Eric Meurice - Chairman, President and CEO Peter Wennink - EVP and CFO Craig DeYoung - VP of IR

Herman Luticara - Betten Financial News Simon Schafer - Goldman Sachs Nicolas Gaudois - Deutsche Bank Jay Deahna - JP Morgan Mehdi Hosseini - Friedman, Billings, Ramsey Timothy Arcuri - Citigroup Thomas Brenier - Societe Generale Jonathan Crossfield - Merrill Lynch Stuart Adrian - Morgan Stanley Robert Maire - Needham & Company Doug Reid - Thomas Weisel Partners Mark Bachman - Pacific Crest

Ladies and gentlemen, thank you for standing by and welcome to the ASML 2007 First Quarter Results Conference Call on April 18, 2007. Throughout today's introduction, all participants will be in a listen-only mode. After ASML's introduction, there will be an opportunity to ask questions. (Operator Instructions). I would now like to turn the conference over to Mr. Craig DeYoung. Go ahead please, sir.

Thank you, operator. Good afternoon and good morning, ladies and gentlemen. This is Craig DeYoung, Head of Investor Relations at ASML. Welcome to our Investor Call and webcast. The subject of today's call is ASML’s 2007 first quarter results. And with me here today and hosting this call are ASML’s CEO, Eric Meurice and CFO, Peter Wennink. I’d like to draw your attention to the Safe Harbor statement contained in today’s press release and presentation. You can find both the press release and the presentation on our website at www.asml.com. The length of this call will be 60 minutes. And now at this point, I’d like to turn over to Eric Meurice for a brief introduction.

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Thank you, Craig. Good afternoon and good morning. Thank you for attending our conference call. As it was the case in last quarter’s conference call, we will split the introduction in two parts. Peter will start with a review of our Q1 financial performance with added comments on the outlook for Q2, and I will complete the introduction with a longer term view of our business opportunities. Following the introduction, we will open up the call for questions. So Peter, please.

Thank you Eric, and welcome to everyone. First of all, like Eric said, I would like to review our Q1 results highlights. And in that regard, I am happy to report that our Q1 results were solid as we had predicted. In reviewing our results in detail, you have seen that we've reported healthy revenues, operating margins, and net profit for the quarter. Q1 revenues were recorded at 960 million euros, roughly 50% higher than the same period last year. As indicated during our Q4 earnings call, the average selling price for the quarter was impacted by shipments of i-line tools, as we shipped relatively large volume of XT:400s to newly constructed memory fabs. This is a direct result of market share against for this product line, resulting from our early efforts to significantly increase the value of ownership of these systems. On the operating side, our operating cost grew 26% year-on-year, was mainly driven by increased R&D spend. This resulted in an operating margin in the quarter of 20.5% and that compares to 18.2% the same time last year. However, our first quarter operating results do reflect the impact of the Brion acquisition, which had an impact on our operating income of around 25 million euros; 23 of which was for one-time non-recurring R&D charges. Without the impact of Brion, our operating income would have been 220 million euros or close to 23%. With all these focus on the growth and market share gains, I must note that we have not lost sight of the level of our operational expenditure. Although we have grown our operational cost base to support future growth in both our R&D spend and SG&A cost, we do focus on creating cost variability, such that we can manage the profitability through the cycle. About 30% of the R&D costs are variable in a quarter’s time and approximately 10% of SG&A costs are variable. And that makes ASML pretty flexible and adaptive to any market environment. Although we don’t communicate our unit breakeven level, since we believe that would really only be relevant in extreme business conditions, we do focus on it from an internal point of view. And the internal regular reviews on it are pretty clear and have remained at the breakeven level at a constant low level despite our increase in the absolute operational cost levels. I see unit growth forecasts and also the continued drive of the industry for leading-edge shrink capability. We will keep supporting the lithography equipment growth. I think this was clearly evidenced by good level of order intake in Q1, reaching a level of 911 million euros, leading to another record backlog of close to 2.2 billion euros. Although the order intake was lower in units as compared to previous quarter, the demand for our leading-edge products continues to be high. And it is clearly evidenced by Q1 order average selling price of 15.2 million euros for our new systems. Also in Q1, we continue to execute our share buyback program with the purchase of an additional 8 million shares, which is about 1.3% on outstanding shares. And that actually completed a 10% share buyback as authorized by our shareholders in March of last year. Since we feel confident in our ability to keep generating robust cash flows we have asked for, and we are given the authorization to actually additionally buy back a significant number of ASML shares through September 2008. Net cash from operations was 173 million euros in Q1. That allowed us to end the quarter with cash between 1.4 billion euros and 1.5 billion euros after having used in the first quarter about 350 million euros for the share buyback and the finalization of the Brion acquisition. Now having finalized the Q1 review brings us to the outlook for Q2. With regard to bookings, as we mentioned, by the way, in our previous earnings call, the current market conditions make it difficult to call the exact timing of the order booking. However, we do believe that technology and capacity needs of our customers in the second half will ensure an appropriate level of order intake to justify our growth expectations for the full year. And I would also like to point out that when assessing our quarterly booking levels, it's clear, the focus on unit booking is less relevant now. And it is due to the highly discrepant average selling prices for leading-edge versus trading-edge millimeter systems. And our order book at the end of Q1 is very healthy. And we also expect that our order book, our Q2 backlog levels will remain supportive to our expected 2007 growth scenario. As expected, the Q1 orders from our Flash and DRAM customers decreased in comparison with the last quarter, as these customers have planned a front loaded year. Our logic customers continue the effort to increase capacity in line with what we think is sound IC demand, which resulted in overall in the strong order intake in Q1. And ordering patterns of the different semiconductor market segments, they compensate each other by providing robustness of the total market. Now we can also confirm that our optimism about the year is also based on the industry average IC units forecast by segment as is regularly provided by Gartner Dataquest, VLSI, and iSuppli. And this is currently supporting the custom plans of capacity growth full for litho tools that we currently foresee. As a consequence of this analysis per segment which is confirmed by our Q1 results plus our strong Q1 bookings, our confidence for growth, like I said before, in 2007 is reassured. And is also clearly supported by a record backlog of which 78% is shippable in the next six months and almost all of it before the end of the year. Now, I think that closes my outlook on Q2 and I would like to turn back to you, Eric, for the remaining.

Thank you, Peter. So you did the easy thing. Good short-term and mid-term view. Thanks to a good backlog. Let’s talk about longer term. The longer term ASML continues to focus on technology leadership. And at this moment, we are working on four areas. Immersion, value lithography with the integration of Brion, which we just acquired. Third area is improved TWINSCAN technology to address double patterning. And fourth area, EUV. So let me spend a bit of time on each of those four areas. First immersion, ASML continues to strengthen its lead in the area of immersion. We have now shipped over 40 immersion tools. A significant number and on which a significant portion of those tools are already producing Flash memory device in volume. With the last machine that we have shipped in immersion, the XT:1700 customers are able to do three things. They are able to do production, immediate production at 65-nanometer node. This really is not requiring immersion but it enables better performance with immersion. But there also in parallel, ramp 55-nanomenter, which is necessary and which requires basically immersion. And they are also starting the development of the 45-nanometer half pitch technology. So this XT:1700 product is in fact the only system on the market which can do so, which can stretch as far as 45-nanometer. Leading-edge flash customers are even now reaching regularly over 1,000 wafers per day on these tools and are working now on ramping up to 2,000 wafers per day at the tool. We are talking production volume. In fact, we are talking about mature production volume when you talk about 1,000 wafer per day to 2,000 wafer per day per machine. In total over 100,000 wafers at this moment are treated per month on our immersion machines. As you know, there is significant risk in switching lithography platform. And the fact that the customers have been defining their products and processes on these machines does solidify our relationships for the future. Furthermore, our new machinery XT:1900i, which is due for shipment very early into Q3, has already imaged at 36.5 nanometer, which is a first unique performance. And we have confirmed that this machinery, XT:1900i, have confirmed immersion and throughput performance on the current prototypes that we have. This was expected because the 1900 is, in fact, a derivative of the 1700. This means that all the experience accumulated on the 1700 makes the introduction of the 1900 much easier. So again, we expect therefore a smooth production transition from the 1700 to the 1900 at our customers. Turning to our immersion developments. With the Brion acquisition now complete, we are starting an aggressive development program for exploitation of the synergistic effects of Brion’s computational capabilities and ASML's competence, scanner competence. As we have mentioned before, the objective of this acquisition is to reinforce Brion’s business in IC design verification, and in RET/OPC businesses market. While Brion will help in return ASML developed lithography platforms, which have capabilities to optimize the scanner setting for a specific application. So a value proposition, an additional value proposition for ASML. The customer benefit is an ability to maximize yield, the first good news. But the second good news is to be able to define more critical design roles, which will in turn increase the device performance. These synergies between ASML and Brion will enable each to achieve greater value generation and improve competitive differentiation. The third aspect as we discussed is double patterning. We know at this moment that EUV is confirming its potential as the most extendable and cost effective long-term solution for technology nodes beyond 32 nanometers. Our progress with customers and partners on our two EUV alpha tools being installed is allowing the industry to address that infrastructure needed. But certainly this will require a bit of maturity, and we expect EUV to ramp into production in 2010 or 2011. Although as I repeat, it is fundamental that the work is starting now to create the infrastructure necessary. But in the meantime, we believe that double patterning technology will be the necessary technology employed as a bridge technology of true EUV. ASML is focusing significant resources to develop lithography solutions for this new application, double patterning, so as to support higher throughput required by this technology and more accurate overlay. So, in summary, we confirm our robust execution in terms of market share progress, our robust financial results. We confirm our short-term and mid-term growth forecast for 2007, and that is Peter’s point. And we confirm our value generation proposition for the longer term, which was my point. So, on this Peter and I are ready to take your questions.

Operator, before I turn it to you for the questions, I'd like to state a couple of ground rules. I'd ask that you please identify yourself and your organization when you are called online. We’d also like to kindly ask that you limit your question to one with one short follow-up if necessary. This will allow us to get as many callers on line as possible. So, operator, could you have the first question, please.

Of course. Thank you, sir. Ladies and gentlemen, at this time, we’ll begin the question-and-answer session. (Operator Instructions). First question is coming from [Herman Luticara]. Go ahead please sir. Please state your company name. Herman Luticara - Betten Financial News: Betten Financial News. My question is about the dividend. You’ve mentioned in your press release that this led to certainly in the option in slower growth model. Could you explain a bit more about that?

Yes. We think that the best way to return cash to our shareholders momentarily is buying that shares because we do believe into growth profile of this company. And we think that attributing that growth profile to a lower number of outstanding shares will create a bigger value, where that growth profile somewhere in the future is going to tail off. And I think that argument does not hold anymore. And then dividend is a very good alternative for return of cash. Herman Luticara - Betten Financial News: Could you be more specific about the date when you are thinking of paying a dividend?

No. We think we are going to grow for a long time Herman. Herman Luticara - Betten Financial News: All right. Thank you.

Next question is from Mr. Simon Schafer. Please state your company name followed by your question. Simon Schafer - Goldman Sachs: Hi. It’s Simon Schafer with Goldman Sachs. I was wondering whether you could share some more detail with respect to the Brion acquisition, now that it’s closed. Any type of more updated guidance or targets that you may have, you may want to share in terms of the operating profile or the type of revenue growth that we may be looking for?

As you know, Brion is a private company. It had executed a certain numbers of products in different segments. Now that they are integrated since a month, we are reviewing the business plans and the future of those segments. And try to take decisions on the appropriate place to put the resources and accelerate the market segment with their highest potential. So this activity is taking place at this very moment. And we will not be able, I guess, to present any thing of material value before the end of the year. So, in the meantime, trust the fact that we’ve acquired the company at $275 million. Because we believe there is potential for more than that. We are not disappointed about the quality of the people that we have acquired basically. And we, however, need some time because this is a long-term business decision that we have taken.

Like Eric said, it is not going have a significant impact on our results for this year. Simon Schafer - Goldman Sachs: Understood. Thanks. And then a quick follow-up on the margin side. How many units do you have in your backlog? And how does that break up between 1700 and 1900 side?

We will try to avoid making the differentiation of 1700 and 1900, not for any other reason. And we will talk about this probably during the quarter with other questions. It’s a yo-yo with customers sometimes preferring 1700 and then converting to 1900 and vice versa. Because in fact most of those projects will survive. Those offer a different function to the customers. So this ratio is a bit irrelevant at this moment. It changes all the time and we don't even know where it will go. But in terms of backlog, at this moment we've got 24 combined units and we've shipped four in Q1. So, so far in three months of activity basically, we have accumulated to 28 potential for the year. And of course, we expect to book a bit more than that. So, we are well on the way to continue the leadership into immersion during the year. Simon Schafer - Goldman Sachs: Great. Thanks very much.

The next question is from Mr. Nicolas Gaudois. Please state your company name followed by your question. Nicolas Gaudois - Deutsche Bank: Yes. Hi. I am Nicolas Gaudois, Deutsche Bank. First question is specifically on some of the backlog movements. We've seen memory backlog coming down. And Korea seems to make all of the Delta, effectively. Taiwan backlog is flat. And with about foundry is flat as well. So does this imply that you shown increase in your Taiwan DRAM backlog in the quarter, while actually rest of Memory U.S. and Europe was down? And if that is the case, what could we see as the potential offset. If by Q3 some of these Taiwanese DRAM customers decide to actually delay a bit some of the delivery dates looking obviously at what price have done recently?

Yeah. Nicolas good question. In fact, what is happening now is exactly what we had modeled and communicated in the past, I think, two conference calls where we said, the year 2007 will see front loaded Flash which is lot of revenue or billings into Q1, Q2, less in Q3, Q4. But then we said DRAM was spread Q1, Q2, Q3; less in Q4. And then we said foundry is going to help us out in fact in Q3 and Q4. And as well as other logic customers being spread and nicely spread with a good numbers. So this is basically developing. This is what you will see with those percentage backlogs where Flash reduces, DRAM goes up, foundry goes up and you should see also IC going up in percentage. Is there a risk? So this was basically written on the wall since six to nine months, we’ve faked that and we are executing too to this. And we don’t see a change to that. Your question then, your hidden question is, is there something that can happen in Q3 in the market that would make some customers decide to delay their receipt of our machine. Well, first of all, legally they can’t because our orders are non-cancelable. But obviously, when there is good reason and there is no need for capacity, we are always willing to spread because there is no interest for anybody to force capacity that is not used. On this case, we are fairly comfortable because you are talking about DRAM at the end of the year which is usually a place where nobody can call that the needs for the Christmas season and et cetera very well and therefore most of the capacity deals are strategic, and this one is even bigger as a strategic move because most those Taiwanese are basically building new fabs. So, you have got two reasons to move strategically, which are less impacted by some kind of fear of a short-term price question. So, I would be highly surprised that we would receive phone calls for feeding for push out of our DRAM brands for Q2. Nicolas Gaudois - Deutsche Bank: Fair enough, and just as a very quick follow-up, if we look at your Japanese backlog, it kind of stepped up basically in Q1 '06 and Q2 again and then it has been flat is when essentially three quarters in a row at a decent levels 6% of backlog but, when and how, what would be the drivers try to just start to see this backlog portion coming from Japan effectively take another step up in the next 12 months or so?

We were very, very happy with our progression in Japan. The key measure at this moment is probably more market share than it is backlog percentage. And the percentage, the market share as you know and has been published starting to get above 10% in the past six months or so, and is heading towards 20% as a high speed and above. So, that's, yes, of course translates into some machines coming in. These machines coming in are the high level machines high ASP. And it is therefore now difficult for us to assess which quarter is going to see them happening and which quarter we ship and which quarter we take them in. And they make big difference, lumpy differences, and I am not hiding anything by saying we are not shipping our i-line in Japan at this moment and not too many KrF and we are in the ArF/immersion business. So, I can't really tell you where you will be starting to see the color of Japan much bigger in the backlog, but I can tell you that I see market share about 20% or so. Nicolas Gaudois - Deutsche Bank: Thanks.

And above that Nick, I mean 6% of that backlog but the backlog has been rising in absolute terms. And so in absolute levels, our business in Japan has actually grown and just for your indication, of the order intake, the bookings in Q1, 11% of the bookings value was in Japan. So that's more than 6%. Nicolas Gaudois - Deutsche Bank: Okay. I was looking at actual value to be honest in the backlog, but that's fine. Thank you very much, guys for the explanations.

Thank you.

The next question is from Mr. Jay Deahna. Please state your company name followed by your question. Jay Deahna - JP Morgan: Thanks, Jay Deahna with JP Morgan. Congratulations on great execution, more than one question, but quick ones. The first one is given the mix shift towards higher value products and that you got some i-line and KrF in the pipeline recently. Does the order value in 1Q feel like a trough? That's the first question. The second question, your seemingly, slightly incrementally more confident. There should be in a growth year, are you assuming that this is the growth year driven just by ASPs, for ASML or does that includes some unit growth as well? And then the third one is, are you still looking at 35 to 40 immersion tools this year? And then the last one is what you are thinking in terms of the possibility for churns business for flash later in the year given that Samsung semiconductor CEO said recently the flash could be in severe shortage in the second half.

So, Peter is going to try to handle your first two questions, and I am preparing myself for the maybe the last one, go ahead, Peter.

Just writing and making some notes. Jay, first the question on mix and high value whether the Q1 would indicate an order trough, I don't think they are correlated to be honest. It's just when we look at where the demand for the year comes from. So, basically you are leading also to your second question is that we do believe that in the segments IDM, DRAM, but also flash we have significant unit growth numbers. That's force our customers to put capacity orders in but also when we look at their shrink roadmaps that they need the technology that we will be introducing in the second half of the year. I think that is driving really when customers or what customers will place in terms of an order. And when the order comes in, and that's also why we are not guiding, because of those market conditions and as a level of uncertainty there, that we don't care that much when they come in. And timing of the order book is not that important for us it is more important that we have a strong view on what we think our customers need in terms of capacities, I guess the backlog of their unit growth, our market share gains and technology introductions. And that also comes to the answer to a question to it. We think is going to be growth year driven I could say in the second half of the year clearly by ASP, because there is the 1900 introduction, and you will also see the majority of immersion shipments. I think market share will account for some unit numbers but it would say generally it is the quality in ASP that is driving the top line this year. Jay Deahna - JP Morgan: Okay. And then, just one quick clarification on the first response. I wasn’t clear exactly what you were saying. The question was, does 1Q look like possibly a value order trough for the year in the near space. Am I correct in your saying, may be but it depends on timing of orders and you don’t care when you order.

Yeah, correct. And also, when you look at the remainder of the year, we do expect an immersion ramp up in 2008, clearly going forward to the ASP trend of this company is of course up. So, yeah, that is I think what we care about. We care about market share in that segment. We care about the ASP trend. And we’re pretty confident that there is going to be top-line growth as a result of that. And when those order timing comes in, doesn’t really matter that much. Jay Deahna - JP Morgan: May we assume that the downside risk from 1Q is relatively limited given that there you got a lot of immersion in front end?

Again, we say that Jay we don’t know. We are pretty comfortable on the capacity plans and that’s why we are calling in the billings. And we really don’t miss, now we’ve done this, and say that here is going to be growth, and here is going to be growth. Because we know what really these project are. But it is true that knowing which product each customer will take and when they take this, it’s really difficult to call. Today, as I said, to one of the callers, we don’t even know that we want the 1700 and 1900. This is based on, then decided whether they want to drive more 55 nano or more 45 nano, then it is also based on us. If the 1900 runs faster than we think, then they are going to jump on 1900 because they get more headroom. So, in other terms, imagine that we are successful then introduce our 1900 a bit earlier than necessary. That will freeze orders of the 1700. Do you understand my point? You've got complexity about the timing, which is why we are not wanting to call bookings, but we call billings, and we show fairly significant body language on that.

Jay, I think we are going to have to move on. Operator, can we have the next call?

Immersion question, yes. In fact, we've read the literature, Gartner says about 45 immersion tool in the year, you know that our competitor, says that it may be much bigger than that. At this moment on the total 45, total market. We've got as I said, 24 in backlog for a ship that’s 28, and you can imagine that the 35-ish, 40ish range is absolutely within reach. Regarding your flash turns, absolutely. We are confirming that the current capacity plan that we are building for our customers from now to Q4, we'll get to a near full utilization by the end of the year, if of course the statistics that have been discussed by the Dataquest and so are correct on the unit. If that’s the case, there are opportunities for returns. If this is the case, there is an upside potential, yes. Jay Deahna - JP Morgan: Thank you.

Next question is from Mr. Mehdi Hosseini. Please state your company name followed by your question. Mehdi Hosseini - Friedman, Billings, Ramsey: Thank you. Mehdi Hosseini, from Friedman, Billings, Ramsey. My takeaway so far from the conference call is that there is definitely a downtake in the unit shipment of immersion for this year. And I want to ask a question that would help me understand what's going on and maybe you answer this, the question about the immersion how it is tracking. When you look at the business opportunities between flash and DRAM, and logic, is there any way you could quantify the units of immersion used for like a 30-k per month flash DRAM capacity versus logic. In other words, if you were to compare double patterning with immersion, is there anyway we could think about the difference in the number of units used in a typical fab with a 30-k per month capacity.

Okay, this is of course a complex question. Let me try my best with different facts. First of all, I don’t think we are saying that immersion is lower than before. I think there was a number running around of 35 to 40 units for us. And we just confirmed that it is within reach. If you remember, long time ago, I was asked. What is the typical pattern for a new technology like immersion to grow? And I said, well, if you were to look at what we did with the 1400 which is a former generation. I said about 70 units for 18 months was what we achieved and that the time I said, I don't know, if that could be replicated to immersion, we will see, but that’s an order of magnitude. So, if you look now at 35 to 40 units in 12 months and then you add the 25 units or so that we shipped six months ago in the last six months of the year, or whatever, that you're talking about already nearly 65 units, which is not far from my 70, which happened on the simpler technology. So, we are confirming that in fact everything is happening turned again at this moment. Regarding probably the background of your question which was, what's happening between the immersion and double patterning, and who’s going to win, and how does that impact lithography business? Honestly we don’t care. If you do double patterning, you will use more of our 1400 and more of our i-line tools. And if you don’t do double patterning, you will pay more for immersion at a lower throughput than the 1400. One is the exact equation that says how much of which is which? Honestly, I don’t know it’s highly complicated. It depends on how many layers you do in immersion, it depends what type of double patterning you are using. You’ve got some people doing double patterning in logic that has signification parties, and there are some other people doing double patterning in memory, all this is highly different. So honestly we feel very, very happy to be very well positioned in double patterning and in immersion. We have a 1450 machine that runs faster with better overlay for double patterning. I think we are the only one in the market with this, and we have our world leadership in immersions. So dear customer be our guest, we love it. Mehdi Hosseini - Friedman, Billings, Ramsey: If I may, just one follow-up. Your days of inventory were not significant. You only had like four immersion bookings in the Q1. With the days of inventory going up and assuming six to nine months lead time for immersion tools, does that imply that you are going to see sort of the hockey stick in immersion shipment in the latter part of the year?

Well, first of all I’ll correct you. I said four shipment in Q1 and I should have said eight bookings in Q1. Mehdi Hosseini - Friedman, Billings, Ramsey: Sorry about that.

We have a good set of bookings of immersion into two, but as I said on the last week of Q2 somebody is going to tell me where is the 1900, and I won't give you your bookings before I know if I want you to switch my potential 1700 to 1900. So, you are going to have some orders into Q2, yes, it is possible. But we will get more orders of immersion in the July August timeframe, because we went to see how good the 1900 is. But yes, we are going to have billings significant into Q3 and Q4, because this is when we are ramping the 1900. Mehdi Hosseini - Friedman, Billings, Ramsey: Yes, thank you.

Next question comes from Mr. Timothy Arcuri. Please state your company name followed by your question. Timothy Arcuri - Citigroup: Citigroup thank you. I want to talk a little bit about the 200 millimeter, 300 millimeter upgrade in the memory world. I wanted to ask you two things. Number one; what's your view on the obsolescence of the existing 200 millimeter capacity in the ground? Is there a fundamental, technical or cost issue from a litho perspective that’s going to force the industry to go and replace all this big 200 millimeter capacity in the ground? And then I had a follow up thanks.

In fact Peter you may. I think it’s difficult to know the economics of the fab. Sometimes fabs are limited by square meters, in which case we had some customers who are driving us to move from 200 to 300. So basically square meters and people available, means that some of those guys say output per square meters is fundamental in which case there is no question. So we are doing some of that. And some of the customers are saying, look I am happy with my square meters throughput. I can buy, I can build a 300 millimeter fab outside so I want both. And you do have some people still asking us to do, in fact today. Not today, six months ago, we had one or two customers asking us to allow a 1900 to 100 millimeter machine. So, in other terms, I think you can probably justify those economics.

It depends on the customer also. It very much depends on the customer. And like Eric said, we have seen both on the 1400 and the 1700. But I also will request for the 1900 to make it 200 millimeter compatible, and the only reason why they do that is to extend the life of the 200 millimeter fabs. But in principle if you would have a fully depreciated 200 millimeter fab and a fully depreciated 300 millimeter fab, it's clear that the cost advantage is going in the direction of the 300 millimeter fab. Now, when we get more 300 millimeter fabs in a deprecation phase, where it's more comparable with the 200 millimeter fabs, then yes, you will get more shifts over. And what we are seeing with some customers that also that the 200 millimeter tools are been used for specialty DRAM products. They are being remarketed and refurbished onto the second-hand foundry to market. So, there is some 200 millimeter business in the refurbishment area that is a result of some customers going to 300 millimeter. But it's not significant at this moment. Timothy Arcuri - Citigroup: Okay, great. And then I guess just last thing, have you done any analysis that might try to pinpoint what the total or what your total dollar opportunity is related to the obsolescence of this 200 millimeter capacity? So as the memory companies go out and replace this capacity in the next few years, have you done any work on what your opportunity is there, and do you think any of that money has been spent yet? Thanks.

We have not, because even if that doesn't happen, we have simulated significant goals anyway. So, there is definite upside potential if there is an obsolescence wave that happens here, you are right. But we are showing growth anyway just by the build-up of the 200 millimeter to 300 millimeter capacity.

And again Tim we haven't seen a lot of activity in that area yet. Timothy Arcuri - Citigroup: Okay. So, there is not much of that money that's been spent yet from your view?

Correct. Timothy Arcuri - Citigroup: Okay. Thanks.

Next question comes from Mr. Thomas Brenier. Please state your company name followed by your question. Thomas Brenier - Societe Generale: Yes, good afternoon, this is Thomas Brenier from Societe Generale. Kind of a general question, if you could help us on that. If you can compare the investment needed for equivalent fab in terms of lithography between moving from 90 to 65-nanometer and moving from 65 to 45-nanometer. How much would be the increase or the difference?

The only thing I can do, you could probably call Frankie and Craig to get more. You better call the other guys, but obviously the ASP has grown as you know from 15 million per machine at 90 to 20 at 65, to now at 30 million or so, and the throughput originally where 150 machines for the cheap machine and now 120. So, you can make some calculations about the fact that yes 45-nanometer costs significantly more in lithography, which is by the way one of our opportunities. But again, I will push you back…

We have the data by the way. We have the data, so if you could call either Craig De or Frankie, they can give you answer. Thomas Brenier - Societe Generale: Okay, thanks. And then could you may be update us. I am not sure anything has changed, but you are on your way to go to a size where you can address between 4 billion euros to 5 billion euros in phase, and I think last time we discussed that. You were mentioning more 5 billion euros. Do you have more visibility as far as when you think you can get to this level, in terms of your ability to serve the market, and the ability of the market to take that?

We gave a directional 5 billion euro sales target by year 2010, because we believe that this is what the market requires in view of the new technologies and the famous 8% to 10% semiconductor unit growth that people would consider as appropriate. So I am just saying that this market share of about 70ish% market share plus this growth will generate 5 billion. But we didn't want to say that we knew anything about cycles, and therefore it could be plus or minus two years depending on where the industry is. And at this point, we are not calling cycles long-term. We don't know better. But we are running and on an intrinsic curve that should get us at 5 billion by 2010, if there is basically no cycle any longer and everything is smooth at 10% unit growth of semiconductor. Thomas Brenier - Societe Generale: Okay. Thanks.

The next question comes from Mr. Jonathan Crossfield. Please state your company name followed by your question. Jonathan Crossfield - Merrill Lynch: Yeah, it's Merrill Lynch. My question was just on the change from 1 billion euro net cash target to a growth cash of 1 billion to 1.5 billion. First of all, could you just give us a bit of background on why you have changed from net to gross, and secondly what's the basis or would they tell me what level of cash you target within that range?

Well to answer that last question first, the 1 to 1.5 is basically dependent on what we need for the cycle. Well, we generally don't need a lot of cash for a down cycle, but we might need more cash for the strength of an up cycle. And if you talk about the 5 billon plus company, it could be that in a ramp up to 5 billion, the working capital needs of the company, because we are still largely pre-financing everything that we ship to our customers in work in process and in accounts receivable. And that will take a lot of cash and that will there term let say the upper side of that range. And in areas where and in times of a cycle where the businesses not at its peak, we could do with in principle less cash and that is the lower side of that particular range. The reason why we changed from net cash to gross cash is because we feel that even in a -- if you would look at our current cash balance is about 1.4 billon and that is above the 1 billion net cash. In cycles when we are looking not to invest that much money in working capital, we could actually do with a lower cash balance. So it's less conservative and we feel it is appropriate under the circumstances. We are a growing company; we take care of our working capital needs. So I think also from a cash target point of view we can do with some less conservative targets, and that's why we are communicated basically like that. Jonathan Crossfield - Merrill Lynch: Great, thanks very much, Peter.

Our next question comes from Mr. [Adrian] go ahead please, sir. Please state your company name followed by your question. Stuart Adrian - Morgan Stanley: [Stuart Adrian from Morgan Stanley]. Peter, just can I ask following on from the last question actually, these rather open ended comment relating to buyback that you have in your press release.

Yes. Stuart Adrian - Morgan Stanley: Is there anything that you need to internally other than the AGM authorization that you already have to actually action a buyback. I am just trying to work out, kind of what the milestone is from here?

I think in principal it’s not that. We have to go through the normal statutory and regulatory approvals in our company. And we just need to make sure that everything is put in place from lets say a legal and a text point of view, and then we can execute. So, there is, in principal nothing that would hinder us. Stuart Adrian - Morgan Stanley: Okay. And then, just in terms of mix of business. If we look at the backlog, the memory proportion of backlog has come down from 64% into Q4 to 54%. Now, when do you think that normalizes? And what do you think the normal level of memory as the proportion of total backlog is given in the current environment?

I think we’ve answered that a quarter ago, where we’ve said it’s around 50%. That’s what we said about half of our business. That’s where we currently are. I think that is what we would regard as a more stable division between the three segments. Stuart Adrian - Morgan Stanley: Okay, that’s great. Thank you.

Next question comes from Mr. Robert Maire. Please state your company name followed by your question. Robert Maire - Needham & Company: Yes, Needham & Company. Similar to the question you just answered, in terms of share of the foundry versus IDM versus memory going forward over the year, would you expect that strength in foundry offsets perhaps a little weakness or softness in the memory market, while IDM remained flat? How do you see that playing out over the year? Do you see foundry picking up more aggressively in the second half or first half loaded. And do you see any weakness in memory being more weaker in the second half? I know you don’t want to give order guidance, but in terms of one offsetting the other. And the second question, at a recent suppliers conference for major logic manufacturer there seem to be some aggressive talk about 450 millimeter wafer size being pushed and I'd like to get your comments on that and your R&D plans and development plans for potential other wafer sizes?

Yeah. Well to answer your first question, how we see it playing out. I also think its also a bit like we said in the previous call. Clearly from a shipment point of view, we've seen, because this is evidenced by the way of our shipments in Q1 where close to 70% was shipped to memory customers. That’s what we said first half of the year the shipment to memory customers. We are seeing from the utilizations that we are seeing from our tools. We are seeing that, clear indication that we have seen the trough in the foundry business in Q1. Now, that means that they are still not at utilization levels where they feel a lot of capacity strain. But with that inflection point in Q1, it is also not unreasonable to suspect that by the end of the year in Q4 they will need extra capacity, and that means that they will need to start ordering that over Q2 and Q3. That in fact would offset indeed the weakness in terms of shipments from the memory business. Because if you look at our bookings, yes of course, the bookings for memory customers came down in Q1, as we would expect it, since that shipments are front-loaded and they don’t need to load in the second half, except of course the new technology. So, yes, because clearly that is an offsetting trend. The IDM customers were pretty healthy in the first quarter, and that is basically one of the most predictable segments that we have, when we talk to our customers at the beginning of the year, and go through their CapEx budgets and CapEx needs then that is a segment of the business, that is probably the most predictable to us. So, if you look at the year, how it will turn out, first half, dominated by memory shipments, second half we will see a return of the foundry’s towards the end of the year. We see the shipments of new technology, the 1900 within the line base of our IDM customers, making sure that there is a good healthy shipment pattern. Robert Maire - Needham & Company: And if we are just looking on an order basis, does that suggest that throughout the year we see a sequential slowing of orders from memory, while we see a sequential increase of orders from foundry, is that the correct assumption to make?

That is basically what I am saying. And also, what one of the previous people that asked questions brought forward is that, if it turns out that there is going to be a flash shortage towards the end of the year, you could also see flash customers coming back towards the end of the year, and that's what Eric basically told also.

Regarding 450.

450 millimeter. Yeah.

450, we are I would say passive on this question. I would say not positively passive, but passive here to help as usual. But there are multiple decisions to be made in the industry, first of all is, what's the cost of the fab and it's not on the lithography into this. Second set of question is, can we do the same thing with a faster machine? Either it's a large size that you process or is the smaller size, 300 millimeter but you process much faster. And third set of question is, what is the industry for 450? Obviously, I think I guess who this logic manufacturer is. But if you ask the same question to a smaller guy, you may get an answer that says 450 is already in production for two years and that would not work out as an efficient way of producing. So this is an industry question. ASML clearly thinks that they can do, but there’s a lot of economics to be sought through before that were to be done. And I forgot to tell you. And by the way if you redo this and we introduce EUV which is already complicated, until you put this on a 450 type base you are also adding difficulties. So, long-term I think it’s an interesting concept, we should always continue to document how to do this. I would not think that it has an initial term possibility. Robert Maire - Needham & Company: I can take it from that answer that you haven’t committed to build or are spending significant amounts of R&D money on that project. Is that correct?

In any event we would not before the industry which is so. We are going to be humble today. We can’t drive the whole industry here. So we are glad to participate to any industry scale projects, yes, but at this moment we haven't yet decided to invest because there’s no project started. Robert Maire - Needham & Company: Thank you. Congratulations again.

Thank you.

The next question comes from Mr. Doug Reid. Please state your company name followed by your question. Doug Reid - Thomas Weisel Partners: Thomas Weisel Partners and thank you. You mentioned earlier in the call that much of your outlook for '07 is based on views you’ve obtained from third party data vendors. Wonder if you could give a little more color in to the actual quality of your own visibility based on discussions with customers. I mean how is the tone of discussions with memory customers in particular changed over the past quarter? And generally speaking how would you describe the quality of your visibility in the memory?

Okay. Well this is an important question because it hasn’t come. We all had the question whether memory, flash and DRAM would be impacted in terms of CapEx plan in view of the price pressure that these two segments are getting into. What we see and the fundamental message here that I give you is, we've seen a lot of discussions about scheduling and about mix and about switch from DRAM to flash, which has been making our life a bit difficult and has stretched our capability for lead time and rescheduling and et cetera. And this has happened in Q1, this is happening in Q2, where we have this type of activity. So in other terms, the volume is still there where either unit volume of DRAM and Flash has still sustained. These strategic projects as we discussed at the beginning of the call with Taiwan et cetera are still there. But the price pressure obviously puts responsibility on those manufactures to do the right thing, and to be smart about which machine they want and when and et cetera. So honestly we are living through hell to give them satisfaction in terms of mix, changes and et cetera. But at the end if we succeed to do that, we still have the same volume. And this is what basically the message you got today about a difficult environment price wise at the customer level. But in terms of unit wise we are well versatile. Doug Reid - Thomas Weisel Partners: Yeah thank you.

Next question is from Mr. Mark Bachman please state your question company name followed by your question. Mark Bachman - Pacific Crest: Pacific Crest Securities, Peter can you give us some more color on your guidance here, specifically with a 140 units of backlog. And your comment suggesting that 78% to ship along the next two quarters. This seems to me that you are going to ship roughly a 152, about a backlog in both Q2 and Q3. And then given the guide for the 69 units in Q2, this just leaves me with 46 units being shipped from backlog in Q3. So, my questions are, do you expect any additional shipments in Q3 from the orders received in Q2? And then also can you describe how the shippable backlog in each of these quarters will change with regard to ASPs per units?

Yes. On your first question, yes. We will book orders in Q2 that will be shippable in Q3. That is a direct result of our continued push on lead time reduction, which is on average six months, which doesn't mean that our customers honor that. So, some look shorter and got some fight over that from time to time. And clearly I think the order intake will also reflect bidding term a speed term of the company. Now you'll see going forward in 2008 there will be more immersion ramps. There will be definitely, it will be right in the middle of the flash whole unit production rampage is using immersion you'll see that DRAM will start to use immersion in volume RAM foundries will be starting using it so I think when you look at lets say the medium term or the trend this clearly has to go up as it follows the ASP trend of the company and yes also in Q2 we'll be booking orders for Q3. Mark Bachman - Pacific Crest: Okay, and then just as a quick follow-up here can you talk about you said that normalized backlog should be around 50%.

Yes. Mark Bachman - Pacific Crest: But why isn’t the value of your backlog more weighted to the memory if these are the actual customers that are taking a lead against tools with much higher ASPs. Are you suggesting to us that logic and foundry put together are going to eat more memory as we go forward in terms of immersion units?

If you are talking about total backlog value. Mark Bachman - Pacific Crest: That's right.

That's the backlog value it's about 50%. So in units it's of course less because you are right. And when you look at the average selling price per segment, the highest average selling price is for the memory customers followed by the IDMs and then followed by foundries. So in essence, we don’t make that split per segment for the immersion part of the backlog. So my general answer would be the 50% that I talked about, so roughly 50% is based on the value which is not in terms of units. 50%is indeed lower because yes the higher ASP tools go to the memory mix. Mark Bachman - Pacific Crest: Okay, thank you so much.

I think we are out of time and I'd like to thank everybody for joining us today on the call, and operator if you would be so kind enough to close the call formally I would appreciate it.

Of course, ladies and gentlemen, this concludes the ASML 2007 first quarter results conference call. Thank you for participating. You may now disconnect.

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