 7.95% |
Members of ASML’s current Board of Management and Supervisory Board (7 persons)3 | 101,220 | 0.03% |
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 192 | |
AGM and share capital (continued) |
Annual Reports | ||||
ASML publishes, among others, the following annual reports regarding the financial year 2023: •The statutory Annual Report, prepared in accordance with the requirements of Dutch law. The Financial Statements included therein are prepared in accordance with Part 9 of Book 2 of the Dutch Civil Code and EU-IFRS; and •The Annual Report on Form 20-F, prepared in accordance with the requirements of the Exchange Act. The Financial Statements included therein are prepared in conformity with US GAAP. •Both reports have the same qualitative base and describe the same risk factors that are specific to the semiconductor industry, ASML and ASML’s shares. We also provide sensitivity analyses by providing: •A narrative explanation of ASML’s Financial Statements; •The context within which financial information should be analyzed; and •Information about the quality, and variability, of our earnings and cash flow. | ||||
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 193 | |
Financial reporting and audit |
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 194 | |
Financial reporting and audit (continued) |
Practices followed by ASML in lieu of Nasdaq rules | |
Quorum | ASML does not follow Nasdaq’s quorum requirements applicable to meetings of ordinary shareholders. In accordance with Dutch law and generally accepted Dutch business practice, ASML’s Articles of Association provide that there are no quorum requirements generally applicable to general meetings of shareholders. |
Solicitation of proxies | ASML does not follow Nasdaq’s requirements regarding the solicitation of proxies and the provision of proxy statements for general meetings of shareholders. ASML does furnish proxy statements and solicit proxies for the General Meeting. Dutch corporate law sets a mandatory (participation and voting) record date for Dutch listed companies at the 28th day prior to the date of the General Meeting. Shareholders registered at such a record date are entitled to attend and exercise their rights as shareholders at the General Meeting, regardless of sale of shares after the record date. |
Distribution of Annual Report | ASML does not follow Nasdaq’s requirement regarding distribution to shareholders of copies of an annual report containing audited Financial Statements prior to our AGM. The distribution of our annual reports to shareholders is not required under Dutch corporate law or Dutch securities laws, or by Euronext Amsterdam. Furthermore, it is generally accepted business practice for Dutch companies not to distribute annual reports. In part, this is because the Dutch system of bearer shares has made it impractical to keep a current list of holders of the bearer shares in order to distribute the annual reports. Instead, we make our Annual Report available at our corporate head office in the Netherlands (and at the offices of our Dutch listing agent as stated in the convening notice for the meeting) no later than 42 days prior to convocation of the AGM. In addition, we post a copy of our Annual Reports on our website prior to the AGM. |
Equity compensation arrangements | ASML does not follow Nasdaq’s requirement to obtain shareholder approval of stock option or purchase plans or other equity compensation arrangements available to officers, directors or employees. It is not required under Dutch law or generally accepted practice for Dutch companies to obtain shareholder approval of equity compensation arrangements available to officers, directors or employees. The General Meeting adopts the Remuneration Policy for the Board of Management, approves equity compensation arrangements for the Board of Management and approves the remuneration for the Supervisory Board. The Remuneration Committee evaluates the achievements of individual members of the Board of Management with respect to the short- and long-term quantitative performance and he full Supervisory Board evaluates the quantitative performance criteria. Equity compensation arrangements for employees are adopted by the Board of Management within limits approved by the General Meeting. |
ASML ANNUAL REPORT 2023 | CORPORATE GOVERNANCE CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 195 | |
Compliance with Corporate Governance requirements |
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 196 | |
Message from the Chair of the Supervisory Board | ||||||
Another record performance, in challenging circumstances |
I am confident that we benefit from a management team, workforce and technological leadership that will enable all our stakeholders as well as wider society to reap long-term rewards.” | |||
Nils Smedegard Andersen | |||
Chair of the Supervisory Board | |||
The Supervisory Board supervises and advises the Board of Management in performing its management tasks and setting the direction for ASML, focusing on long-term and sustainable value creation. The members of the Supervisory Board are fully independent. | |||
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 197 | |
Message from the Chair of the Supervisory Board (continued) |
6 | 44% | ||
Supervisory Board meetings | Female members | ||
(2022: 7) | (2022: 44%) | ||
98% | 3.2 | ||
Attendance rate | Years average tenure | ||
(2022: 95%) | (2022: 4) |
Deep dive: Market and geopolitics | ||||
The Supervisory Board discussed with the Board of Management the short-, medium- and long-term market developments in the semiconductor industry and the related growth opportunities for ASML. Aspects discussed were the key end market drivers, the future of lithography shrink and future affordability of lithography solutions, potential opportunities in adjacent technologies and ASML's competitive position. In terms of geopolitics, global forces limiting ASML's options to do business in China were extensively discussed and the Supervisory Board made recommendations as to how to best navigate this situation. | ||||
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 198 | ||
Supervisory Board focus in 2023 |
Alongside the annual strategy review, the Supervisory Board addressed strategic topics throughout the year via deep dives, which enabled focused, in-depth review.” |
Nils Andersen |
Chair of the Supervisory Board |
Deep dive: Transformation | ||||
After a decade of strong growth, ASML anticipates continued future growth with its usual cycles. In consequence, we have to be able to respond to market demand with increased flexibility and agility to maintain our customer trust and technology leadership. In order to respond to these challenges, the Board of Management embarked on a journey to drive 3 strategic transformation projects related to Customer Trust, Robust Supply Chain, and Integrated Operating Model. Ample time was spent by the Supervisory Board discussing these programs in open dialogues with the Board of Management, during which the Supervisory Board challenged and advised the Board of Management on how to organize for the future expected growth towards 2030. The Supervisory Board is pleased with the strengthening of our supply chain resilience as well as with the reorganization of ASML's customer- facing organization, which will be implemented in 2024. | ||||
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 199 | |
Supervisory Board focus in 2023 (continued) |
Deep dive: ESG Sustainability strategy | ||||
As a Supervisory Board we consider ESG Sustainability an increasingly important topic. While the Supervisory Board keeps the overall oversight of ESG Sustainability, various ESG Sustainability aspects are discussed at committee level, e.g. reporting in the Audit Committee, diversity in the Selection and Nomination Committee, ESG Sustainability as part of the Board of Management's incentive scheme in the Remuneration Committee and product and technology aspects in the Technology Committee. In 2023, we discussed ASML’s updated ESG Sustainability strategy and execution with the Board of Management. In deep dive sessions specific attention was paid to EUV energy efficiency, which is a key area of focus also given ASML's CO2 reduction ambitions, and the Diversity & Inclusion strategy and the implementation thereof. To underline the importance of ESG Sustainability, the Supervisory Board decided to establish an ESG Committee in 2023. | ||||
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 200 | |
Supervisory Board focus in 2023 (continued) |
Strategy & sustainable long- term value creation | ||||
Q1 | ||||
•ESG strategy, including deep dives on EUV energy efficiency and Diversity & Inclusion •Expansions beyond current scope and M&A strategy •Remuneration Board of Management and Supervisory | ||||
Q2 | ||||
•Deep dive: Future operating model •Deep dive: Tool allocation policy •Deep dive: Scenarios to ramp the end-to-end supply chain including industrial footprint | ||||
Q3 | ||||
•Deep dive: value strategy and service business model •Deep dive: BPI | ||||
Q4 | ||||
•Annual strategy review •Deep dive: Semi & litho market •Deep dive: Geopolitics & market access •Deep dive: Global footprint •Deep dive: Cost & Flexibility | ||||
Business developments | ||||
Q2 | ||||
•Market outlook and demand drivers •Update on business sectors: EUV, DUV, Applications | ||||
Q4 | ||||
•Transformation projects related to sourcing & supply chain, Customer and future operating model | ||||
Risk management | ||||
Q1 | ||||
•Update risk landscape & deep dive: security | ||||
Financial & operational performance | ||||
Q1 | ||||
•2022 Annual Results and Annual Report •2022 external audit report •Final dividend 2022 •External auditor rotation •Legal matters report | ||||
Q3 | ||||
•2022 statutory interim report •Cash return including dividend policy and interim dividend •Business Performance Improvement initiative including update on Our New Enterprise (ONE) program | ||||
Q4 | ||||
•Update of business plans of the business sectors and functions •Cash return including interim dividend and share buyback program | ||||
People & organization | ||||
Q1 | ||||
•Composition of Supervisory Board •Composition of Board of Management •Remuneration Policy for the Board of Management | ||||
Q3 | ||||
•Human Resources & Organization (HR&O) update •Composition of Supervisory Board •Composition of Board of Management •HR&O, including deep dives on Diversity & Inclusion and Culture | ||||
Q4 | ||||
•Composition of Supervisory Board •Composition of Board of Management •People Strategy •Results of employee engagement survey | ||||
Governance and stakeholders | ||||
Q1 | ||||
•Outcome of Supervisory Board evaluation •AGM agenda •New Dutch Corporate Governance Code •Amendment to the Rules of Procedure Board of Management and Supervisory Board | ||||
Q2 | ||||
•AGM update | ||||
Q3 | ||||
•ESG oversight by Supervisory Board and Committees | ||||
R | ||||
Q4 | ||||
•Implementation of the Dutch Corporate Governance Code •Amendment Rules of Procedure Supervisory Board and Board of Management •D&I Policies •Supplier deep dive: Zeiss •Supplier visit: Zeiss | ||||
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 201 | |
Supervisory Board focus in 2023 (continued) |
Meetings of the Supervisory Board | ||||
Most Supervisory Board and Committee meetings held in 2023 were in-person meeting, but the Supervisory Board also met virtually on some occasions. In addition to plenary discussions, break- out sessions in smaller groups were organized for discussing key strategic topics to optimize interaction. We also used preview videos for meeting preparation in addition to written meeting documents, in order to allow as much time as possible for discussion. | ||||
Supervisory Board meeting attendance overview1 | ||||||||||||
98% | ||||||||||||
Attendance rate | ||||||||||||
Name | Supervisory Board | Audit Committee | Remuneration Committee | Selection and Nomination Committee | Technology Committee | ESG Committee | ||||||
Nils Andersen (Chair)2 | 4/4 | 3/3 | n/a | 4/4 | n/a | n/a | ||||||
Annet Aris | 6/6 | n/a | 5/5 | 6/6 | 5/5 | n/a | ||||||
Birgit Conix | 6/6 | 6/6 | n/a | n/a | n/a | 2/2 | ||||||
Mark Durcan | 6/6 | n/a | n/a | 6/6 | 5/5 | n/a | ||||||
Warren East | 6/6 | 6/6 | n/a | n/a | 5/5 | n/a | ||||||
Alexander Everke | 6/6 | n/a | 5/5 | n/a | n/a | 2/2 | ||||||
Terri Kelly | 6/6 | n/a | 5/5 | 6/6 | n/a | n/a | ||||||
Jack de Kreij3 | 4/4 | 3/3 | 3/3 | n/a | n/a | n/a | ||||||
An Steegen | 5/6 | n/a | n/a | n/a | 1/2 | 1/2 | ||||||
Gerard Kleisterlee4 | 2/2 | n/a | 1/1 | 2/2 | 3/3 | n/a | ||||||
Rolf-Dieter Schwalb4 | 2/2 | 3/3 | 2/2 | n/a | n/a | n/a | ||||||
1.This overview contains the attendance data as of the formal date of appointment of until the formal end date of the appointment. 2.Appointed at the AGM on April 26, 2023; also appointed as chair of the Selection and Nomination Committee. 3.Appointed at the AGM on April 26, 2023; also appointed as chair of the Audit Committee and member of the Remuneration Committee. 4.Stepped down per the AGM on April 26, 2023. |
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 202 | |
Meetings and attendance |
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 203 | |
Meetings and attendance (continued) |
Supervisory Board skills | |||||||||||||||||||||||||||||||||
Board member | General skills | ASML skills | |||||||||||||||||||||||||||||||
Nils Andersen (Chair) | • | • | • | • | • | • | • | ||||||||||||||||||||||||||
Annet Aris | • | • | • | • | • | • | • | • | |||||||||||||||||||||||||
Birgit Conix | • | • | • | • | • | • | |||||||||||||||||||||||||||
Marc Durcan | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||||||
Warren East | • | • | • | • | • | • | • | • | • | • | |||||||||||||||||||||||
Alexander Everke | • | • | • | • | • | • | • | • | • | • | |||||||||||||||||||||||
Terri Kelly | • | • | • | • | • | • | |||||||||||||||||||||||||||
Jack de Kreij | • | • | • | • | • | • | • | • | |||||||||||||||||||||||||
An Steegen | • | • | • | • | • | • | • | • | |||||||||||||||||||||||||
(Former) Executive board member of (listed) international company | Finance / governance | Remuneration | Human resources / employee relations | IT / digital / cyber | ESG | Semiconductor ecosystem | Deep understanding of semiconductor technology | High-tech manufacturing / integrated supply chain management | Business in Asia | ||||||||||||||||||||||||
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 204 | |
Meetings and attendance (continued) |
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 205 | |
Meetings and attendance (continued) |
Supervisory Board | |||||||||||||||||||||||||
Audit Committee | ESG Committee | Remuneration Committee | Selection and Nomination Committee | Technology Committee | |||||||||||||||||||||
Assisting in overseeing the integrity and quality of our financial reporting and the effectiveness of risk management and controls | Overseeing the ESG sustainability strategy and performance aimed at sustainable, long- term value creation. | Overseeing the development and implementation of the Remuneration Policies, in cooperation with the Audit and Technology Committee | Assisting with the preparation of the selection criteria and appointment procedures for the Supervisory Board and Board of Management | Providing advice with respect to our technology plans required to execute the business strategy | |||||||||||||||||||||
3 | 3 | 4 | 4 | 4 | |||||||||||||||||||||
Members | Members | Members | Members | Members | |||||||||||||||||||||
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 206 | |
Supervisory Board committees |
Audit Committee | ||||||
The Audit Committee assists the Supervisory Board in overseeing the integrity and quality of our financial reporting and the effectiveness of the internal risk management and internal control systems. | ||||||
Main responsibilities: | ||||||
•Overseeing the integrity and quality of ASML’s Financial Statements and sustainability disclosures and submitting proposals to ensure such integrity; •Overseeing the accounting, financial and sustainability reporting processes and the audits of the Financial Statements; •Overseeing the effectiveness of our internal risk management and control systems, including compliance with the relevant legislation and regulations, and the effect of codes of conduct; •Overseeing the integrity and effectiveness of our system of disclosure controls and procedures and our system of internal controls over financial and sustainability reporting; •Overseeing the External Auditor’s qualifications, independence, performance and determining its compensation; and •Overseeing the functioning of Internal Audit. | ||||||
Members: | ||||||
•Jack de Kreij (Chair) •Birgit Conix •Warren East The members of the Audit Committee are all independent members of the Supervisory Board. The Supervisory Board has determined that both Jack De Kreij and Birgit Conix qualify as Audit Committee financial experts pursuant to section 407 of the Sarbanes-Oxley Act and Dutch statutory rules, taking into consideration their extensive financial backgrounds and experience. | ||||||
A key area of focus for the Audit Committee in 2023 was how to navigate macroeconomic and semiconductor industry cycle related challenges while investing in future growth | ||||||
Recurring agenda topics (quarterly) | Attendance | ||||||||
•Financial update •Review of the quarterly financial results and press release •Accounting and Internal Control update •Observations of External Auditor •Risk update, incl. (IT) Security •Internal Audit update •Disclosure Committee report •Legal matters report •Ethics and compliance | In addition to the Audit Committee members, the Chair of the Supervisory Board attends the Audit Committee meetings whenever possible. The external auditor and the internal auditor have a standing invitation for Audit Committee meetings and attended all Audit Committee meetings in 2023. The CEO, CFO, EVP Finance, Corporate Chief Accountant, the Head of Risk and Business Assurance are invited to the meetings. | ||||||||
The overview below provides a number of topics discussed during Audit Committee meetings in 2023, in addition to the recurring agenda topics. | |||||||||
Q1 | Q3 | ||||||||
•2022 Annual Report and Financial Statements US GAAP and EU-IFRS •Accounting deep dive: Balance sheet review •2022 External audit report •Annual reporting process •Capital return, incl. interim dividend Q1'23 and final dividend 2022 •Fraud-risk assessment •Results of the external auditor evaluation 2022 •Results of the Audit Committee self-evaluation •Annual plans of Risk and Internal Audit •Compliance deep dives: Finance, ABC and Antitrust •Appointment new head of Internal Audit | •Statutory Interim report 2023 •Capital return, incl. interim dividend Q3'23 •Compliance deep dive: Finance •Audit Committee responsibilities in the area of ESG | ||||||||
Q2 | Q4 | ||||||||
•2023 SOX plan incl. materiality and scoping •External audit plan 2023 •Audit on expense reporting Board of Management and Supervisory Board 2022 •Update Internal Audit Charter •Initial independence discussion with newly to be appointed external auditor | •Financing •Capital return including Q4 2023 interim dividend •2023 Annual Report process •Long-term financial plan •Annual Plan 2024 •Internal Audit Plan 2024 •Compliance deep dive: legal compliance •Annual tax update •External audit update on 'hard close' procedures •Review of Rules of Procedure for the Audit Committee | ||||||||
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 207 | |
Supervisory Board committees (continued) |
Audit Committee |
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 208 | |
Supervisory Board committees (continued) |
Audit Committee |
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 209 | |
Supervisory Board committees (continued) |
ESG Committee | ||||||
The ESG Committee advises the Supervisory Board in carrying out its governance and oversight responsibilities with regard to sustainability, environmental, social and governance matters. | ||||||
Main responsibilities: | ||||||
•the ESG sustainability strategy, including the various sub- themes of the ESG sustainability strategy; •the integration of ESG in the Company and the ESG sustainability strategy; • the periodic assessment and evaluation of ASML’s ESG sustainability performance and progress against its objectives; • the relationships and engagement with ASML’s stakeholders; and •the (impact of) external ESG matters and developments which are relevant for ASML and the general evolution of the ESG landscape. | ||||||
Members: | ||||||
•Birgit Conix (Chair) •Alexander Everke •An Steegen The ESG Committee may be supported by external experts as well as experts from within ASML who act as advisers on the subjects reviewed and discussed. | ||||||
On April 26, 2023, the Supervisory Board decided to establish the ESG Committee to focus on ESG and sustainability in recognition of their importance to ASML. | ||||||
Recurring agenda topics (quarterly) | Attendance | ||||||||
•ESG Strategy and performance •ESG Governance •ESG Compliance | In addition to the ESG Committee members, the EVP & Chief Business Officer, the EVP & CFO and the Head of ESG Sustainability have a standing invitation to attend the ESG Committee meetings. Internal experts and external advisers may is also invited to attend the ESG Committee meetings when deemed necessary. The advisers do not have voting rights. | ||||||||
ESG Committee meetings in 2023 | |||||||||
In general, the ESG Committee meets at least twice a year and more frequently when deemed necessary. In 2023, the ESG Committee held two meetings. | |||||||||
The overview below provides details on the topics discussed during ESG Committee meetings in 2023. | |||||||||
Q1 | Q3 | ||||||||
•No meetings | •Performance on ESG KPIs and ESG targets for the Long-Term Incentive (LTI) •Feedback from ESG benchmarks •Update on preparations for CSRD compliance •Deep dive on Scope 1 & 2 emissions •Human Rights Policy •Formalities related to ESG Committee set-up | ||||||||
Q2 | Q4 | ||||||||
•No meetings | •Performance on ESG KPIs and ESG LTI targets •Feedback from relevant benchmarks and update on selection of benchmarks •ESG Strategy update •Update on preparations for CSRD compliance •Deep dive on EUV energy use per wafer pass | ||||||||
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 210 | |
Supervisory Board committees (continued) |
ESG Committee |
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 211 | |
Supervisory Board committees (continued) |
Supervisory Board Oversight over overall company strategy aimed at sustainable long-term value creation and company performance, including ESG aspects | |||||||||||||||
Audit Committee | ESG Committee | Remuneration Committee | Selection and Nomination Committee | Technology Committee | |||||||||||
Non-financial reporting, ESG internal controls and assurance | Oversight over ESG strategy (execution) & performance | ESG metrics as part of executive remuneration | Corporate Governance Leadership Development & succession including diversity | Product & Technology roadmap related ESG matters/ programs (e.g. EUV energy efficiency) | |||||||||||
Selection and Nomination Committee | ||||||
The Selection and Nomination Committee assists the Supervisory Board in relation to its responsibilities over the composition and functioning of the Supervisory Board and the Board of Management and the monitoring of corporate governance developments. | ||||||
Main responsibilities: | ||||||
•Preparing the selection criteria and appointment procedures for members of the Supervisory Board and Board of Management, and the supervision of the Board of Management’s policy in relation to the selection and appointment criteria for senior management; •Periodically evaluating the scope and composition of the Board of Management and the Supervisory Board, and proposing the profile of the Supervisory Board; •Periodically evaluating the functioning of the Board of Management and the Supervisory Board, and their individual members; •Preparing the Supervisory Board’s decisions for appointing and reappointing members of the Board of Management and proposing (re)appointments of members of the Supervisory Board; and •Monitoring and discussing developments in corporate governance. | ||||||
Members: | ||||||
•Nils Andersen (Chair) •Annet Aris •Mark Durcan •Terri Kelly Each member is an independent, non-executive member of our Supervisory Board, in accordance with the Nasdaq Listing Rules. | ||||||
In 2023, the Selection and Nomination Committee's key area of focus was Board of Management composition and succession. | ||||||
Recurring agenda topics | Attendance | ||||||||
•Role, composition and functioning of the Board of Management •Role, composition and functioning of the Supervisory Board •Corporate governance | In addition to the Selection and Nomination Committee members, the two presidents and the EVP HRO are regularly invited to attend (parts of) its meetings. An external adviser is also invited to attend the Selection and Nomination Committee meetings when deemed necessary. | ||||||||
The overview below provides details on the topics discussed during Selection and Nomination Committee meetings in 2023. | |||||||||
H1 | H2 | ||||||||
•Composition of Board of Management, including succession and transition pipeline •Profile and composition of Supervisory Board and composition of its committees •Nominations for appointment of Supervisory Board members •Induction program for new Supervisory Board members •Amendment of Rules of Procedure Board of Management and Supervisory Board •Outcome of evaluation of Supervisory Board and committees •Performance of the Board of Management and individual members •Diversity policy of the Board of Management •New Dutch Corporate Governance Code •ESG Sustainability Committee set-up and composition | •Composition of Board of Management, including diversity aspects & requirements, and succession pipeline •End of appointment term, retirement of the Co-Presidents and appointment of Christophe Fouquet as President and CEO per the 2024 AGM •Intended appointment of Jim Koonmen as member of the Board of Management per the 2024 AGM •Profile and composition of Supervisory Board •Nomination for appointment of Annet Aris, Mark Durcan and Warren East as Supervisory Board members per the 2024 AGM •Approach to the 2023 self-evaluation of the Supervisory Board and Committees •Implementation of the revised Dutch Corporate Governance Code, including related governance documents, •Responsibilities of the Selection & Nomination Committee in the area of ESG | ||||||||
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 212 | |
Supervisory Board committees (continued) |
Selection and Nomination Committee |
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 213 | |
Supervisory Board committees (continued) |
Technology Committee | ||||||
The Technology Committee advises the Supervisory Board with respect to the technology plans required to execute our business strategy. | ||||||
Main responsibilities: | ||||||
•Advising on technology trends, the study of potential alternative strategies, the technology strategy, product roadmaps, required technical resources and operational performance in R&D; •Making recommendations to the Supervisory Board on technology-related projects with respect to ASML’s competitive position; and •Discussing the technology targets set to measure short- and long-term performance as well as the achievements related to these, and advising the Remuneration Committee on this topic. | ||||||
Members: | ||||||
•Mark Durcan (Chair) •Annet Aris •Warren East •An Steegen The Technology Committee is supported by external experts as well as experts from within ASML who act as advisers on the subjects reviewed and discussed. External experts may include representatives of customers, suppliers and partners to increase the Committee’s understanding of the technology and research required to develop our leading-edge systems. | ||||||
In Q4 2023, the Technology Committee visited ASML's facility in Wilton, CT, USA. | ||||||
Recurring agenda topics (quarterly) | Attendance | ||||||||
•Role, composition and functioning of the Board of Management •Role, composition and functioning of the Supervisory Board •Corporate governance | In addition to the Technology Committee members, the Committee’s external and internal advisers regularly attended committee meetings. The advisers do not have voting rights. | ||||||||
Technology Committee meetings in 2023 | |||||||||
In general, the Technology Committee meets at least twice a year and more frequently when deemed necessary. In 2023, the Technology Committee held five meetings. | |||||||||
The overview below provides details on the topics discussed during Technology Committee meetings in 2023. | |||||||||
Q1 | Q3 | ||||||||
•Review of Applications •Technology Leadership Index performance review 2022 and 2020-2022 and target setting for 2023 and 2023-2025 | •Review of DUV (including Installed Base and Service and Mature Products) •Device Roadmap | ||||||||
Q2 | Q4 | ||||||||
•Review of the Development & Engineering, System Engineering and Research | •Review of EUV Low NA and High NA •Visit to ASML's facility in Wilton, CT, USA | ||||||||
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 214 | |
Supervisory Board committees (continued) |
Technology Committee |
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 215 | |
Supervisory Board committees (continued) |
ASML ANNUAL REPORT 2023 | SUPERVISORY BOARD REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 216 | |
Financial Statements and Profit Allocation |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 217 | |
Message from the Chair of the Remuneration Committee |
2023 was again a very dynamic, challenging year for ASML and this translated into another busy year for our committee as we continued to evolve the ways in which we can support the growth of the company.” | ||
Terri Kelly | ||
Chair of the Remuneration Committee | ||
Outlook |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 218 | |
Message from the Chair of the Remuneration Committee (continued) |
Our remuneration principles for performance support long-term success and sustainable value | |||
Competitiveness | The remuneration structure and levels intend to be competitive in the relevant labor market, while at the same time taking into account societal trends and perceptions. | ||
Alignment | The remuneration policy is aligned with the short-term and long-term incentive policies for ASML senior management and other ASML employees and takes into account internal relativities. | ||
Long-term orientation | The policy and incentives focus on sustainable and long-term value creation. | ||
Compliance | ASML adopts the highest standards of good corporate governance. | ||
Simplicity and transparency | The policy and its execution are as simple as possible and easily understandable to all stakeholders. |
Linking remuneration to purpose and strategy | ||||||||||||
Purpose | Strategy | Incentive measures | Pay for performance | |||||||||
Unlocking the potential of people and society by pushing technology to new limits. | Grow our holistic lithography business | Financial measures | Remuneration outcomes | |||||||||
Secure unique supply chain capabilities to ensure business continuity | Customer Orientation | |||||||||||
Move toward adjacent business opportunities | Technology leadership | |||||||||||
Deliver on our ESG sustainability commitments | Leadership in ESG sustainability | |||||||||||
How we performed in 2023 | ||||||||
Financial (based on US GAAP) | Non-financial | |||||||
€27.6bn | €14.1bn | €9.0bn | 7.8 | |||||
Total sales | Gross profit | Income from operations | Technology Leadership Index score | |||||
(2022: €21.2bn) | (2022: €10.7bn) | (2022: €6.5bn) | (2022: 8.1) | |||||
€5.4bn | €19.91 | 65.8% | 10.8% | |||||
Net cash provided by operating activities | Earning per share | ROAIC (Non-GAAP measure)1 | Dow Jones Sustainability Index (DJSI)2 | |||||
(2022: €8.5bn) | (2022: €14.14) | (2022: 48.2%) | (2022: 10.8%) |
Relative TSR - ASML vs PHLX |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 219 | |
Remuneration at a glance | ||||||
Remuneration is an essential tool to motivate the right talent to continue to achieve our technology roadmap and business priorities. |
We aim to align the total remuneration for our Board of Management to our business strategy through a combination of fixed pay and short- and long- term incentives, underpinned by stretching performance targets. | |
€24.6m | |
Total remuneration | |
128.2% | |
Achieved of STI target | |
157.7% | |
Achieved of LTI target | |
43:1 | |
CEO vs. average per FTE1 |
Board of Management | |
Peter T.F.M. Wennink1 | |
Total remuneration 2023 (€’000s) | |
€5,941 | |
Martin A. van den Brink1 | |
Total remuneration 2023 (€’000s) | |
€5,939 | |
Frédéric J.M. Schneider-Maunoury | |
Total remuneration 2023 (€’000s) | |
€3,574 | |
Roger J.M. Dassen | |
Total remuneration 2023 (€’000s) | |
€3,558 | |
Christophe D. Fouquet | |
Total remuneration 2023 (€’000s) | |
€3,519 | |
Wayne R. Allan2 | |
Total remuneration 2023 (€’000s) | |
€2,071 |
Remuneration summary (€’000s) |
Base salary and benefit | STI | LTI | ||||||||||
Stakeholder engagement in 2023 | |||
During 2023, we consulted with our large shareholders and other stakeholders. The Remuneration Committee also consulted the views of the Board of Management. | |||
Shareholders | |||
Number of organizations met | 8 | ||
Number of meetings | 8 | ||
Percentage of issued share capital owned3 | 20% | ||
Shareholders representatives and proxy advisers | |||
Number of organizations met | 3 | ||
Number of meetings | 3 | ||
Works Council | |||
Number of organizations met | 1 | ||
Number of meetings | >5 | ||
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 220 | |
Remuneration at a glance (continued) |
Remuneration Committee | ||||||
The Remuneration Committee advises the Supervisory Board and prepares the Supervisory Board’s resolutions with respect to the remuneration of the Board of Management and the Supervisory Board. | ||||||
Main responsibilities: | ||||||
•Overseeing the development and implementation of the Remuneration Policy for the Board of Management and preparing the Supervisory Board Remuneration Policy; •Reviewing and proposing to the Supervisory Board corporate goals and objectives relevant to the variable part of the Board of Management’s remuneration; •Carrying out scenario analyses of the possible financial outcomes on the variable remuneration of meeting these goals, as well as exceeding these goals, before proposing these corporate goals and objectives to the Supervisory Board for approval; and •Evaluating the performance of the members of the Board of Management in view of those goals and objectives, and – based on this evaluation – recommending to the Supervisory Board appropriate compensation levels for the members of the Board of Management. •Staying apprised of external pay practices and the effectiveness of our remuneration policy and incentive measures in attracting and retaining top talent. | ||||||
Members: | ||||||
•Terri Kelly (Chair) •Annet Aris •Alexander Everke •Jack de Kreij Each member is an independent, non-executive member of our Supervisory Board in accordance with the Nasdaq Listing Rules. Ms. Kelly is neither a former member of our Board of Management, nor a member of the management board of another company. Currently, no member of the Remuneration Committee is a member of the management board of another Dutch listed company. | ||||||
The Committee will continue to consider what the optimal incentive measures are to drive sustainable long-term value creation. | ||||||
Recurring agenda topics | Attendance | ||||||||
•Remuneration of the Board of Management •Remuneration of the Supervisory Board •Update on performance on targets for short- and long-term incentive | In addition to the Remuneration Committee members, the Remuneration Committee generally invites the CEO, the EVP HRO, the Head of Compensation and Benefits and in some instances also the CFO or the CBO, as BoM member responsible for ESG, to attend (parts of) its meetings. The Remuneration Committee’s external adviser is also invited to attend the Remuneration Committee meetings when deemed necessary. | ||||||||
The below overview provides details on the topics discussed during Remuneration Committee meetings in 2023. | |||||||||
Q1 | Q3 | ||||||||
•Total remuneration BoM 2023, incl. base salary 2023, and STI and LTI at-target levels •Short-Term Incentive Plan: Performance 2022, pay-out 2022 and targets 2023 •Long-Term Incentive Plan: share vesting performance period 2020-2022, and conditional grant and targets performance period 2023-2025 •Compliance with share ownership requirements •Remuneration Report 2022 •Self-evaluation of Remuneration Committee •Supervisory Board Remuneration Policy review including stakeholder outreach | •Progress STI and LTI targets and metrics •Review of potential changes in STI or LTI metrics within limits of Remuneration Policy •Latest trends in policies and reporting •Report on interaction with the Works Council, including discussion on societal benchmark •ESG related activities within scope of Remuneration Committee | ||||||||
Q2 | Q4 | ||||||||
•No meetings | •Progress STI and LTI targets •Board of Management remuneration 2024, including base salary, at- target levels for STI and LTI, selection of STI and LTI metrics and target levels •Update on corporate governance developments: remuneration •US Claw Back Policy •Engagement of external auditor for agreed-upon procedures on remuneration •Draft Remuneration Report 2023 •Share planning for the period AGM 2024-2025 •Compliance of BoM members with share ownership requirement | ||||||||
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 221 | |
Remuneration Committee |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 222 | |
Remuneration Committee (continued) |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 223 | |
Remuneration Committee (continued) |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 224 | |
Board of Management remuneration |
The current reference group consists of the following companies: | |||
Current reference group composition | |||
European companies with focus on long-term technology/ industrial engineering/R&D | Semiconductor manufacturing companies | Semiconductor equipment companies | |
ABB | Broadcom | Applied Materials | |
Airbus | Intel | Lam Research | |
Dassault Systèmes | Qualcomm | ||
Infineon Technologies | |||
Linde | |||
Medtronic | |||
Novartis | |||
NXP Semiconductors | |||
Philips | |||
Roche | |||
SAP | |||
Schneider Electric | |||
Shell | |||
Siemens | |||
Siemens Healthineers |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 225 | |
Board of Management remuneration (continued) |
Performance driven scenarios | |
Retains high proportion of performance related by: | |
2023 Levels for maximum performance | |||
Presidents | |||
Other members | |||
% Variable | 83% | |
% Variable | 83% | |
2023 Levels for on target performance | |||
Presidents | |||
Other members | |||
% Variable | 73% | ||
% Variable | 73% | ||
Threshold performance | |||
Presidents | |||
Other members | |||
n | Base salary | |
n | STI | |
n | LTI | |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 226 | |
Board of Management remuneration (continued) |
Base salary | + | STI Cash bonus | + | LTI Share-based incentive | + | Pension and other benefits | = | Total remuneration |
Fixed remuneration (base salary) | |||||
Link to strategy/rationale | 2022 policy | ||||
Attract, motivate and retain qualified industry professionals for the Board of Management in order to define and achieve strategic goals. | Benchmark | ||||
•Consisting of 20 most relevant technology and R&D oriented companies, including ASML’s talent competitors and business peers and (indirect) customers •Composition of companies in the reference group takes into account ASML’s geographic location – it’s weighted toward European companies (75% weighting), with some US companies (25% weighting) | |||||
STI (cash bonus) | |||||
Link to strategy/rationale | 2022 policy | ||||
Ensure a balanced focus on both the (financial) performance of ASML in the short-term, and the sustained company future in terms of technological advancement and customer satisfaction, fueling long-term success. | •Maximum target STI: 120% of base salary for the presidents and 100% for the other BoM members •2023 target STI: 105% of base salary for the presidents and 95% for the other BoM members | ||||
The weight of the individual STI performance metrics is as follows: | |||||
•60% Financial •20% Technology Leadership Index •20% Customer Orientation | |||||
LTI (share-based incentive) | |||||
Link to strategy/rationale | 2022 policy | ||||
Contribute to the strategy, long-term interests and sustainability of ASML using performance measures which balance the direct interest of ASML’s investors, the long-term financial success of ASML, the long-term continuation of technological advancement and the environmental and social dimensions of sustainability. | Maximum target LTI: capped at 200% of base salary 2023 target LTI: 170% of base salary | ||||
The weight of the individual LTI performance metrics is as follows: | |||||
•30% Relative TSR •20-30% ESG measures; 2023 weight: 20% •20-30% Technology Leadership Index; 2023 weight: 20% •20-30% Strategic value drivers; 2023 weight: 30% | |||||
Other elements of fixed remuneration (pension and other benefits) | |||||
Link to strategy/rationale | 2022 policy | ||||
Contribute to the competitiveness of the overall remuneration package and create alignment with market practice. | •Pension arrangement based on the ‘excedent’ (supplementary) arrangement for ASML employees in the Netherlands – a defined contribution plan •Expense reimbursements, such as company car costs, travel expenses, representation allowances, housing costs (gross amount before taxes), social security costs and health and disability insurance costs | ||||
Share ownership guidelines | |||||
Link to strategy/rationale | 2022 policy | ||||
Requirement for a minimum share ownership by members of the Board of Management. Ensure alignment between the interests of the Board of Management members and ASML’s long-term value creation. | •Presidents three times annual base salary, other Board members two times annual base salary •5-year period to comply for new members •Supervisory Board has discretion to allow a temporary deviation in extraordinary circumstances •Any shortfall will be remediated through the next vesting of shares | ||||
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 227 | |
Board of Management remuneration (continued) |
Annual plan 2023 | Performance metrics selected | EBIT % Customer orientation Technology leadership | Performance assessment by SB |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 228 | |
Board of Management remuneration (continued) |
Performance targets1 | Actual outcome | Pay-out2 | ||||
Weight | Threshold | Target | Stretch | % target | ||
EBIT Margin (%) (Non-GAAP measure) | 60% | 29% | 31% | 34% | 32.8% | 130.2% |
Customer Orientation | 20% | 127.8% | ||||
Consisting of the following equally weighted sub-targets: | ||||||
Applications market share | 5% | * | 110.0% | |||
DUV output (systems) | 5% | * | 101.3% | |||
EUV availability | 5% | * | 150.0% | |||
TechInsights survey | 5% | Top 5 | Top 3 | Top 2 | Top 2 | 150.0% |
Technology Leadership Index | 20% | 4 | 6 | 10 | 7.8 | 122.5% |
Total | 100% | 128.2% |
Weight | |
EBIT Margin (%) (Non-GAAP measure) | 60% |
Customer Orientation | 20% |
Consisting of the following sub-targets: | |
Applications: Adoption of Multi Beam | 2.5% |
DUV Cost and Competitiveness | 2.5% |
EUV Low NA Maturity | 2.5% |
EUV High NA Performance | 2.5% |
ASML Customer Trust Survey | 10% |
Technology Leadership Index | 20% |
Total | 100% |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 229 | |
Board of Management remuneration (continued) |
Target setting process | |||||||
Review company strategy in line with financial plan | Determine business priorities for upcoming 3-year performance period | Determine LTI performance measures for 3-year performance period | Finalize long-term financial plan | ||||
Step 1 | Step 2 | Step 3 | Step 4 | ||||
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 230 | |
Board of Management remuneration (continued) |
Performance metric | Performance targets | |||
Weight | Threshold | Target | Maximum | |
Relative TSR | 30% | Lower quartile | Median | Upper quartile |
Normalized three-years average Cash Conversion Rate %1 | 30% | 85% | 90% | 95% |
ESG Measures | 20% | |||
Consisting of equally weighted sub-metrics: | ||||
Net zero emission (Scope 1+2) with minimum compensation | <37kT compensation | <30kT compensation | <20kT compensation | |
Employee engagement | X2 – 4% point | X2 – 2% point | X2 | |
Total and JG9+ Inflow of women | 22% | 24% | 26% | |
Technology Leadership Index | 20% | 4 | 6 | 10 |
Total | 100% |
Grant date | Vesting period within 3 years | Vesting date | Holding period 2 years | End of transfer restrictions | ||||||||||
–In the period between the Grant date and the Vesting date, Performance Shares are conditional. | –Performance Shares are delivered to the Participant. However, Transfer Restrictions apply: acquired Performance Shares cannot be transferred during the Holding Period –Participant is allowed to sell sufficient Performance Shares to cover tax obligations |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 231 | |
Board of Management remuneration (continued) |
Performance targets | Actual performance | Pay-out %2 | ||||||
Performance metric | Weight | Threshold | Target | Exceed | Stretch | % of target | ||
Relative TSR | 30% | (20%) | 0% | n/a | 20% | 11.0% | 155.0% | |
ROAIC1 | 40% | 27.0% | 30.0% | 33.0% | 36.0% | 65.8% | 200.0% | |
Technology Leadership Index | 20% | 4 | 6 | 8 | 10 | 8.2% | 155.8% | |
Sustainability | 10% | ≤10.0% | ≤9% | n/a | ≤7% | 10.8% | 0.0% | 4 |
Total | 100% | 157.7% | 3 |
Performance targets | ||||
Performance metric | Weight | Threshold | Target | Maximum |
Relative TSR | 30% | As per remuneration policy | ||
ROAIC (2024-2026)1 | 30% | 45% | 70% | 90% |
ESG measures | 20% | |||
Consisting of the following sub-measures: | ||||
Employee engagement (Relative benchmark target vs top 25% performing companies) | 6.7% | -4 | -2 | 0 |
Gender diversity: | 6.7% | |||
•% Inflow of women all JG and JG 9+ | 24% | 26% | 28% | |
•% Representation of women in JG 13+ | 12% | 14% | 16% | |
Commitment of top-80% suppliers (based on CO2e emissions) to reduce their CO2e footprint by 2030 | 6.7% | 65% | 75% | 85% |
Technology Leadership Index | 20% | 4 | 6 | 10 |
Total | 100% |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 232 | |
Board of Management remuneration (continued) |
Board of Management | Ownership guidelines | 2023 base salary (in € thousands) | Number of outstanding vested shares | Ownership ratio1 |
P.T.F.M. Wennink | 3x base | 1,040 | 39,292 | 25.76 |
M.A. van den Brink | 3x base | 1,040 | 11,609 | 7.61 |
F.J.M. Schneider- Maunoury | 2x base | 725 | 20,685 | 19.45 |
R.J.M. Dassen | 2x base | 725 | 16,718 | 15.72 |
C.D. Fouquet | 2x base | 725 | 7,179 | 6.75 |
W.R. Allan | 2x base | 725 | 4,677 | 4.40 |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 233 | |
Board of Management remuneration (continued) |
Board of Management | Financial Year | Base salary | Pension | Other benefits | Total fixed | % Fixed | STI | LTI | Total variable | % Variable | Total Remuneration | Relative proportion fixed vs. variable | |
P.T.F.M. Wennink1 | 2023 | 1,040 | 248 | 61 | 1,349 | 22.7% | 1,400 | 3,192 | 4,592 | 77.3% | 5,941 | 0.29 | |
2022 | 1,020 | 206 | 58 | 1,284 | 30.0% | 961 | 2,035 | 2,996 | 70.0% | 4,280 | 0.43 | ||
2021 | 1,020 | 206 | 57 | 1,283 | 26.6% | 1,098 | 2,439 | 3,537 | 73.4% | 4,820 | 0.36 | ||
M.A. van den Brink1 | 2023 | 1,040 | 248 | 59 | 1,347 | 22.7% | 1,400 | 3,192 | 4,592 | 77.3% | 5,939 | 0.29 | |
2022 | 1,020 | 206 | 57 | 1,283 | 30.0% | 961 | 2,035 | 2,996 | 70.0% | 4,279 | 0.43 | ||
2021 | 1,020 | 206 | 56 | 1,282 | 26.6% | 1,098 | 2,439 | 3,537 | 73.4% | 4,819 | 0.36 | ||
F.J.M. Schneider-Maunoury | 2023 | 725 | 148 | 45 | 918 | 25.7% | 883 | 1,773 | 2,656 | 74.3% | 3,574 | 0.35 | |
2022 | 694 | 141 | 36 | 871 | 30.6% | 619 | 1,354 | 1,973 | 69.4% | 2,844 | 0.44 | ||
2021 | 694 | 115 | 36 | 845 | 26.8% | 747 | 1,566 | 2,313 | 73.2% | 3,158 | 0.37 | ||
R.J.M. Dassen | 2023 | 725 | 121 | 56 | 902 | 25.4% | 883 | 1,773 | 2,656 | 74.6% | 3,558 | 0.34 | |
2022 | 694 | 116 | 51 | 861 | 30.4% | 619 | 1,354 | 1,973 | 69.6% | 2,834 | 0.44 | ||
2021 | 694 | 115 | 51 | 860 | 22.6% | 747 | 2,193 | 2,940 | 77.4% | 3,800 | 0.29 | ||
C.D. Fouquet | 2023 | 725 | 82 | 56 | 863 | 24.5% | 883 | 1,773 | 2,656 | 75.5% | 3,519 | 0.32 | |
2022 | 694 | 78 | 53 | 825 | 29.5% | 619 | 1,354 | 1,973 | 70.5% | 2,798 | 0.42 | ||
2021 | 694 | 78 | 52 | 824 | 26.3% | 747 | 1,566 | 2,313 | 73.7% | 3,137 | 0.36 | ||
W.R. Allan2 | 2023 | 492 | 82 | 38 | 612 | 29.6% | 599 | 860 | 3 | 1,459 | 70.4% | 2,071 | 0.42 |
Total Board of Management | 2023 | 4,747 | 929 | 315 | 5,991 | 24.4% | 6,048 | 12,563 | 18,611 | 75.6% | 24,602 | 0.32 | |
2022 | 4,122 | 747 | 255 | 5,124 | 30.1% | 3,779 | 8,132 | 11,911 | 69.9% | 17,035 | 0.43 | ||
2021 | 4,122 | 720 | 252 | 5,094 | 25.8% | 4,437 | 10,203 | 14,640 | 74.2% | 19,734 | 0.35 |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 234 | |
Board of Management remuneration (continued) |
Former Board of Management | Financial Year | Base salary | Pension | Other benefits | Total fixed | % Fixed | STI | LTI | Total variable | % Variable | Total Remuneration | Relative proportion fixed vs. variable |
F.J. van Hout1 | 2021 | 231 | 47 | 16 | 294 | 11.4% | 243 | 2,036 | 2,279 | 88.6% | 2,573 | 0.13 |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 235 | |
Board of Management remuneration (continued) |
Market-based element | Non-market-based elements | ||||||||||||
Board of Management | Grant date | Status | Full control | Number of shares at target | Fair value at grant date | Number of shares at target | Fair value at grant date | Total number of shares at target | Total number of shares at maximum (200%) | Vesting date | Number of vested shares on publication date | Year-end closing share price in year of vesting | End of lock-up date |
P.T.F.M. Wennink | 1/27/23 | Conditional | No | 1,049 | 901.9 | 2,447 | 603.4 | 3,496 | 6,991 | 1/1/26 | n/a | n/a | 1/1/28 |
4/29/22 | Conditional | No | 709 | 596.0 | 1,655 | 533.5 | 2,364 | 4,727 | 1/1/25 | n/a | n/a | 1/1/27 | |
1/22/21 | Conditional1 | No | 1,053 | 635.6 | 2,455 | 454.9 | 3,508 | 7,016 | 1/1/24 | 5,531 | 681.7 | 1/1/26 | |
1/24/20 | Unconditional | No | 1,387 | 286.9 | 3,235 | 263.7 | 4,622 | 9,245 | 1/1/23 | 8,420 | 503.8 | 1/1/25 | |
7/19/19 | Unconditional | No | 2,217 | 245.4 | 5,173 | 194.4 | 7,390 | 14,780 | 1/1/22 | 13,326 | 706.7 | 1/1/24 | |
M.A. van den Brink | 1/27/23 | Conditional | No | 1,049 | 901.9 | 2,447 | 603.4 | 3,496 | 6,991 | 1/1/26 | n/a | n/a | 1/1/28 |
4/29/22 | Conditional | No | 709 | 596.0 | 1,655 | 533.5 | 2,364 | 4,727 | 1/1/25 | n/a | n/a | 1/1/27 | |
1/22/21 | Conditional1 | No | 1,053 | 635.6 | 2,455 | 454.9 | 3,508 | 7,016 | 1/1/24 | 5,531 | 681.7 | 1/1/26 | |
1/24/20 | Unconditional | No | 1,387 | 286.9 | 3,235 | 263.7 | 4,622 | 9,245 | 1/1/23 | 8,420 | 503.8 | 1/1/25 | |
7/19/19 | Unconditional | No | 2,217 | 245.4 | 5,173 | 194.4 | 7,390 | 14,780 | 1/1/22 | 13,326 | 706.7 | 1/1/24 | |
F.J.M. Schneider-Maunoury | 1/27/23 | Conditional | No | 731 | 901.9 | 1,706 | 603.4 | 2,437 | 4,874 | 1/1/26 | n/a | n/a | 1/1/28 |
4/29/22 | Conditional | No | 483 | 596.0 | 1,126 | 533.5 | 1,609 | 3,217 | 1/1/25 | n/a | n/a | 1/1/27 | |
1/22/21 | Conditional1 | No | 717 | 635.6 | 1,670 | 454.9 | 2,387 | 4,774 | 1/1/24 | 3,763 | 681.7 | 1/1/26 | |
1/24/20 | Unconditional | No | 858 | 286.9 | 2,001 | 263.7 | 2,859 | 5,718 | 1/1/23 | 5,208 | 503.8 | 1/1/25 | |
7/19/19 | Unconditional | No | 1,371 | 245.4 | 3,198 | 194.4 | 4,569 | 9,137 | 1/1/22 | 8,239 | 706.7 | 1/1/24 | |
R.J.M. Dassen | 1/27/23 | Conditional | No | 731 | 901.9 | 1,706 | 603.4 | 2,437 | 4,874 | 1/1/26 | n/a | n/a | 1/1/28 |
4/29/22 | Conditional | No | 483 | 596.0 | 1,126 | 533.5 | 1,609 | 3,217 | 1/1/25 | n/a | n/a | 1/1/27 | |
1/22/21 | Conditional1 | No | 717 | 635.6 | 1,670 | 454.9 | 2,387 | 4,774 | 1/1/24 | 3,763 | 681.7 | 1/1/26 | |
1/24/20 | Unconditional | No | 858 | 286.9 | 2,001 | 263.7 | 2,859 | 5,718 | 1/1/23 | 5,208 | 503.8 | 1/1/25 | |
7/19/19 | Unconditional | No | 1,371 | 245.4 | 3,198 | 194.4 | 4,569 | 9,137 | 1/1/22 | 8,239 | 706.7 | 1/1/24 | |
1/25/19 | Unconditional | No | 3,000 | 169.0 | 7,000 | 148.3 | 10,000 | 20,000 | 1/1/22 | 18,032 | 706.7 | 1/1/24 | |
C.D. Fouquet | 1/27/23 | Conditional | No | 731 | 901.9 | 1,706 | 603.4 | 2,437 | 4,874 | 1/1/26 | n/a | n/a | 1/1/28 |
4/29/22 | Conditional | No | 483 | 596.0 | 1,126 | 533.5 | 1,609 | 3,217 | 1/1/25 | n/a | n/a | 1/1/27 | |
1/22/21 | Conditional1 | No | 717 | 635.6 | 1,670 | 454.9 | 2,387 | 4,774 | 1/1/24 | 3,763 | 681.7 | 1/1/26 | |
1/24/20 | Unconditional | No | 858 | 286.9 | 2,001 | 263.7 | 2,859 | 5,718 | 1/1/23 | 5,208 | 503.8 | 1/1/25 | |
7/19/19 | Unconditional | No | 1,371 | 245.4 | 3,198 | 194.4 | 4,569 | 9,137 | 1/1/22 | 8,239 | 706.7 | 1/1/24 | |
W.R. Allan2 | 1/27/23 | Conditional | No | 731 | 901.9 | 1,706 | 603.4 | 2,437 | 4,874 | 1/1/26 | n/a | n/a | 1/1/28 |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 236 | |
Board of Management remuneration (continued) |
Market-based element | Non-market-based elements | ||||||||||||
Former Board of Management | Grant date | Status | Full control | Number of shares at target | Fair value at grant date | Number of shares at target | Fair value at grant date | Total number of shares at target | Total number of shares at maximum (200%) | Vesting date | Number of vested shares on publication date | Year-end closing share price in year of vesting | End of lock-up date |
F.J. van Hout | 1/22/21 | Conditional1 | No | 239 | 635.6 | 557 | 454.9 | 796 | 1,592 | 1/1/24 | 1,255 | 681.7 | 1/1/26 |
1/24/20 | Unconditional | No | 858 | 286.9 | 2,001 | 263.7 | 2,859 | 5,718 | 1/1/23 | 5,208 | 503.8 | 1/1/25 | |
7/19/19 | Unconditional | No | 1,371 | 245.4 | 3,198 | 194.4 | 4,569 | 9,137 | 1/1/22 | 8,239 | 706.7 | 1/1/24 |
Instrument: | Performance shares | |
Grant | Conditional grant on an annual basis based on maximum achievable opportunity. The number of performance shares to be conditionally awarded is calculated using the volume-weighted average share price during the last quarter of the year preceding the conditional award. | |
Grant date | Date on which the performance shares are conditionally granted. | |
Performance period | Period of three-years over which the achievement of the pre-defined performance targets is measured. | |
Vesting | The shares will become unconditional after the end of the performance period, depending on the level of achievement of the predetermined performance targets. | |
Lock-up period | The minimum holding period is two years after the vesting date. | |
Upon termination of contract, the transfer restrictions will remain in place during the holding period except in case of decease. | ||
In case a tax payment is due by the members of the Board of Management over the retrieved variable income, performance shares may be partially sold at vesting (‘sell to cover’) in accordance with the law and internal regulations. |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 237 | |
Board of Management remuneration (continued) |
For the year ended December 31 (€, in thousands) | 2019 | 2020 | Change (in %) | 2021 | Change (in %) | 2022 | Change (in %) | 2023 | Change (in %) |
Net sales | 11,820,001 | 13,978,452 | 18% | 18,610,994 | 33% | 21,173,448 | 14% | 27,558,506 | 30% |
Net income based on US GAAP | 2,592,252 | 3,553,670 | 37% | 5,883,177 | 66% | 5,624,209 | (4)% | 7,838,994 | 39% |
Net income based on EU-IFRS | 2,581,107 | 3,696,813 | 43% | 6,134,595 | 66% | 6,395,775 | 4% | 8,115,168 | 27% |
ASML share price (closing price on Euronext Amsterdam in €) | 263.7 | 397.6 | 51% | 706.7 | 78% | 503.8 | (29)% | 681.7 | 35% |
Average number of payroll employees in FTEs | 22,192 | 24,727 | 11% | 28,223 | 14% | 33,071 | 17% | 38,805 | 17% |
Dow Jones Sustainability Index (DJSI)1 | 10.2% | 9.0% | (11.8)% | 12.1% | 34.4% | 10.8% | (10.7)% | 10.8% | —% |
Remuneration P.T.F.M. Wennink (CEO)2 | 4,361 | 4,564 | 5% | 4,820 | 6% | 4,280 | (11)% | 5,941 | 39% |
Remuneration M.A. van den Brink2 | 4,360 | 4,564 | 5% | 4,819 | 6% | 4,279 | (11)% | 5,939 | 39% |
Remuneration R.J.M. Dassen | 2,956 | 3,804 | 29% | 3,800 | —% | 2,834 | (25)% | 3,558 | 26% |
Remuneration C.D. Fouquet | 2,203 | 2,975 | 35% | 3,137 | 5% | 2,798 | (11)% | 3,519 | 26% |
Remuneration F.J.M. Schneider-Maunoury | 2,724 | 2,927 | 7% | 3,158 | 8% | 2,844 | (10)% | 3,574 | 26% |
Remuneration W.R. Allan5 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | 2,071 | n/a |
Average remuneration per FTE4 based on US GAAP | 114 | 120 | 5% | 122 | 2% | 125 | 2% | 138 | 10% |
Average remuneration per FTE4 based on EU-IFRS | 114 | 120 | 5% | 122 | 2% | 118 | (3)% | 143 | 21% |
Internal pay ratio (CEO versus employee remuneration based on US GAAP)2,3 | 38 | 38 | —% | 40 | 5% | 34 | (15)% | 43 | 26% |
Internal pay ratio (CEO versus employee remuneration based on EU-IFRS)2,3 | 38 | 38 | —% | 40 | 5% | 36 | (10)% | 42 | 17% |
Ratio of the percentage increase in annual total compensation for CEO to the percentage increase in average annual remuneration for all employees4 based on US GAAP | n/a | n/a | n/a | n/a | n/a | (5.5) | n/a | 3.9 | (171)% |
Ratio of the percentage increase in annual total compensation for CEO to the percentage increase in average annual remuneration for all employees4 based on EU-IFRS | n/a | n/a | n/a | n/a | n/a | 3.7 | n/a | 1.9 | (49)% |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 238 | |
Board of Management remuneration (continued) |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 239 | |
Board of Management remuneration (continued) |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 240 | |
Supervisory Board remuneration |
Fixed remuneration | |||||||
Description in 2023 Remuneration Policy | 2022 | 2023 | |||||
Fixed remuneration paid in cash | Chair of Supervisory Board | €130,000 | €140,000 | ||||
including a base membership fee, committee fees and additional | Vice Chair of Supervisory Board | €94,000 | €100,000 | ||||
c | compensation contingent on SB members' activities and | Member of Supervisory Board | €75,000 | €80,000 | |||
responsibilities | Chair Audit Committee | €25,500 | €27,000 | ||||
Member Audit Committee | €18,000 | €18,000 | |||||
Chair of other Committees | €20,000 | €22,000 | |||||
Member of other Committees | €14,500 | €16,000 | |||||
Extra allowance for intercontinental meetings | |||||||
Description in 2023 Remuneration Policy | 2022 | 2023 | |||||
Extra, fixed allowance paid in connection with additional time commitment for intercontinental travel | For each meeting that involves intercontinental travel | €5,000 | €5,000 | ||||
Expenses | |||||||
Description in 2023 Remuneration Policy | 2022 | 2023 | |||||
Expenses incurred in relation to meeting attendance are reimbursed. In addition, a fixed net cost allowance is paid, covering certain pre- defined out-of-pocket expenses | Fixed net cost allowance | ||||||
Chair of Supervisory Board | €1,980 | €1,980 | |||||
Member of Supervisory Board | €1,380 | €1,380 | |||||
Remuneration in special circumstances | |||||||
The Supervisory Board may, upon recommendation of the Remuneration Committee, grant additional remuneration in special circumstances. This may concern granting increased Supervisory Board and/or Committee fees, depending on the character of the circumstances, for instance in case of a significant increase in time investment by its members. | The additional annual remuneration per member will be capped at one time the amount of the annual Supervisory Board membership fee payable to such member. The Supervisory Board considers an increase of at least 25% a significant increase in time investment | ||||||
Loans and guarantees | ||||||
Description | Value | |||||
No (personal) loans or guarantees or the like will be granted | Not applicable | |||||
Shares and share ownership | ||||||
Description | Value | |||||
No (rights to) shares are granted by way of remuneration. Any holding of ASML shares is for the purpose of long-term investment. Any trading activity is subject to ASML’s Insider Trading Rules | Not applicable | |||||
Other arrangements | ||||||
Description | Value | |||||
(Re)appointment based on Dutch law and ASML’s Articles of Association. No claw-back, severance or change in control arrangements are in place | Not applicable | |||||
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 241 | |
Supervisory Board remuneration (continued) |
Membership fees 2023 | Committee fees 2023 | Allowances 20231 | Proportion fixed vs. variable 2023 | Total remuneration 2023 | Total remuneration 2022 | Total remuneration 2021 | Total remuneration 2020 | Total remuneration 2019 | |
T.L. Kelly | 79 | 37 | 21 | 100:0 | 137 | 126 | 107 | 88 | 101 |
A.P. Aris | 99 | 47 | 6 | 100:0 | 152 | 144 | 127 | 95 | 98 |
B.M. Conix | 79 | 29 | 1 | 100:0 | 109 | 99 | 63 | n/a | n/a |
D.M. Durcan | 79 | 37 | 21 | 100:0 | 137 | 126 | 112 | 57 | n/a |
D.W.A. East | 79 | 34 | 6 | 100:0 | 119 | 99 | 93 | 59 | n/a |
N.S. Andersen2 | 95 | 27 | 1 | 100:0 | 123 | n/a | n/a | n/a | n/a |
J.P. de Kreij3 | 55 | 29 | 1 | 100:0 | 85 | n/a | n/a | n/a | n/a |
A.F.M. Everke | 79 | 24 | 1 | 100:0 | 104 | 66 | n/a | n/a | n/a |
A.L. Steegen | 79 | 24 | 6 | 100:0 | 109 | 66 | n/a | n/a | n/a |
Total | 723 | 288 | 64 | 100:0 | 1,075 | 726 | 502 | 299 | 199 |
Membership fees 2023 | Committee fees 2023 | Allowances 20231 | Proportion fixed vs. variable 2023 | Total remuneration 2023 | Total remuneration 2022 | Total remuneration 2021 | |
G.J. Kleisterlee2 | 43 | 17 | 1 | 100:0 | 61 | 190 | 178 |
R.D. Schwalb2 | 24 | 13 | — | 100:0 | 37 | 116 | 113 |
J.M.C. Stork | n/a | n/a | n/a | n/a | n/a | 40 | 113 |
D.A. Grose | n/a | n/a | n/a | n/a | n/a | n/a | 36 |
C.M.S. Smits Nusteling | n/a | n/a | n/a | n/a | n/a | n/a | 31 |
Total | 67 | 30 | 1 | 100:0 | 98 | 346 | 471 |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 242 | |
Supervisory Board remuneration (continued) |
ASML ANNUAL REPORT 2023 | REMUNERATION REPORT CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 243 | |
Remuneration Report - Other Information |
Financials & Non-financials | ||||
IN THIS SECTION | ||||
Consolidated Financial Statements | ||||
Report of Independent Registered Public Accounting Firm | ||||
Consolidated Statements of Operations | ||||
Consolidated Statements of Comprehensive Income | ||||
Consolidated Balance Sheets | ||||
Consolidated Statements of Shareholders’ Equity | ||||
Consolidated Statements of Cash Flows | ||||
Notes to the Consolidated Financial Statements | ||||
Non-financial statements | ||||
Assurance Report of the Independent Auditor | ||||
About the non-financial information | ||||
Non-financial indicators |
ASML ANNUAL REPORT 2023 | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 244 |
Consolidated Financial Statements | ||||
IN THIS SECTION | ||||
Report of Independent Registered Public Accounting Firm | ||||
Consolidated Statements of Operations | ||||
Consolidated Statements of Comprehensive Income | ||||
Consolidated Balance Sheets | ||||
Consolidated Statements of Shareholders’ Equity | ||||
Consolidated Statements of Cash Flows | ||||
Notes to the Consolidated Financial Statements | ||||
ASML ANNUAL REPORT 2023 | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 245 |
ASML ANNUAL REPORT 2023 | CONSOLIDATED FINANCIAL STATEMENTS | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 246 | |
Report of Independent Registered Public Accounting Firm | ||||||
To the Shareholders and the Supervisory Board |
ASML ANNUAL REPORT 2023 | CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 247 | |
Report of Independent Registered Public Accounting Firm (continued) |
Year ended December 31 (€, in millions, except per share data) | Notes | 2021 | 2022 | 2023 | |
Net system sales | |||||
Net service and field option sales | |||||
Total net sales | 2, 3 | ||||
Cost of system sales | ( | ( | ( | ||
Cost of service and field option sales | ( | ( | ( | ||
Total cost of sales1 | ( | ( | ( | ||
Gross profit | |||||
Research and development costs | ( | ( | ( | ||
Selling, general and administrative costs | ( | ( | ( | ||
Other income | 10 | ||||
Income from operations | |||||
Interest and other, net | 16 | ( | ( | ||
Income before income taxes | |||||
Income tax expense | 21 | ( | ( | ( | |
Income after income taxes | |||||
Profit from equity method investments | 9 | ||||
Net income | |||||
Basic net income per ordinary share | 23 | ||||
Diluted net income per ordinary share | 23 | ||||
Number of ordinary shares used in computing per share amounts: | |||||
Basic | 23 | ||||
Diluted | 23 |
ASML ANNUAL REPORT 2023 | CONSOLIDATED FINANCIAL STATEMENTS | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 248 | |
Consolidated Statements of Operations |
Year ended December 31 (€, in millions) | Notes | 2021 | 2022 | 2023 | |
Net income | |||||
Other comprehensive income (OCI): | |||||
Proportionate share of OCI from equity method investments | |||||
Foreign currency translation, net of taxes: | |||||
Gain (loss) on foreign currency translation | ( | ||||
Financial instruments, net of taxes: | |||||
Gain (loss) on derivative financial instruments | 25 | ( | |||
Transfers to net income | 25 | ( | |||
Other comprehensive income, net of taxes | ( | ||||
Total comprehensive income, net of taxes | |||||
Attributable to equity holders |
ASML ANNUAL REPORT 2023 | CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 249 | |
Consolidated Statements of Comprehensive Income |
As of December 31 (€, in millions, except share and per share data) | Notes | 2022 | 2023 | |
Assets | ||||
Cash and cash equivalents | 4 | |||
Short-term investments | 4 | |||
Accounts receivable, net | 5 | |||
Finance receivables, net | 6 | |||
Current tax assets | 21 | |||
Contract assets | 2 | |||
Inventories, net | 7 | |||
Other assets1 | 8 | |||
Total current assets | ||||
Finance receivables, net | 6 | |||
Deferred tax assets | 21 | |||
Loan receivable2 | 26 | |||
Other assets3 | 8 | |||
Equity method investments | 9 | |||
Goodwill | 11 | |||
Other intangible assets, net | 12 | |||
Property, plant and equipment, net | 13 | |||
Right-of-use assets | 14 | |||
Total non-current assets | ||||
Total assets | ||||
As of December 31 (€, in millions, except share and per share data) | Notes | 2022 | 2023 | |
Liabilities and shareholders’ equity | ||||
Accounts payable4 | ||||
Accrued and other liabilities5 | 15 | |||
Current tax liabilities | 21 | |||
Current portion of long-term debt | 16 | |||
Contract liabilities | 2 | |||
Total current liabilities | ||||
Long-term debt | 16 | |||
Deferred and other income tax liabilities | 21 | |||
Contract liabilities | 2 | |||
Accrued and other liabilities | 15 | |||
Total non-current liabilities | ||||
Total liabilities | ||||
Ordinary shares; € | ||||
Issued and outstanding shares | ||||
Share premium | ||||
Treasury shares at cost | ( | ( | ||
Retained earnings | ||||
Accumulated other comprehensive income | ||||
Total shareholders’ equity | 22 | |||
Total liabilities and shareholders’ equity |
ASML ANNUAL REPORT 2023 | CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 250 | |
Consolidated Balance Sheets |
Notes | Issued and Outstanding Shares | Share Premium | Treasury Shares at Cost | Retained Earnings | OCI1 | Total | |||
(€, in millions) | Number | Amount | |||||||
Balance at January 1, 2021 | ( | ||||||||
Components of comprehensive income: | |||||||||
Net income | — | — | — | — | — | ||||
Proportionate share of OCI from equity method investments | — | — | — | — | — | ||||
Gain (loss) on foreign currency translation | — | — | — | — | — | ||||
Gain (loss) on financial instruments | 25 | — | — | — | — | — | |||
Total comprehensive income | — | — | — | — | |||||
Purchase of treasury shares | 22 | ( | — | ( | — | — | ( | ||
Cancellation of treasury shares | 22 | — | ( | — | ( | — | |||
Share-based payments | 20 | — | — | — | — | — | |||
Issuance of shares | 20 | ( | ( | — | |||||
Dividend paid | 22 | — | — | — | — | ( | — | ( | |
Balance at December 31, 2021 | ( | ||||||||
Components of comprehensive income: | |||||||||
Net income | — | — | — | — | — | ||||
Proportionate share of OCI from equity method investments | — | — | — | — | — | ||||
Gain (loss) on foreign currency translation | — | — | — | — | — | ||||
Gain (loss) on financial instruments | 25 | — | — | — | — | — | ( | ( | |
Total comprehensive income | — | — | — | — | |||||
Purchase of treasury shares | 22 | ( | — | — | ( | — | — | ( | |
Cancellation of treasury shares | 22 | — | ( | — | ( | — | |||
Share-based payments | 20 | — | — | — | — | — | |||
Issuance of shares | 20 | ( | ( | — | |||||
Dividend paid | 22 | — | — | — | — | ( | — | ( | |
Balance at December 31, 2022 | ( |
ASML ANNUAL REPORT 2023 | CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 251 | |
Consolidated Statements of Shareholders’ Equity |
Notes | Issued and Outstanding Shares | Share Premium | Treasury Shares at Cost | Retained Earnings | OCI1 | Total | |||
(€, in millions) | Number | Amount | |||||||
Balance at December 31, 2022 | ( | ||||||||
Components of comprehensive income: | |||||||||
Net income | — | — | — | — | — | ||||
Proportionate share of OCI from equity method investments | — | — | — | — | — | ||||
Gain (loss) on foreign currency translation | — | — | — | — | — | ( | ( | ||
Gain (loss) on financial instruments | 25 | — | — | — | — | — | ( | ( | |
Total comprehensive income | — | — | — | — | ( | ||||
Purchase of treasury shares | 22 | ( | — | — | ( | — | — | ( | |
Cancellation of treasury shares | 22 | — | ( | — | ( | — | |||
Share-based payments | 20 | — | — | — | — | — | |||
Issuance of shares | 20 | — | ( | ( | — | ||||
Dividend paid | 22 | — | — | — | — | ( | — | ( | |
Balance at December 31, 2023 | ( |
ASML ANNUAL REPORT 2023 | CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 252 | |
Consolidated Statements of Shareholders’ Equity (continued) |
Year ended December 31 (€, in millions) | Notes | 2021 | 2022 | 2023 | |
Cash Flows from Operating Activities | |||||
Net income | |||||
Adjustments to reconcile net income to net cash flows from operating activities: | |||||
Depreciation and amortization1 | 12, 13 | ||||
Impairment and loss (gain) on disposal | 12, 13 | ( | |||
Share-based compensation expense | 18, 20 | ||||
Gain on sale of subsidiaries | 10 | ( | |||
Inventory reserves | 7 | ||||
Deferred tax expense (benefit) | 21 | ( | ( | ( | |
Equity method investments2 | 9 | ( | |||
Changes in assets and liabilities: | |||||
Accounts receivable, net | 5 | ( | ( | ||
Finance receivables, net | 6 | ( | |||
Inventories | 7 | ( | ( | ( | |
Other assets | 8 | ( | ( | ( | |
Accrued and other liabilities | 15 | ||||
Accounts payable | ( | ||||
Current tax assets and liabilities | 21 | ( | |||
Contract assets and liabilities | 2 | ( | |||
Net cash provided by operating activities | |||||
Cash Flows from Investing Activities | |||||
Purchase of property, plant and equipment3 | 13 | ( | ( | ( | |
Purchase of intangible assets | 12 | ( | ( | ( | |
Purchase of short-term investments | 4 | ( | ( | ( | |
Maturity of short-term investments | 4 | ||||
Loans issued and other investments | 26 | ( | ( | ( | |
Proceeds from sale of subsidiaries (net of cash disposed of) | 10 | ||||
Acquisition of subsidiaries (net of cash acquired) | 10 | ( | |||
Net cash used in investing activities | ( | ( | ( |
Year ended December 31 (€, in millions) | Notes | 2021 | 2022 | 2023 | |
Cash Flows from Financing Activities | |||||
Dividend paid | 22 | ( | ( | ( | |
Purchase of treasury shares | 22 | ( | ( | ( | |
Net proceeds from issuance of shares | 20 | ||||
Net proceeds from issuance of notes, net of issuance costs | 16 | ||||
Repayment of debt and finance lease obligations | 14, 16 | ( | ( | ( | |
Net cash used in financing activities | ( | ( | ( | ||
Net cash flows | ( | ||||
Effect of changes in exchange rates on cash | ( | ( | |||
Net increase (decrease) in cash and cash equivalents | ( | ||||
Cash and cash equivalents at beginning of the year | 4 | ||||
Cash and cash equivalents at end of the year | 4 | ||||
Supplemental Disclosures of Cash Flow Information | |||||
Unpaid portion of property, plant and equipment, excluded in investing activities, included in Accounts payable | |||||
Interest received | |||||
Interest paid | ( | ( | ( | ||
Income taxes paid, net of refunds | ( | ( | ( |
ASML ANNUAL REPORT 2023 | CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 253 | |
Consolidated Statements of Cash Flows |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 254 | |
Notes to the Consolidated Financial Statements |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 255 | |
Notes to the Consolidated Financial Statements (continued) |
Goods or services | Nature, timing of satisfying the performance obligations, and significant payment terms | |
New systems (established technologies) | New systems sales include i-line, KrF, ArF, ArFi and NXE-related systems, along with the related factory options ordered with the base system, as well as metrology and inspection systems. | |
Prior to shipment, the majority of our systems undergo a Factory Acceptance Test (FAT) in our cleanroom facilities, effectively replicating the operating conditions that will be present on the customer’s site, in order to verify whether the system meets its standard specifications and any additional technical and performance criteria agreed with the customer. | ||
A system undergoing FAT is shipped only after all contractual specifications are met or discrepancies from agreed upon specifications are waived and customer sign-off is received for delivery. Each system’s performance is re-tested through a Site Acceptance Test (SAT) after installation at the customer site. We have never failed to successfully complete installation of a system at a customer’s premises; therefore, acceptance at FAT is considered to be proven for established technologies with a history of successful customer acceptances at SAT (equal or better than FAT). | ||
Transfer of control and recognition of revenue of a system undergoing a FAT and for which customer acceptance at FAT is proven, will occur upon delivery of the system. | ||
Transfer of control and recognition of revenue of a system not undergoing a FAT or for which customer acceptance at FAT is not proven, will occur after successful installation upon customer acceptance of the system at SAT. | ||
New system sales do not meet the requirements for over time revenue recognition because our customers do not simultaneously receive and consume the benefits provided by our performance, or control the asset throughout any stage of our production process, as well as the systems are considered to have alternative use. |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 256 | |
Notes to the Consolidated Financial Statements (continued) |
Goods or services | Nature, timing of satisfying the performance obligations, and significant payment terms | |
Used systems | We have no repurchase commitments in our general sales terms and conditions, however we occasionally repurchase systems that we previously manufactured and sold, in order to refurbish and resell the system to a different customer. This repurchase decision is mainly driven by market demand expressed by other customers. | |
Transfer of control of a used system, and recognition of revenue, follow the same logic as for our “New systems (established technologies)”. | ||
Field upgrades and options (system enhancements) | Field upgrades and options mainly relate to goods and services that are delivered for systems already installed in the customer factories. Certain upgrades require significant installation efforts, enhancing an asset the customer controls, therefore resulting in transfer of control over the period of installation, measured using the cost incurred method which is estimated using labor hours, as this best depicts the satisfaction of our obligation in transferring control. For the options and other upgrades for which the customer receives and consumes the benefit at the moment of delivery, the transfer of control and recognition of revenue will occur upon delivery. | |
As long as we are not able to make a reliable estimate of the total efforts needed to complete the upgrade, we only recognize revenue to cover costs incurred. Margin will be realized at the earlier of us being able to make a reliable estimate or completion of the upgrade. | ||
New product introduction | We sell new products and services, which are evolutions of our existing technologies. If installation is determined not to be a separate performance obligation or if there is not a sufficient established history of acceptance on FAT, the product is determined to be a “new product introduction”. | |
New product introductions are typically newly developed options to be used within our systems. Transfer of control and revenue recognition for new product introductions occurs after successful installation and customer acceptance at SAT. Once there is an established history of successful installation and customer acceptance, revenue will be recognized consistent with other systems and goods after transfer of control. | ||
Installation | Installation is provided within the selling price of a system. Installation is considered to be distinct as it does not significantly modify the system being purchased and the customer or a third party could be capable of performing the installation themselves, if desired. Transfer of control takes place over the period of installation from delivery through SAT, measured on a straight-line basis, as our performance is satisfied evenly over this period of time. Installation is not considered to be distinct when recognition of revenue related to a system occurs upon customer acceptance of the system at SAT after installation is complete. | |
Warranties | We provide standard warranty coverage on our systems for and non-consumable parts necessary to repair our systems during these warranty periods. These standard warranties cannot be purchased and do not provide a service in addition to the general assurance the system will perform as promised. As a result, no revenue is allocated to these standard warranties. | |
Both the extended and enhanced warranties on our systems are accounted for as a separate performance obligation, with transfer of control taking place over the warranty period, measured on a straight-line basis, as this is a stand-ready obligation. |
Goods or services | Nature, timing of satisfying the performance obligations, and significant payment terms | |
Time-based licenses and related service | Time-based licenses relate to software licenses and the related service which are sold for a period of time. The licenses and the related service are not considered to be individually distinct as the support services are integral to the customer’s ability to continue to use the software license in the rapidly changing technological environment. The transfer of control takes place over the license term, measured on a straight-line basis, as our performance is satisfied evenly over this period of time. Payments are generally made in installments throughout the license term. | |
Application projects | Application projects are node transition and consulting projects which at times may be provided as free service within a volume purchase agreement. Measuring satisfaction of this performance obligation is performed through an input method based on the labor hours expended relative to the estimated total labor hours as this best depicts the transfer of control of these kind of services. | |
Service contracts | Service contracts are entered into with our customers to support our systems used in their ongoing operations during the systems life cycle, typically in the form of full-service agreements, limited manpower agreements, other labor agreements, parts availability or parts usage agreements. These services are for a specified period of time and typically have a fixed price. Control transfers over this period of time, measured on a straight-line basis, as these are stand-ready obligations. For service contracts where the price is not fixed, the transaction price has a variable component that is based on the performance of the system. | |
Billable parts and labor | Billable labor represents maintenance services to our systems installed in the customer’s factories while in operation, through purchase orders from our customer. Control over these services is transferred to the customer upon receipt of customer sign-off. | |
Billable parts represent spare parts including optical components relating to our systems installed in the customer’s factories while in operation, through purchase orders from our customer. | ||
Billable parts can be: | ||
•Sold as direct spare parts, for which control transfers point in time upon delivery; or | ||
•Sold as part of maintenance services, where control transfers point in time upon receipt of customer sign-off. | ||
Field projects (relocations) | Field projects represent mainly relocation services. Measuring satisfaction of this performance obligation is performed through an input method based on the labor hours expended relative to the estimated total labor hours as this best depicts the transfer of control of our service. | |
OnPulse Maintenance | OnPulse maintenance services are provided over a specified period of time on our light source systems. Payment is determined by the number of pulses counted from each light source system, which is variable. Invoicing is monthly based on the pulses counted. Revenue is recognized in line with invoicing using the practical expedient in ASC 606-10-55-18. |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 257 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 | Net system sales in units | Net system sales in € millions |
2023 | ||
NXE | ||
ArFi | ||
ArF dry | ||
KrF | ||
I-line | ||
Metrology & Inspection | ||
Total | ||
2022 | ||
NXE | ||
ArFi | ||
ArF dry | ||
KrF | ||
I-line | ||
Metrology & Inspection | ||
Total | ||
2021 | ||
NXE | ||
ArFi | ||
ArF dry | ||
KrF | ||
I-line | ||
Metrology & Inspection | ||
Total |
Year ended December 31 | Net system sales in units | Net system sales in € millions |
2023 | ||
Logic | ||
Memory | ||
Total | ||
2022 | ||
Logic | ||
Memory | ||
Total | ||
2021 | ||
Logic | ||
Memory | ||
Total |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 258 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2022 | 2023 | |||
Contract Assets | Contract Liabilities | Contract Assets | Contract Liabilities | ||
Balance at beginning of the year | |||||
Transferred from contract assets to accounts receivables | ( | — | ( | — | |
Revenue recognized during the year ending in contract assets | — | — | |||
Revenue recognized that was included in contract liabilities | — | ( | — | ( | |
Changes as a result of cumulative catch-up adjustments arising from changes in estimates | — | ( | — | ( | |
Remaining performance obligations for which considerations have been received, or for which we have an unconditional right to consideration | — | — | |||
Transfer between contract assets and liabilities | |||||
Other | — | — | — | ( | |
Total |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
New systems | ||||
Used systems | ||||
Net system sales |
Year ended December 31 (€, in millions) | Total net sales | Long-lived assets |
2023 | ||
Japan | ||
South Korea | ||
Singapore | ||
Taiwan | ||
China | ||
Rest of Asia | ||
Netherlands | ||
EMEA | ||
United States | ||
Total |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 259 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | Total net sales | Long-lived assets |
2022 | ||
Japan | ||
South Korea | ||
Singapore | ||
Taiwan | ||
China | ||
Rest of Asia | ||
Netherlands | ||
EMEA | ||
United States | ||
Total | ||
2021 | ||
Japan | ||
South Korea | ||
Singapore | ||
Taiwan | ||
China | ||
Rest of Asia | ||
Netherlands | ||
EMEA | ||
United States | ||
Total |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 260 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
Deposits with financial institutions, governments and government-related bodies | |||
Investments in money market funds | |||
Bank accounts | |||
Cash and cash equivalents | |||
Deposits with financial institutions, governments and government-related bodies | |||
Short-term investments |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
Accounts receivable, gross | |||
Allowance for credit losses | ( | ||
Accounts receivable, net |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
Finance receivables, gross | |||
Unearned interest | |||
Finance receivables, net | |||
Current portion of finance receivables, gross | |||
Current portion of unearned interest | |||
Non-current portion of finance receivables, net |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 261 | |
Notes to the Consolidated Financial Statements (continued) |
(€, in millions) | Amount |
2024 | |
2025 | |
2026 | |
2027 | |
2028 | |
Thereafter | |
Finance receivables, gross |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
Raw materials | |||
Work-in-process | |||
Finished products | |||
Inventories, gross | |||
Inventory reserves | ( | ( | |
Inventories, net |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
Balance at beginning of year | ( | ( | |
Additions for the year | ( | ( | |
Effect of changes in exchange rates | ( | ||
Utilization of the reserve | |||
Balance at end of year | ( | ( |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 262 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
Advance payments to Carl Zeiss SMT GmbH1 | |||
Prepaid expenses | |||
Derivative financial instruments2 | |||
VAT receivable | |||
Other assets | |||
Other current assets | |||
Advance payments to Carl Zeiss SMT GmbH1 | |||
Prepaid expenses | |||
Derivative financial instruments2 | |||
Compensation plan assets | |||
Other assets | |||
Other non-current assets |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 263 | |
Notes to the Consolidated Financial Statements (continued) |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 264 | |
Notes to the Consolidated Financial Statements (continued) |
Category | Estimated useful life |
Brands | |
Intellectual property | |
Developed technology | |
Customer relationships | |
Other |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 265 | |
Notes to the Consolidated Financial Statements (continued) |
€, in millions | Brands | Intellectual property | Developed technology | Customer relationships | Other | Total |
Cost | ||||||
Balance at January 1, 2022 | ||||||
Additions | ||||||
Disposals | ( | ( | ||||
Effect of changes in exchange rates | ||||||
Balance at December 31, 2022 | ||||||
Additions | ||||||
Disposals | ( | ( | ||||
Effect of changes in exchange rates | ( | ( | ||||
Balance at December 31, 2023 | ||||||
Accumulated amortization | ||||||
Balance at January 1, 2022 | ||||||
Amortization | ||||||
Impairment charges | ||||||
Disposals | ( | ( | ||||
Effect of changes in exchange rates | ||||||
Balance at December 31, 2022 | ||||||
Amortization | ||||||
Impairment charges | ||||||
Disposals | ( | ( | ||||
Effect of changes in exchange rates | ( | ( | ||||
Balance at December 31, 2023 | ||||||
Carrying amount | ||||||
December 31, 2022 | ||||||
December 31, 2023 |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 266 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Cost of Sales | ||||
R&D Costs | ||||
SG&A | ||||
Total Amortization |
€, in millions | Amount |
2024 | |
2025 | |
2026 | |
2027 | |
2028 | |
Thereafter | |
Total |
Category | Estimated useful life |
Buildings | |
Machinery and equipment | |
Leasehold improvements | |
Furniture, fixtures and other |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 267 | |
Notes to the Consolidated Financial Statements (continued) |
€, in millions | Land and buildings | Machinery and equipment | Leasehold improvements | Furniture, fixtures and other | Total |
Cost | |||||
Balance at January 1, 2022 | |||||
Additions | |||||
Disposals | ( | ( | ( | ( | ( |
Net non-cash movements to/from Inventories | |||||
Effect of changes in exchange rates | ( | ( | ( | ( | |
Balance at December 31, 2022 | |||||
Additions | |||||
Disposals | ( | ( | ( | ( | ( |
Net non-cash movements to/from Inventories | ( | ( | |||
Effect of changes in exchange rates | ( | ( | ( | ( | ( |
Balance at December 31, 2023 | |||||
Accumulated depreciation and impairment | |||||
Balance at January 1, 2022 | |||||
Depreciation | |||||
Impairment charges | |||||
Disposals | ( | ( | ( | ( | ( |
Net non-cash movements to/from Inventories | ( | ( | |||
Effect of changes in exchange rates | ( | ( | ( | ( | ( |
Balance at December 31, 2022 | |||||
Depreciation | |||||
Impairment charges | |||||
Disposals | ( | ( | ( | ( | ( |
Net non-cash movements to/from Inventories | ( | ( | |||
Effect of changes in exchange rates | ( | ( | ( | ( | ( |
Balance at December 31, 2023 |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 268 | |
Notes to the Consolidated Financial Statements (continued) |
€, in millions | Land and buildings | Machinery and equipment | Leasehold improvements | Furniture, fixtures and other | Total |
Carrying amount | |||||
December 31, 2022 | |||||
December 31, 2023 |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Cost of Sales | ||||
R&D Costs | ||||
SG&A | ||||
Total Depreciation |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 269 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
Properties | |||
Cars | |||
Warehouses | |||
Other | |||
Right-of-use assets |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
Current | |||
Non-current | |||
Lease liabilities |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Properties | ||||
Cars | ||||
Warehouses | ||||
Other | ||||
Lease expenses |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Total cash flows |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Weighted average remaining lease term (months) | ||||
Weighted average discount rate (%) |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 270 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
Costs to be paid1 | |||
Personnel-related items | |||
Derivative financial instruments2 | |||
Operating lease liabilities3 | |||
Provisions | |||
Standard warranty reserve | |||
Other | |||
Accrued and other liabilities | |||
Less: non-current portion of accrued and other liabilities | |||
Current portion of accrued and other liabilities |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
Balance at beginning of year | |||
Additions for the year | |||
Utilization of the reserve | ( | ( | |
Effect of exchange rates | ( | ||
Balance at end of year |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 271 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
€ September 19th 2023 interest annually payable on September 19th | |||
€ interest annually payable on July 7th | |||
€ 2027 interest annually payable on May 28th | |||
€ 25th 2030 interest annually payable on February 25th | |||
€ interest annually payable on May 7th | |||
€ interest annually payable on May 17th | |||
€ 2025 interest annually payable on December 6th | |||
Debt acquired from Berliner Glas (ASML Berlin GmbH) | |||
Other | |||
Long-term debt | |||
Less: current portion of long-term debt | |||
Non-current portion of long-term debt |
€, in millions | Amount |
2024 | |
2025 | |
2026 | |
2027 | |
2028 | |
Thereafter | |
Total debt maturities |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
Amortized cost amount | |||
Fair value interest rate swaps1 | ( | ( | |
Carrying amount |
Year ended December 31 (€, in millions) | 2022 | 2023 | |
Principal amount | |||
Carrying amount | |||
Fair value1 |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 272 | |
Notes to the Consolidated Financial Statements (continued) |
Payments due by period (€, in billions) | Total | 1 year | 2 years | 3 years | 4 years | 5 years | >5 years |
Long-term debt obligations, including interest1 | |||||||
Lease obligations2 | |||||||
Purchase obligations | |||||||
Total contractual obligations |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 273 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Wages and salaries | ||||
Social security expenses | ||||
Pension and retirement expenses | ||||
Share-based payments | ||||
Personnel expenses |
Average number of payroll employees in FTEs | 2021 | 2022 | 2023 | |
Netherlands | ||||
Worldwide (including Netherlands) |
Year ended December 31 (in FTE) | 2021 | 2022 | 2023 | |
Customer Support | ||||
Manufacturing and Supply Chain Management | ||||
Strategic Supply Management | ||||
General and Administrative | ||||
Sales and Mature Products and Services | ||||
Research and Development | ||||
Total | ||||
Less: Temporary employees | ||||
Payroll employees |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Board of Management | ||||
Former Board of Management | ||||
Other employees | ||||
Total STI bonus expenses |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 274 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Pension plan based on multi-employer union plan | ||||
Pension plans based on defined contribution and other plans | ||||
Pension and retirement expenses |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 275 | |
Notes to the Consolidated Financial Statements (continued) |
LTI performance plan criteria | Market/Non-Market element | Weight |
Relative TSR | Market | |
Strategic value drivers | Non-Market | |
Technology Leadership Index | Non-Market | |
ESG Measures | Non-Market | |
Total |
Year ended December 31 | 2021 | 2022 | 2023 | |
Share price in € at grant date | ||||
Expected volatility ASML | ||||
Expected volatility PHLX index | n/a | n/a | ||
Average volatility of the peer group (market practice) | n/a | |||
Vesting period | ||||
Dividend yield | ||||
Risk free interest rate (Eurozone) | ( | |||
Risk free interest rate (US) |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 276 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Total incurred expenses | ||||
Recognized income tax benefit (excluding excess income tax benefits) | ||||
Total expected expenses in future periods | ||||
Weighted average period in which these expected expenses are to be recognized |
EUR-denominated | USD-denominated | |||||||
Year ended December 31 | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | ||
Total fair value at vesting date of shares vested during the year (in millions) | ||||||||
Weighted average fair value of shares granted |
EUR-denominated | USD-denominated | |||
Number of shares | Weighted average fair value at grant date | Number of shares | Weighted average fair value at grant date | |
Conditional shares outstanding at January 1, 2023 | ||||
Granted | ||||
Vested | ( | ( | ||
Forfeited | ( | ( | ||
Conditional shares outstanding at December 31, 2023 |
EUR-denominated | USD-denominated | |||||||
Year ended December 31 | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | ||
Weighted average share price at the exercise date of stock options | ||||||||
Aggregate intrinsic value of stock options exercised (in millions) | ||||||||
Weighted average remaining contractual term of currently exercisable options (in years) | ||||||||
Aggregate intrinsic value of exercisable stock options (in millions) | ||||||||
Aggregate intrinsic value of outstanding stock options (in millions) |
EUR-denominated | USD-denominated | |||
Number of options | Weighted average exercise price per ordinary share (EUR) | Number of options | Weighted average exercise price per ordinary share (USD) | |
Outstanding, January 1, 2023 | ||||
Granted1 | ||||
Exercised | ( | ( | ||
Forfeited | ||||
Expired | ( | |||
Outstanding, December 31, 2023 | ||||
Exercisable, December 31, 2023 |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 277 | |
Notes to the Consolidated Financial Statements (continued) |
EUR-denominated | USD-denominated | ||||
Range of exercise prices (€) | Number of outstanding options | Weighted average remaining contractual life of outstanding (years) | Range of exercise prices (USD) | Number of outstanding options | Weighted average remaining contractual life of outstanding (years) |
Total | Total |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 278 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Netherlands | ||||
Foreign | ||||
Income before income taxes | ||||
Income tax (expense) / benefit current | ( | ( | ( | |
Income tax (expense) / benefit deferred | ( | ( | ( | |
Income tax (expense) / benefit Netherlands | ( | ( | ( | |
Income tax (expense) / benefit current | ( | ( | ( | |
Income tax (expense) / benefit deferred | ||||
Income tax (expense) / benefit Foreign | ( | ( | ( | |
Total income tax (expense) / benefit current | ( | ( | ( | |
Total income tax (expense) / benefit deferred | ||||
Total income tax (expense) / benefit | ( | ( | ( |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Current year tax (expense) / benefit | ( | ( | ( | |
Prior year tax (expense) / benefit | ( | ( | ||
Total current tax (expense) / benefit | ( | ( | ( |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Changes to recognition of operating losses and tax credits | ( | ( | ||
Prior year tax (expense) / benefit | ( | ( | ||
Tax rate changes | ( | |||
Origination and reversal of temporary differences, operating losses and tax credits | ||||
Total deferred tax (expense) / benefit |
Year ended December 31 (€, in millions) | 2021 | %1 | 2022 | %1 | 2023 | %1 | |
Income before income taxes | |||||||
Income tax expense based on ASML’s domestic rate | ( | ( | ( | ||||
Effects of tax rates in foreign jurisdictions | ( | ( | ( | ||||
Adjustments in respect of tax-exempt income | |||||||
Adjustments in respect of tax incentives | ( | ( | ( | ||||
Adjustments in respect of prior years’ current taxes | ( | ( | ( | ||||
Adjustments in respect of prior years’ deferred taxes | ( | ( | ( | ||||
Movements in the liability for unrecognized tax benefits | ( | ( | ( | ||||
Tax effects in respect of acquisition/restructuring related items | ( | ||||||
Change in valuation allowance | ( | ( | |||||
Equity method investments | ( | ( | ( | ||||
Effect of change in tax rates | ( | ( | |||||
Other (credits) and non-tax deductible items | ( | ( | |||||
Income tax expense | ( | ( | ( |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 279 | |
Notes to the Consolidated Financial Statements (continued) |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 280 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Liability for unrecognized tax benefits | ( | ( | ( | |
Deferred tax assets | ||||
Deferred tax liabilities | ( | ( | ( | |
Deferred and other tax assets (liabilities) |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 281 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Balance as at January 1 | ( | ( | ( | |
Gross increases – tax positions in prior period | ( | ( | ( | |
Gross decreases – tax positions in prior period | ||||
Gross increases – tax positions in current period | ( | ( | ( | |
Settlements | ||||
Lapse of statute of limitations | ||||
Effect of changes in exchange rates | ( | ( | ||
Total liability for unrecognized tax benefits | ( | ( | ( | |
Balance of accrued interest and penalties | ( | ( | ( | |
Total liabilities for unrecognized tax benefits including interest and penalties | ( | ( | ( |
Country | Years |
Netherlands | 2020-2023 |
US | 2017-2023 |
Taiwan | 2018-2023 |
South Korea | 2019-2023 |
China | 2013-2023 |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 282 | |
Notes to the Consolidated Financial Statements (continued) |
Deferred taxes (€, in millions) | January 1, 2023 | Credits and other | Consolidated Statements of Operations | Effect of changes in exchange rates | December 31, 2023 | |
Deferred tax assets: | ||||||
Capitalized R&D expenditures | — | ( | ( | |||
Goodwill | — | — | ||||
R&D & other tax credit carry forwards | ( | ( | ||||
Inventories | — | ( | ||||
Contract liabilities | — | ( | ||||
Accrued and other liabilities1 | — | ( | ||||
Operating loss carry forwards | — | ( | ||||
Property, plant and equipment | — | ( | ||||
Lease liabilities | — | ( | ||||
Other intangible assets | — | ( | — | |||
Share-based payments | — | ( | ||||
Other temporary differences | — | ( | ||||
Total deferred tax assets, gross | ( | ( | ||||
Valuation allowance2 | ( | — | ( | |||
Total deferred tax assets, net | ( | ( | ||||
Deferred tax liabilities: | ||||||
Other intangible assets | ( | — | ( | |||
Goodwill | ( | — | ( | — | ( | |
Inventories | — | ( | ( | |||
Right-of-use assets | ( | — | ( | ( | ||
Property, plant and equipment | ( | — | ( | ( | ||
Accrued and other liabilities | — | ( | — | ( | ||
Contract liabilities | ( | — | ( | ( | ||
Long-term debt | ( | — | ( | — | ( | |
Other temporary differences | ( | — | ( | ( | ||
Total deferred tax liabilities | ( | ( | ( | |||
Net deferred tax assets (liabilities) | ( | ( | ||||
Classified as: | ||||||
Deferred tax assets – non-current | ||||||
Deferred tax liabilities – non-current | ( | ( | ||||
Net deferred tax assets (liabilities) |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 283 | |
Notes to the Consolidated Financial Statements (continued) |
Deferred taxes (€, in millions) | January 1, 2022 | Credits and other | Consolidated Statements of Operations | Income tax recognized in Other Comprehensive Income | Effect of changes in exchange rates | December 31, 2022 | |
Deferred tax assets: | |||||||
Capitalized R&D expenditures | — | — | |||||
R&D & other tax credit carry forwards | — | ||||||
Inventories | — | — | |||||
Contract liabilities | — | — | ( | ||||
Accrued and other liabilities1 | — | — | |||||
Operating loss carry forwards | — | ( | — | ( | |||
Property, plant and equipment | — | — | ( | ||||
Lease liabilities | — | — | |||||
Other intangible assets | — | ( | — | — | |||
Share-based payments | — | — | |||||
Other temporary differences | — | ( | ( | ||||
Total deferred tax assets, gross | ( | ||||||
Valuation allowance2 | ( | — | ( | — | ( | ( | |
Total deferred tax assets, net | ( | ||||||
Deferred tax liabilities: | |||||||
Other intangible assets | ( | — | — | ( | ( | ||
Goodwill | ( | — | ( | — | — | ( | |
Right-of-use assets | ( | — | ( | — | ( | ( | |
Property, plant and equipment | ( | — | — | ( | ( | ||
Contract liabilities | ( | — | ( | — | — | ( | |
Long-term debt | ( | — | — | — | — | ( | |
Other temporary differences | ( | — | ( | ( | ( | ||
Total deferred tax liabilities | ( | ( | ( | ( | ( | ||
Net deferred tax assets (liabilities) | ( | ||||||
Classified as: | |||||||
Deferred tax assets – non-current | |||||||
Deferred tax liabilities – non-current | ( | ( | |||||
Net deferred tax assets (liabilities) |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 284 | |
Notes to the Consolidated Financial Statements (continued) |
Type of shares | Number of shares | Nominal value | Votes per share |
Cumulative preference shares | € | ||
Ordinary shares | € |
Year ended December 31 | 2021 | 2022 | 2023 | |
Issued ordinary shares with nominal value of € | ||||
Issued ordinary treasury shares with nominal value of € | ||||
Total issued ordinary shares with nominal value of € |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 285 | |
Notes to the Consolidated Financial Statements (continued) |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 286 | |
Notes to the Consolidated Financial Statements (continued) |
Period | Total number of shares purchased | Average price paid per Share (€) | Total number of shares purchased under programs | Maximum value of shares that may yet be purchased (€ millions) |
January 1 - 31, 2023 | ||||
February 1 - 28, 2023 | ||||
March 1 - 31, 2023 | ||||
April 1 - 30, 2023 | ||||
May 1 - 31, 2023 | ||||
June 1 - 30, 2023 | ||||
July 1 - 31, 2023 | ||||
August 1 - 31, 2023 | ||||
September 1 - 30, 2023 | ||||
October 1 - 31, 2023 | ||||
November 1 - 30, 2023 | ||||
December 1 - 31, 2023 | ||||
Total |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 287 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions, except per share data) | 2021 | 2022 | 2023 | |
Net income | ||||
Weighted average number of shares outstanding | ||||
Basic net income per ordinary share | ||||
Weighted average number of shares outstanding | ||||
Plus shares applicable to options and conditional shares | ||||
Diluted weighted average number of shares | ||||
Diluted net income per ordinary share |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 288 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2022 | 2023 | |||
Impact on net income | Impact on equity | Impact on net income | Impact on equity | ||
US dollar | ( | ||||
Japanese yen | ( | ( | ( | ( | |
Taiwanese dollar | ( | ||||
Other currencies | ( | ( | |||
Total | ( | ( |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 289 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2022 | 2023 | |||
Impact on net income | Impact on equity | Impact on net income | Impact on equity | ||
Effect of a |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 290 | |
Notes to the Consolidated Financial Statements (continued) |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 291 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2022 | 2023 | |||
Notional amount | Fair Value | Notional amount | Fair Value | ||
Forward foreign exchange contracts | ( | ( | |||
Interest rate swaps | ( | ( |
Year ended December 31 (€, in millions) | 2022 | 2023 | |||
Assets | Liabilities | Assets | Liabilities | ||
Interest rate swaps — fair value hedges | |||||
Forward foreign exchange contracts — cash flow hedges | |||||
Forward foreign exchange contracts — no hedge accounting | |||||
Total | |||||
Less non-current portion: | |||||
Interest rate swaps — fair value hedges | |||||
Total non-current portion | |||||
Total current portion |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 292 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31, 2023 (€, in millions) | Level 1 | Level 2 | Level 3 | Total | |
Assets measured at fair value | |||||
Derivative financial instruments1 | |||||
Money market funds2 | |||||
Short-term investments3 | |||||
Total | |||||
Liabilities measured at fair value | |||||
Derivative financial instruments1 | |||||
Assets and Liabilities for which fair values are disclosed | |||||
Loan receivable | |||||
Long-term debt4 |
Year ended December 31, 2022 (€, in millions) | Level 1 | Level 2 | Level 3 | Total | |
Assets measured at fair value | |||||
Derivative financial instruments1 | |||||
Money market funds2 | |||||
Short-term investments3 | |||||
Total | |||||
Liabilities measured at fair value | |||||
Derivative financial instruments1 | |||||
Assets and Liabilities for which fair values are disclosed | |||||
Loan receivable | |||||
Long-term debt4 |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 293 | |
Notes to the Consolidated Financial Statements (continued) |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 294 | |
Notes to the Consolidated Financial Statements (continued) |
Year ended December 31 (€, in millions) | 2022 | 2023 | Maximum exposure to loss | |
Advance payments included in Other assets | ||||
Advance payments included in Property, plant and equipment | ||||
Loan receivable | ||||
Investment agreement for | ||||
Accounts receivable | ||||
Accounts payable | ||||
Cost to be paid included in Accrued and other liabilities |
Year ended December 31 (€, in millions) | 2021 | 2022 | 2023 | |
Total purchases |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 295 | |
Notes to the Consolidated Financial Statements (continued) |
ASML ANNUAL REPORT 2023 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 296 | |
Notes to the Consolidated Financial Statements (continued) |
ASML ANNUAL REPORT 2023 | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 297 |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL STATEMENTS | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 298 | |
Assurance Report of the Independent Auditor |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 299 | |
Assurance Report of the Independent Auditor (continued) |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 300 | |
About the non-financial information |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 301 | |
About the non-financial information (continued) |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 302 | |
About the non-financial information (continued) |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 303 | |
About the non-financial information (continued) |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 304 | |
About the non-financial information (continued) |
(Sub)section Annual Report | Scope | ||
Supporting our customers | ASML worldwide, excluding Cymer and Berliner Glas (ASML Berlin GmbH) NOTE: Techinsights ASML only | ||
How we innovate | ASML worldwide | ||
Financial performance | |||
Financial PIs | ASML worldwide | ||
Energy efficiency and climate action | |||
Scope 1 and 2 emissions from our own operations – Manufacturing and buildings | ASML locations above 250 FTE (based on assessment 2019/2020) | ||
Scope 3 emissions from our own operations – Business travel and commuting and supply chain (including logistics) | ASML worldwide: except categories 8, 9, 10, 13, 14 and 15 | ||
Scope 3 emissions from product use at our customers | ASML products that reached a certain stage of maturity and have been measured (excluding Cymer lasers sold with non-ASML lithography systems) | ||
Circular economy | |||
Prevent waste | ASML locations above 250 FTE (based on assessment 2019/2020) | ||
Extend the lifetime of our products | ASML products, excluding YieldStar and SBI/MBI metrology tools | ||
Reuse parts | ASML worldwide, excluding Cymer, HMI and Berliner Glas (ASML Berlin GmbH) | ||
Recycle materials | ASML locations above 250 FTE (based on assessment 2019/2020) | ||
Water management | ASML locations above 250 FTE (based on assessment 2019/2020), except for Total ultrapure water consumption and Total water recycled and reused, which is Veldhoven (NL), Linkou (TW) and HMI Tainan (TW) only |
Attractive workplace for all | |||
Inspiring a unified culture | ASML worldwide, excluding Berliner Glas (ASML Berlin GmbH), except for we@ASML results, which include ASML Berlin GmbH | ||
Providing the best employee experience | ASML worldwide, excluding Berliner Glas (ASML Berlin GmbH) NOTE: The scope for indicator Open positions filled by internal candidates (in %) includes only open positions for which a formal vacancy has been created. The scope for we@ASML survey results includes ASML Berlin GmbH, except for male/female split | ||
Enabling strong leadership | ASML worldwide, excluding Berliner Glas (ASML Berlin GmbH) except for the we@ASML survey results, which includes ASML Berlin GmbH | ||
Ensuring employee health and safety | ASML worldwide, excluding Berliner Glas (ASML Berlin GmbH) | ||
Responsible supply chain | |||
Responsible supply chain | ASML worldwide, excluding Berliner Glas (ASML Berlin GmbH) except for Responsible Business Alliance (RBA) risk assessment, where Cymer and HMI is also excluded | ||
Innovation ecosystem | |||
Public-private partnerships | ASML worldwide | ||
Partnerships with academia and research institutes | ASML worldwide | ||
Supporting startups and scaleups | ASML Netherlands | ||
Valued partner in our communities | |||
Community engagement program | ASML worldwide -Volunteering hours for technology promotion (ASML Netherlands only) -Volunteering hours for community engagement (excludes Berliner Glas (ASML Berlin GmbH) and HMI) | ||
ESG integrated governance | |||
Business ethics and Code of Conduct | ASML worldwide | ||
Product safety | ASML worldwide, excluding HMI | ||
Rest | ASML worldwide | ||
ASML ANNUAL REPORT 2023 | NON-FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 305 | |
About the non-financial information (continued) |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL STATEMENTS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 306 | |
About the non-financial information (continued) |
Supporting customers | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Overall loyalty score (customer feedback survey) | n/a | 78.3% | 86.0% | The survey takes place every year since 2023. A new weighting methodology has been applied in 2023. If we apply the same methodology for the 2022 survey, the score would have been 78.8%. | ||
TechInsights | The yearly overall customer satisfaction rate compared to competitors and industry peers. | |||||
Large suppliers of chipmaking equipment – score (scale 0 to 10) | 9.2 | 9.4 | 9.4 | |||
Suppliers of fab equipment – score (scale 0 to 10) | 9.2 | 9.4 | 9.4 | |||
Technical leadership for lithography equipment – score (scale 0 to 10) | 9.5 | 9.8 | 9.7 |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 307 | |
Non-financial indicators |
Energy efficiency and climate action – Energy | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Energy consumption (in TJ) | 1,689 | 1,633 | 1,729 | |||
Energy savings worldwide through projects (in TJ) | 13 | 32 | 47 | We started a new master plan period for 2021-2025 with a target to achieve 100 TJ annual energy savings by the end of 2025. The savings are realized by projects resulting in improved technical installation or by projects resulting in an improved production process. Types of energy included in savings: fuel and electricity. The savings reported are cumulated compared with the base year; therefore, they are not comparable between years. | ||
Energy intensity (TJ per €m revenue) | n/a | 0.08 | 0.06 | The denominator is revenue and the numerator represents total energy consumption within the organization made up of total electricity consumption (in TJ) and fossil fuels (natural gas) consumption (in TJ). | ||
Energy consumption outside of the organization (in TJ) | n/a | 94,053 | 115,420 | The 2023 figure includes nine months of actual data and three months of estimates. The 2022 figure has been adjusted with data for the entire year (93,962 TJ best estimate in the 2022 Annual Report) and excludes indirect climate change effects of air travel (radiative forcing). | ||
Electricity purchased per location (in TJ) | ||||||
Veldhoven | 881 | 837 | 899 | |||
Wilton | 120 | 130 | 140 | |||
Linkou | 34 | 34 | 35 | |||
San Diego | 176 | 188 | 187 | |||
San Jose | 28 | 25 | 27 | |||
Tainan | 36 | 43 | 44 | |||
Other | 47 | 50 | 53 | Other includes the locations with more than 250 FTE combined (based on assessment 2019/2020). | ||
Total | 1,322 | 1,307 | 1,385 | |||
Fossil fuels consumed from non-renewable sources (in TJ)1 | Fossil fuels consumed consists of only natural gas. | |||||
Veldhoven | 184 | 149 | 160 | |||
Wilton | 127 | 121 | 125 | |||
Linkou | — | — | — | No natural gas is used by this manufacturing location. | ||
San Diego | 43 | 43 | 44 | |||
San Jose | 5 | 6 | 8 | |||
Tainan | — | — | — | No natural gas is used by this manufacturing location. | ||
Other | 8 | 7 | 7 | Other includes the locations with more than 250 FTE combined (based on assessment 2019/2020). | ||
Total | 367 | 326 | 344 | |||
Fuels consumed from renewable sources (in TJ) | — | — | — |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 308 | |
Non-financial indicators (continued) |
Energy efficiency and climate action – CO2e emissions | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Scope 1 CO2 emissions (in kt) | 19.3 | 17.3 | 19.2 | |||
Scope 2 CO2 emissions (in kt) – Market-based | 20.1 | 20.8 | 15.9 | |||
Scope 3 - Category 1 Purchased goods and services | 3,305.0 | 3,928.0 | 4,459.9 | |||
Scope 3 - Category 2 Capital goods | 463.0 | 482.0 | 621.1 | |||
Scope 3 - Category 3 Fuel- and energy related activities | 8.0 | 8.0 | 8.8 | |||
Scope 3 - Category 4 Upstream transportation and distribution | 254.0 | 354.0 | 367.3 | |||
Scope 3 - Category 5 Waste generated in operations | 1.0 | 1.0 | 1.3 | |||
Scope 3 - Category 6 Business travel | 20.0 | 69.0 | 69.8 | Excluding indirect climate change effects of air travel (radiative forcing) and taking into account purchases of SAF. | ||
Scope 3 - Category 7 Employee commuting | 20.0 | 41.0 | 54.4 | |||
Scope 3 - Category 11 Use of sold products | 7,355.0 | 7,053.1 | 9,442.4 | |||
Scope 3 - Category 12 End-of-life treatment of sold products | 0.2 | 0.2 | 0.2 | |||
Scope 3 CO2 emissions (in kt) | 11,426.2 | 11,936.3 | 15,025.2 | The 2023 figure includes nine months of actual data and three months of estimates. The 2022 figure has been adjusted with data for the entire year (11,900 kt best estimate in the 2022 Annual Report). |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 309 | |
Non-financial indicators (continued) |
Energy efficiency and climate action – CO2e emissions | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Indirect climate change effects of air travel (radiative forcing) | 9.4 | 46.3 | 52.0 | In previous years, this was reported as part of our scope 3 emissions. | ||
Reduction due to purchase of SAF (kt CO2e) | 0.0 | 0.0 | 10.2 | SAF purchases reduce our total scope 3 emissions (from business travel). | ||
Emission intensity net scope 1+2+3 (in kt/€m revenue) | 0.62 | 0.57 | 0.55 | The 2023 figure includes nine months of actual data and three months of estimates. Gases included is only CO2, as the other gases are negligible. The 2022 figure has been adjusted with data for the entire year. | ||
Net emission footprint change in % (scope 1+2) – Market-based | 156% | (3)% | (8)% | |||
Scope 2 CO2e emissions (in kt) – Location-based | n/a | 192.9 | 168.1 | |||
Type of energy attribute certificates (in TJ) | ||||||
Guarantees of Origin (GOs) | 883 | 840 | 901 | |||
Renewable energy certificates (RECs) | 331 | 351 | 361 | |||
International renewable energy certificates (I-RECs) | — | 3 | 3 | |||
Total | 1,214 | 1,194 | 1,265 | |||
Reduction in GHG emissions split by (in kt) | ||||||
Scope 1 - Savings worldwide through projects | n/a | 0.16 | 0.39 | |||
Scope 2 - Savings worldwide through projects | n/a | 2.41 | 3.79 | |||
Total | n/a | 2.57 | 4.18 | The savings reported are cumulated compared with the base year; therefore, they are not comparable between years. | ||
Significant air emissions - VOC (kg) | n/a | 13,289 | 16,299 | |||
Number of significant fines and non-monetary sanctions | — | — | — | |||
The monetary value of significant fines for non-compliance with environmental laws and regulations (in € thousands) | — | — | — |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 310 | |
Non-financial indicators (continued) |
Circular economy – Waste management | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Total waste generated (in 1,000 kg)1 & 2 | ||||||
Total non-hazardous waste | 5,284 | 6,295 | 7,821 | |||
Total hazardous waste | 395 | 380 | 458 | |||
Total construction waste | 199 | 238 | 653 | |||
Total | 5,878 | 6,913 | 8,932 | Total waste is treated offsite, no waste treatment onsite. | ||
Total waste by disposal (in 1,000 kg)1 | ||||||
Waste diverted from disposal | 4,544 | 5,186 | 5,125 | |||
Waste directed to disposal | 1,334 | 1,727 | 3,807 | Total waste has grown as the company has grown. This bucket has increased due to lower recycling rates reported by our waste treatment suppliers who have used different definitions in the past, and due to the improved quality of data shared with ASML. We are working with vendors and suppliers to improve the recycling rate. | ||
Total | 5,878 | 6,913 | 8,932 | |||
Waste diverted from disposal: Recycling (in 1,000 kg)1 | We apply recycling of waste. Other categories like preparation for reuse and composting are not applicable to ASML. | |||||
Total non-hazardous waste | 4,028 | 4,719 | 4,171 | |||
Total hazardous waste | 346 | 309 | 381 | |||
Total construction waste | 170 | 158 | 573 | |||
Total | 4,544 | 5,186 | 5,125 | |||
Waste directed to disposal: Incineration (with energy recovery) (in 1,000 kg)1 | ||||||
Total non-hazardous waste | 938 | 1,246 | 2,542 | Total waste has grown as the company has grown. This bucket has increased due to lower recycling rates reported by our waste treatment suppliers who have used different definitions in the past, and due to the improved quality of data shared with ASML. We are working with vendors and suppliers to improve the recycling rate. | ||
Total hazardous waste | 16 | 37 | 33 | |||
Total construction waste | 17 | 74 | 1 | |||
Total | 971 | 1,357 | 2,576 | |||
Waste directed to disposal: Incineration (without energy recovery) (in 1,000 kg)1 | ||||||
Total non-hazardous waste | 51 | 66 | 316 | |||
Total hazardous waste | 27 | 24 | 32 | |||
Total construction waste | 0 | 0 | 0 | |||
Total | 78 | 90 | 348 |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 311 | |
Non-financial indicators (continued) |
Circular economy – Waste management | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Waste directed to disposal: Landfill (in 1,000 kg)1 | ||||||
Total non-hazardous waste | 267 | 264 | 792 | |||
Total hazardous waste | 6 | 10 | 12 | |||
Total construction waste | 12 | 6 | 79 | |||
Total | 285 | 280 | 883 | |||
Total waste disposed of (% of total waste from operations)1 | ||||||
Incineration (with energy recovery) | 17% | 19% | 31% | |||
Incineration (without energy recovery) | 1% | 2% | 4% | |||
Landfill | 5% | 4% | 10% | |||
Total | 23% | 25% | 45% |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 312 | |
Non-financial indicators (continued) |
Water management | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Water consumption (in 1000 m3), split by: | ||||||
Veldhoven | 728 | 834 | 856 | |||
San Diego | 105 | 115 | 90 | |||
Wilton | 95 | 90 | 101 | |||
Linkou | 26 | 22 | 23 | |||
San Jose | 21 | 32 | 28 | |||
Tainan | 30 | 33 | 34 | |||
Other | 36 | 36 | 42 | Other includes the locations with more than 250 FTE combined (based on assessment 2019/2020). | ||
Total | 1,041 | 1,162 | 1,174 | Municipal water supply. | ||
Total ultrapure water consumption (in 1000 m3) | 84 | 86 | 99 | Only Veldhoven, Linkou and HMI Tainan are in scope for this indicator. The other locations are excluded from the scope because the data to report on the indicator is not yet available. | ||
Total water recycled and reused (in %) | 1.2% | 1.6% | 1.5% | Only Veldhoven, Linkou and HMI Tainan are in scope for this indicator. The other locations are excluded from the scope because the data to report on the indicator is not yet available. | ||
Water intensity (in 1000m3/€m revenue) | 56 | 55 | 43 | Water intensity is calculated as total water consumption (in m3) divided by total revenue (in millions). |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 313 | |
Non-financial indicators (continued) |
Attractive workplace for all – Workforce indicators1 | ||||||||||||||||
Number of FTEs (payroll and temporary) | Total ASML | Asia | EMEA | US | ||||||||||||
2021 | 2022 | 2023 | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | |||||
Payroll employees (in FTE) | 28,747 | 34,719 | 38,656 | 7,404 | 8,840 | 9,083 | 15,444 | 18,660 | 21,512 | 5,899 | 7,219 | 8,061 | ||||
Female (in %) | 18 | 19 | 20 | 17 | 18 | 18 | 18 | 20 | 21 | 17 | 19 | 19 | ||||
Male (in %) | 82 | 81 | 80 | 83 | 82 | 82 | 82 | 80 | 79 | 83 | 81 | 81 | ||||
Unknown (in %) | n/a | — | — | n/a | — | — | n/a | — | — | n/a | — | — | ||||
Temporary employees (in FTE) | 2,095 | 2,924 | 2,091 | 26 | 31 | 28 | 1,786 | 2,607 | 1,901 | 283 | 286 | 162 | ||||
Female (in %) | 18 | 19 | 20 | 19 | 23 | 14 | 20 | 20 | 22 | 8 | 2 | 2 | ||||
Male (in %) | 82 | 73 | 73 | 81 | 71 | 86 | 80 | 80 | 78 | 92 | 18 | 8 | ||||
Unknown (in %) | n/a | 8 | 7 | n/a | 6 | — | n/a | — | — | n/a | 80 | 90 | ||||
Total | 30,842 | 37,643 | 40,747 | 7,430 | 8,871 | 9,111 | 17,230 | 21,267 | 23,413 | 6,182 | 7,505 | 8,223 | ||||
Total number of FTEs (by age group) | ||||||||||||||||
<30 | 6,344 | 8,837 | 8,669 | 2,191 | 2,736 | 2,367 | 3,041 | 4,449 | 4,531 | 1,112 | 1,652 | 1,771 | ||||
30-50 | 19,058 | 22,736 | 25,488 | 4,933 | 5,778 | 6,316 | 11,007 | 13,170 | 14,801 | 3,118 | 3,788 | 4,371 | ||||
>50 | 5,158 | 5,792 | 6,430 | 305 | 355 | 425 | 3,182 | 3,647 | 4,074 | 1,671 | 1,790 | 1,931 | ||||
Unknown | 282 | 278 | 160 | 1 | 2 | 3 | — | 1 | 7 | 281 | 275 | 150 | ||||
Total | 30,842 | 37,643 | 40,747 | 7,430 | 8,871 | 9,111 | 17,230 | 21,267 | 23,413 | 6,182 | 7,505 | 8,223 | ||||
Total number of FTEs (payroll and temporary) | ||||||||||||||||
Female (in %) | 18 | 19 | 20 | n/a | 18 | 18 | n/a | 20 | 21 | n/a | 18 | 19 | ||||
Male (in %) | 82 | 80 | 80 | n/a | 82 | 82 | n/a | 80 | 79 | n/a | 79 | 79 | ||||
Unknown (in %) | n/a | 1 | — | n/a | — | — | n/a | — | — | n/a | 3 | 2 |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 314 | |
Non-financial indicators (continued) |
Attractive workplace for all – Workforce indicators1 | ||||||||||||||||
Number of payroll FTEs (split into full-time and part-time) | Total ASML | Asia | EMEA | US | ||||||||||||
2021 | 2022 | 2023 | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | |||||
Full-time payroll FTEs | ||||||||||||||||
Female (in %) | 16 | 18 | 19 | 17 | 18 | 18 | 15 | 17 | 18 | 17 | 19 | 19 | ||||
Male (in %) | 84 | 82 | 81 | 83 | 82 | 82 | 85 | 83 | 82 | 83 | 81 | 81 | ||||
Unknown (in %) | n/a | — | — | n/a | — | — | n/a | — | — | n/a | — | — | ||||
Total | 26,847 | 32,635 | 36,292 | 7,401 | 8,835 | 9,078 | 13,560 | 16,594 | 19,166 | 5,886 | 7,206 | 8,048 | ||||
Number of payroll FTEs (split into full-time and part-time) | ||||||||||||||||
Part-time payroll FTEs | ||||||||||||||||
Female (in %) | 37 | 38 | 39 | — | 28 | 12 | 37 | 38 | 39 | 27 | 30 | 28 | ||||
Male (in %) | 63 | 62 | 61 | 100 | 72 | 88 | 63 | 62 | 61 | 73 | 70 | 72 | ||||
Unknown (in %) | n/a | — | — | n/a | — | — | n/a | — | — | n/a | — | — | ||||
Total | 1,900 | 2,084 | 2,364 | 3 | 5 | 5 | 1,884 | 2,066 | 2,346 | 13 | 13 | 13 |
Attractive workplace for all – Workforce indicators | ||||||||||||||||
Number of new hires payroll employees (in FTE) | Total ASML | Asia | EMEA | US | ||||||||||||
2021 | 2022 | 2023 | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | |||||
Number of new hires | 4,373 | 7,130 | 4,129 | 1,848 | 2,057 | 648 | 1,737 | 3,306 | 2,556 | 788 | 1,767 | 925 | ||||
New hires as a % of the total payroll employees | 15 | 21 | 11 | 25 | 23 | 7 | 11 | 18 | 12 | 13 | 25 | 12 | ||||
Gender | ||||||||||||||||
Female | 896 | 1,724 | 1,105 | 313 | 415 | 179 | 432 | 903 | 711 | 151 | 406 | 215 | ||||
Male | 3,477 | 5,400 | 3,023 | 1,535 | 1,641 | 469 | 1,305 | 2,402 | 1,844 | 637 | 1,357 | 710 | ||||
Unknown | n/a | 6 | 1 | n/a | 1 | — | n/a | 1 | 1 | n/a | 4 | — | ||||
Total | 4,373 | 7,130 | 4,129 | 1,848 | 2,057 | 648 | 1,737 | 3,306 | 2,556 | 788 | 1,767 | 925 | ||||
Age group | ||||||||||||||||
<30 | 2,392 | 3,581 | 1,684 | 1,213 | 1,321 | 308 | 783 | 1,457 | 995 | 396 | 803 | 381 | ||||
30-50 | 1,789 | 3,241 | 2,185 | 627 | 730 | 333 | 848 | 1,708 | 1,395 | 314 | 803 | 457 | ||||
>50 | 190 | 308 | 260 | 6 | 6 | 7 | 106 | 141 | 166 | 78 | 161 | 87 | ||||
Unknown | 2 | — | — | 2 | — | — | — | — | — | — | — | — | ||||
Total | 4,373 | 7,130 | 4,129 | 1,848 | 2,057 | 648 | 1,737 | 3,306 | 2,556 | 788 | 1,767 | 925 |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 315 | |
Non-financial indicators (continued) |
Attractive workplace for all – Workforce indicators | ||||||||||||||||
Employee attrition (in FTE) | Total ASML | Asia | EMEA | US | ||||||||||||
2021 | 2022 | 2023 | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | 2021 | 2022 | 2023 | |||||
Number of involuntary employee attrition1 | 199 | 226 | 352 | 41 | 34 | 59 | 101 | 119 | 202 | 57 | 73 | 91 | ||||
Number of voluntary employee attrition | 1,234 | 1,678 | 981 | 421 | 530 | 249 | 341 | 503 | 429 | 472 | 645 | 303 | ||||
Total | 1,433 | 1,904 | 1,333 | 462 | 564 | 308 | 442 | 622 | 631 | 529 | 718 | 394 | ||||
Gender | ||||||||||||||||
Female | 258 | 372 | 320 | 78 | 107 | 87 | 89 | 129 | 159 | 91 | 136 | 74 | ||||
Male | 1,175 | 1,532 | 1,013 | 384 | 457 | 221 | 353 | 493 | 472 | 438 | 582 | 320 | ||||
Unknown | n/a | — | — | n/a | — | — | n/a | — | — | n/a | — | — | ||||
Total | 1,433 | 1,904 | 1,333 | 462 | 564 | 308 | 442 | 622 | 631 | 529 | 718 | 394 | ||||
Age group | ||||||||||||||||
<30 | 337 | 516 | 343 | 143 | 220 | 98 | 69 | 121 | 141 | 125 | 175 | 104 | ||||
30-50 | 806 | 1,063 | 718 | 292 | 326 | 193 | 257 | 383 | 353 | 257 | 354 | 172 | ||||
>50 | 290 | 325 | 272 | 27 | 18 | 17 | 116 | 118 | 137 | 147 | 189 | 118 | ||||
Total | 1,433 | 1,904 | 1,333 | 462 | 564 | 308 | 442 | 622 | 631 | 529 | 718 | 394 |
Attractive workplace for all – Workforce indicators | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Workers who are not employees (in FTE)1 | n/a | 1,682 | 1,591 |
Attractive workplace for all – Employee engagement | ||||||
Engagement score we@ASML by gender | 2021 | 2022 | 2023 | Comments | ||
Female | 78.0% | 77.3% | 79.5% | This figure excludes Berliner Glas (ASML Berlin GmbH) | ||
Male | 78.0% | 78.1% | 80.7% | This figure excludes Berliner Glas (ASML Berlin GmbH) | ||
Benchmark | 76.0% | 74.0% | 75.2% |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 316 | |
Non-financial indicators (continued) |
Attractive workplace for all – Employee engagement | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Employee attrition (in %) | 5.4 | 6.0 | 3.6 | |||
Open positions filled by internal candidates (in %) | 29 | 27 | 29 |
Attractive workplace for all – Employee engagement | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Total training expenses (in € millions) | 27 | 47 | 64 | Out-of-pocket expenses for technical and non-product-related classroom trainings as recorded in MyLearning (learning management system). | ||
Average spend on training and development per FTE (€) | 1,020 | 1,491 | 1,724 | |||
Total number of training hours per FTE | Includes technical and non-product-related training hours (including nomination courses). | |||||
Female | 25 | 41 | 53 | |||
Male | 30 | 52 | 62 | |||
Unknown | n/a | 304 | 455 | |||
Weighted average | 29 | 50 | 60 | |||
Number of technical training hours per technical FTE | The number of technical training hours per FTE is calculated as the total technical training hours divided by the total payroll FTEs working in technical departments within Operations and R&D. In 2023, a new categorization took place based on the academy structure, causing a shift between technical training hours and non-product-related training hours. | |||||
Female | 22 | 41 | 34 | |||
Male | 29 | 50 | 44 | |||
Unknown | n/a | 347 | 343 | |||
Weighted average | 28 | 49 | 43 | |||
Number of non-product-related training hours per FTE | Excluding nomination courses (leadership development programs). In 2023, a new categorization took place based on the academy structure, causing a shift between technical training hours and non-product-related training hours. | |||||
Female | 8 | 11 | 25 | |||
Male | 5 | 8 | 20 | |||
Unknown | n/a | 27 | 198 | |||
Weighted average | 5 | 8 | 21 | |||
Nomination courses: Leadership development programs | ||||||
Number of training hours | 6,264 | 47,454 | 143,960 | In 2023, we saw an increase in the number of types of leadership development training. | ||
Number of employees attending (unique) | 48 | 322 | 2,517 |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 317 | |
Non-financial indicators (continued) |
Attractive workplace for all – Diversity and inclusion | |||||||||||||||||
Description | Gender | Gender ratio | Age group | Comments | |||||||||||||
Male/female in managerial positions and on Supervisory Board (in headcount)1 | Female | Male | Unknown | Total | Female | Male | Unknown | <30 | 30-50 | >50 | Unknown | Total | |||||
Supervisory Board | 4 | 5 | — | 9 | 44% | 56% | —% | — | — | 9 | — | 9 | |||||
Board of Management | — | 6 | — | 6 | —% | 100% | —% | — | 1 | 5 | — | 6 | |||||
Senior management | 96 | 712 | — | 808 | 12% | 88% | —% | — | 332 | 476 | — | 808 | |||||
Middle management | 607 | 3,318 | — | 3,925 | 15% | 85% | —% | 3 | 2,328 | 1,594 | — | 3,925 | |||||
Junior management | 387 | 1,785 | — | 2,172 | 18% | 82% | —% | 71 | 1,770 | 331 | — | 2,172 | |||||
Other | 6,781 | 25,489 | 3 | 32,273 | 21% | 79% | —% | 8,024 | 20,344 | 3,905 | — | 32,273 | |||||
Total | 7,875 | 31,315 | 3 | 39,193 | 20% | 80% | —% | 8,098 | 24,775 | 6,320 | — | 39,193 | |||||
Gender | Gender ratio | ||||||||||||||||
Male/female split by sector (in FTE) | Female | Male | Unknown | Total | Female | Male | Unknown | ||||||||||
Customer support | 1,434 | 8,304 | 8 | 9,746 | 15% | 85% | —% | ||||||||||
Manufacturing and supply chain management | 1,602 | 7,140 | 58 | 8,800 | 18% | 81% | 1% | ||||||||||
Research and development | 2,544 | 12,682 | 74 | 15,300 | 17% | 83% | —% | ||||||||||
General and administrative | 1,686 | 2,332 | 9 | 4,027 | 42% | 58% | —% | ||||||||||
Sales and mature product services | 166 | 675 | — | 841 | 20% | 80% | —% | ||||||||||
Strategic supply management | 640 | 1,390 | 3 | 2,033 | 31% | 68% | —% | ||||||||||
Total | 8,072 | 32,523 | 152 | 40,747 | 20% | 80% | —% |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 318 | |
Non-financial indicators (continued) |
Attractive workplace for all – Diversity and inclusion | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Number of nationalities working for ASML | ||||||
Asia | 33 | 40 | 40 | |||
EMEA | 108 | 124 | 126 | |||
US | 90 | 101 | 103 | |||
Worldwide total | 122 | 143 | 144 | |||
Foreign nationals working for ASML (in %) | Foreign nationals working for ASML (in %) is the percentage of payroll and temporary employees with a nationality other than the country in which the employee is working. | |||||
Asia | 5 | 5 | 4 | |||
EMEA | 33 | 38 | 39 | |||
US | 28 | 25 | 29 | |||
Worldwide total | 26 | 28 | 29 |
Attractive workplace for all – Labor relations | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Percentage of employees covered by collective bargaining agreements | 52% | 53% | 60% | Korea was added to the collective bargaining agreements in 2023, resulting in an increase in the %. |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 319 | |
Non-financial indicators (continued) |
Attractive workplace for all – Fair remuneration2 | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Ratio of base salary of women to men total1 | ||||||
Senior management | 99% | 100% | 100% | |||
Middle management | 99% | 99% | 98% | |||
Non-management | 98% | 98% | 97% | |||
Ratio of base salary of women to men Asia1 | ||||||
Senior management | n/a | 102% | 95% | |||
Middle management | n/a | 98% | 96% | |||
Non-management | n/a | 95% | 95% | |||
Ratio of base salary of women to men EMEA1 | ||||||
Senior management | n/a | 99% | 100% | |||
Middle management | n/a | 98% | 98% | |||
Non-management | n/a | 98% | 98% | |||
Ratio of base salary of women to men US1 | ||||||
Senior management | n/a | 100% | 102% | |||
Middle management | n/a | 100% | 98% | |||
Non-management | n/a | 100% | 99% | |||
Ratio of total cash of women to men total1 | ||||||
Senior management | 99% | 102% | 100% | |||
Middle management | 99% | 98% | 98% | |||
Non-management | 98% | 97% | 98% | |||
Ratio of total cash of women to men Asia1 | ||||||
Senior management | n/a | 110% | 100% | |||
Middle management | n/a | 92% | 98% | |||
Non-management | n/a | 96% | 97% | |||
Ratio of total cash of women to men EMEA1 | ||||||
Senior management | n/a | 101% | 100% | |||
Middle management | n/a | 98% | 98% | |||
Non-management | n/a | 98% | 98% |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 320 | |
Non-financial indicators (continued) |
Attractive workplace for all – Fair remuneration2 | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Ratio of total cash of women to men US1 | ||||||
Senior management | n/a | 96% | 100% | |||
Middle management | n/a | 100% | 98% | |||
Non-management | n/a | 100% | 99% | |||
Internal pay ratio (CEO versus employee remuneration)3 | 40 | 34 | 43 | For more information, see Remuneration Report. |
Attractive workplace for all – Benefits which are standard for full-time and part-time employees of the organization but are not provided to temporary employees1 | ||||
Type of employee benefit | Type of employee | |||
Full-time employees | Part-time employees | Temporary employees2 | ||
i. Life insurance3 | yes | yes | no | |
ii. Healthcare3 | yes | yes | no | |
iii. Disability and invalidity coverage3 | yes | yes | no | |
iv. Parental leave3 | yes | yes | no | |
v. Retirement provision | yes | yes | no | |
vi. Stock ownership | yes | yes | no |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 321 | |
Non-financial indicators (continued) |
Attractive workplace for all – Employee health and safety | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
ASML recordable incident rate1 | 0.17 | 0.18 | 0.21 | Includes illness and injuries. | ||
Number of recordable incidents (employees) | 48 | 63 | 83 | |||
Number of recordable incidents (contractors) | n/a | 9 | 6 | |||
Number of fatalities | — | — | — | This relates to both employees and workers who are not employees. | ||
Employees with work-related injuries split by: | ||||||
Rate of fatalities | n/a | — | — | |||
Number of recordable injuries | n/a | 48 | 70 | |||
Rate of recordable injuries | n/a | 0.14 | 0.18 | |||
Number of high-consequence injuries | n/a | 2 | 4 | |||
Rate of high-consequence injuries | n/a | 0.006 | 0.010 | |||
Main types of work-related injuries by employees (split by hazard group) | ||||||
Electrical | n/a | 1 | 3 | |||
Ergonomics | n/a | 17 | 25 | |||
Facilities | n/a | 88 | 107 | |||
Hazardous gases | n/a | — | 11 | |||
Hazardous substances & materials | n/a | 9 | 21 | |||
Hoisting & lifting | n/a | 10 | 10 | |||
Mechanical | n/a | 147 | 189 | |||
Pressure systems | n/a | 1 | 3 | |||
Radiation | n/a | — | 2 | |||
Thermal | n/a | 2 | 10 | |||
Travel | n/a | 10 | 15 | |||
Working at height | n/a | n/a | 1 | |||
# hours worked | n/a | 68,746,820 | 79,658,141 | |||
Workers who are not employees with work-related injuries split by: | ||||||
Number of recordable injuries | n/a | 8 | 6 |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 322 | |
Non-financial indicators (continued) |
Attractive workplace for all – Employee health and safety | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Number of high-consequence injuries | n/a | — | — | |||
Main types of work-related injuries by workers who are not employees (split by hazard group) | ||||||
Electrical | n/a | 1 | 1 | |||
Ergonomics | n/a | 3 | 1 | |||
Facilities | n/a | 18 | 19 | |||
Hazardous gases | n/a | — | 2 | |||
Hazardous substances & materials | n/a | 1 | 4 | |||
Hoisting & lifting | n/a | 5 | 1 | |||
Mechanical | n/a | 29 | 41 | |||
Pressure systems | n/a | 2 | — | |||
Thermal | n/a | — | 3 | |||
Travel | n/a | 1 | 2 | |||
Working at height | n/a | n/a | 1 | |||
Employees with work-related ill health split by: | ||||||
Number of fatalities | n/a | — | — | |||
Number of recordable ill-health | n/a | 15 | 13 | |||
Main types of work-related ill health by employees (split by hazard group) | ||||||
Electrical | n/a | — | — | |||
Ergonomics | n/a | 22 | 33 | |||
Facilities | n/a | 4 | 6 | |||
Hazardous substances & materials | n/a | 4 | — | |||
Hoisting & lifting | n/a | 2 | — | |||
Mechanical | n/a | 1 | — | |||
Pressure systems | n/a | 1 | — | |||
Radiation | n/a | — | 1 | |||
Workers who are not employees with work-related ill health split by: | ||||||
Number of fatalities | n/a | — | — | |||
Number of recordable ill-health | n/a | 1 | — |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 323 | |
Non-financial indicators (continued) |
Attractive workplace for all – Employee health and safety | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Main types of work-related ill health by workers who are not employees (split by hazard group) | ||||||
Ergonomics | n/a | 2 | 3 | |||
Facilities | n/a | — | 1 | |||
Hazardous gases | n/a | 1 | — | |||
Hoisting & lifting | n/a | — | 1 | |||
Mechanical | n/a | 1 | — | |||
Travel | n/a | — | 1 | |||
Working at height | n/a | n/a | 1 |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 324 | |
Non-financial indicators (continued) |
Responsible supply chain | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Suppliers assessed on sustainability (in #), split by: | ||||||
Audits | — | 2 | 16 | In 2021, the audits were put on hold due to the COVID-19 restrictions. Since October 2023, sustainability has become a full mature section in the supplier audits. | ||
RBA self-assessment questionnaire (SAQ) | 56 | 59 | 128 |
Total number of suppliers | 4,657 | 4,984 | 5,126 | |||
Number of suppliers per region | ||||||
Asia | 1,319 | 1,348 | 1,375 | |||
EMEA (excl. Netherlands) | 702 | 745 | 758 | |||
Netherlands | 1,459 | 1,584 | 1,638 | |||
North America | 1,177 | 1,307 | 1,355 | |||
Total | 4,657 | 4,984 | 5,126 | |||
Number of suppliers, split by: | ||||||
Product-related | 772 | 789 | 813 | |||
Non-product-related | 3,885 | 4,195 | 4,313 | |||
Total | 4,657 | 4,984 | 5,126 | The majority are Tier 1 suppliers. | ||
Number of suppliers, split by: | ||||||
Critical | 229 | 245 | 278 | Critical suppliers are Tier 1 suppliers of strategic importance. | ||
Non-critical | 4,428 | 4,739 | 4,848 | |||
Total | 4,657 | 4,984 | 5,126 | |||
Number of critical suppliers, split by: | ||||||
Product-related | 197 | 216 | 249 | |||
Non-product-related | 32 | 29 | 29 | |||
Total | 229 | 245 | 278 | |||
Number of suppliers in scope for risk management | 243 | 264 | 278 | This includes 26 critical Tier 2 suppliers. | ||
Total sourcing spend (in million EUR) | 9,045 | 12,402 | 15,461 | |||
Sourcing spend per supplier group (in %) | ||||||
Product-related | 70% | 69% | 69% | |||
Non-product-related | 30% | 31% | 31% | |||
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 325 | |
Non-financial indicators (continued) |
Responsible supply chain | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Proportion of spending on local suppliers (in %) | We define ‘local’ as the country in which a significant location of operation is located. The significant locations of operations are the main manufacturing sites of ASML, which are located in Veldhoven, the Netherlands; Linkou, Taiwan; San Diego and Wilton, both in the US. The manufacturing location in Tainan is immaterial for this indicator. | |||||
Veldhoven | 45% | 45% | 47% | A relatively large amount of the total supplier spend for Veldhoven relates to Carl Zeiss (non-local). | ||
Linkou | 50% | 53% | 64% | |||
San Diego | 92% | 92% | 94% | |||
Wilton | 64% | 71% | 70% |
ESG integrated governance – Business ethics | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Total number of Speak Up messages, split by: | 396 | 414 | 631 | |||
Anti-bribery & Anti-corruption Speak Up messages | 37 | 31 | 121 | One of the Speak Up messages indicated led to an indication of violation of anti-corruption laws. The matter was reviewed and appropriate actions taken. | ||
Human rights Speak Up messages | 187 | 165 | 244 | The 244 reports include all the following topics: (i) discrimination (ii) harassment (iii) diversity (iv) freedom of association (v) privacy (vi) work life balance (vii) forced and bonded labor (viii) health and safety (ix) other human rights. | ||
- of which discrimination and harassment | n/a | 106 | 117 | This covers different categories, including religious discrimination, age, gender, pregnancy and sexual orientation. |
ESG integrated governance – Product safety | ||||||
Description | 2021 | 2022 | 2023 | Comments | ||
Number of (significant) fines for non-compliance with product design related laws and regulations | — | — | — | |||
Monetary value of significant fines for non-compliance with product design related laws and regulations | — | — | — |
ASML ANNUAL REPORT 2023 | NON-FINANCIAL INDICATORS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 326 | |
Non-financial indicators (continued) |
ASML ANNUAL REPORT 2023 | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 327 |
Year ended December 31 | 2022 | 2023 | |||||
(€, in thousands) | KPMG Accountants NV | KPMG Network | Total | KPMG Accountants NV | KPMG Network | Total | |
Audit fees | 3,203 | 1,064 | 4,267 | 3,509 | 1,152 | 4,661 | |
Audit-related fees | 150 | — | 150 | 196 | — | 196 | |
Tax fees | — | — | — | — | — | — | |
All other fees | 47 | 9 | 56 | 28 | 11 | 39 | |
Principal accountant fees | 3,400 | 1,073 | 4,473 | 3,733 | 1,163 | 4,896 |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 328 | |
Appendix - Principal accountant fees and services |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 329 | |
Appendix - Property, plant and equipment |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 330 | |
Appendix - Dutch and US taxation |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 331 | |
Appendix - Dutch and US taxation (continued) |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 332 | |
Appendix - Dutch and US taxation (continued) |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 333 | |
Appendix - Dutch and US taxation (continued) |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 334 | |
Appendix - Dutch and US taxation (continued) |
Year ended December 31 (€, in millions) | 2022 | 2023 |
Deposits with financial institutions, governments and government-related bodies | 2,548.1 | 1,348.7 |
Investments in money market funds | 3,196.7 | 3,167.4 |
Bank accounts | 1,523.5 | 2,488.6 |
Cash and cash equivalents | 7,268.3 | 7,004.7 |
Deposits with financial institutions, governments and government-related bodies | 107.7 | 5.4 |
Short-term investments | 107.7 | 5.4 |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 335 | |
Appendix - Financing policy |
Cumulative cash returns (Cash return is cumulative share buyback + dividend) |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 336 | |
Appendix - Financing policy (continued) |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 337 | |
Appendix - Government regulation |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 338 | |
Appendix - Offer and listing details |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 339 | |
Appendix - Exchange controls |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 340 | |
Appendix - Documents on display |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 341 | |
Appendix - Controls and procedures |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 342 | |
Appendix - Financial calendar and investor relations |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 343 | |
Appendix - ASML contact information |
Item | Form 20-F Caption | Location in this document | Page |
Part I | |||
1 | Identity of Directors, Senior Management and Advisors | Not applicable | |
2 | Offer Statistics and Expected Timetable | Not applicable | |
3 | Key Information | ||
B. Capitalization and Indebtedness | Not applicable | ||
C. Reasons for the Offer and Use of Proceeds | Not applicable | ||
D. Risk Factors | Risk - Risk factors | ||
4 | Information on the Company | ||
A. History and Development of the Company | Cover Page | ||
At a glance | |||
Appendix - Property, plant and equipment | |||
Appendix - Documents on display | |||
Appendix - ASML contact information | |||
B. Business Overview | At a glance | ||
Marketplace | |||
Note 2 Revenue from contracts with customers | |||
Note 3 Segment disclosure | |||
Appendix - Government regulation | |||
C. Organizational Structure | Corporate Governance - Compliance with Corporate Governance requirements - Corporate Information | ||
D. Property, Plant and Equipment | Note 13 Property, plant and equipment, net | ||
Appendix - Property, plant and equipment | |||
4A | Unresolved Staff Comments | Not applicable | |
5 | Operating and Financial Review and Prospects | ||
A. Operating Results | Financial performance - Performance KPIs | ||
B. Liquidity and Capital Resources | Financial performance - Performance KPIs | ||
Financing policy | |||
Consolidated Statements of Cash Flows | |||
Note 4 Cash and cash equivalents and short-term investments | |||
Note 16 Long-term debt and interest and other costs |
Item | Form 20-F Caption | Location in this document | Page |
Note 17 Commitments and contingencies | |||
Note 25 Financial risk management | |||
C. Research and Development, Patents and Licenses, etc. | Q&A with the CTO | ||
How we innovate | |||
Financial performance - Research and development costs | |||
Innovation ecosystem | |||
Information Security - Intellectual Property protection | |||
D. Trend Information | Long-term growth opportunities | ||
Risk - Risk factors | |||
E. Critical Accounting Estimates | Consolidated Financial Statements - Notes to the Consolidated Financial Statements - Note 1 General information / summary of general accounting policies | ||
6 | Directors, Senior Management and Employees | ||
A. Directors and Senior Management | Corporate Governance | ||
B. Compensation | Remuneration Report | ||
C. Board Practices | Corporate Governance | ||
Corporate Governance – Supervisory Board Report – Supervisory Board committees | |||
D. Employees | Social - Attractive workplace for all | ||
E. Share Ownership | Corporate Governance - AGM and share capital - Major shareholders | ||
Remuneration Report - Board of Management remuneration | |||
Note 20 Share-based compensation | |||
F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation | Not applicable | ||
7 | Major Shareholders and Related Party Transactions | ||
A. Major Shareholders | Corporate Governance - AGM and share capital - Major shareholders | ||
B. Related Party Transactions | Note 26 Related parties and variable interest entities | ||
C. Interests of Experts & Counsel | Not applicable |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 344 | |
Appendix - Reference table 20-F |
Item | Form 20-F Caption | Location in this document | Page |
8 | Financial Information | ||
A. Consolidated Statements and Other Financial Information | Consolidated Financial Statements | ||
B. Significant Changes | Long-term growth opportunities | ||
Notes to the Consolidated Financial Statements | |||
9 | The Offer and Listing | ||
A. Offer and Listing Details | Appendix - Offer and listing details | ||
B. Plan of Distribution | Not applicable | ||
C. Markets | Appendix - Offer and listing details | ||
D. Selling Shareholders | Not applicable | ||
E. Dilution | Not applicable | ||
F. Expenses of the Issue | Not applicable | ||
10 | Additional Information | ||
A. Share Capital | Not applicable | ||
B. Memorandum and Articles of Association | Corporate Governance | ||
C. Material Contracts | None | ||
D. Exchange Controls | Appendix - Exchange controls | ||
E. Taxation | Appendix - Dutch and US taxation | ||
F. Dividends and Paying Agents | Not applicable | ||
G. Statement by Experts | Not applicable | ||
H. Documents on Display | Appendix - Documents on display | ||
I. Subsidiary Information | Not applicable | ||
J. Annual Report to Security Holders | Not applicable | ||
11 | Quantitative and Qualitative Disclosures About Market Risk | Note 16 Long-term debt and interest and other costs | |
Note 25 Financial risk management | |||
12 | Description of Securities Other Than Equity Securities | Appendix - Offer and listing details | |
Part II | |||
13 | Defaults, Dividend Arrearages and Delinquencies | None | |
14 | Material Modifications to the Rights of Security Holders and Use of Proceeds | None | |
15 | Controls and Procedures | Appendix - Controls and procedures |
Item | Form 20-F Caption | Location in this document | Page |
16A | Audit Committee Financial Expert | Supervisory Board Report - Supervisory Board committees - Audit Committee | |
16B | Code of Ethics | Governance - ESG integrated governance - Business ethics and Code of Conduct | |
16C | Principal Accountant Fees and Services | Appendix - Principal accountant fees and services | |
16D | Exemptions from the Listing Standards for Audit Committees | Not applicable | |
16E | Purchases of Equity Securities by the Issuer and Affiliated Purchasers | Note 22 Shareholders’ equity | |
16F | Change in Registrant’s Certifying Accountant | None | |
16G | Corporate Governance | Corporate Governance – Compliance with Corporate Governance requirements – US listing requirements | |
16H | Mine Safety Disclosure | Not applicable | |
16I | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | Not applicable | |
16J | Insider Trading Policies | Not applicable | |
16K | Cybersecurity | Risk - Risk factors | |
Governance - ESG integrated governance - Information security | |||
Part III | |||
17 | Financial Statements | Not applicable | |
18 | Financial Statements | Consolidated Financial Statements | |
19 | Exhibits | Exhibit index |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 345 | |
Appendix - Reference table 20-F (continued) |
ASML ANNUAL REPORT 2023 | OTHER APPENDICES CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 346 | |
Appendix - Special note regarding emission targets |
Name | Description | |
0-9 | ||
3TG | Tin, tantalum, tungsten and gold | |
3D NAND | A type of non-volatile flash memory in which the memory cells are stacked vertically in multiple layers. | |
A | ||
A&M | Access & Mobility | |
ABC compliance review | Anti-bribery and corruption compliance review | |
ADAS | Advanced driver-assistance systems | |
ADI | After development inspection | |
AFM | The Dutch Authority for the Financial Markets (Autoriteit Financiële Markten) | |
AGM | Annual General Meeting | |
AI | Artificial intelligence | |
AIoT | Artificial intelligence of things | |
Applied Materials Inc. | Semiconductor equipment company | |
ARCNL | Advanced Research Center for Nanolithography | |
ArF | Argon fluoride | |
ArFi | Argon fluoride immersion | |
ASC | Accounting Standards Codification | |
ASC 606 | Accounting Standards Codification revenue recognition | |
ASC 740 | Accounting Standards Codification provision for income taxes | |
ASML | ASML Holding NV and/or any of its subsidiaries and associates | |
ASML Foundation | An independent charity with strong ties to ASML that supports educational initiatives for disadvantaged 4- to 18-year-olds in regions where ASML operates. | |
ATP throughput | Throughput of the measured system (in wph) according to the acceptance test protocol | |
B | ||
BAPA | Bilateral advance pricing agreements | |
Big data | Extremely large data sets that may be analyzed computationally to reveal patterns, trends and associations. | |
Big Four accounting firms | Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers | |
BoM | Board of Management | |
BOM | Brabantse Ontwikkelings Maatschappij |
Name | Description | |
Bradley Curve | Illustrates the relationship between accidents and corporate culture | |
Brainport Eindhoven | A technology region in the south of the Netherlands comprising companies, educational institutions and governmental organizations. | |
BREEAM | Building Research Establishment Environmental Assessment Method | |
Brion | Brion Technologies, Inc. | |
C | ||
CAGR | Compound annual growth rate | |
Canon | Canon Kabushiki Kaisha | |
CAPEX | Capital expenditures, defined as additions in property, plant and equipment plus additions in intangible assets plus additions in right-of-use assets (operating and finance). | |
Capital resources | Financial, manufactured, intellectual, human, social and relationship, and natural elements employed to produce goods and services. | |
Carl Zeiss SMT | Carl Zeiss SMT GmbH | |
Cash conversion rate | An economic statistic in controlling that represents the relationship between cash flow and net profit. | |
CBO | Chief Business Officer | |
CCIP | Customer Co-investment Program | |
CCPA | California Consumer Privacy Act (US) | |
CCR % | Cash conversion rate percentage | |
CD | Critical dimension | |
CDP | The Carbon Disclosure Project | |
CEO | Chief Executive Officer | |
CERN | The European Organization for Nuclear Research | |
CFO | Chief Financial Officer | |
CGU | Cash-generating unit | |
CGU ASML | ASML excluding CGU Cymer Light Sources | |
CHIPS and Science Act | The Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (CHIPS Act), signed into law in August 2022, designed to boost US competitiveness, innovation and national security. | |
CISO | Chief Information Security Officer | |
CIT | Corporate income tax | |
CLA | Collective labor agreement | |
Cleanroom | The central part of a wafer fab where wafers are processed and the environment is carefully controlled to eliminate dust and other contaminants. |
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Definitions |
Name | Description | |
CMD | Capital Markets Day | |
CMO | Chief Marketing Officer | |
CMOS | Complementary metal–oxide semiconductor | |
CO2(e) | Carbon dioxide (equivalent) | |
Code | The Dutch Corporate Governance Code | |
Code of Conduct | Code of ethics and conduct | |
Company | ASML Holding NV | |
Computational lithography | The use of powerful algorithms and computer modeling of the manufacturing process to optimize reticle patterns by intentionally deforming them to compensate for physical and chemical effects that occur during lithography and patterning. | |
COO | Chief Operations Officer | |
COSO | Committee of Sponsoring Organizations of the Treadway Commission | |
COVID-19 | Coronavirus disease 2019 | |
CRC | ASML’s corporate risk committee | |
CRE | Corporate Real Estate department of ASML | |
CRMC | Capital Research & Management Company | |
CSPO | Chief Strategic Sourcing & Procurement Officer | |
CSRD | Corporate Sustainability Reporting Directive | |
CTO | Chief Technology Officer | |
Cyber Weerbaarheidscentrum Brainport | Foundation in the Brainport Eindhoven region that offers companies in the high-tech and manufacturing industry the opportunity to enhance their protection against cybercrime. | |
Cymer | Cymer Inc., Cymer LLC and its subsidiaries | |
D | ||
D&E | Development and engineering | |
DEFRA | Department for Environment, Food & Rural Affairs | |
Deloitte | Deloitte Accountants BV | |
D&I | Diversity and inclusion | |
DJSI | Dow Jones Sustainability Index | |
DRAM | Dynamic random-access memory | |
DUV | Deep ultraviolet |
Name | Description | |
DUV immersion fast shipment | A process that reduces some of the testing in our factory. Customer acceptance after the reduced factory acceptance test (FAT) is considered to be proven for established technologies with a history of successful customer acceptances after the site acceptance test (SAT). Transfer of control for these systems and recognition of revenue related to these systems has occurred upon delivery of the systems. | |
E | ||
EAC | Energy attribute certificates | |
EBIT | Earnings before interest and taxes | |
EHS | Environment, health and safety | |
EHS Competence Center | A group within ASML that defines EHS standards, gathers best practices and helps managers implement them. | |
EIM | External interface module | |
EMEA | Europe, the Middle East and Africa | |
EMS | Environmental management system | |
EPE | Edge placement error | |
EPS | Earnings per share | |
ERM | Enterprise risk management | |
ERP | Enterprise resource planning system | |
ESA | European Space Agency | |
eScan | ASML’s e-beam wafer inspection system family for targeted in-line defect detection. | |
ESG | Environmental, social and governance | |
ESG score | An integrated scoring system for environmental, social and governance (ESG) factors used in credit rating decisions. | |
ETR | Effective tax rate | |
EU | European Union | |
EU-IFRS | International Financial Reporting Standards as adopted by the European Union | |
EXE - EUV 0.55 NA | High numerical aperture, specifically a next-generation EUV lithography platform, also referred to as EUV 0.55 NA. | |
Euribor | Euro Interbank Offered Rate | |
Eurobond | A bond denominated in euros | |
Euroclear Nederland | The Dutch Central Securities Depository (Nederlands Centraal Instituut voor Giraal Effectenverkeer BV) | |
Euronext Amsterdam | Euronext Amsterdam NV |
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Definitions (continued) |
Name | Description | |
EUV | A lithography technology that uses extreme ultraviolet (EUV) light with a wavelength of 13.5 nm – this is currently the cutting edge of lithography, enabling technology nodes of 16 nm and beyond. | |
EVP | Executive Vice President | |
EVP HR&O | Executive Vice President Human Resources & Organization | |
Exchange Act | US Securities Exchange Act of 1934 | |
F | ||
Fab | Semiconductor fabrication plant | |
FAQ | Frequently asked questions | |
Farmout suppliers | Our suppliers that we work with as co-investors | |
Fast shipment | A fast shipment process skips some of the testing in our factory and provides our customers with earlier access to wafer output capacity. When customer acceptance at FAT is not proven, this leads to a deferral of revenue recognition until SAT | |
FAT | Factory acceptance test | |
FDII | Foreign-derived intangible income | |
Feature | The elements that make up the pattern for a given layer of a microchip. | |
FFHA | Foundation for Hospital Art | |
Fitch | A leading provider of credit ratings, commentary and research for global capital markets. | |
Flash | A type of non-volatile memory used for storing and transferring information | |
Foundry | A contract manufacturer of logic chips | |
Fraunhofer | Applied research organization in Germany | |
FTEs | Full-time equivalents | |
FTSE4Good | Series of ethical investment stock market indices launched in 2001 by the FTSE Group. | |
G | ||
G-SEED | Green Standard for Energy and Environmental Design | |
GAAP | Generally accepted accounting principles | |
GDP | Gross domestic product | |
GDPR | General data protection regulation | |
Gemba Walk | The Gemba Walk is an opportunity for staff to stand back from their day-to-day tasks to walk the floor of their workplace to identify wasteful activities. | |
GeSI | Global e-Sustainability Initiative | |
GHG | Greenhouse gas | |
GPU | Graphics processing unit |
Name | Description | |
GQLTCS | General, quality, logistics, technology, cost and sustainability | |
GRI | Global Reporting Initiative | |
GRI standards | GRI sustainability reporting standards | |
H | ||
H2 | Molecular hydrogen | |
HDD | Hard disk drive | |
HMI | The brand name for ASML’s range of electron beam (e-beam) wafer inspection and metrology systems | |
Holistic lithography | Our approach to optimizing the entire microchip printing process and enabling affordable scaling in chip technology by integrating lithography systems with computational modeling and wafer metrology and inspection solutions to analyze and control the manufacturing process in real time | |
Horizon Europe Program | A public-private partnership that facilitates collaboration and strengthens the impact of research and innovation in developing, supporting and implementing EU policies while tackling global challenges | |
HR&O | Human Resources & Organization | |
HTSC | High Tech Systems Center | |
Huisman | Huisman Equipment BV | |
HVAC | Heating, ventilation and air conditioning | |
I | ||
IAS | International accounting standards | |
IBM | Installed base management | |
IC | Integrated circuit | |
ICT | Information and communication technology | |
ID2PPAC | Integration of processes and modules for the 2 nm node meeting Power Performance Area and Cost requirements | |
IDM | Integrated device manufacturer | |
IEA | International Energy Agency | |
IFRS | International financial reporting standards | |
IIRC | International Integrated Reporting Council | |
i-line | Light with a wavelength of 365 nm, generated by mercury vapor lamps and used in some lithography systems. | |
ILO | International Labor Organization | |
Imaging | The transfer of a pattern onto the photoresist on a wafer using light. | |
imec | Interuniversitair Micro-Elektronica Centrum |
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Definitions (continued) |
Name | Description | |
Immersion lithography | A lithography technique that uses a pool of ultrapure water between the lens and the wafer to increase the lenses numerical aperture (ability to collect and focus light). This improves both the resolution and depth of focus for the lithography system. | |
Inclusion Index | The overall score related to the questions included in the we@ASML survey that specifically relate to ‘inclusion'. | |
Industrial site | Industrial buildings and offices combined at one location | |
Intel | Intel Corporation | |
Internal Control - Integrated Framework 2013 | Criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission. | |
Internet of Things (IoT) | A network of physical objects embedded with sensors, actuators, electronics and software that allow the objects to collect and exchange data. | |
IP | Intellectual property | |
IPR | Intellectual property rights | |
IRA | Inflation Reduction Act of 2022 | |
I-REC | International renewable energy certificate | |
IRS | Internal Revenue Service of the United States | |
ISO | International Organization for Standardization | |
IT2 | IC Technology for the 2 nm Node (EU project) | |
J | ||
JG13+ | Job grade 13 and higher | |
JP Morgan Chase | US-based holder of our New York share register | |
K | ||
KLA-Tencor | KLA-Tencor Corporation | |
KPI | Key performance indicator | |
KPMG | KPMG Accountants NV | |
K-Reach | Act on the Registration and Evaluation of Chemicals in South Korea | |
KrF | Krypton fluoride | |
kt | Kilotonne or 1,000 tonnes (1 tonne = unit of mass equal to 1,000 kilograms) | |
kWh | Kilowatt-hour | |
L | ||
LED | Light-emitting diode |
Name | Description | |
LEED | Leadership in Energy and Environmental Design | |
LGBTQIA+ | Lesbian, gay, bisexual, transgender, queer, intersex, asexual and other identities | |
LIBOR | London Interbank Offered Rate | |
Lithography | Lithography, or photolithography, is the process in microchip manufacturing that uses light to pattern parts on a silicon wafer. | |
Logic | Integrated devices such as microprocessors, microcontrollers and GPUs. Also refers to companies that manufacture such devices. | |
LTI | Long-term incentive | |
LXP | Learning eXperience Platform | |
M | ||
MBA | Master of Business Administration | |
Memory | Microchips, such as NAND Flash and DRAM, that store information. Also refers to companies that manufacture such chips. | |
Metalektro | Multi-employer union plan is managed by PME (Stichting Pensioenfonds van de Metalektro). | |
Metrology | The science of weights and measures or of measurement. | |
mm | Millimeter (one thousandth of a meter) | |
MNP | Make Next Platform | |
Moody's | An American credit rating agency that provides corporate ratings. | |
MPS | Mature Products and Services | |
MSCI | Morgan Stanley Capital International | |
Mt | Megatonne, a metric unit equivalent to 1 million (106) tonnes, or 1 billion (109) kilograms | |
MW | Megawatt, a metric unit equivalent to one million (106) watt | |
N | ||
NA | Numerical aperture | |
NAND | A binary logical operator that gives an output when it receives one or no input; a composite of ‘NOT AND’. | |
Nanoscale | The nanoscopic scale (or nanoscale) usually refers to structures with a length scale applicable to nanotechnology, usually cited as 1–100 nanometers. | |
Nasdaq | Nasdaq Stock Market LLC | |
Net bookings | Net bookings include all system sales orders and inflation related adjustments, for which written authorizations have been accepted. | |
Net zero emissions | Reaching a state of net zero emissions involves: (a) reducing scope 1, 2 and 3 emissions to zero or to a residual level that is consistent with reaching net-zero emissions at the global or sector level in eligible 1.5°C scenarios or sector pathways and; (b) neutralizing any residual emissions at the net zero target date and any GHG emissions released into the atmosphere thereafter. |
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Definitions (continued) |
Name | Description | |
NGO | Nongovernmental organization | |
NIIT | Net investment income tax | |
Nikon | Nikon Corporation | |
NL | The Netherlands | |
nm | Nanometer (one billionth of a meter) | |
Node | A stepping stone in the chipmaking industry’s roadmap for smaller features and more advanced microchips, describes and differentiates generations of semiconductor manufacturing technologies and the chips made with them. Nodes with 'smaller sizes' refer to more advanced technologies. | |
Non-GAAP | A measure of a company’s historical or future financial performance, financial position or cash flows that are not calculated or presented in accordance with the GAAP. | |
NPR | Non-product-related | |
NRE | Non-recurring engineering | |
NV | Naamloze vennootschap, referred to as NV | |
NXE - EUV 0.33 NA | A dual-stage stepper based on the NXT platform powered by an extreme UV-based light source at 13.5 nm wavelength to enable resolution of 13 nm half pitch and beyond, also referred to as EUV 0.33 NA. | |
NXE fast shipment | A process that reduces some of the testing in our factory. Final testing and formal acceptance then takes place at the customer site. This leads to a deferral of revenue recognition for those shipments until formal customer acceptance, but does provide our customers with earlier access to wafer output capacity. | |
NXT | An enhanced version of the original TWINSCAN system platform offering significantly improved overlay and productivity. | |
O | ||
OCI | Other comprehensive income | |
ODM | Original design manufacturer | |
OECD | Organization for Economic Co-operation and Development | |
OEM | Original equipment manufacturer | |
ONE | ASML’s Our New Enterprise program, which aims to improve our business processes and IT enterprise management system. | |
Operations employees | Customer support and Manufacturing and Supply Chain Management employees | |
Overlay | The layer-to-layer alignment of chip structures | |
P | ||
P&L | Statement of profit and loss | |
PAS | Philips Automatic Stepper |
Name | Description | |
Pattern fidelity | A holistic measure of how well the desired pattern is reproduced on the wafer. | |
Pattern fidelity control | A holistic approach to controlling the whole process of manufacturing advanced microchips in high volumes that aims to improve overall yields. It draws data from production equipment and computational lithography tools, analyzing it with techniques such as machine learning to provide real-time feedback. | |
Patterning | The process of creating a pattern in a surface to build microchips. | |
PCAOB | Public Company Accounting Oversight Board | |
PFAS | Perfluoroalkyl chemicals | |
PGP | Product generation process | |
Philips | Health technology company, headquartered in the Netherlands | |
PHLX Index | Semiconductor sector index | |
PIN3S | Pilot Integration of 3 nm Semiconductor Technology | |
PIs | Performance indicators | |
PME | Bedrijfstakpensioenfonds Metalektro | |
Preference shares foundation | Stichting Preferente Aandelen ASML | |
Preference share option | An option to acquire cumulative preference shares in our capital. | |
Q | ||
Q&As | Questions and answers | |
R | ||
R&D | Research and development | |
RBA | Responsible Business Alliance | |
RC | ASML’s Remuneration Committee | |
REACH | Registration, evaluation, authorization and restriction of chemicals | |
Recoverable amount | The greater out of an asset’s fair value less costs to sell and its value in use. | |
REMA | EUV reticle masking module | |
Remuneration Policy | The remuneration policy applicable to the Board of Management of ASML Holding NV | |
Reticle | A plate containing the pattern of features to be transferred to the wafer for each exposure. | |
ROAIC | Return on average invested capital | |
RoHS | Restriction of hazardous substances | |
S |
ASML ANNUAL REPORT 2023 | DEFINITIONS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 351 | |
Definitions (continued) |
Name | Description | |
Standard & Poor's | A stock index of the United States that, due to its broad composition, gives a reliable picture of developments in the American stock market. | |
Samsung | Samsung Electronics Corporation | |
SAQ | Self-assessment questionnaire | |
Sarbanes-Oxley Act | The Sarbanes-Oxley Act of 2002 | |
SAT | Site acceptance test | |
SB | ASML’s Supervisory Board | |
SBTi | Science-Based Targets initiative | |
Scope 1 CO2e emissions | Direct carbon dioxide emissions from resources an organization owns or controls | |
Scope 2 CO2e emissions | Indirect carbon dioxide emissions due to the energy an organization consumes | |
Scope 3 CO2e emissions | All other indirect carbon dioxide emissions that occur in an organization’s value chain | |
Scope 3 CO2e emissions intensity | All other indirect carbon dioxide emissions that occur in an organization’s value chain expressed as a percentage of revenue or gross profit. | |
SDGs | United Nations' Sustainable Development Goals | |
SEC | The United States Securities and Exchange Commission | |
SEMI | Semiconductor Equipment and Materials International | |
SEMI S2 | SEMI S2 – Safety Guideline, Environmental, Health and Safety Guideline for Semiconductor Manufacturing Equipment, a set of performance-based EHS considerations for semiconductor manufacturing equipment. | |
SEMI S23 | SEMI S23 – Guide for Conservation of Energy, Utilities and Materials Used by Semiconductor Manufacturing Equipment, guidelines for collecting, analyzing, and reporting energy-consuming semiconductor manufacturing equipment utility data. | |
SG&A | Selling, general and administrative expenses | |
Shrink | The process of developing smaller transistors for more advanced chips. | |
SMART Photonics | Foundry for integrated photonic circuits | |
SoC | System on a chip | |
SPE Shareholders | A syndicate of three banks for the purpose of leasing ASML’s headquarters in Veldhoven. | |
SPIE | International society for optics and photonics | |
S&P | Sourcing and procurement | |
SSD | Solid-state drive | |
Springplank 040 | Social care organization in Eindhoven offering support and guidance to homeless people. | |
SSRA | Safety risk assessment |
Name | Description | |
Star level | Startups accelerated by Eindhoven Startup alliance / HighTechXL that show a multiple of investment of above 10 times. | |
STEM | Science, technology, engineering and mathematics | |
STI | Short-term incentive | |
STR | Stichting Technology Rating, a non-profit organization | |
Sub fab | Located under the cleanroom floor, the sub fab contains auxiliary equipment such as the drive laser. | |
SWOT | Strengths, weaknesses, opportunities and threats | |
T | ||
TAPES3 | Technology Advances for Pilot line of Enhanced Semiconductors for 3 nm | |
TC | ASML’s Technology Committee | |
TCC | Total Cash Compensation | |
TCFD | Task Force on Climate-related Financial Disclosures | |
TCJA | Tax Cuts and Jobs Act | |
Technical competence | The capabilities and spread of technical expertise among our people, and the extent to which they are embedded in our processes and operations. | |
Thales NL | Dutch branch of the international Thales Group | |
Throughput | The number of wafers a system can process per hour | |
Tier 1 (2, 3) supplier | Tier 1 suppliers are direct suppliers, whereas Tier 2, 3 and beyond refer to suppliers of our suppliers. | |
TJ | Terajoule (one trillion joules) | |
TNO | Nederlandse Organisatie voor Toegepast Natuurwetenschappelijk Onderzoek (Netherlands Organisation for Applied Scientific Research) | |
Transistor | A semiconductor device that is the fundamental building block of microchips | |
TSCA | Toxic Substances Control Act | |
TSMC | Taiwan Semiconductor Manufacturing Company Ltd. | |
TSR | Total shareholder return | |
TWINSCAN | ASML’s unique lithography system platform, with two complete wafer stages to allow one wafer to be mapped while another is being exposed, thereby enabling higher accuracy and throughput. | |
U | ||
UNGP | United Nations guiding principles | |
US | United States | |
US GAAP | Generally accepted accounting principles in the United States of America | |
US ITC | United States International Trade Commission |
ASML ANNUAL REPORT 2023 | DEFINITIONS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 352 | |
Definitions (continued) |
Name | Description | |
V | ||
Vanderlande | A material handling and logistics automation company based in the Netherlands | |
VAT | Value-added tax | |
VIE | Variable interest entity | |
VLSI | VLSI Research Inc. | |
VNO-NCW | The Confederation of Netherlands Industry and Employers | |
VOC | Volatile organic compound | |
VP | Vice president | |
VPA | Volume purchase agreement | |
VPC | Volume parts contract | |
VR | Virtual reality | |
W | ||
WACC | Weighted average cost of capital | |
Wafer inspection | The process of locating and analyzing individual chip defects on a wafer | |
Wafer metrology | The process of measuring the quality of patterns on a wafer | |
Waste intensity | The total waste in millions of kilograms (excluding construction waste) divided by revenue (in millions of euros). | |
Wavelength | The distance between two peaks of a wave such as light. The shorter the wavelength of light used in a lithography system, the smaller the features the system can resolve. | |
Website | www.asml.com | |
WHT | Withholding tax | |
Works Council | Works Council of ASML Netherlands BV | |
wph | Wafers per hour | |
X | ||
XTAL | XTAL, Inc. | |
Y | ||
YieldStar | ASML’s diffraction-based wafer metrology platform | |
Z | ||
ZEISS | Carl Zeiss AG |
ASML ANNUAL REPORT 2023 | DEFINITIONS CONTINUED | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 353 | |
Definitions (continued) |
ASML ANNUAL REPORT 2023 | SIGNATURES | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 354 | |
Signatures |
Exhibit No. | Description | |
1.1 | ||
2.1 | ||
4.1 | ||
4.2 | ||
4.3 | ||
4.4 | ||
4.5 | ||
4.6 | ||
4.7 | ||
4.8 | ||
4.9 | ||
4.10 | 10.14 and 10.15, Carl Zeiss AG (Incorporated by reference to the Registrant’s Annual Report on Form 20-F for the fiscal year ended December 31, 2019)3 | |
4.11 |
Exhibit No. | Description | |
8.1 | ||
12.1 | ||
13.1 | ||
15.1 | ||
19.1 | ||
97.1 | ||
101.INS | XBRL Instance Document2 | |
101.SCH | XBRL Taxonomy Extension Schema Document2 | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document2 | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document2 | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document2 | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document2 | |
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)2 |
ASML ANNUAL REPORT 2023 | EXHIBIT INDEX | STRATEGIC REPORT | CORPORATE GOVERNANCE | FINANCIALS | 355 | |
Exhibit index |