ASML (ASML) Q4 2025: EUV Systems Surge 39% as AI Demand Drives Record Orders
ASML’s Q4 2025 delivered a record-breaking finish, propelled by a decisive 39% leap in EUV system revenue as customer confidence in AI-fueled semiconductor demand translated into concrete capacity expansion. Management’s strategic pivot to streamline engineering leadership—cutting 1,700 roles but adding 1,400 new engineering positions—underscores a push for agility amid organizational complexity. With a robust order book and rising service revenue, ASML enters 2026 positioned for double-digit growth, though normalization in China and execution on supply chain ramp remain key watchpoints.
Summary
- AI-Driven Demand Converts to Orders: Customer conviction in AI infrastructure is now translating into aggressive fab buildouts and tool shipments.
- Engineering Restructuring Targets Agility: Leadership roles cut to reduce complexity, freeing resources for core innovation and product development.
- China Normalizes, EUV Accelerates: Shift in regional mix and product intensity signals maturing global customer base and technology migration.
Performance Analysis
ASML closed 2025 with net revenue of €32.7 billion and gross margin of 52.8%, marking a record year across all major metrics: sales, order intake, and cash flow. The standout driver was EUV (Extreme Ultraviolet) lithography systems, which jumped 39% year-over-year, fueled by both higher unit shipments and a richer mix of advanced, high-productivity tools. Notably, the average sales price rose as customers prioritized the latest 3800-series models, reflecting a shift to more advanced nodes and higher wafer throughput per tool.
Immersion lithography remained robust, but DeepUV (DUV) systems declined 6%, largely due to a pullback in China, which saw its share of system sales fall from 33% to 20% as backlog normalization set in. Installed base management and services surged 26%, now rivaling ASML’s total 2017 revenue, underscoring the resilience and recurring nature of the business. Metrology and inspection grew nearly 30%, reflecting customer needs for tighter process control and yield improvement at leading-edge nodes.
- EUV Outpaces All Other Segments: Advanced lithography now comprises 90% of system revenue, a clear sign of industry migration to leading-edge processes.
- Service and Upgrades Outperform: Installed base sales hit €8.2 billion, providing a buffer against cyclicality and supporting margin stability.
- China Decline Offsets Global Upside: Regional mix shift is pronounced, but offset by memory and logic expansions in Korea, US, and Europe.
R&D investment scaled to €4.7 billion, up sharply from €2.5 billion in 2021, enabling rapid product development but also driving organizational complexity that is now being addressed by management’s restructuring plan.
Executive Commentary
"We finished the year very, very, very strong with a record quarter, record year, record booking. And this is basically a sign of the direction this industry is taking."
Christophe Fouquet, CEO
"EUV grew 39% in comparison to last year... a mix of both more tools, significantly higher sales price... most of the tools that we sold in 2025 were 3800 tools, which... saw an increase in productivity from 160 wafers per hour to 220 wafers per hour."
Roger Dasse, CFO
Strategic Positioning
1. AI as a Multi-Segment Demand Catalyst
AI infrastructure investment is directly driving both advanced (EUV) and mature (DUV) lithography demand, with customers now confident enough to initiate new fab construction and capacity expansion. This tailwind is visible across logic and memory, with memory customers especially aggressive as high-bandwidth DRAM becomes a critical bottleneck.
2. Organizational Simplification to Unlock Engineering Productivity
ASML is executing a major restructuring of its technology leadership, eliminating 1,700 management roles while creating 1,400 new engineering positions. The aim is to reduce layers and decision bottlenecks, enabling engineers to focus on innovation rather than navigating matrix complexity. This move responds to both internal feedback and customer demands for faster, more responsive product development.
3. Installed Base and Recurring Revenue Fortify Resilience
Services, upgrades, and installed base management now represent a material share of overall revenue, helping to buffer ASML against cyclical swings in system sales. As the EUV installed base expands, so does the high-margin service opportunity, creating a durable growth vector independent of new tool cycles.
4. Regional and Product Mix Shifts
China’s contribution to system sales is normalizing as pandemic-era backlog clears, while Korea, the US, and Europe are picking up the slack with advanced node investments. Memory’s share of end-use is set to rise in 2026, reflecting the outsized role of AI in driving DRAM demand.
5. Technology Roadmap and Capacity Readiness
ASML’s R&D focus remains squarely on EUV, with ongoing development of high-NA and future high-productivity platforms. The company is incrementally ramping its own and its supply chain’s capacity to meet a projected surge in high-volume shipments, while also preparing for eventual insertion of even more advanced (INA, hyper-NA) tools in the late decade.
Key Considerations
This quarter’s results highlight a pivotal inflection in both market demand and internal execution, with ASML navigating a rare combination of external tailwinds and self-imposed transformation.
Key Considerations:
- AI Demand Converts to Real Orders: Customer announcements are now translating to tangible shipments, not just capex signaling.
- Leadership Layer Reduction: The shift from 4,500 to 1,500 technology leaders, with 1,400 new engineering roles, is designed to accelerate innovation velocity.
- Supply Chain and Capacity Scaling: ASML and its partners are ramping long-lead items and move rates to support 2026’s expected volume surge.
- Service Revenue as a Shock Absorber: Growing installed base sales provide downside protection in the event of system order volatility.
- Regional Demand Rotation: Declining China sales are offset by new investment cycles in Korea, the US, and Europe, shifting the geographic center of gravity.
Risks
Execution risk is elevated as ASML undertakes a major organizational restructuring while simultaneously ramping output to meet record demand. The normalization of China sales could expose the company to regional volatility if other markets do not scale as expected. Supply chain constraints, fab readiness among customers, and the timing of advanced node adoption remain potential bottlenecks. Management’s forward-looking statements hinge on sustained AI momentum and continued customer investment discipline.
Forward Outlook
For Q1 2026, ASML guided to:
- Net revenue between €8.2 billion and €8.9 billion
- Gross margin between 51% and 53%
For full-year 2026, management guided:
- Revenue of €34 to €39 billion, implying a midpoint growth of 12% over 2025
- Gross margin of 51% to 53%
Management highlighted:
- Strong EUV and installed base business as primary growth engines
- Non-EUV business expected to be flat, with China sales declining to 20% of total
Takeaways
ASML’s trajectory is defined by a synchronized surge in AI-driven demand and a decisive internal reorganization, both of which aim to sustain technology leadership and operational agility.
- EUV Momentum Defines Cycle: Advanced lithography is now the clear growth engine, outpacing legacy segments and reshaping the revenue mix.
- Organizational Simplification as Strategic Lever: The leadership cutback is a proactive move to unlock engineering capacity, not a cost-saving reaction.
- Watch for Supply Chain and Customer Fab Readiness: The next test will be whether ASML and its customers can synchronize capacity ramp without bottlenecks or delays.
Conclusion
ASML exits 2025 with record results and a robust order pipeline, underpinned by AI’s transformation of semiconductor demand. The company’s willingness to restructure for speed and innovation, even amid a boom, signals a management team focused on long-term leadership. Execution on both organizational and supply chain fronts will be critical as the industry enters a new phase of technology intensity and geographic diversification.
Industry Read-Through
ASML’s results provide a clear read-through for the broader semiconductor equipment ecosystem: AI is now a realized, not just anticipated, demand driver, leading to accelerated fab construction and tool ordering across both logic and memory. The normalization of China’s contribution suggests that future growth will be more globally diversified, with Korea, the US, and Europe taking the lead in advanced node adoption. Equipment vendors, materials suppliers, and service providers should expect increased demand for high-throughput, advanced process tools, while also preparing for ongoing organizational complexity as scale and technology roadmaps converge.