Drivers

Three different drivers relate to senior managers’ possible frame shifting over time: (1) market dynamics, (2) financial results, (3) sales of shares.

4.1.1. Market dynamics

The first driver that has influence on frame shifting over time are the market dynamics.

Market dynamics include the themes uncertainty in the current environment, transition to new technology, competition, and legal issues.

Uncertainty in the current environment is indicated by the following quotes from Eindhovens Dagblad (2011-03), translated from Dutch to English:

Cedar [an analist] expects it is possible to make chips with a capacity of 64 and also 128 Gigabit. But later, without EUV technology, that development will stop. He says he is not alone in his concerns. “A lot of people in the semiconductor industry are very concerned about EUV. Not only about its availability, but also about its cost. These things are going to cost many millions of dollars.”.

Competition is a factor of market dynamics that might drive actors to shift frame strategies over time in order to legitimize technological changes. What competitors develop or do in the market has effect on the possible success of another companies technologies.

Volkskrant (2012-01), translated from Dutch to English:

The enormous expenditure on the development of new machines has not done ASML any harm. Last year, the first so-called EUV machine rolled off the production line. The device, which costs about 75 million euros to purchase, uses extreme ultraviolet (EUV) light and can therefore work even more accurately and precisely than its predecessors, which use deep ultraviolet light. 0.000016 millimeters. Where predecessors, which are

still used all over the world for the production of chips and which are also still fully produced by ASML, can 'draw' lines on a chip with a thickness of 38 nanometers (0.000038 millimetres), EUV machines theoretically make lines of 16 nanometers (0.000016 millimeters). Canon already dropped out in the EUV area and Nikon also seems unable to follow the people of Veldhoven. For ASML's customers, these developments can be a reason to turn to those competitors. If they don't, they will help ASML into the saddle as a future monopolist. Yet ASML is not afraid of that. In the first place, because the competition does not have the latest generation of lithography machines, which are simply necessary to be able to continue to reduce costs. In addition, because Nikon and Canon will not be catching up any time soon. Analysts have also pointed out more than once that the technology is far too expensive and high-quality for that and the accumulated backlog is now too great. The EUV machines are not yet fully developed.

Furthermore, the technological need from the market may change over time. Therefore, transition to new technology could drive change in framing strategies. Eric Meurice CEO of ASML (2012-01): “we are encouraged, as Peter said, by the short-term view, 2012, and by the mid-to-long-term prospect of this lithography market, which is very, very much driven by a huge industry technology transition appetite.”

Also legal issues may trigger choice of framing strategies such as the restrictions of the U.S. to ASML about delivering EUV to China. Peter Wennink CEO of ASML (2020-01): “And regarding the impact of recent U.S. restrictions, it's difficult to determine how near-term dynamics will evolve, but when you look at the end-market demand and the growing digital economy with secular growth drivers, like 5G, AI and high-performance compute, the demand for semiconductors for these products will continue and it will fuel future innovations. Wafers

and products to support this technology and innovation will be produced somewhere in the world, and it will certainly require advanced lithography.”

To summarize, the driver market dynamics stresses the changes in the environment that might influence framing strategies of senior managers, this could be the extend of uncertainty in the market regarding the technological change, competition that tries to introduce technologies with the same purpose as ASML’s new technology, readiness of the market to transition to new technology, and legal issues.

4.1.2. Financial results

The second driver, financial results indicate the progress of a company, increasing or decreasing revenue may say something about the rising trust of the technology. Eindhovens dagblad (2016-02), translated from Dutch to English: The signal that ASML gave yesterday at the presentation of its quarterly figures is very mixed. The reported turnover of 1.33 billion euros is the lowest in eighteen months. In contrast, the forecast turnover for the current quarter of 1.7 billion euros is the second highest in the existence of the chip machine manufacturer from Veldhoven. It proves the erratic nature of the semiconductor industry. Even though CEO Peter Wennink foresaw this development six months ago.”

Tubantia (2018-04), translated from Dutch to English: “ASML and all its suppliers are currently producing chip machines at an unprecedented value. The current quarter will generate a record turnover of 3 billion euros, which means that the turnover target for 2020 for the entire year has already been almost achieved.”

As these quotes illustrate, the driver financial results affect framing strategies of senior managers as the financial numbers imply the current success of the company. When financial results are low, this does not translate legitimation towards the stakeholders concerning the new

introduced technology. Therefore, this might influence the confidence level about the new technology.

4.1.3. Sales of shares

The third driver, sales of shares, involves the investments of parties, as well as the, resell of the shares. When a lot of parties invest in the company, a certain degree of trust is indicated.

The same counts when shares are sold again, this might give the audience the feeling these parties do not have confidence anymore in the company. However, there might also be other reason for selling shares, such as the party’s need for liquid resources.

Eindhovens dagblad (2012-03), translated from Dutch to English:

With an agreement, which has aroused admiration in broad financial circles, ASML has committed its customer Intel as a research partner. TSMC and Samsung will also follow shortly, although their contribution will be smaller. Together, the three are pooling 1.38 billion euros to accelerate research at ASML. The development of EUV technology has to catch up and hardly anything has been done about increasing the chip disks from 300 to 450 millimeters.

Volkskrant (2015-01), translated from Dutch to English: “TSMC announced at the beginning of this year that it will sell its stake in ASML this month for 1.5 billion euros – with just under 600 million euros in profit.”

In summary, external and internal reasons for managers to change their framing strategy are considered to be the market dynamics, more specifically this includes uncertainty in the current environment about the technology, the market readiness to transition to a new technology, the competition, and legal issues. The financial results of ASML may induce change in the framing strategy of the company. An increase or decrease financial results indicates trust of the customer. Finally, sales of shares may drive change in framing strategies

of a senior manager, because this also may show the degree of trust from investors. In ASML’s case even customers became investors to accelerate the development of the technology. This expresses the trust of the customers