Timm Schulze-Melander

Jason answered directly that the shortfall was tool utilization such as emulation and cloud spend, not headcount, and guided OpEx to grow mid-single-digit percentage quarter-on-quarter.

Rene answered directly that there is no single point of failure and expressed confidence in partner capabilities and upside capacity.

Rene clarified he expects the vast majority, not necessarily 100%, of accelerator-paired CPUs to be Arm. Cited Google's 80% performance improvement from switching to Arm host processors.

Jason guided to roughly 20% royalty growth for FY2027, with licensing 60/40 back-end weighted. OpEx will grow sequentially each quarter, with incremental margin improvement by year-end.

Rene said Arm is highly involved in research on SRAM and alternative memory technologies to address increasing AI compute demands under constrained power and battery budgets. Power efficiency is a continuous focus given expanding AI workloads on battery-powered devices.

Rene declined specific forecasts but said compute demand is greater now than at the January Stargate announcement. Power infrastructure is the primary constraint on realizing the opportunity.

Jason explained the early royalty was from an existing CSS customer upgrading to gen-2. Close partnership on gen-1 allowed gen-2 adoption within months of technology delivery, faster than expected.

Jason outlined sequential shape: Q1 strong, flattish into Q2 (seasonally lower), then 10-15% sequential growth in each of the last two quarters.

Jason said no structural change. Larger deals naturally take longer due to board approvals, but the dynamics are the same as prior year.

Jason deferred FY26 guidance to next quarter but reiterated mid-20% royalty growth target. Emphasized CSS is an even larger growth driver than v9 alone.

Roger said the sequential shape is mostly upgrade-business tapering from the 1H peak, offset by continued EUV service growth as more tools come out of warranty, and the step isn't as draconian as the rounded 20% figure implies.

Christophe said High NA imaging and overlay performance are validated; the remaining gating factor is tool maturity, can the system run without major interruptions so customers can trust repeatable HVM performance. Work continues heavily through this year and next.

Roger said ASML is typically the importer but that contractual terms drive actual tariff pass-through, and ASML believes cost should be allocated fairly across the value chain rather than sit with ASML.

Roger confirmed 5200 tools are part of the five High NA revenue recognitions planned for 2025, alongside remaining 5000-series rev recs.

Brice clarified the China forecast is more intuition-based (digestion after elevated spending) than hard visibility. On leading-edge, noted the multi-year visibility built since COVID has degraded as customers delay commits in the uncertain environment.

Gary emphasized Applied's deep customer visibility reduces technology risk, with co-innovation engagements even with customers' customers. Revenue grew 4 times in packaging over 5 years with continued strong growth expected.

Gary noted packaging revenue spans all architectures including HBM. Brice explained the $674M tax asset revaluation was due to renewed Singapore incentive rates making the deferred asset less valuable.

Bren clarified the 2026 outlook is driven by continuing the N2 ramp across the customer base, with high NA not a material factor in that time frame, leaving it as potential upside.

Bren explained the sequential margin improvement was driven by higher-value product mix within systems, not volume leverage.

Bren explained service tariff exposure stems from KLA being the importer of parts under contract obligations, with potential mitigation through pricing strategy and shifting to ex-works transactions.

Doug said spares are doing well with utilization trending favorably, while the NAND upgrade vs new equipment split will become more balanced over time.