Responsibility to execute ASML's strategy in a sustainable way
ASML's business strategy is based on achieving and further developing a position as a technology leader in semiconductor lithography. This strategy results in the delivery of lithography systems which enable customers to produce the highest performance and lowest cost semiconductors. The superior value of ownership offered to customers as a result of ASML's strategy also maximizes ASML's own financial performance, aligning the interests of ASML and our customers. We implement our strategy through customer focus, strategic investment in R&D and operational excellence.

ASML's approach to executing our strategy sustainably rests on three pillars. Our first priority is to continue R&D-intensive creation of more advanced lithography scanners, which help produce chips that require less energy to operate (discussed in more detail in this chapter). Second, we will work towards greater energy efficiency of our ASML scanners (Environmental chapter). Third, we will reduce the environmental impact of our manufacturing sites and systems and offer a safe and fulfilling work environment for talented people of all backgroundsand gender (chapters: Suppliers, Environment, Workplace and Careers and Health and Safety).

The power of shrink
By executing our strategy successfully for the past 25 years, ASML has enabled chip makers to:

1. Double the computing power per chip
2. At equivalent power consumption
3. For half the price
4. Every 1.5 to 2 years

This makes the semiconductor industry unique, because it is capable of continuing rapid improvements in performance and productivity, which are unmatched by any other industry. This progress is powered by better imaging capabilities from companies like ASML that enable chip makers to project smaller structures on a silicon wafer, increasing the computing capacity per chip at roughly stable costs. Today, chip makers can image electronic circuits and features that are over 6,000 times smaller than they were in the early 1970s. This trend was first observed by Intel co-founder Gordon Moore in 1965 and has held true ever since (see graph 1).

Moore's Law has resulted in our information society with fast wired and wireless communications - built on affordable chips - which has improved work, trading and living conditions on all continents.

Moore's Law also has an impact on the energy usage of chips. Smaller geometries allow for much lower electrical currents to operate the chip. High on the heels of Moore's Law follows the trend that the number of computations per unit of electricity doubles every 1.5 years (see graph 2).This has helped to contain the world's energy consumption despite the proliferation of affordable computing.

With the advent of mobile computing, chip developers are even more focused on energy efficiency in order to reduce the drain on batteries while still being able to offer good performance. This is being achieved by a combination of transistor scaling, enabled by ASML machines, as well as innovative new chip designs.

Still, it is clear that the affordability of computing power has increased its pervasiveness, and hence total energy consumption. However, the introduction of new chip technology brings two kinds of benefits. The first is that technology helps to execute existing tasks more efficiently. The second benefit is that every improvement in cost, size and energy efficiency of semiconductors opens up new possibilities and markets for the use of advanced technology. While economic growth has become substantially less energy-intensive over the past decade, more benefits of technology substitution need to be realized in order to cut absolute energy usage. In a study commissioned by the Semiconductor Industry Association, the Washington DC-based American Council for an Energy-Efficient Economy (ACEEE) has found that there is potential to reduce energy consumption from the US Department of Energy's reference scenario, as shown in graph 3.

ASML's contribution to this sustainability trend is to continue improving the imaging capabilities of our scanners every year, thereby offering the potential for radical energy performance improvements of semiconductors and through semiconductor technology.

Investing in innovation
Our rapid strides in technological advancement are the result of large investments in R&D. In order to meet our customers' expectations, ASML is committed to significant long-term investments in R&D that are not significantly impacted by short-term cyclical swings. In 2009, despite the impact of the severe global economic downturn caused by the current global financial and economic crisis, these investments amounted to € 495 million versus E 534 million in 2008 (total includes investments made using government grants), see graph 5. This makes ASML one of the biggest R&D investors in Europe per employee (see graph 4).

Eighteen of the world's top 20 chip makers was an ASML customer in 2009. Those customers want us to deliver the right technology at the right time to meet long-term roadmaps which often extend many years into the future.

We currently focus our R&D investments on three core programs, centered around current-generation cost-efficient immersion, high-performance immersion and next-generation Extreme Ultraviolet (EUV) technologies. Performance has improved over the years, where our EUV architecture will take the smallest resolution we can image to less than 20 nanometers (see figure 1).

To develop new products, ASML also works with universities and independent external research institutes which bring in specialist knowledge for specific projects. This cross-fertilization increases development speed and makes both ASML and its research partners stronger. In EUV, for instance, research groups introduced knowledge about vacuum technology while ASML expanded vacuum technology applications.

A number of suppliers also carry out their own R&D.This significantly leverages ASML's own R&D investments. ASML aims to increase supplier R&D over the coming years, enabling even faster and more efficient R&D. This means that ASML is at the heart of a cooperative knowledge network which improves competences throughout the chain. ASML's suppliers are set to increase their R&D over the coming years in order to continue and accelerate the industry's innovation pace, (see graph 6).

Our collaborative approach to business is also reflected in the way we engage with suppliers and customers. Suppliers are treated as partners who receive insight into ASML's planning and operations so they can best prepare for global economic trends and customer requests. Customers are served by gaining early access to new lithography technology at open research institutes where pre-competitive chip process development is carried out in order to help define roadmaps and determine efficient investments.

Business Continuity
In order to guarantee delivery of our long-term commitment, we have had a Business Continuity policy and procedures since 2006. This was triggered by the increasing demand from our customers for continuity planning and ASML's objective to demonstrate responsible business behavior. In addition, the international community was already working towards standardization in the area of Business Continuity management.
These elements were re-emphasized in the 2008 annual enterprise risk assessment executed by ASML's executive committee. As a result, the ASML Business Continuity Management system is currently being revisited. This will ultimately lead to the Business Continuity manual.

Some examples of measures that prevent the loss of resources that are critical to our key processes:

• Redundancy in data centers for back-up and recovery purposes of critical information technology applications and data.
• Increased availability of remote working licenses to ensure employees can continue working independently if a particular ASML site is affected by a catastrophe.
• Measures to prevent the H1N1 virus from spreading within ASML and to our customers/suppliers and to monitor the impact of the virus on the ASML workforce / available capacity.
• Redundancy in manufacturing capability for volume products.
• Focusing on business continuity as an integral part of ASML's supplier selection and evaluation process