How Does ASML Make its Money?
ASML Holding is a Dutch company that manufactures the most advanced semiconductor lithography equipment in the world. Lithography is the core process in chipmaking — it uses light to print circuit patterns onto silicon wafers. ASML is the sole manufacturer of extreme ultraviolet (EUV) lithography machines, which are required to produce the most advanced chips (below 7nm) used in AI accelerators, smartphones, and high-performance computing.
ASML holds one of the most critical monopolies in the global technology supply chain. Every leading-edge chip from TSMC, Samsung, and Intel is made using ASML’s EUV machines. These machines cost $150-350 million each and are so complex that no other company has been able to replicate them despite decades of effort.
Revenue Breakdown
| Revenue Source | 2024 | 2023 | YoY Growth |
|---|---|---|---|
| EUV Systems | $11.2B | $9.8B | +14.3% |
| DUV & Other Systems | $8.8B | $9.0B | -2.2% |
| Installed Base Management | $6.5B | $5.9B | +10.2% |
| Total Revenue | $28.3B | $25.8B | +9.7% |
EUV Systems — 40% of Revenue
ASML’s crown jewel. EUV lithography systems use 13.5nm wavelength light to print the tiniest transistor patterns possible. The latest High-NA EUV systems (the TWINSCAN EXE series) enable sub-2nm chip production and cost over $350 million each. ASML shipped approximately 55 EUV systems in 2024. Demand is driven by TSMC, Samsung, and Intel racing to produce the most advanced AI and mobile chips.
DUV & Other Systems — 31% of Revenue
Deep ultraviolet (DUV) lithography systems, which use older but still essential technology for producing chips at 7nm and above. These machines are the workhorses of the semiconductor industry, used for everything from automotive chips to memory. DUV systems are less expensive ($50-100M each) but sold in higher volumes.
Installed Base Management — 23% of Revenue
Service, maintenance, upgrades, and refurbishment of the ~1,000+ ASML systems installed at customer fabs worldwide. This is a high-margin, recurring revenue stream that grows as the installed base expands. Customers pay annual service contracts and purchase upgrades to improve machine performance and extend useful life.
Income Statement Overview
| Metric | 2024 | 2023 |
|---|---|---|
| Total Revenue | €28.3B | €25.8B |
| Cost of Sales | €16.0B | €14.8B |
| Gross Profit | €12.3B | €11.0B |
| Operating Expenses | €4.6B | €4.2B |
| Operating Income | €7.7B | €6.8B |
| Net Income | €6.3B | €5.6B |
Key Financial Metrics
- Gross Margin: 43.5% — Despite selling machines that cost hundreds of millions each, ASML’s margins have expanded as EUV systems become a larger share of revenue. EUV systems carry higher margins than DUV.
- Operating Margin: 27.2% — Strong for capital equipment. The monopoly position eliminates pricing pressure.
- Revenue Growth: +9.7% — Growth was moderated in 2024 by China export restrictions and timing of EUV deliveries. Order backlog remains massive, suggesting acceleration ahead.
- Order Backlog: €36B+ — Represents over a year of revenue. Customers are committing years in advance to secure EUV capacity, providing exceptional visibility.
- R&D Spending: €4.2B — ASML invests heavily in next-generation High-NA EUV and future lithography technologies. This R&D spending is what maintains the monopoly.
What to Watch
- High-NA EUV adoption — The first High-NA systems (EXE:5000 series) have been delivered to Intel and TSMC. Broad adoption will drive the next leg of revenue growth as these machines cost 2x more than current EUV systems.
- China export restrictions — U.S. and Dutch government restrictions limit ASML’s ability to sell advanced lithography equipment to Chinese customers. China was previously a major revenue contributor. The extent of future restrictions directly impacts revenue.
- AI-driven demand — The AI infrastructure buildout requires the most advanced chips, which require EUV lithography. As AI spending accelerates, demand for ASML’s systems should grow correspondingly.
- Capacity expansion at TSMC, Samsung, Intel — All three major customers are building new fabs simultaneously (TSMC in Arizona and Japan, Samsung in Texas, Intel in Arizona and Ohio). This represents a generational capex cycle benefiting ASML.
- Next-generation lithography — Beyond High-NA EUV, ASML is researching what comes next. Maintaining the technology leadership moat is essential — though no competitor appears close to challenging ASML’s position.