Last Updated -
May 30, 2026
Explore the business model, global strategy, and market performance including insights into its position in China.
ASML Holding N.V. is a semiconductor equipment company founded in 1984 and headquartered in Veldhoven, the Netherlands. It supplies lithography systems, the machines chipmakers use to project circuit patterns onto silicon wafers. ASML is the sole commercial supplier of extreme ultraviolet lithography, or EUV, used in leading-edge chip production, and it also sells deep ultraviolet lithography, metrology and inspection tools, computational lithography software, services, field upgrades and refurbished systems.
The company has developed from a Dutch equipment venture into a central supplier for global semiconductor manufacturing. Its strategy is to help chipmakers make smaller, faster and more energy-efficient chips by improving patterning accuracy, productivity and process control. ASML’s customer base is concentrated among the world’s largest logic, memory and foundry manufacturers, with Asia as its largest regional market and China remaining financially material despite export-control limits on advanced tools.
ASML had more than 44,000 full-time-equivalent employees at the end of 2025 and reported full-year 2025 net sales of €32.7 billion, net income of €9.6 billion and a 52.8% gross margin. In Q1 2026, net sales were €8.767 billion, gross margin was 53.0% and net income was €2.757 billion, with 67 new lithography systems and 12 used systems sold. Installed Base Management, which includes service and field-option sales for machines already in use, contributed €2.488 billion in the quarter, showing the importance of ASML’s aftermarket revenue alongside new system shipments.
ASML makes money by selling lithography and related semiconductor manufacturing systems to chipmakers, then generating service, maintenance and upgrade revenue from the installed base. Its tools are used to pattern integrated circuits, making the company a critical supplier to leading logic, memory and foundry manufacturers.
In Q1 2026, ASML reported total net sales of €8.767 billion, gross profit of €4.645 billion and a 53.0% gross margin. The quarter included 67 new lithography systems and 12 used lithography systems sold. Installed Base Management sales were €2.488 billion, equal to about 28% of quarterly sales, showing the importance of recurring service and field-option activity alongside new system deliveries.
The company’s operating model is capital intensive and research driven. ASML spent €4.7 billion on R&D in 2025, with Q1 2026 R&D costs highlighted at around €1.2 billion. This spending supports its EUV roadmap, High-NA EUV development, DUV improvements, metrology tools and computational lithography software.
ASML’s market position is exceptional because it is the sole commercial supplier of EUV lithography systems used in leading-edge chip production. EUV is central to the most advanced semiconductor nodes, while DUV remains important for mature chips and many advanced manufacturing steps. This gives ASML a broader role than a single-product equipment supplier.
Direct competitors are limited in the most advanced lithography market. Nikon and Canon compete in parts of the lithography equipment market, especially outside EUV. Applied Materials, Lam Research, KLA and Tokyo Electron are major semiconductor equipment peers, but they focus on adjacent process areas such as deposition, etch, process control and inspection rather than EUV lithography. Compared with U.S. peers such as Applied Materials or Lam Research, ASML has a narrower product focus but a stronger strategic position in one bottleneck technology.
ASML’s customer base is global and concentrated among large semiconductor manufacturers in Taiwan, South Korea, the United States, China, Japan and Europe. Asia is the company’s largest revenue region, accounting for €28.1 billion of ASML’s €32.7 billion in 2025 net sales, while the United States contributed €4.1 billion and EMEA €0.5 billion.
China remains financially material but politically constrained. Third-party reporting citing 2025 figures put China at 29.1% of ASML’s 2025 revenue, down from 36% in 2024. ASML has not shipped its most advanced EUV systems to China because of Dutch and U.S.-aligned export restrictions, and additional DUV licensing rules affect some Chinese sales and service activity. Management’s 2026 sales guidance of €36 billion to €40 billion includes a range for possible export-control outcomes, making policy a core variable in the business model.
ASML’s market position is strongest where chip complexity rises. AI infrastructure, advanced logic, HBM and advanced DRAM demand support customer investment in leading-edge capacity. At the same time, the business remains cyclical because a small group of large chipmakers drives demand, and revenue recognition depends on expensive, long lead-time systems. The result is a rare strategic equipment franchise with high margins, recurring installed-base revenue and meaningful exposure to semiconductor capital spending cycles.
China is a meaningful market for ASML, but its role is constrained by export controls. Asia accounted for €28.1 billion of ASML’s €32.7 billion 2025 net sales, and third-party reporting put China at 29.1% of 2025 revenue, down from 36% in 2024. China demand is concentrated in DUV systems, installed-base service and field upgrades, since ASML has not shipped its most advanced EUV systems to China under Dutch and U.S.-aligned restrictions. The company’s local strategy is therefore to serve legally permitted mature-node and installed-base demand while managing licensing limits on tools, upgrades and service for certain customers. Its main China competitors are domestic equipment suppliers in selected process steps, though none match ASML’s EUV position. In Q1 2026, ASML reported €8.767 billion of total sales, and management’s 2026 guidance explicitly included export-control outcomes, making China policy a material swing factor.
ASML entered 2026 from a position of strong demand but with a more complex growth mix. Full-year 2025 sales reached €32.7 billion, with a 52.8% gross margin and €9.6 billion of net income. In Q1 2026, sales were €8.767 billion, down from €9.718 billion in Q4 2025, while gross margin reached 53.0% and net income was €2.757 billion. The quarter showed both the lumpiness of system revenue and the resilience of the installed base, with Installed Base Management sales rising to €2.488 billion, about 28% of quarterly sales. Management updated its 2026 outlook to €36 billion to €40 billion of sales and a 51% to 53% gross margin, with Q2 sales expected at €8.4 billion to €9.0 billion.
ASML’s future direction is clear: defend EUV leadership, expand High-NA adoption, deepen installed-base revenue and support customers building advanced logic and memory capacity. The outlook is favorable if AI-related semiconductor investment stays strong and non-China demand offsets lower China activity. The main constraint is not market relevance, but policy risk, customer capex timing and the operational challenge of scaling some of the world’s most complex manufacturing equipment.
Next Earnings Planned for:
July 15, 2026
This Company Profile was written by Dominik Diemer
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