ASML reviews 2028 EUV tool expansion as Q3 sales hit €11.7B

ASML said Oct. 14, 2026, it is investigating expanding lithography equipment manufacturing capacity beyond its 30% target for 2028 after reporting third-quarter net sales of €11.7 billion ($12.7 billion).

Quarterly revenue grew 25% from €9.3 billion in the second quarter, reaching the upper end of management guidance. Operating profitability rose alongside demand for lithography machines used to manufacture artificial intelligence processors.

Installed base management revenue, which includes machine servicing and software productivity upgrades, rose 19% sequentially to €3.3 billion ($3.6 billion). That division exceeded quarterly guidance by €400 million, generating 28% of total revenue.

Net income totaled €5.0 billion ($5.4 billion), up 71% from €2.92 billion in the previous quarter. The figure included a €500 million valuation gain on ASML's equity investment in French software developer Mistral AI.

Gross margin widened to 57.5%, beating corporate forecasts. Chief Financial Officer Roger Dassen attributed the margin performance to high-margin upgrade packages that increase wafer throughput on existing factory lines without requiring cleanroom expansion.

ASML raised the lower boundary of its full-year 2026 revenue guidance to between €44 billion and €45 billion ($48 billion to $49 billion). The previous guidance range stood between €43 billion and €45 billion.

The updated full-year forecast represents 36% revenue growth over 2025 levels, with gross margins targeted at 56%. Fourth-quarter net sales are projected between €14.2 billion and €15.2 billion, the company said.

ASML booked net system sales of €8.4 billion ($9.1 billion) during the three months ended Sept. 30, shipping 113 new lithography machines and five used systems. Logic manufacturers generated 54% of system revenue.

Memory manufacturers generated 46% of quarterly tool revenue as fabricators ramped production of high-bandwidth memory modules. ASML expects full-year equipment sales to memory clients to rise 75% compared to 2025.

Extreme ultraviolet systems accounted for €4.1 billion ($4.5 billion) across 17 units shipped in the quarter, including one commercial High-NA tool. Deep ultraviolet and metrology systems generated €4.3 billion in revenue.

Chief Executive Officer Christophe Fouquet said scheduled machine shipments will fail to satisfy chipmaker demand in 2027 and 2028. Customers are already requesting shipment allocations for 2029 and 2030 delivery slots, Fouquet said.

ASML previously planned to assemble 65 low numerical aperture EUV scanners in 2026, up from 44 tools in 2025. The company planned a 30% capacity expansion in 2027, followed by another 30% in 2028.

Fouquet said the toolmaker has initiated formal engineering and procurement reviews to expand 2028 capacity beyond that 30% addition. Management cited rising lithography intensity — the number of patterning exposures per wafer — in leading-edge fabs.

Taiwan Semiconductor Manufacturing Co. takes approximately 35% of ASML's EUV shipments as it equips 2-nanometer wafer plants. TSMC agreed to co-develop 12-inch photomasks with ASML to raise dual-mask productivity above 40% on High-NA lines.

Samsung Electronics and SK hynix draw an estimated 30% of global EUV shipments to support DRAM fabrication in South Korea. SK hynix applies EUV patterning to its 10-nanometer class fourth-generation memory chips for Nvidia AI accelerators.

Intel processed more than 1 million test wafers through ASML's High-NA EUV equipment to validate its internal fabrication process. The numerical aperture upgrade from 0.33 to 0.55 allows chipmakers to print finer circuit lines in a single step.

Mainland Chinese buyers generated 20% of ASML's net sales during the quarter, matching previous guidance. Dutch export licensing restrictions and American trade rules prohibit ASML from shipping advanced EUV systems and immersion DUV scanners to Chinese plants.

To raise equipment output, ASML reduced cleanroom assembly cycles from 22 weeks to 15 weeks by streamlining optical calibration routines. Production teams reallocated floor space from laboratory research cabins directly into commercial assembly bays, Dassen said.

The company also shipped its YieldStar 550 metrology scanner during the quarter to support circuit alignment on 2-nanometer logic and advanced memory. The metrology scanner offers 60% higher measurement throughput than preceding inspection tools.

ASML repurchased €4.1 billion ($4.5 billion) in common stock during the third quarter under an ongoing capital allocation program. The supervisory board approved an interim dividend of €1.88 per share, payable Nov. 4, 2026.

The company has not published targeted unit build numbers or specific component supplier procurement targets for the proposed 2028 manufacturing expansion.

Management will present updated capacity goals and long-term volume projections at its next Capital Markets Day on June 10, 2027.