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So I think currently they just don’t know what next year is going to produce for them in terms of demand. But we do see the sector leaders in DRAM for example going to take and make strategic investments to try to differentiate themselves even further from their competition. We’ll see that with the DRAM leaders and with the foundry leader for sure. So what again is going to drive Q4 in the main is execution on these strategies that are largely independent of the overall demand environment and can even happen and be supported by a weaker environment.Again the leaders will normally invest in downturns or in weakness to try to exaggerate the difference between them and their competition. So that’s what we’re seeing. If we look at the NAND, which is probably a clearer sector for ASML. So you may or may not be aware. We have an ability to model the scanner demand based on bit growth demand or bit supply growth actually. So in 2012 the expectation today by industry analysts and ASML uses industry analyst numbers. We don’t – we’re not good at forecasting what demands are going to be in our customers end markets. But we use industry analyst forecasts and today we expect, based on those forecasts, about 80% bit demand growth in 2012. We’re able then to calculate based on the technology NODE transitions that are planned by the individual customers, how much of that bit demand or the bit supply can be gained by the shrinks alone, and then if any how much wafer capacity needs to be added. So if we assume the bit growth to be 80 and given the technology NODE transitions collectively in the NAND sector amongst the four customers, we calculate the bits can be grown by about 55% given those strengths, which means that the industry needs to add some additional wafer capacity to compensate the other 25%. And we estimate today that that would be nominally about 150,000 to 170,000 wafers starts.
So and that’s against an over 200,000 wafers started in this year to meet roughly the same bit growth given the technology NODE transitions. So we’ll see a somewhat similar situation in NAND next year. So we’ve got to get our arms around that. As I mentioned earlier, bit growth and DRAMs, DRAM can be based on the technology NODE transitions planned again by the collective DRAM customers to a level of about 40% and the current industry analyst forecasted bit demand growth next year is roughly 40%.So if that demand level holds up, that means that we’ll have a reasonable supply-demand balance in bits provided just by the shrink plans of our customers today. So again then the question that remains today for us about 2012 is as I mentioned before, the overall capacity planning of the logic guys generally. So we’re going to have to wait and see a bit. Again we have a little bit of clarity on Q4 now in terms of order intake. The question is whether we’ll support a forecasted level of Q1 shipments that is actually above Q1 shipment levels and we have to wait and see whether those bookings come through to support that level or not. So it’s a bit of wait and see, although we have an idea what the range will be. But we have very, very little visibility into the order levels of Q1 at this point in time. So I expect that our customers will wait in general for the holiday seasons around the world to sell through out of that before they can really understand what the volume requirements are for next year. So we’re kind of in a wait-and-see mode on that front. Read the rest of this transcript for free on seekingalpha.com