// analysis
ASML: the earnings engine inside the installed base
ASML earns billions from machines already sold. How maintenance and upgrades create value, with the costs of downtime and export controls.
Sources and reading context
Contents11 sections
An ASML lithography machine can keep generating revenue long after it has been delivered. Its light source needs maintenance, its precision has to be sustained, parts wear out and customers may buy upgrades to raise throughput. In the third quarter of 2026, services and field options generated €3.289 billion. The earnings attached to machines already in factories now deserve as much attention as new equipment sales. 1, 2
The opportunity goes beyond customer loyalty. When chipmakers need more capacity, improving a tool that is already connected and qualified can be valuable. ASML gets another opportunity to monetise technology around which a customer has organised production. The practical question is how much of that incremental value the chipmaker keeps, and how much the equipment supplier can capture.
The accounts offer an initial answer, with an important qualification. In the first half of 2026, under European IFRS, services and field options accounted for almost all of the increase in gross profit. That comparison is also affected by higher amortisation of capitalised development spending. The figures show an accounting shift; standalone installed-base operating profit and contract-level returns remain undisclosed. 5; l0g calculations
A machine has more than one commercial life
Lithography projects circuit patterns onto silicon wafers. It is used at several stages in manufacturing. Extreme ultraviolet, or EUV, systems serve particularly demanding layers; deep ultraviolet, or DUV, is also used for other layers and processes. A production tool must combine resolution, alignment precision and throughput while remaining available on the factory floor. 13
Its usefulness can improve without replacing the entire machine. Upgrades can change wafer handling, light-source power, software or process precision. ASML describes these levers in its product and support documentation. An installed system is therefore a platform on which additional capabilities can be sold. 12, 13
The relationship can last a long time. ASML’s 2025 annual report says roughly 95% of the systems sold over the preceding thirty years remain in use. That is a statement about equipment longevity from the manufacturer. Utilisation rates and the value of current service contracts require separate evidence. An older tool can remain useful in a less advanced process while earning very different annual revenue from a recently installed EUV machine. 3, p. 18
Two forces shape the economics. Shipments expand the fleet that may require services. Technical improvements expand the products ASML can sell to certain generations of that fleet. Revenue also depends on how intensively customers operate the machines and when they choose to upgrade them. Counting tools is a starting point, rather than a formula for automatic annual income.
In Q3 2026, service and field-option sales rose 67.6% year on year, compared with 50.8% for systems. They represented 28.2% of quarterly sales. Their increase contributed €1.327 billion to a total revenue gain of €4.146 billion, or about 32%. Systems remained the larger source of incremental revenue in absolute terms, while the installed base became more important. 2; l0g calculations
Method and scope
US GAAP revenue in billion euros, Q3 2025 versus Q3 2026. Systems: 5.5538 then 8.3732; services and field options: 1.9622 then 3.2888. Totals: 7.516 and 11.662. Both bars use a zero-to-€12bn scale. Service growth: 67.6%. Contribution to total growth: 1.3266 / 4.1460 = 32.0%.
One revenue line, several contractual schedules
ASML calls the business Installed Base Management. In the financial statements, the relevant line is net service and field-option sales. It combines activities with different revenue patterns. Only some of them fit a straightforward recurring-revenue description.
A maintenance agreement may pay for staff and parts to be available over a defined period. Revenue is generally recognised over time as that stand-ready service is provided. Performance clauses can introduce variable remuneration. Billable parts and one-off work follow their own delivery or service milestones. 4, note 2
Other revenues track usage. Under the OnPulse model described by ASML, light-source maintenance payments depend on pulse counts. A fab running its tools harder may generate more of this revenue. The link to customer activity is more immediate than under a simple annual subscription. 4, note 2
Upgrades introduce another pattern. Some options are recognised when delivered. Work requiring substantial installation may be recognised over the installation period, according to the contractual performance obligation. A strong wave of upgrades can therefore create an exceptional quarter without turning into an identical subscription in the following quarter. 4, note 2
Method and scope
Qualitative schematic based on note 2 of the 2025 US GAAP accounts. Stand-ready services are generally recognised over time; OnPulse follows source pulses. Options may be recognised on delivery or over the progress of a significant installation. The shapes depict contractual timing, rather than actual amounts or revenue proportions.
That distinction helps explain Q3. In the prepared remarks for the 14 October earnings call, management attributed the installed-base business’s roughly €400 million guidance beat to strong demand for EUV and DUV productivity upgrades. It also linked the group’s 57.5% gross margin to particularly high-margin components within the installed-base business. Those comments identify a driver, rather than disclose the margin of the entire business. 6, p. 1
The different revenue streams can respond differently to a downturn. A maintenance retainer can provide visibility. Usage-linked components may weaken when production falls. A major upgrade can be advanced, deferred or grouped with other interventions. Treating the aggregate as one recurring revenue stream would conceal much of the mechanism investors and customers need to understand.
Where the gross-profit mix shifts
The statutory interim report provides a breakdown absent from the quarterly US GAAP table: cost of sales is separated between systems and services/options. That makes it possible to calculate gross profit for each category. Gross profit is the revenue left after costs classified as cost of sales; research, selling expenses and other charges still have to be covered. 5, pp. 5 and 12
Between the first halves of 2025 and 2026, gross profit from services and options rose from €2.185 billion to €3.164 billion. Systems remained close to €6.04 billion. The total increase of €982 million comprises €979.1 million from services/options and €2.9 million from systems. The installed-base category thus explains 99.7% of the increase in this accounting framework and period. 5; l0g calculations
Method and scope
H1 2025 versus H1 2026, EU-IFRS, unaudited and not externally reviewed. Systems gross profit: €6,038.2m then €6,041.1m; services and options: €2,185.2m then €3,164.3m. Changes: +€2.9m and +€979.1m. Higher amortisation of capitalised development affects the comparison. Research and other charges still have to be funded from gross profit; operating profit and cash flow are separate metrics. US GAAP follows different accounting treatment.
The accounting matters. ASML says the fall in its overall IFRS gross margin, from 53.3% to 50.9%, was mainly caused by higher amortisation of capitalised development spending. Some expenditure was initially recorded as an asset and is subsequently charged to earnings. The amortisation schedule can affect comparisons between periods and activities. The interim report itself has neither been audited nor reviewed by an external auditor. 5, pp. 4-7
US GAAP treats this spending differently. Extending the IFRS chart with the US quarterly margin, or transferring the 99.7% attribution to US GAAP, would produce a misleading series. The calculation describes the change in reported IFRS gross profit. It does not measure the whole operational improvement, cash generation or net earnings contribution.
Levels also matter. In H1 2026, services and options contributed about 34.4% of IFRS gross profit on 29% of revenue. Systems still generated nearly two-thirds of gross profit. Across the full 2025 year under US GAAP, calculated gross margins were 50.9% for services/options and 53.5% for systems. Superior installed-base profitability is therefore sensitive to product mix, timing and accounting, rather than an immutable feature of the business. 3, p. 54; 5; l0g calculations
Selling more output inside an existing fab
An upgrade’s value is easiest to understand from the customer’s side. A faster machine can handle more wafer passes in the same floor space. That additional capacity can avoid some of the constraints associated with installing another tool. Its actual value depends on the upgrade price, downtime, demand and the way the production line is organised.
A recent example shows the scale. The 2025 annual report describes a PEP-E software upgrade raising NXE:3800E productivity from 220 to 230 wafers per hour. That is a 4.5% increase in throughput. It is a vendor-reported capability, not an independent measurement of finished-chip output across customers’ fabs. 4, Product sustainability; l0g calculation
This physical distinction is crucial. A wafer passes through many operations, including repeated lithography steps. A faster lithography tool raises saleable-chip output only where the rest of the process allows it. A saturated inspection step, a slower downstream operation or poor manufacturing yield can constrain the benefit. Wafers per hour measure capacity at a particular step, not the number of finished chips leaving the fab.
For ASML, the value created gives room to negotiate. Pricing can reflect incremental capacity and costs the customer avoids. The customer still has choices: accept existing performance, postpone the upgrade, reorganise output or prioritise another investment. ASML’s technical role strengthens its position, while the contract and the customer’s realistically achievable gains shape the bill.
Pricing has a timeline, too. In the management video accompanying Q3 results, ASML says it has concluded new price negotiations with major customers. Their impact should be partly visible in 2027 and fully effective from 2028 onward. The comments concern group pricing discussions, without a split between machines and upgrades. Those future terms cannot simply be used to explain the margin already reported in Q3 2026. 7
Downtime changes the answer
A substantial upgrade can temporarily remove valuable production capacity. The transition cost helps explain why the decision is more complicated than comparing two throughput specifications.
At its September 2021 Investor Day, ASML presented an upgrade from NXT:1960 to NXT:1980: six weeks of work to raise throughput from 230 to 295 wafers per hour. This is a historical example. It is neither a universal installation time nor a description of current commercial terms. It is nevertheless a useful basis for isolating the production trade-off. 8, slide 22
Assume the original machine could keep running without interruption, while the upgraded tool immediately reaches its stated speed after forty-two days offline. Availability and loading are held equal before and after the work. Under those assumptions, cumulative wafer passes catch up about 191 days after the upgrade begins, or nearly 149 days after the tool restarts. This is an illustrative calculation, not a payback period published by ASML. 8; l0g scenario
Method and scope
Historical NXT:1960-to-NXT:1980 technical case presented by ASML in September 2021: 230 to 295 wafer passes per hour. l0g scenario: 42 days offline, equal constant 100% availability and loading, immediate restart and no other bottleneck. Cumulative-volume catch-up from the start: 42 × 295 / (295 − 230) = 190.615 days, or 148.615 days after restart. Over 365 days: 2,014,800 versus 2,286,840 passes, +13.5%. These are passes at one production step, separate from finished chips or financial payback.
During the shutdown, the no-upgrade path keeps producing. After restart, the extra speed gradually closes that gap. The catch-up date measured from the start of the work equals downtime multiplied by the new throughput, divided by the throughput improvement. The formula compares volumes. It does not price the upgrade, the customer’s margins or the cost of capital.
Over 365 days, assuming constant 100% availability and loading, the model produces roughly 2.287 million wafer passes with the upgrade, compared with 2.015 million without it. The cumulative gain is 13.5%, below the 28.3% improvement in steady-state throughput. A lower common availability or loading factor reduces both volumes but leaves this model’s catch-up date unchanged. A gradual ramp or different operating rates would change the answer. [l0g scenario using historical technical inputs from 8]
l0g / ASML / INDUSTRIAL CAPACITY
Downtime has a production cost
A faster machine can first fall behind while its upgrade is installed. Compare cumulative volumes with a machine that keeps running at its original speed.
Change the assumptions
TEACHING SCENARIO: throughput of 230 then 295 wafer passes per hour and six weeks of downtime come from an ASML example published in 2021. The 365-day horizon, 90% availability and 80% loading are l0g assumptions.
- Volume at the original speed
- passes
- Volume with the upgrade
- passes
- Cumulative volume difference
- passes
- Catch-up from the start of downtime
- days
+13.5 % · Difference over the selected horizon
Catch-up falls within the displayed horizon. After restart : 148.6 days.
Million wafer passes
Assumptions, formula and source
Availability is the fraction of time when the machine can operate; loading is the share of that capacity used. Both paths use the same rates. The upgraded speed is reached immediately at restart. Other factory steps, ramp-up, costs, prices and margins are outside this calculation.
Catch-up from the start = downtime × upgraded speed ÷ (upgraded speed − original speed), when throughput increases.
The historical technical parameters concern the NXT:1960 to NXT:1980 upgrade presented in 2021. ASML explained that periods of lower utilization could accommodate lengthy hardware upgrades.
ASML Investor Day 2021, slides 21–22
All calculations run in this page. Settings remain in memory only while it is open.
ASML’s 2021 presentation already noted that periods of lower utilisation can make lengthy hardware upgrades easier to schedule. This creates an interesting cyclical effect. A customer may use a production lull to improve its tools, whereas a fully loaded fab must attach a high value to every week offline. Usage-based services and upgrade demand can consequently react differently to the same industry cycle. 8, slide 21
A former 2030 range enters the 2026 outlook
In November 2024, ASML presented installed-base revenue scenarios for 2030 ranging from €11 billion to €13 billion. The three cases reflected a growing fleet and additional services sold to customers. They were conditional long-term scenarios built at that time. 9, slides 15-16
The first nine months of 2026 have already delivered €8.538 billion of realised revenue. Adding the approximately €3.7 billion that management expects for Q4 gives an implied full-year figure of about €12.2 billion. That falls inside the former 2030 range. It still depends on the fourth quarter being delivered and is not a reported annual result. 2, 6; l0g calculation
Method and scope
US GAAP service and field-option revenue. Reported 2025: €8.193bn. Reported nine months of 2026: €8.5381bn. Q4 guidance dated 14 October: about €3.7bn, implying €12.2381bn for the year if delivered. The dashed €11–13bn range represents the 2030 scenarios published on 14 November 2024, rather than updated guidance. Reported revenue, quarterly guidance and historical scenarios retain distinct visual status on a shared scale.
The comparison captures the pace of the acceleration, subject to two qualifications. A scenario presented in 2024 is not automatically the appropriate 2030 forecast today. And 2026 revenue may include a wave of upgrades whose repeatability has yet to be established. The level reached and the sustainable rate of activity answer different questions.
Future disclosures will need to be read for continuity in revenue, commentary on the mix and the associated cost trajectory. Sustained demand for upgrades could increase the fleet’s earnings potential. It could also bring forward work that customers would otherwise have undertaken later. Available public accounts do not quantify those effects separately.
Export controls can reach the service visit
A machine’s presence at a customer site does not ensure that every future part, software update or technical intervention can be supplied freely. Dutch strategic export-control policy also covers transfers of technology and certain services, including repair and maintenance. The treatment of an intervention depends on the product, destination, end user and applicable rules. 10
For example, the Netherlands announced an extension involving measurement and inspection technology on 15 January 2025, effective from 1 April that year. Its notice describes case-by-case licensing, rather than a blanket ban on all exports. Both the distinction and the two dates matter when political announcements are translated into revenue assumptions. 11
Method and scope
Regulatory mechanism schematic. Applicable rules depend on product, destination, end user and service. Both branches refer only to work requiring authorisation: approval under its terms, or delay/refusal. The diagram determines no individual licence, assumes no blanket prohibition and estimates no revenue loss.
The economic exposure extends over the life of the relationship. If a necessary authorisation is delayed or refused, a supplier may lose or defer work, and the customer may face maintenance or upgrade constraints. The impact will depend on spare-parts inventories, permitted alternatives and operating requirements. None of the public documents reviewed supports a precise estimate of revenue lost across ASML’s entire installed base in China under such a scenario.
Assessing that exposure requires a map of equipment and service types. The geographic mix of new-system sales alone does not reveal maintenance-revenue exposure. Long-lived machines can support sales for years while extending the period over which regulatory decisions may affect the relationship.
A stronger earnings engine, with economic rent still to be measured
The installed base gives ASML a powerful opportunity: sell the machine, support its operation and capture part of the value of improving it. Better use of capital already committed by the customer can create meaningful value, particularly when adding industrial capacity is difficult.
The figures support the growing importance of that engine. Its H1 IFRS gross-profit contribution is substantial; Q3 confirms accelerating revenue, and management identifies upgrades as a margin driver. Systems nevertheless remain the larger source of gross profit in absolute terms, and comparisons must preserve their accounting basis. 2, 5, 6
A strict claim of economic rent would require measuring returns after all relevant costs, against the capital and risks needed to deliver the business. Public disclosures do not isolate that calculation. Intervention pricing, allocated research costs, field-service economics and negotiated contractual terms remain largely unavailable.
The supported conclusion is more specific. Machines already sold have become a major source of revenue growth and, in some periods, gross-profit improvement. Their value depends on use, remaining technical potential and permission to supply it. Understanding ASML now requires looking beyond shipments to the work and revenue each installed generation can still support.
Method and limitations
This document-based investigation is current to 1 November 2026. Monetary figures are nominal euros. The US GAAP third quarter ended on 27 September 2026; the EU-IFRS first half ended on 28 June 2026. Comparisons retain their respective accounting frameworks. Contribution percentages and category margins are calculated from reported figures, while retaining the relevant periods and scopes.
Equipment performance, fleet longevity and operational explanations come from ASML. No independent customer-fab measurements, private contracts or interviews were obtained. Government sources establish the regulatory mechanism without determining individual equipment licences. Prepared remarks and the management video were reviewed; the prepared document does not contain the full question-and-answer session.
The workshop compares theoretical volumes at one lithography step. It is neither a complete production model nor an estimate of an upgrade’s financial return. Historical inputs are sourced and the simulator’s assumptions can be changed locally.
Further reading
Production speed meets electricity constraints in our analysis of TSMC and data-center power risk. The semiconductor stack of constraints places lithography in its wider industrial setting. On the financing side, falling compute prices and GPU-backed debt examine another way to value equipment already deployed.
Sources
- Third-quarter 2026 results
US GAAP results and management outlook; third quarter ended 27 September 2026. Rounded headline figures.
Passages and scope
Period: 2026 disclosure with the stated comparatives. Manufacturer capabilities and management explanations remain attributed to ASML.
- Q3 2026 US GAAP financial statements
Exhibit 99.3, pages 2 and 6: reported US GAAP quarterly and nine-month revenues, with 2025 comparisons. Unaudited.
Passages and scope
Period: 2026 disclosure with the stated comparatives. Manufacturer capabilities and management explanations remain attributed to ASML.
- 2025 strategic report
Pages 18, 54 and 58: fleet longevity, category gross margins and the historical 2030 scenarios. Longevity is a manufacturer statement.
Passages and scope
Period: 2025 reporting. Manufacturer capabilities and management explanations remain attributed to ASML.
- 2025 annual report, US GAAP
Note 2: service, OnPulse and upgrade revenue recognition. Product sustainability: the PEP-E software upgrade from 220 to 230 wafers per hour. PEP-E is documented on page 171, with the productivity table on page 177.
Passages and scope
Period: 2025 reporting. Manufacturer capabilities and management explanations remain attributed to ASML.
- 2026 statutory interim report, EU-IFRS
Exhibit 99.4, pages 4–7 and 12: EU-IFRS revenue and category costs. Neither audited nor reviewed. Category gross profit is a calculation, distinct from operating profit.
Passages and scope
Period: 2026 disclosure with the stated comparatives. Manufacturer capabilities and management explanations remain attributed to ASML.
- Q3 2026 earnings call: prepared remarks
Prepared remarks, pages 1–2: productivity upgrades, group margin and Q4 installed-base outlook. These remarks precede the full question-and-answer session.
Passages and scope
Period: 2026 disclosure with the stated comparatives. Manufacturer capabilities and management explanations remain attributed to ASML.
- Q3 2026 management video transcript
Management video transcript: concluded pricing negotiations, with a partial impact in 2027 and a full impact in 2028. Group commentary, without an upgrade-only split.
Passages and scope
Period: 2026 disclosure with the stated comparatives. Manufacturer capabilities and management explanations remain attributed to ASML.
- 2021 Investor Day: Customer Support
Wayne Allan, slides 21–22: scheduling lengthy upgrades and the NXT:1960-to-NXT:1980 example. Historical technical inputs, separate from our illustrative volume model.
Passages and scope
Period: historical 2021 presentation. Manufacturer capabilities and management explanations remain attributed to ASML.
- 2024 Investor Day: financial model
Roger Dassen, slides 15–16: conditional 2030 installed-base revenue scenarios of €11 billion, €12 billion and €13 billion, presented in 2024.
Passages and scope
Period: conditional 2030 scenarios presented in 2024. Manufacturer capabilities and management explanations remain attributed to ASML.
- Netherlands: strategic export-control policy
Official strategic-goods policy covering goods, technology and certain services. Individual equipment and interventions require their own regulatory assessment.
Passages and scope
Period: official documentation available at consultation. Individual interventions require their own regulatory assessment.
- Netherlands: announced extension of semiconductor export controls
Announcement of 15 January 2025, effective 1 April 2025: an extension involving measurement and inspection technology; case-by-case licensing.
Passages and scope
Period: official documentation available at consultation. Individual interventions require their own regulatory assessment.
- ASML: customer support
Official commercial documentation on maintenance, parts, diagnostics and support. Capabilities are described by the supplier.
Passages and scope
Period: official documentation available at consultation. Manufacturer capabilities and management explanations remain attributed to ASML.
- ASML: TWINSCAN NXE:3800E
Manufacturer documentation for the NXE:3800E, its productivity and optical system. This is not an independent measurement of customer output.
Passages and scope
Period: official documentation available at consultation. Manufacturer capabilities and management explanations remain attributed to ASML.
- AFM: filing of the 2026 interim report
AFM filing register: cross-check of the interim report publication date. Registration does not endorse the economic analysis.
Passages and scope
Period: 2026 disclosure with the stated comparatives. Individual interventions require their own regulatory assessment.
This analysis is not investment advice.
// cite this analysis
l0g, “ASML: the earnings engine inside the installed base”, l0g.fr, published November 01, 2026, updated November 01, 2026, https://l0g.fr/en/analysis/asml-earnings-engine-installed-base/
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