Q2 2026 ASML Holding NV Earnings Call

July 15, 2026

Operator: Good day. Thank you for standing by. Welcome to the ASML 2026 Q2 Financial Results Conference Call on 15 July 2026. At this time, all participants are in a listen-only mode. After the speaker's introduction, there will be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mr. Jim Kavanagh. Please go ahead.

Speaker #1: After this speaker's introduction, there'll be a question-and-answer session. To ask a question during the session, you will need to press *1 and 1 on your telephone.

Speaker #1: You will then hear an automated message advising your hand is raised. To withdraw your question, please press *1 and 1 again. Please be advised that today's conference is being recorded.

Speaker #1: I would now like to hand the conference over to Mr. Jim Kavanagh. Please go ahead.

Speaker #2: Thank you, operator. Welcome, everyone. This is Jim Kavanagh, Head of Investor Relations at ASML. Joining me today on the call are ASML CEO Christophe Fouquet and our CFO, Roger Dassen.

Jim Kavanagh: Thank you, operator. Welcome, everyone. This is Jim Kavanagh, Head of Investor Relations at ASML. Joining me today on the call are ASML CEO, Christophe Fouquet, and our CFO, Roger Dassen. The subject of today's call is ASML's 2026 Q2 results. The length of the call will be 60 minutes. Questions will be taken in the order they are received. This call is also being broadcast live over the internet on www.asml.com. A transcript of management's opening remarks and a replay of the call will be available on our website shortly following the conclusion of this call. Before we begin, I would like to caution listeners that comments made by management during this conference call will include forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve material risks and uncertainties.

Speaker #2: The subject of today's call is ASML's second quarter 2026 results. The length of the call will be 60 minutes, and questions will be taken in the order they are received.

Speaker #2: This call is also being broadcast live over the internet on www.asml.com. A transcript of management's opening remarks and a replay of the call will be available on our website shortly following the conclusion of this call.

Speaker #2: Before we begin, I would like to caution listeners that comments made by management during this conference call will include forward-looking statements within the meaning of the Federal Securities Laws.

Speaker #2: These forward-looking statements involve material risks and uncertainties. For a discussion of risk factors, I encourage you to review the Safe Harbor statement contained in today's press release and presentation found on our website at www.asml.com.

Jim Kavanagh: For a discussion of risk factors, I encourage you to review the safe harbor statement contained in today's press release and presentation found on our website at www.asml.com, and on ASML's annual report on the Form 20-F and other documents as filed with the Securities and Exchange Commission. With that, I would like to turn the call over to Christophe Fouquet for a brief introduction.

Speaker #2: And on ASML's annual report on the Form 20F and other documents, as filed with the Securities and Exchange Commission. With that, I would like to turn the call over to Christophe Fouquet for a brief introduction.

Speaker #3: Thank you, Jim. Welcome, everyone, and thank you for joining us for our second quarter 2026 results conference call. Before we begin the Q&A session, Roger and I would like to provide an overview and some commentary on the second quarter 2026 results, as well as provide some additional comments on the current business environment and on our future business outlook.

Christophe Fouquet: Thank you, Jim. Welcome, everyone, and thank you for joining us for our Q2 2026 results conference call. Before we begin the Q&A session, Roger and I would like to provide an overview and some commentary on the Q2 2026 results, as well as provide some additional comments on the current business environment and on our future business outlook. Roger.

Speaker #2: Roger?

Speaker #4: Thank you, Christophe, and welcome, everyone. I will first review the second quarter 2026 financial accomplishments, and then provide guidance on the third quarter and the full year of 2026.

Jim Kavanagh: Thank you, Christophe, and welcome everyone. I will first review the Q2 2026 financial accomplishments and then provide guidance on the Q3 and the full year 2026. Let me start with our Q2 accomplishments. In the Q2 2026, total net sales were €9.3 billion, which is above the high end of our guidance as a result of higher-than-expected Installed Base Management sales. Net system sales were €6.6 billion, which included €3.8 billion from EUV system sales, including sales of one High NA system, and €2.8 billion from non-EUV system sales. Net system sales were almost equally split between logic at 51% and memory at 49%. Installed Base Management sales for the quarter came in at €2.8 billion, almost €300 million above our guidance, a result driven primarily by additional upgrade business.

Speaker #4: Let me start with our second quarter accomplishments. In the second quarter of 2026, total net sales were $9.3 billion euros, which is above the high end of our guidance as a result of higher-than-expected install-based management sales.

Speaker #4: Net systems sales were €6.6 billion, which included €3.8 billion from EUV systems sales, including sales of one high-end system, and €2.8 billion from non-EUV systems sales.

Speaker #4: Net systems sales were almost equally split between Logic at 51% and Memory at 49%. Install-based management sales for the quarter came in at $2.8 billion euros, almost $300 million euros above our guidance, a result-driven primarily by additional upgrade business.

Speaker #4: Gross margin for the quarter was above our guidance at 54%, primarily due to the contribution of very high-margin components within our install-based management business.

Jim Kavanagh: Gross margin for the quarter was above our guidance at 54%, primarily due to the contribution of very high-margin components within our Installed Base Management business. Our operating expenses were higher than guided due to the recognition of estimated costs related to the technology and IT transformation in Q2, primarily in R&D. R&D expenses came in at €1.3 billion, and SG&A expenses came in at around €3 billion. The effective tax rate for Q2 was 17.5%. For the full year 2026, we expected annualized effective tax rate is around 17%. Net income in Q2 was €2.9 billion, representing 31.3% of total net sales, resulting in earnings per share of €7.59. Turning to the balance sheet, we ended the Q2 with cash equivalents, and short-term investments at a level of €7.6 billion. Our free cash flow in Q2 was €1.3 billion. Moving to our cash return to our shareholders.

Speaker #4: Our operating expenses were higher than guided due to the recognition of estimated costs related to the technology and IT transformation in Q2, primarily in R&D.

Speaker #4: R&D expenses came in at $1.3 billion euros and SG&A expenses came in at around $0.3 billion euros. The effective tax rate for Q2 was 17.5% for the full year 2026.

Speaker #4: We expected annualized effective tax rate is around 17%. Net income in Q2 was $2.9 billion euros, representing 31.3% of total net sales, resulting in earnings per share of 7.159 euros.

Speaker #4: Turning to the balance sheet, we ended the second quarter with cash, cash equivalents, and short-term investments at a level of €7.6 billion. Our free cash flow in Q2 was €1.3 billion.

Speaker #4: Moving to our cash return to our shareholders, in Q2, ASML paid the final dividend over 2025 of $2.70 per ordinary share. Together with the three interim dividends paid in 2025 and 2026, this resulted in a total dividend for 2025 of 7.50 euro per ordinary share.

Jim Kavanagh: In Q2, ASML paid the final dividend over 2025 of €2.70 per ordinary share. Together with the three interim dividends paid in 2025 and 2026, this resulted in a total dividend for 2025 of €7.50 per ordinary share. In the Q2, we purchased around €1.1 billion worth of shares under the current 2026-2028 share buyback program. The first quarterly interim dividend over 2026 will be €1.88 per ordinary share and will be made payable on 5 August 2026. With that, I would like to turn to our expectations for the Q3 2026.

Speaker #4: In the second quarter, we purchased around 1.1 billion euros' worth of shares under the current 2026-2028 share buyback program. The first quarterly interim dividend over 2026 will be $1.88 euro per ordinary share, and will be made payable on August 5, 2026.

Speaker #4: With that, I would like to turn to our expectations for the third quarter of 2026. We expect Q3 total net sales to be between €11 billion and €12 billion.

Roger Dassen: We expect Q3 total net sales to be between EUR 11 billion and EUR 12 billion. We expect our Q3 Installed Base Management sales to be around EUR 2.9 billion. Gross margin for Q3 is expected to be between 55% and 57%. The expected R&D expenses for Q3 are around EUR 1.2 billion, and SG&A is expected to be around EUR 0.4 billion. Driven by continued strong demand, we are updating our full year 2026 guidance. We now expect total net sales between EUR 43 billion and EUR 45 billion, with a gross margin between 54% and 56%, billion numbers in euros. With that, I would like to turn the call back over to Christophe.

Speaker #4: We expect our Q3 install-based management sales to be around $2.9 billion euros, gross margin for Q3 is expected to be between 55 and 57%.

Speaker #4: The expected R&D expenses for Q3 are around €1.2 billion, and SG&A is expected to be around €0.4 billion. Driven by continued strong demand, we are updating our full-year 2026 guidance.

Speaker #4: We now expect total net sales between $43 and $45 billion, with a gross margin between 54% and 56%. Billion numbers in euros. With that, I would like to turn the call back over to Christophe.

Speaker #2: Thank you, Roger. I will now provide some additional details on the dynamics that prompted us to raise our guidance for the full year. The combination of continued strong momentum in customer demand and our ability to respond to that by driving higher output was strength in our supply chain or manufacturing and our install teams in the field are the primary drivers of our improved guidance.

Christophe Fouquet: Thank you, Roger. I will now provide some additional details on the dynamics that prompted us to raise our guidance for the full year. The combination of continued strong momentum in customer demand and our ability to respond to that by driving higher output through strengths in our supply chain, our manufacturing, and our install teams in the field are the primary drivers of our improved guidance. Strong end market demand this year has motivated our customers to aggressively add capacity on their leading-edge nodes. A number of our customers have revised their capital expenditure plans upward for the year, and our ability to increase output has allowed us to meet their request for additional lithography system. The dynamics are very similar in both advanced logic and DRAM, and the plans to build up capacity are equally aggressive.

Speaker #2: Strong end-market demand this year, as motivated our customers to aggressively add capacity on their leading-edge nodes. A number of our customers have revised their capital expenditure plans upward for the year.

Speaker #2: And our ability to increase output has allowed us to meet their requests for additional lithography systems. The dynamics are very similar in both advanced logic and DRAM.

Speaker #2: And the plans to build up capacity are equally aggressive. Our customers in both segments are entering into long-term agreements with their customers, providing them with longer-term visibility and the confidence to add significant capacity to support demand.

Christophe Fouquet: Our customers in both segments are entering into long-term agreements with their customer, providing them with longer-term visibility and the confidence to add significant capacity to support demand. In logic, there is a continued investment, not only to enable the expansion of 3nm capacity in support of the latest generation of AI accelerators, but also at both the 5nm and the 4-nanometer nodes to support the diverse set of chips required by AI product. At the same time, the 2-nanometer node continues to ramp rapidly to support next generation HPC and mobile applications. Our customers are already planning investment to support the development of the 1.4-nanometer nodes. These dynamics in the logic segments are driving both an increase in litho intensity and greater demand for advanced lithography. We now expect advanced logic foundry-related net system sales to grow over 25% this year.

Christophe Fouquet: Our customers in both segments are entering into long-term agreements with their customer, providing them with longer-term visibility and the confidence to add significant capacity to support demand. In logic, there is a continued investment, not only to enable the expansion of 3nm capacity in support of the latest generation of AI accelerators, but also at both the 5nm and the 4nm nodes to support the diverse set of chips required by AI product. At the same time, the 2-nanometer node continues to ramp rapidly to support next generation HPC and mobile applications. Our customers are already planning investment to support the development of the 1.4-nanometer nodes. These dynamics in the logic segments are driving both an increase in litho intensity and greater demand for advanced lithography. We now expect advanced logic foundry-related net system sales to grow over 25% this year.

Speaker #2: In logic, there is a continued investment, not only to enable the expansion of 3-nanometer capacity in support of the latest generation of AI accelerators, but also at both the 5-nanometer and the 4-nanometer nodes to support the diverse set of chips required by AI products.

Speaker #2: At the same time, the 2-nanometer node continues to ramp rapidly to support next-generation HPC and mobile applications. And our customers are already planning investment to support the development of the 1.4-nanometer nodes.

Speaker #2: This dynamics in the logic segments are driving both an increase in litho-intensity and greater demand for advanced lithography. We now expect advanced logic foundry-related net systems sales to grow over 25% this year.

Speaker #2: In DRAM, the supply challenges driving up both DDR and HBM prices have prompted significant investments in fab expansion. Our customers are adding meaningful capacity this year, while at the same time they plan further capacity expansion as indicated by the plans to build multiple megafabs.

Christophe Fouquet: In DRAM, the supply challenges driving up both DDR and HBM prices have prompted significant investments in fab expansion. Our customers are adding meaningful capacity this year, while at the same time they plan further capacity expansion, as indicated by the plans to build multiple mega fabs. These additions will come online in phases over the coming years. In addition, DRAM lithography intensity is rising as customers migrate to advanced nodes. This includes both EUV and DUV immersion, with EUV Low-NA growth driven by the increased replacement of multi-patterning with more cost-effective single exposure EUV. As a result, we anticipate our memory-related net system sales to grow by over 75% this year. I will now turn it back over to Roger to provide details on what that means for the different parts of our business and our plans to support this growing demand.

Speaker #2: This addition will come online in phases over the coming years. In addition, DRAM lithography intensity is rising, as customers migrate to advanced nodes. This includes both EUV and DPV immersion.

Speaker #2: With EUV low-NA growth driven by the increased replacement of multi-patterning with more cost-effective single-expose EUV. As a result, we anticipate our memory-related net systems sales to grow by over 75% this year.

Speaker #2: I will now turn it back over to Roger to provide details on what that means for the different parts of our business and our plans to support this growing demand.

Speaker #1: Thanks, Christophe. Starting first with our EUV business, we now expect to ship around 65 low-NA EUV systems this year, resulting in year-over-year EUV net system sales growth of over 45%.

Roger Dassen: Thanks, Christophe. Starting first with our EUV business. We now expect to ship around 65 Low-NA EUV systems this year, resulting in year over year EUV net system sales growth of over 45%. This demand is being fueled by very strong momentum in both DRAM and advanced logic. Moving to the DUV business. For immersion DUV, we expect about 130 shipments this year, which is similar to the output level of these systems in 2025. This year, we have worked closely together with our supply chain partners to re-accelerate our output of these systems. Shipments of dry DUV systems have also increased markedly this year. Further, greater process control intensity at advanced nodes has led to major traction when it comes to adoption of our optical and metrology products across all key customers.

Speaker #1: This demand is being fueled by very strong momentum in both DRAM and advanced logic. Moving to the DPV business: For immersion DPV, we expect about 130 shipments this year, which is similar to the output level of these systems in 2025.

Speaker #1: This year, we have worked closely together with our supply chain partners to re-accelerate our output of these systems. Shipments of dry DPV systems have also increased markedly this year.

Roger Dassen: Further, greater process control intensity at advanced nodes has led to major traction when it comes to adoption of our optical and metrology products across all key customers. Given these trends in our DUV and metrology and inspection business, we expect growth in non-EUV net system sales of around 25% this year. Installed Base Management sales are expected to grow over 30% this year, driven by service revenue from our expanding EUV installed base and customer demand for performance and productivity upgrades to support their increasing capacity requirements. Turning to our China-related business.

Speaker #1: Further, greater process control intensity at advanced nodes has led to major traction when it comes to adoption of our optical and beam ED metrology products across all key customers.

Speaker #1: Given these trends and our DPV and metrology and inspection business, we expect growth in non-EUV net systems sales of around 25% this year. Installed base management sales are expected to grow over 30% this year, driven by service revenue from our expanding EUV install base and customer demand for performance and productivity upgrades to support their increasing capacity requirements.

Roger Dassen: Given these trends in our DUV and metrology and inspection business, we expect growth in non-EUV net system sales of around 25% this year. Installed Base Management sales are expected to grow over 30% this year, driven by service revenue from our expanding EUV installed base and customer demand for performance and productivity upgrades to support their increasing capacity requirements. Turning to our China-related business. We continue to expect this to make up around 20% of our total net sales for the full year, as it increases in line with the overall business, mainly related to an increased demand in mainstream logic. With regard to our capacity plans, we are continuing to have very constructive conversations with our customers to better understand the demand for our systems beyond 2026.

Speaker #1: Turning to our China-related business, we continue to expect this to make up around 20% of our total net sales for the full year, as it increases in line with the overall business, mainly related to an increased demand in mainstream logic.

Roger Dassen: We continue to expect this to make up around 20% of our total net sales for the full year, as it increases in line with the overall business, mainly related to an increased demand in mainstream logic. With regard to our capacity plans, we are continuing to have very constructive conversations with our customers to better understand the demand for our systems beyond 2026. With increasing visibility into their customers' plans, our customers have been able to share forecasts with us that extend out multiple years.

Speaker #1: With regard to our capacity plans, we are continuing to have very constructive conversations with our customers to better understand the demand for our systems beyond 2026.

Speaker #1: With increasing visibility into their customer plans, their customers' plans, our customers have been able to share forecasts with us that extend out multiple years.

Roger Dassen: With increasing visibility into their customers' plans, our customers have been able to share forecasts with us that extend out multiple years.

Speaker #1: We see this heightened visibility reflected in auto momentum that has remained extremely strong through the first half of the year. As a result, our backlog continues to increase with a broad mix of customers.

Jim Kavanagh: We see this heightened visibility reflected in order momentum that has remained extremely strong through the H1 of the year. As a result, our backlog continues to increase with a broad mix of customers. For 2027, we are now close to being fully covered with orders for Low-NA EUV, and we are planning to increase our Low-NA EUV capacity by around 30%. Looking ahead to 2028, we have already received a significant number of Low-NA EUV orders. Strong demand forecasts from our customers have led us to investigate a further 30% capacity increase for that year. Similarly, for our immersion systems, we intend to increase capacity by 30% in 2027 and are investigating a potential further 30% expansion for 2028. With that, I would like to turn it back over to Christophe.

Roger Dassen: We see this heightened visibility reflected in order momentum that has remained extremely strong through the H1 of the year. As a result, our backlog continues to increase with a broad mix of customers. For 2027, we are now close to being fully covered with orders for Low-NA EUV, and we are planning to increase our Low-NA EUV capacity by around 30%. Looking ahead to 2028, we have already received a significant number of Low-NA EUV orders. Strong demand forecasts from our customers have led us to investigate a further 30% capacity increase for that year. Similarly, for our immersion systems, we intend to increase capacity by 30% in 2027 and are investigating a potential further 30% expansion for 2028. With that, I would like to turn it back over to Christophe.

Speaker #1: For 2027, we are now close to being fully covered with orders for low-NA EUV, and we are planning to increase our low-NA EUV capacity by around 30%.

Speaker #1: Looking ahead to 2028, we have already received a significant number of low-NA EUV orders. Strong demand forecasts from our customers have led us to investigate a further 30% capacity increase for that year.

Speaker #1: Similarly, for our immersion systems, we intend to increase capacity by 30% in 2027, and our investigating a potential further 30% expansion for 2028. With that, I would like to turn it back over to Christophe.

Speaker #2: Thank you, Roger. Turning to our technology roadmap, we see INA EUV continue to make good progress. We are continuing to work very closely with our customers to prove the value of INA technology for their process technology roadmaps.

Christophe Fouquet: Thank you, Roger. Turning to our technology roadmap, we see High-NA EUV continue to make good progress. We are continuing to work very closely with our customers to prove the value of High-NA technology for their process technology roadmaps. In parallel, the maturity of the platform is improving towards the level required for insertion into high-volume manufacturing. We are also very pleased to announce in a press release earlier today that Intel Foundry is using ASML High-NA EUV technology on the Intel 18A process node to produce a subset of its Intel Core Ultra Series 3 processors. This milestone marks an important step in demonstrating High-NA EUV readiness in a production environment. To conclude, customer demand remains very strong, with visibility now extending several years into the future.

Speaker #2: In parallel, the maturity of the platform is improving toward the level required for insertion into high-volume manufacturing. We are also very pleased to announce, in a press release earlier today, that Intel Foundry is using ASML INA EUV technology on the Intel 18A process node to produce a subset of its Intel Core Ultra Series 3 processors.

Speaker #2: This milestone marks an important step in demonstrating INA EUV readiness in a production environment. To conclude, customer demand remains very strong, with visibility in our expanding several years into the future.

Speaker #2: We have responded effectively to the increasing demand, and will continue investing to ensure our capacity and capability remains aligned with our customer needs. We also see that the rapid growth of AI-related demand in advanced logic and DRAM is accelerating the move toward more advanced lithography solution and increasing lithography intensity.

Christophe Fouquet: We have responded effectively to the increasing demand and will continue investing to ensure our capacity and capability remains aligned with our customer needs. We also see that the rapid growth of AI-related demand in advanced logic and DRAM is accelerating the move toward more advanced lithography solution and increasing lithography intensity. At our next Capital Markets Day, which will be held on 10 June 2027, we will update our longer-term views to reflect the market and technology dynamics since our last Capital Markets Day. I look forward to seeing many of our investors there. With that, we will be happy to take your questions.

Speaker #2: At our next Capital Markets Day, which will be held on June 10, 2027, we will update our longer-term views to reflect the market and technology dynamics since our last Capital Markets Day.

Speaker #2: I look forward to seeing many of our investors there. With that, we will be happy to take your questions.

Speaker #1: Thank you, Roger. And thank you, Christophe. The operator will instruct you momentarily on the protocol for the Q&A session. Beforehand, I would like to ask that you kindly limit yourself to one question with one short follow-up, if necessary.

Jim Kavanagh: Thank you, Roger, and thank you, Christophe. The operator will instruct you momentarily on the protocol for the Q&A session. Beforehand, I would like to ask that you kindly limit yourself to one question with one short follow-up if necessary. This will allow us to get through as many callers as possible. Now, operator, can we have your final instructions and then the first question, please?

Speaker #1: This will allow us to get through as many callers as possible. Now, operator, can we have your final instructions and then the first question, please?

Speaker #3: Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced.

Operator: Thank you. As a reminder, to ask a question, you will need to press *1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press *1 and 1 again. We will now go to the first question. One moment, please. Your first question today comes from the line of François Bovet from UBS. Please go ahead.

Speaker #3: To withdraw your question, please press star 1 and 1 again. We will now go to the first question. One moment, please. And your first question today, comes from the line of François Beauvignier from UBS.

Speaker #3: Please go ahead.

Speaker #4: Thank you very much. My first question, maybe, is: ASML has often described its pricing approach as being based on the value delivered to customers.

François-Xavier Bouvignies: Thank you very much. My first question maybe is on, ASML has often described its pricing approach as being based on the value delivered to customers, although, of course, by definition, that requires assumptions about the economic benefits the customers can extract from your tools. With that in mind, I just wanted to revisit TSMC's recent comments on High-NA systems being too expensive. One interpretation could be that customers are finding more value in the Low-NA than maybe we previously expected, particularly if they can do some triple patterning at competitive cost versus High-NA. My question is: Is there any scope for pricing adjustments for Low-NA over time to ensure that the system pricing remains aligned with the incremental value you give to customers? If that makes sense.

Speaker #4: Although, of course, by definition, that requires assumptions about the economic benefits the customers can extract from your tools. So with that in mind, I just wanted to revisit TSMC's recent comments on high-NA systems being too expensive.

Speaker #4: One interpretation could be that customers are finding more value in the low-NA than maybe we previously expected, particularly if they can do some triple patterning at competitive cost versus high-NA.

Speaker #4: So my question is, is there any scope for pricing adjustments for low-NA over time to ensure that the system pricing remains aligned with the incremental value customers I mean, the incremental value you give to customers?

Speaker #4: If that makes sense?

Speaker #1: Well, I think, François, I think I understand maybe the question and the connection between INA and low-NA. So let me start with INA. I think we discussed that in the past.

Christophe Fouquet: Well, Francois, I think I understand maybe the question, the connection between High-NA and the Low-NA. Let me start with High-NA. I think we discussed that in the past, and every new generation of lithography system ASML ever brought to market was with a strong intention to reduce the cost of patterning. When you look at High-NA single exposure, the design of the tool, the performance of the tool will be such that it provide a cost benefit to our customer. Now, of course, to reach that point, you need to have the right maturity of the platform. I just mentioned that we are still basically working in bringing the High-NA platform to the level of maturity of Low-NA. When you achieve that, this is practically the time where the cost of High-NA is going basically to provide an advantage versus the existing technology.

Christophe Fouquet: Well, François, I think I understand maybe the question, the connection between High-NA and the Low-NA. Let me start with High-NA. I think we discussed that in the past, and every new generation of lithography system ASML ever brought to market was with a strong intention to reduce the cost of patterning. When you look at High-NA single exposure, the design of the tool, the performance of the tool will be such that it provide a cost benefit to our customer. Now, of course, to reach that point, you need to have the right maturity of the platform. I just mentioned that we are still basically working in bringing the High-NA platform to the level of maturity of Low-NA. When you achieve that, this is practically the time where the cost of High-NA is going basically to provide an advantage versus the existing technology.

Speaker #1: And every new generation of lithography system ASML have brought to market was with a strong intention to reduce the cost of patterning. So when you look at INA single expose, the design of the tool, the performance of the tool, will be searched at it provide a cost benefit to our customer.

Speaker #1: Now, of course, to reach that point, you need to have the right maturity of the platform. I just mentioned that we are still basically working in bringing the INA platform to the level of maturity of low-NA.

Speaker #1: And when you achieve that, this is practically the time when the cost of INA is basically going to provide an advantage versus the existing technology.

Speaker #1: So I think that logic is still true. And again, it gets implemented when the platform reaches the right maturity. Therefore, I think there is no real need to maybe look at one tool price versus the other, because that logic, I think, was also true for low-NA, if you remember our discussion back in 2018–2019.

Christophe Fouquet: I think that logic is still true, and again, gets implemented when the platform reaches the right maturity. Therefore, I think there is no real need to maybe look at one tool price versus the other, because that logic, I think, was also true for Low-NA, if you remember our discussion back in 2018 and 2019. I think the key, again, for High-NA to be cost-effective, to beat the cost of Low-NA plus immersion multi-patterning, is to bring High-NA to the right maturity. In that sense, we are very happy with the press release this morning about Intel, because this is, I would say, maybe the strongest sign so far that we're getting there.

Speaker #1: I think the key, again, for INA to be cost-effective to beat the cost of low-NA plus immersion multi-patterning is to bring INA to the right maturity.

Speaker #1: And in that sense, we were very happy with the press release this morning about Intel, because this is, I would say, maybe the strongest sign so far that we're getting there.

Speaker #4: So there is no function of low-NA pricing. Yeah, sorry, go ahead, Roger.

François-Xavier Bouvignies: There is no question of low NA pricing. Yeah, sorry. Go ahead, Roger.

Speaker #1: So I would say, François, in addition to that, when it comes to low-NA pricing, of course, you know that we keep on increasing the productivity of the low-NA tools.

Roger Dassen: I would say, François, in addition to that, when it comes to Low-NA pricing, of course, you know that we keep on increasing the productivity of the Low-NA tools. Of course, that gives us a pretty strong runway for potential price improvements going forward. You're right, value-based pricing is the concept that we follow within ASML. You're also right that in the current environment, of course, the value for customers is higher than in other circumstances. I would agree with you that the current environment provides more flexibility for pricing than what you would have had in different days. Of course, you will also appreciate, given the long order lead times that we have, that that doesn't translate into pricing effects tomorrow. Clearly, the environment that we live in today, with the value that our products bring to customer, is substantial.

Speaker #1: So that, of course, that gives us a pretty strong runway for potential price improvements going forward. And you're right. I mean, value-based pricing is the concept that we follow within ASML.

Speaker #1: And you're also right that, in the current environment, of course, value for customers is higher than in other circumstances. So I would agree with you that the current environment provides more flexibility for pricing than what you would have had in different days.

Speaker #1: Of course, you will also appreciate, given the long-order lead times that we have, that that doesn't translate into pricing effects tomorrow. But clearly, the environment that we live in today with the value that our products bring to customer is substantial.

Roger Dassen: Of course, you will also appreciate, given the long order lead times that we have, that that doesn't translate into pricing effects tomorrow. Clearly, the environment that we live in today, with the value that our products bring to customer, is substantial. Of course, gives us flexibility on pricing, more so than what you would have seen in the past. Of course, we're executing on that as well.

Speaker #1: Of course, gives us flexibility on pricing more so than what you would have seen in the past. And of course, we're executing on that as well.

Roger Dassen: Of course, gives us flexibility on pricing, more so than what you would have seen in the past. Of course, we're executing on that as well.

Speaker #4: When could that happen now, Roger? I mean, to your point, it's not tomorrow or the day after tomorrow, so when is it?

François-Xavier Bouvignies: When could that happen, Roger? To your point, it's not tomorrow. After tomorrow? When is it?

Speaker #1: So that really depends that really depends on the order situation that you have with customers. As I said, it's obviously linked to order lead times.

Roger Dassen: That really depends on the order situation that you have with customers. As I said, it's obviously linked to order lead time. Of course, that varies from one to the other. The dynamic is clearly there, François.

Speaker #1: So and of course, that varies from one to the other. But the dynamic is clearly there, François.

Speaker #4: Okay. And maybe the follow-up quick one is on the 100—I mean, the 30% increase in ’28, which implies 110 tools. And I mean, Christophe, you mentioned ‘investigating the world as precise.’

François-Xavier Bouvignies: Okay. Maybe the follow-up quick one is on the 30% increase in 2028, which implies 110 tools. Christophe, you mentioned investigating the world is precise. Do you need a new clean room for that, or are you contemplating maybe to add clean room to ASML capabilities?

Speaker #4: Do you need a new clean room for that, or are you contemplating maybe to add clean room to ASML capabilities?

Speaker #1: Well, I think all the capacity increases, either planned or investigated, we're talking about are based on our existing footprints. So, we have been working extremely hard, as you may have noticed in the last six to nine months, to increase our output.

Christophe Fouquet: I think all the capacity increase, either planned or investigated, we're talking about are based on our existing footprints. We have been working extremely hard, as you may have noticed in the last six, nine months, to increase our output. We'll continue to work very hard in the next few months to do the same. The number we are mentioning, we can achieve basically by optimizing the existing clean room space in the right way. This is also why we can create basically that improvement on the short term.

Speaker #1: We'll continue to work very hard in the next few months to do the same. The number we are mentioning can be achieved basically by optimizing the existing cleanroom space in the right way.

Speaker #1: So this is also why we can create basically that improvement on the short term.

François-Xavier Bouvignies: Great. Thank you both.

Speaker #4: Great. Thank you both.

Speaker #1: You're welcome.

Christophe Fouquet: You're welcome.

Speaker #2: Thank you. Your next question today. Comes from the line of Joe Katraki from Wells Fargo. Please go ahead.

Operator: Thank you. Next question today comes from the line of Joe Quatrochi from Wells Fargo. Please go ahead.

Operator: Thank you. Our next question today comes from the line of Joe Quatrochi from Wells Fargo. Please go ahead.

Speaker #3: Yeah, thanks for taking the questions. You noted that you're close to receiving all the orders you need for 2027 to be covered on low-NA.

Joe Quatrochi: Yeah. Thanks for taking the questions. You noted that you're close to receiving all the orders you need for 2027 to be covered on Low NA, and you're increasing the capacity, obviously by 30%. I guess the question is the implied kind of 85 tools for next year, is that the ceiling of what you think you can support and your supply chain can support next year? Or it sounds like maybe the existing footprint could support more. Is there a possibility that that could move higher as we move closer to 2027?

Speaker #3: And you're increasing the capacity, obviously, by 30%. So I guess the question is, is the implied kind of 85 tools for next year—is that the ceiling of what you think you can support, and your supply chain can support, next year?

Speaker #3: Or it sounds like maybe the existing footprint could support more. Is there possibility that that could move higher as we move closer to 2027?

Speaker #1: Joe, it's the balance as we see it today. The balance between demand and supply as we see it today gets us to the 30%, right?

Roger Dassen: Joe, it's the balance as we see it today. The balance between demand and supply as we see it today gets us to the 30%, right? That's the way we do it. If customers are going to come to ASML and say, "ASML, we need considerably more," then just as we've been doing it in the past couple of months, we need to look ourselves in the eye, we need to look at all the supply chain, and just see what can further be done. At this stage, given the conversations we have, we think the 85 is a nice representation of the balance between what customers are asking of us, and what at this stage we've been asking ourselves in the supply chain to do.

Speaker #1: So that's the way we do it. If customers are going to come to ASML and say, "ASML, we need considerably more," then just as we've been doing it in the past couple of months, we need to look ourselves in the eye.

Speaker #1: We need to look at all the supply chain. And just see what can further be what can further be done. But at this stage, given the conversations we have, we think the 85 is a nice representation of the balance between what customers are asking of us and what at this stage we've been asking ourselves in the supply chain to do.

Roger Dassen: At this stage, given the conversations we have, we think the 85 is a nice representation of the balance between what customers are asking of us, and what at this stage we've been asking ourselves in the supply chain to do. If more is needed, just as we've done it in the past couple of quarters, we're going to roll up our sleeves and see if more can be done.

Speaker #1: If more is needed, just as we've done in the past couple of quarters, we're going to roll up our sleeves and see if more can be done.

Roger Dassen: If more is needed, just as we've done it in the past couple of quarters, we're going to roll up our sleeves and see if more can be done.

Speaker #3: And maybe, Joe, to add to that—back to François's question—so I explained that the two times 30% is based on our existing footprint.

Christophe Fouquet: Maybe, Joe, to add to that, back to François' question. I explained that the 2 times 30% is based on our existing footprint. The question basically is really the speed at which we need to execute to support the customer demand, and potentially at some point we can execute. On that part, as you have noticed in the last few months, we have been very successful. We have the space, we have, I would say, the recipe to get to those number. As I said, we will continue to both stay in sync with our customer, ask them what they need, and continue to work very hard on output. The first mission of ASML is to provide their customer what they need, basically.

Speaker #3: So the question basically is really the speed at which we need to execute to support the customer demand. And potentially, at some point, we can execute.

Speaker #3: But on that part, as you have noticed in the last few months, we have been very successful. So, we have the space. We have, I will say, the recipe to get to those numbers.

Speaker #3: And as I said, we will continue to both stay in sync with our customer, ask them what they need, and continue to work very hard on output.

Speaker #3: And the first mission of ASML is to provide their customer what they need, basically.

Speaker #1: And Joe, to further build on that, we should also remind ourselves that we shouldn't just be looking at unit percent increases, right? So we're looking at 30%, which is boxes, if you like.

Roger Dassen: Joe, to further build on that, we should also remind ourselves that we shouldn't just be looking at unit percent increases, right? We're looking at 30%, which is boxes, if you like, 30% more tools. You should also recognize that the tool mix that we're going to ship next year is a different tool mix from the tool mix that we shipped this year. When it comes to EUV in particular, the tool mix that we're going to ship next year will be EXE andFs, while this year it's a combination of NXE and EXE. If you recognize the difference in output, then in essence what you're looking at is not 30% improvement of wafer capacity that we're adding, but approximately 45%.

Speaker #1: So, 30% more tools. But you should also recognize that the tool mix we're going to ship next year is different from the tool mix that we shipped this year.

Speaker #1: So when it comes to EUV in particular, right, the tool mix that we're going to ship next year will be E's and F's, while this year it's a combination of E's and E's.

Speaker #1: And if you recognize the difference in output, then in essence, what you're looking at is not 30% improvement of wafer capacity that we're adding, but approximately 45%.

Roger Dassen: If you recognize the difference in output, then in essence what you're looking at is not 30% improvement of wafer capacity that we're adding, but approximately 45%. In addition to that, as you also know, we're offering a whole slew of upgrade packages to the install base to customers, which gives them another significant uptick. It's in a combination of improving the capacity that we have internally to crank out unit numbers and The productivity of the tools and the upgrades of the install base. In that combination, as Christophe said, we think that we're very successful in meeting the objectives and the demands of our customers.

Speaker #1: And in addition to that, as you also know, we're offering a whole slew of upgrade packages to the installed base to customers, which gives them another significant uptick.

Roger Dassen: In addition to that, as you also know, we're offering a whole slew of upgrade packages to the install base to customers, which gives them another significant uptick. It's in a combination of improving the capacity that we have internally to crank out unit numbers

Speaker #1: So it's in a combination of improving the number of the capacity that we have internally to crank out unit numbers and the productivity of the tools and the upgrades of the install base and in that combination, as Christophe said, we think that we're very successful in meeting the objectives and the demands of our customers.

Christophe Fouquet: The productivity of the tools and the upgrades of the install base. In that combination, as Christophe said, we think that we're very successful in meeting the objectives and the demands of our customers.

Joe Quatrochi: That's really helpful, Colin. I appreciate all the detail. Maybe just as a follow-up, you talked about optimizing the existing clean room space for capacity. Does that change at all what you think you could do from a capacity standpoint for High NA? Can you remind us what the High NA capacity is for looking into 2027, 2028?

Speaker #3: That's really helpful, Carter. I appreciate all the detail. Maybe just as a follow-up—you talked about optimizing the existing cleanroom space for capacity.

Speaker #3: Does that change at all what you think you could do from a capacity standpoint for high-NA? Can you remind us what the high-NA capacity is for looking in '27, '28?

Speaker #1: Well, I think for high-NA, Joe, we've followed the exact same principle, which is to match our supply with our customer demand. So I think we optimize across all the products.

Christophe Fouquet: Well, I think for High NA, we follow the exact same principle, which is to match our supply with our customer demand. I think we optimize across all the products. There's also, of course, some discussion around High NA, as we mentioned. There is some discussion about insertion. We keep also, of course, the flexibility to be able to respond to that when the time comes. The optimization I was referring to before is really basically across all product. Now, I think everyone understand that, of course, a lot more is being done today on Low NA and immersion, for example, than High NA. We are not sacrificing, I would say, any of our High NA supply by doing the rest of the optimization.

Speaker #1: And there's also, of course, some discussion around high-NA, as we mentioned. There is some discussion about insertion. So we keep also, of course, the flexibility to be able to respond to that when the time comes.

Speaker #1: So the optimization I was referring to before is really basically across all products. Now, I think everyone understands that, of course, a lot more is being done today on low-NA and immersion, for example, than high-NA.

Speaker #1: But we are not sacrificing, I would say, any of our high-NA supply by doing the rest of the optimization.

Joe Quatrochi: Awesome. Thank you.

Speaker #3: Helpful. Thank you.

Speaker #1: You're welcome.

Christophe Fouquet: You're welcome.

Speaker #2: Thank you. Oh, next question today. Comes from the line of Krish Sankar from TD Cowan. Please go ahead.

Operator: Thank you. Our next question today comes from the line of Krish Sankar from TD Cowen. Please go ahead.

Speaker #1: Yeah, hi. Thanks for taking my question. I had two of them. With the capacity increase to 85 and 110 units, you are meeting the demand, not undershipping.

Krish Sankar: Yeah, hi. Thanks for taking my question. I told them the capacity increase to 85 and 110 units, you are meeting the demand, not under-shipping. Is that correct? If so, if for you to increase, are you waiting for purchase orders from customers before you start adding more capacity? I had a follow-up.

Speaker #1: Is that correct? And if so, for you to increase, are you waiting for purchase orders from customers before you start adding more capacity? And then I had a follow-up.

Christophe Fouquet: Well, on the first question, I think that, as you have noticed in the last few months, I don't think we have reached yet a stable state on what the demand will be for 2027, certainly not for 2028. We keep on revising basically with our customer what that demand is. Again, the whole goal of our supply is to follow that demand. I would not say that we are done with this discussion. I think you see the dynamic on the market. This is still pretty strong. This is also bringing some, of course, I would say, always tension to make sure that the two numbers match, but that's, again, something we'll continue to do. Short answer is, yes, the capacity is there to meet the demand, but the demand is still fluctuating. We get nicer visibility for sure for 2027, even 2028.

Speaker #1: Well, I think on the first question, I think that, as you have noticed in the last few months, I don't think we have reached yet a stable state on what the demand will be for '27, certainly not for '28.

Speaker #1: So we keep on revising basically with our customer what that demand is. And again, the whole goal of our supply is to follow that demand.

Speaker #1: So I will not say that we are down with these discussions. I think you see the dynamic on the market. This is still pretty strong.

Speaker #1: So this is also bringing some of course, I would say, always tension to make sure that the two number match. But that's, again, something we'll continue to do.

Speaker #1: So short answer is yes, the capacity is there to meet the demand. But the demand is still fluctuating. We get nicer visibility for, sure, for '27, even '28.

Speaker #1: But we also mostly are not at the end of the discussion with our customer.

Christophe Fouquet: We also mostly are not at the end of the discussion with our customer. Clearly, Krish, we're not waiting until we get the orders, right? Because we said we're investigating the 110 scenario for EUV in Low NA by 2028. Of course, we don't have orders for 110 EUV Low NA at this stage. We're not waiting. We're preempting. We are doing this because the demand signals that we're getting from customers that have not yet translated into full POs, but the demand signals we're getting from customers are quite strong. That's why we're investigating this and preparing as best as we can at this stage.

Speaker #3: And clearly, Chris, we're not and we're not waiting until we get the orders, right? Because we said we're investigating the 110 scenario for EUV in low-NA by 2028.

Speaker #3: Of course, we don't have orders for 110 EUV low-NA at this stage. So we're not waiting. We're preempting. But we are doing this because the demand signals that we're getting from customers that have not yet translated into full POs, that the demand signals we're getting from customers are quite strong.

Speaker #3: So that's why we're that's why we're investigating this and preparing as best as we can at this stage.

Krish Sankar: Got you. Very helpful. A quick follow-up. It seems like the 3nm node is actually being more of a longer and stronger node than people thought. I would assume that you would still be shipping 3600Ds. Roger, you mentioned that next year there won't be any D in the mix. I just want to clarify, is that true? If so, is it fair to assume that gross margin next year should grow versus this year? Because if your mix is shifting to more volumes of E and eventually F.

Speaker #1: Gotcha. Very helpful. And then a quick follow-up. It seems like the three nanometer node is actually being more of a longer and stronger node.

Speaker #1: And people thought, so I would assume that you would still be shipping 3,600 D's, but Roger, you mentioned that next year there won't be any D in the mix.

Speaker #1: So I just want to clarify, is that true? And if so, is it fair to assume that gross margin next year should grow versus this year?

Speaker #1: Because if your mix is shifting to more volumes of E and eventually F?

Speaker #3: Yeah, Krish, at a certain point in time, we're simply sold out when it comes to D models, right? So, the D uses a specific QB from Zeiss.

Christophe Fouquet: Yeah, Krish, at a certain point in time, we're simply sold out when it comes to D models, right? The D uses a specific POB from ZEISS, and at a certain point in time, we're just done, and we expect to be done or maybe virtually done, but done this year. There might be one or two.

Roger Dassen: Yeah, Krish, at a certain point in time, we're simply sold out when it comes to D models, right? The D uses a specific POB from ZEISS, and at a certain point in time, we're just done, and we expect to be done or maybe virtually done, but done this year. There might be one or two.

Speaker #3: And at a certain point in time, we're just done. And we expect to be done or maybe virtually done, but done this year. There might be one or two slipping into next year.

Krish Sankar: Got it.

Christophe Fouquet: slipping into next year. Essentially, we're done with this this year. From that moment onwards, there is no D POB left anymore, and therefore, we'll build the EXE and NXE next year. Of course, that mix will come with a better ASP than the mix that we have this year, because it also will come with higher productivity as we just laid out, and also comes with a better gross margin profile. Of course, I'm not going to guide you the gross margin for next year, Krish, but it is true that the mix effect on EUV next year will be more positive than it is this year.

Roger Dassen: Slipping into next year. Essentially, we're done with this this year. From that moment onwards, there is no D POB left anymore, and therefore, we'll build the EXE and NXE next year. Of course, that mix will come with a better ASP than the mix that we have this year, because it also will come with higher productivity as we just laid out, and also comes with a better gross margin profile. Of course, I'm not going to guide you the gross margin for next year, Krish, but it is true that the mix effect on EUV next year will be more positive than it is this year.

Speaker #3: But essentially, we're done with it this year. And then from that moment onwards, there is no D POB left anymore. And therefore, we'll build E's and F's next year.

Speaker #3: And of course, that mix will come with a better ASP than the mix that we have this year, because it also will come with higher productivity, as we just laid out.

Speaker #3: And it also comes with a better gross margin profile. Of course, I'm not going to guide you to the gross margin for next year, Krish, but it is true that the mix effect on EUV next year will be more positive than it is this year.

Speaker #1: Thanks a lot, Roger.

Krish Sankar: Thanks a lot, Roger.

Speaker #2: Thank you. Your next question today comes from the line of Stefan Uri from Adobe HS. Please go ahead.

Operator: Thank you. Your next question today comes from the line of Stéphane Houri from ODDO BHF. Please go ahead.

Speaker #4: Yes, good afternoon. So my question is for 2028, where you say you already have large order volumes, but you're not fully booked yet. Can you help us understand where you stand in terms of visibility out of the 110 units targeted?

Stéphane Houri: Yes, good afternoon. My question is for 2028, where you say you have already large order volumes, but not fully booked yet. Can you help us understand where you stand in terms of visibility out of the 110 unit targeted? How is it covered today? Can you talk about the lead times as we speak? I have a follow-up. Thank you.

Speaker #4: Is it how is it covered today? And can you talk about the lead times as we speak? And I have a follow-up. Thank you.

Speaker #1: Well, the fact that we say that we investigate 110, we wouldn't investigate 110 if customers were telling us that that would be a ridiculous number, right?

Christophe Fouquet: Well, the fact that we say that we investigate 110, we wouldn't investigate 110 if customers were telling us that that would be a ridiculous number, right? We're investigating this. Simply because customers are signaling to us that the demand is very strong. The fact that we now start talking about having significant order intake for 2028 already two years in advance is pretty strong. Right. That situation we haven't enjoyed in many, many years. I think that is a very good underpinning of the strong market dynamics that are currently going on. We're not sharing order intakes. I'm not going to give you the coverage number, but I will tell you that the demand signals that we're getting from customers also when it comes to 2028 are sufficiently strong for us to seriously investigate this 110 number and the related number on immersion that we signal to you.

Speaker #1: So, where customers are signaling to us that the demand is very, very strong. But the fact that we now start talking about having significant order intake for ’28 already—like two years in advance—is pretty strong, right?

Roger Dassen: Simply because customers are signaling to us that the demand is very strong. The fact that we now start talking about having significant order intake for 2028 already two years in advance is pretty strong. Right. That situation we haven't enjoyed in many, many years. I think that is a very good underpinning of the strong market dynamics that are currently going on. We're not sharing order intakes. I'm not going to give you the coverage number, but I will tell you that the demand signals that we're getting from customers also when it comes to 2028 are sufficiently strong for us to seriously investigate this 110 number and the related number on immersion that we signal to you.

Speaker #1: So that is something that we haven't—that situation we haven't enjoyed in many, many years. So I think that is a very good underpinning of the strong market dynamics that are currently going on.

Speaker #1: We're not sharing order intakes. I'm not going to give you the coverage number. But I will tell you that the demand signals that we're getting from customers, also when it comes to '28, are sufficiently strong for us to seriously investigate this 110 number and the related number on immersion that we've signaled to you.

Stéphane Houri: Okay. Thank you. About the 75% memory growth in 2026, can you share with us how much is coming from HBM driven lithography intensity versus volume addition, i.e., what I'm trying to know is also if with these investments, the memory manufacturer, your clients, are kind of closing the gap between offer and demand or are just investing in new technologies like HBM? Thank you.

Speaker #4: Okay. Thank you. And about the 75% memory growth in 2026, can you share with us how much is coming from HBM-driven lithography intensity versus volume addition, i.e., what I'm trying to know if is also if with this investment, the memory manufacturer your clients are kind of closing the gap between offer and demand or just investing in new technologies like HBM?

Speaker #4: Thank you.

Roger Dassen: Well, I think the demand is really a combination of a lot more volume, both for HBM and DDR. I think we have seen some shift between one product to the other recently because the price point of DDR, I think is extremely strong right now. There's some optimization at our customers. It's hard to know the exact, I would say, ratio between the two. It doesn't matter that much in term of technology for us because the DRAM, the array itself is the same. HBM will require more wafer, so there's a volume effect again. That's one element. The second element is, of course, the number of EUV and immersion layer, which has increased basically on the nodes that are ramping very strongly right now.

Christophe Fouquet: Well, I think the demand is really a combination of a lot more volume, both for HBM and DDR. I think we have seen some shift between one product to the other recently because the price point of DDR, I think is extremely strong right now. There's some optimization at our customers. It's hard to know the exact, I would say, ratio between the two. It doesn't matter that much in term of technology for us because the DRAM, the array itself is the same. HBM will require more wafer, so there's a volume effect again.

Speaker #1: Well, I think the demand is really a combination of a lot more volume both for HBM and DDR. I think we have seen some shift between one product to the other recently because the price point of DDR, I think, is extremely strong right now.

Speaker #1: So there's some optimization at our customers. It's hard to know the exact I would say ratio between the two. It doesn't matter that much in terms of technology for us because the DRAM, DRA itself, is the same.

Speaker #1: HBM will require more wafers. So there is a volume effect again. So that's one element. The second element is, of course, the number of EUV and immersion layer, which has increased basically on the nodes that are ramping very, very strongly right now.

Christophe Fouquet: That's one element. The second element is, of course, the number of EUV and immersion layer, which has increased basically on the nodes that are ramping very strongly right now. The 1C nodes, for example, which is going to be enormous node or even 1B, are using more EUV layers. This is really this combination, which create a bit the perfect storm for ASML on DRAM this year and most probably the next few years to come.

Speaker #1: So the 1C node, for example, which is going to be enormous node or even 1B, are using more EUV layer. So this is really this combination which created a bit the perfect storm for ASML on DRAM this year and most probably the next few years to come.

Roger Dassen: The 1C nodes, for example, which is going to be enormous node or even 1B, are using more EUV layers. This is really this combination, which create a bit the perfect storm for ASML on DRAM this year and most probably the next few years to come.

Speaker #4: Okay. Thank you very much.

Stéphane Houri: Okay. Thank you very much.

Speaker #2: Thank you. Your next question today. Comes from the line of Didier Semama from Bank of America. Please go ahead.

Operator: Thank you. Your next question today comes from the line of Didier Scemama from Bank of America. Please go ahead.

Speaker #1: Yes. Good afternoon. Thank you for taking my questions. So my first question is on '26. When I look at your guidance on units for immersion and EUV as well as your guidance for IBM, I struggle a little bit to get even to the midpoint.

Didier Scemama: Yes, good afternoon. Thank you for taking my questions. My first question is on 2026. When I look at your guidance on units for immersion and EUV as well as your guidance for IBM, I struggle a little bit to get even to the midpoint. Sorry, I am struggling to not get above the upper end. I apologize. I am trying to understand if your ASPs are going higher in Q3, Q4 because of your holistic litho attach rate on software, or is there any mix impact that is particularly meaningful? Associated with it, when I look at your full year guide on gross margin, you are essentially saying that your gross margin exit rate Q4 is around 56% to 58%, which again would suggest that your mix, your volumes, your software upgrades, et cetera, are very strong.

Speaker #1: So sorry, I'm struggling to not get above the upper end. I apologize. So, I'm trying to understand if your ASPs are going higher in Q3, Q4 because of your holistic litho attach rate on software, or is there any mix impact that is particularly meaningful?

Speaker #1: And associated with it, when I look at your full year guide on gross margin, you essentially saying that your gross margin exit rate Q4 is around 56 to 58%, which again, would suggest that your mix, your volumes, your software, upgrades, etc., are very strong.

Didier Scemama: Associated with it, when I look at your full year guide on gross margin, you are essentially saying that your gross margin exit rate Q4 is around 56% to 58%, which again would suggest that your mix, your volumes, your software upgrades, et cetera, are very strong. Just trying to understand what is going on with those ASPs and systems in particular in Q3, Q4.

Speaker #1: So just trying to understand what's going on is those ASPs and systems in particular in Q3, Q4. Did you it's very hard to validate your number on the phone, but let me tell you that if you look at the if you look at the guidance that we have provided that, of course, there is a little bit of a mix effect in there, I would say, for EUV.

Didier Scemama: Just trying to understand what is going on with those ASPs and systems in particular in Q3, Q4.

Roger Dassen: Didier, it's very hard to validate your number on the phone. Let me tell you that, if you look at the guidance that we have provided that, of course, there is a little bit of a mix effect in there. I would say for EUV, we had quite some D models in H1, and the mix effect will be a bit more positive in H2. We will also have in H2 all the 230 configurations in there. That's going to help a little bit on the ASP side for sure. Of course, the immersion number in H2 will be substantially higher than in H1. As you know, in H1, immersion was low because we had decided in 2025 we were having ZEISS prep for a substantially lower immersion number than what we are currently facing.

Speaker #1: We had quite some D models in the first half. And the mix effect will be a bit more positive in the second half. We'll also have in the second half we'll have all the 230 configurations in there.

Speaker #1: So that's going to help a little bit on the ASP side for sure. Of course, the immersion number in the second half will be substantially higher than in the first half.

Speaker #1: As you know, in the first half, immersion was low because we had decided in 2025 we were having Zeiss prep for a substantially lower immersion number than what we're currently facing.

Speaker #1: So we started the year rather weak. We will make up for that quite substantially in the second half of the year. So I would say the guidance to get to the guidance is around 65 EUV tools, with a slightly better ASP mix because of what I just mentioned.

Roger Dassen: We started the year rather weak. We will make up for that quite substantially in H2 of the year. I would say the guidance to get to the guidance is the around 65 EUV tools with a slightly better ASP mix because of what I just mentioned. Of course, immersion will be quite strong in there. Of course, the Installed Base Management business, as I also indicated, will grow over 30%. I think if you take all those elements into the mix, you should be able to get to the midpoint that I just talked about. In terms of the gross margin, if you do the analysis and if you take midpoint by midpoint, then I think you are looking for H2 at a gross margin of 56% approximately.

Speaker #1: And of course, immersion will be quite strong in there. And of course, the installed base business, as I also indicated, will grow over 30%.

Speaker #1: I think if you take all those elements into the mix, you should be able to get to the midpoint that I just talked about.

Speaker #1: In terms of the gross margin, if you do the analysis and if you take midpoint by midpoint, then I think you're looking for the second half as a gross margin of 56% approximately and we guided 55 to 57 for Q3.

Roger Dassen: We guided 55% to 57% for Q3, you should be looking midpoint at approximately the same number there for Q4. Why is that? Again, it's the mix because we have quite a bit more immersion and Low-NA EUV in there, one. Two, because we have better priced EUV in there for H2. Three, because of the Installed Base Management business, which remains quite strong. Four, of course, we have volume effect, and the fact that we have so much more volume in H2 than in H1, obviously gives you a positive fixed cost coverage. It's the combination of those four as a result of which you see an improvement of the gross margin in H2 versus H1.

Speaker #1: So you should be looking midpoint at approximately the same number there for Q4. And why is that? Again, it's the mix because we have quite a bit more immersion and low-end AUV in there, one.

Speaker #1: Two, because we have better-priced EUV in there for the second half. Three, because of the installed base business, which remains quite strong. Four, of course, we have the volume effect, and the fact that we have so much more volume in the second half than in the first half.

Speaker #1: Obviously, it gives you a positive fixed cost coverage. So it's the combination of those four as a result of which you see an improvement of the gross margin in the second half versus the first half.

Didier Scemama: Yeah. Got it. Very clear. If I take the things that you mentioned in previous questions, the mix of EUV tools, et cetera. Is there any reason why your gross margin should not go higher, in fact, in 2027 than the exit rate of 2026? I guess related to that, any color you can give us on the mix of Low-NA tools next year, whether you have prominently the E tool or is the F tool capturing more than 50% of the value?

Speaker #3: Yeah. Got it. Very clear. And if I take the things that you mentioned in previous questions, the mix of EUV tools, etc., etc., is there any reason why your gross margin should not go higher?

Speaker #3: In fact, in '27 than the exit rate of '26? And I guess related to that, any color you can give us on the mix of low-end tools next year, whether you have prominently the E tool or is the F tool capturing more than 50% of the value?

Speaker #1: So you will appreciate I’m not going to give you guidance on the ’27 gross margin, but if you look at the main drivers that I just gave you for why the second half is better than the first half: on the mix effect within EUV, of course, that should only be better because, as I mentioned, next year we're going to get a mix of E’s and F’s.

Roger Dassen: You would appreciate I'm not going to give you guidance on the 2027 gross margin. If you look at the main drivers that I just gave you, for why H2 is better than H1. On the mix effect within EUV, of course, that should only be better because as I mentioned, next year we're going to get a mix of EXE and NXE. I think it will primarily be EXE. There will be a number of NXE in there, but the lion's share of the tools next year are going to be EXE. Nonetheless, the mix next year will be better than the mix this year, and will be better than the mix even in H2 of the year.

Speaker #1: I think it will primarily DJ be E's. There will be a number of F's in there, but the lion's share of the tools next year are going to be E's.

Speaker #1: Nonetheless, the mix next year will be better than the mix this year, and will be better than the mix even in the second half of the year.

Speaker #1: If you look at immersion and EUV, well, given that we're talking about planning for 30% more immersion, 30% EUV, then I would argue that that shouldn't disappoint, right?

Roger Dassen: Well, given that we're talking about planning for 30% more immersion, 30% EUV, I would argue that that shouldn't disappoint, right? If indeed we're able to get those done, clearly our high-margin scanner products, with the 30% increase that we just talked about, should be positive in there. The volume effect, of course, the fixed cost coverage, you should get that effect, right? If indeed we're going up 30% in those two businesses. The swing factor, of course, is the installed base business, which of course, the service component of the installed base business should be strong, right? Because that simply grows with the install base, almost by definition. That part should be strong. The question is, how strong will the upgrade business be?

Speaker #1: If indeed we're able to get those done, then clearly our high-margin scanner products, with the 30% increase that we just talked about, should be positive in there.

Speaker #1: The volume effect, of course, the fixed cost coverage—you should get that effect, right? If indeed we’re going up 30% in those two businesses.

Speaker #1: And then the swing factor, of course, is the installed base business, which, of course, the service component of the installed base business should be strong, right?

Speaker #1: Because that simply grows with the that grows with the installed base, almost by definition. So that part should be strong. And then the question is how strong will the upgrade business be?

Speaker #1: Which, in the current climate, is very, very strong because customers are looking for productivity. So, in the current market dynamics, you could realistically assume that.

Roger Dassen: Which in the current climate is very, very strong because customers are looking for productivity. In the current market dynamics, you could realistically assume that. That's a qualitative description of the different components. Again, we're not going to guide gross margin. If your perspective on 2027 is that yet again, that will be a bullish market where customers are looking for capacity expansion, then you could argue that the drivers of the gross margin that I just gave you should also be strong in the next year.

Speaker #1: So that's a qualitative description of the different components. Again, we're not going to guide gross margin, but if your perspective on '27 is that yet, again, that will be a bullish market where customers are looking for a lot of capacity expansion, then you could argue that the drivers of the gross margin that I just gave you should also be strong in the next year.

Speaker #3: Absolutely. Thank you so much.

Didier Scemama: Absolutely. Thank you so much.

Speaker #1: You're welcome.

Roger Dassen: You are welcome.

Speaker #2: Thank you. So next question today. Comes from the line of Nigel. Van Putten from Morgan Stanley. Please go ahead.

Operator: Thank you. Your next question today comes from the line of Nico van Putten from Morgan Stanley. Please go ahead.

Operator: Thank you. Your next question today comes from the line of Nigel van Putten from Morgan Stanley. Please go ahead.

Speaker #4: Hi. Thanks a lot. Got a follow-up question on the difference between boxes and productivity. Super helpful that you laid that out. 30% unit growth, but 45% on the actual productivity that you are shipping to customers.

Nico van Putten: Hi. Thanks a lot. Got a follow-up question on the difference between boxes and productivity. Super helpful that you laid that out. 30% unit growth, but 45% on the actual productivity that you are shipping to customers. Now, beyond productivity, I think 3800F is also providing overlay improvements. I think in the past, those were a little bit more difficult in discussions with customers. I'm assuming that if you look at the outlook today and given your previous comments, that maybe 45% productivity is really the lower end of what we should model for revenue in terms of EUV over that period. That is my first question.

Nigel van Putten: Hi. Thanks a lot. Got a follow-up question on the difference between boxes and productivity. Super helpful that you laid that out. 30% unit growth, but 45% on the actual productivity that you are shipping to customers. Now, beyond productivity, I think 3800F is also providing overlay improvements. I think in the past, those were a little bit more difficult in discussions with customers. I'm assuming that if you look at the outlook today and given your previous comments, that maybe 45% productivity is really the lower end of what we should model for revenue in terms of EUV over that period. That is my first question.

Speaker #4: Now, beyond productivity, I think 3,800F is also providing overlay improvements. I think in the past, those were a little bit more difficult in discussions with customers.

Speaker #4: But I'm assuming that if you look at the outlook today and given your previous comments, that maybe 45% productivity is really the lower end of what we should model for revenue in terms of EUV over that period.

Speaker #4: That's my first question.

Speaker #1: Yeah. I'm not going to guide in any way the business for next year. I think we've said what we wanted to say about what we plan for in next year, and we're not going to translate that into euro months yet.

Roger Dassen: Well, I am not going to guide in any way the business for next year. I think we have said what we wanted to say about what we plan for in next year, and we are not going to translate that into euro amounts yet. I think you are very well capable of putting that into your model.

Speaker #1: I think you're very well capable of putting that into your model.

Speaker #4: No, no. Percentage is great. I think you're implying 3,800 F's pretty much only in 2028, which makes sense. I mean, higher productivity is just that. Given the commentary, I think in the past it was sort of straightforward math, almost, that productivity gains are shared.

Nico van Putten: No. That sounds great. I think you're implying 3800Fs pretty much only in 2028, which makes sense. I mean, high productivity. It's just that, given the commentary, I think in the past, it was sort of a straightforward math almost that productivity gains are shared. I'm just trying to get a better sense of there's more than just the productivity in simple throughput. There's overlay improvements, et cetera. Just thinking if that is what we should think about when you say there's more flexibility in pricing.

Nigel van Putten: No. That sounds great. I think you're implying 3800Fs pretty much only in 2028, which makes sense. I mean, high productivity. It's just that, given the commentary, I think in the past, it was sort of a straightforward math almost that productivity gains are shared. I'm just trying to get a better sense of there's more than just the productivity in simple throughput. There's overlay improvements, et cetera. Just thinking if that is what we should think about when you say there's more flexibility in pricing.

Speaker #4: I'm just trying to get a better sense of there's more than just the productivity in terms of throughput. There's overlay improvements, etc. And just thinking of that is what we should think about when you say there's more flexibility in pricing.

Speaker #1: Well, Nigel, the only thing is, of course, we've always been able to show customers not just productivity upgrades, but also the value from better imaging, the better the value of better overlay, etc.

Roger Dassen: No, Nico, the only thing is, of course, we've always been able to show customers not just productivity upgrades, but also the value from better imaging, the value of better overlay, et cetera. As you know, we've always shared the value with the customer in an equitable way and in a certain way. The way that that resulted was that you got this very strong correlation between throughput improvements and ASP. That's just the way things panned out, which put in another way, customers were paying for the productivity upgrade, and the value that we gave them for free was the value associated with, let's say, overlay improvement, imaging quality, and what have you. That's sort of the way things historically panned out.

Roger Dassen: No, Nigel, the only thing is, of course, we've always been able to show customers not just productivity upgrades, but also the value from better imaging, the value of better overlay, et cetera. As you know, we've always shared the value with the customer in an equitable way and in a certain way. The way that that resulted was that you got this very strong correlation between throughput improvements and ASP. That's just the way things panned out, which put in another way, customers were paying for the productivity upgrade, and the value that we gave them for free was the value associated with, let's say, overlay improvement, imaging quality, and what have you.

Speaker #1: And then, as you know, we've always shared the value with the customer in an equitable way. And in a certain way. And the way that that resulted was that you got this very strong correlation between throughput improvement and ASP.

Speaker #1: I mean, that's just the way things panned out, which put in another way, customers were paying for the productivity upgrades. And the value that we gave them for free was the value associated with, let's say, overlay improvement, imaging quality, and what have you.

Roger Dassen: That's sort of the way things historically panned out. There's no reason to believe that that's going to be dramatically different other than what we said earlier on, which that in the current environment with the value that we bring, we obviously are also having conversations with customers on how we get rewarded for the additional value.

Speaker #1: That's sort of the way things historically panned out. And there's no reason to believe that that's going to be dramatically different. Other than what we said earlier on, which that in the current environment with the value that we bring, we obviously are also having conversations with customers on how we get rewarded for that additional value.

Roger Dassen: There's no reason to believe that that's going to be dramatically different other than what we said earlier on, which that in the current environment with the value that we bring, we obviously are also having conversations with customers on how we get rewarded for the additional value.

Speaker #4: Yeah. Very clear. Maybe a quick follow-up on installed base. Thank you for quantifying the outlook for the year. That certainly feels like another upgrade.

Nico van Putten: Yeah. Very clear. Maybe a quick follow-up on install base.

Nigel van Putten: Yeah. Very clear. Maybe a quick follow-up on install base. Thank you for quantifying the outlook for the year. That certainly feels like another upgrade. This business, I think, has been trending better for a while now, also last year. We know the productivity increase of the tools, very helpful, the data you provide, but what is lacking is in terms of which maybe help us with is, in terms of the current configurations that you see as you look at current fleet configurations at customers, how big is that opportunity in terms of upgrading?

Nico van Putten: Thank you for quantifying the outlook for the year. That certainly feels like another upgrade. This business, I think, has been trending better for a while now, also last year. We know the productivity increase of the tools, very helpful, the data you provide, but what is lacking is in terms of which maybe help us with is, in terms of the current configurations that you see as you look at current fleet configurations at customers, how big is that opportunity in terms of upgrading? Given there's a strong need from customers to increase capacity of the tools, given limited clean room, I guess there perhaps a plan in place to make this more of an agreement of sorts in terms of getting better planned install base upgrades and some more visibility also for you guys to be able to service that demand.

Speaker #4: And this business, I think, has been trending better for a while now, also last year. So I mean, we know the productivity increase of the tools.

Speaker #4: Very helpful, the data you provide. But what I can kind of is lacking is in terms of some or which maybe help us with is in terms of the current configurations that you see as you sort of look at current fleet configurations at customers, how big is that opportunity in terms of upgrading?

Speaker #4: And given there's a strong need from customers to increase capacity of the tools, given limited cleanroom, is there perhaps a plan in place to make this more of an agreement of sorts, in terms of getting better planned installed base upgrades and some more visibility also for you guys to be able to service that demand?

Nigel van Putten: Given there's a strong need from customers to increase capacity of the tools, given limited clean room, I guess there perhaps a plan in place to make this more of an agreement of sorts in terms of getting better planned install base upgrades and some more visibility also for you guys to be able to service that demand.

Speaker #1: Well, I think that you said it. So the key element today is that customer wants to get more capacity on their existing fab as quickly as possible.

Christophe Fouquet: Well, I think that you said it. The key element today is that customer wants to get more capacity on their existing fab as quickly as possible. This creates really strong condition for system upgrade. That's true this year. I think we see that in our number. This will be still true next year and mostly beyond that. The need for capacity on very successful advanced node is there. The upgrade product we are developing are covering all the different version of our EUV low-NA or immersion system. We are really capable, basically, to provide product to our customer that can be implemented to every single version of our EUV or immersion tool.

Speaker #1: So this creates really strong condition for system upgrade. That's true this year. I think we see that in our number. This will be still true next year and mostly beyond that.

Speaker #1: So, the need for capacity on very successful advanced nodes is there. The upgrade products we are developing are covering all the different versions of our EUV low-NA, or immersion, systems.

Speaker #1: So we are really capable, basically, to provide product to our customer that can be implemented to every single version of our EUV or emergent tool.

Speaker #1: And today, we see a very strong acceptance of those products. To the point that many discussions were being requested to try to accelerate that and create new product which we plan to do in '27 and even '28.

Christophe Fouquet: Today, we see a very strong acceptance of those products, to the point that we have many discussion where we are being requested to try to accelerate that and create new product, which we plan to do in 2027 and even 2028. I will say as long as we continue to experience this huge demand for existing nodes on the constraints of their existing fab, I think we will expect that the demand for those products will be very strong.

Speaker #1: So I will say, as long as we continue to experience this huge demand for existing nodes, and the constraints of their existing fabs, I think we will expect that the demand for those products will be very strong.

Roger Dassen: Understood. Thank you.

Nigel van Putten: Understood. Thank you.

Speaker #4: Understood. Thank you.

Speaker #2: Thank you. We will now take the next question. The question comes from the line of Tommy Q from Barenberg. Please go ahead.

Operator: Thank you. We will now take the next question. The question comes from the line of Tammy Qiu from Berenberg. Please go ahead.

Speaker #5: Hi. Thank you for taking my question. So the first one is, based on my feedback, investors usually compare your growth to the way the fab is spending growth.

Tammy Qiu: Hi, thank you for taking my question. The first one is, based on my feedback, investors usually compare your growth to the global fabric equipment spending growth. Based on my understanding, this year you have a lot of upgrades because some customers, the lack of clean room, et cetera. In 2027 and 2028, in theory, we are having more clean room coming out of the space. Therefore, there will be more greenfield investment. Do you think you will be therefore in a better position to grow comparing to WFE, comparing to what we are seeing in 2026?

Speaker #5: And based on my understanding, this year you have a lot of upgrades because some customers lacked clean room, etc. And in 2027 and '28, in theory, we are having more clean room coming out of the space.

Speaker #5: So therefore, there will be more greenfield investment. Do you think you'll be there for in a better position to grow comparing to WFE, comparing to what we are seeing in 2026?

Speaker #1: Yeah. I mean, the sound is not very good. I don't think we understood your question. I apologize. Can you try again? Maybe make it a bit shorter or so.

Christophe Fouquet: Tammy, the sound is not very good. I don't think we understood your question. I apologize. Can you try again? Maybe make it a bit shorter or so.

Speaker #5: Yeah, yeah. Sure. Sorry. So basically, 2026 has a lot of clean room constraints. And 2027 and '28 will be more clean room space-based greenfield expansion.

Tammy Qiu: Basically, 2026 has a lot of clean room constraint, 2027 and 2028 will be more clean room space-based greenfield expansion. In my view, that puts you in a better position to outgrow WFE or at least grow in line with WFE. Do you think coming into 2027 and 2028, you will be able to outgrow or grow more than WFE, for your business comparing to 2026?

Speaker #5: And in my view, that puts you in a better position to outgrow WFE or at least grow it in line with WFE. Do you think coming into '27 and '28, you'll be able to outgrow or grow more than WFE for your business comparing to 2026?

Roger Dassen: Tammy, as you know, we never comment on WFE. We comment on our own plans, on the demand as we see it. I think we give you all the parameters on our end, what we're working towards, and I'm sure you have your own expectation of where WFE is going and just compare that. We think that with the 30% numbers that we just indicated, we think we're contributing to the demand that our customers are having.

Speaker #1: I mean, as you know, we never comment on WFE. We comment on our own plans, on the demand that we see it, and I think we.

Speaker #1: Give you all the parameters on our end, what we're working towards, and I'm sure you have your own expectation of where WFE is going.

Speaker #1: And just compare that. But we think that with the 30% numbers that we just indicated, we think we're contributing to the demand that our customers are having.

Speaker #1: So yeah, the only little detail I was stressing again maybe to help you is when it comes to advanced DRAM, when it comes to advanced logic, we see our litho-intensity increase.

Christophe Fouquet: Yeah, the only little detail I will stress again maybe to help you is when it comes to advanced DRAM, when it comes to advanced logic, we see our litho intensity increase. There's demand for more EUV, for more immersion, so maybe that helps you a bit, to answer the question. Every time you convert multi-patterning to single exposure EUV, for example, there is a shift, of course, from non-litho to litho. I think that's maybe one element to help you in your calculations.

Speaker #1: So, the demand for more EUV, for more immersion, so maybe that helps you a bit to answer the question. Every time you convert multi-patterning to single-exposed EUV, for example, there is a shift, of course, from non-litho to litho.

Speaker #1: So, I think that's maybe one element to help you in your calculations.

Tammy Qiu: Okay. Thank you. The second question is on High NA. For the time being, Intel seems to be the main High NA customer for logic, and we've been hearing more from DRAM customers. Do you think there is a chance that DRAM group will be a bigger customer for High NA earlier than logic?

Speaker #5: Okay, thank you. And the second question is on high NA. So, for the time being, Intel seems to be the main high NA customer for logic.

Speaker #5: And we've been hearing more from DRAM customers. Do you think there is a chance that the DRAM group will be a bigger customer for high-NA earlier than logic?

Speaker #1: Well, I don't know if they will be bigger or not. I think what we see is, of course, that both technologies are qualifying equally high NA today.

Christophe Fouquet: Well, I don't know if they will be bigger or not. I think, what we see is, of course, that both technologies are qualifying equally High NA today. We talked about Intel today. I think you know that Intel was first to get the technology, so they are first to implement it in production. As we speak, there is a lot of work down to qualify the technology on product wafer. The opportunity for DRAM is significant also because the volume is also significant, but there's no real change there. I think we still see both logic and DRAM being a good candidate for High NA. The reason for that is both DRAM and advanced logic will be shifting more and more towards multi-patterning Low-NA over time. That apply to both, basically.

Speaker #1: So we talked about Intel today. I think you know that Intel was first to get the technology. So they are first to implement it in production.

Speaker #1: As we speak, there is a lot of work down to qualify the technology on product wafer. So the opportunity for also because the volume is also significant.

Speaker #1: But there's no real change there. I think we still see both logic and DRAM as good candidates for high-NA. The reason for that is both DRAM and advanced logic will be shifting more and more towards multi-patterning low-NA over time.

Speaker #1: So that's applied to both, basically.

Speaker #5: Okay. Thank you.

Tammy Qiu: Okay, thank you.

Speaker #2: Thank you. Next question today. Comes from the line of Chris Casso from Wolf Research. Please go ahead.

Operator: Thank you. Next question today comes from the line of Chris Caso from Wolfe Research. Please go ahead.

Speaker #6: Yes, thank you. Good morning. My first question is about capacity additions. Basically, how long does it take to affect the capacity additions if you were to take on additional capacity?

Chris Caso: Yes. Thank you. Good morning. The first question is about the capacity additions and basically how long does it take to affect the capacity additions. If you were to take a decision now to add more capacity, when would that capacity be effective for shipment? If you can go through some of the steps that you would need to take, I would suppose that the supply chain would be a big part of any decisions to add capacity.

Speaker #6: When would that capacity be effective for shipment? And if you can go through some of the steps that you would need to take—I suppose that would mean the supply chain would be a big part of any decisions to add capacity.

Speaker #1: Yeah. It's a Chris, it's a combination, right? So we have as Christophe said, obviously, we're doing work here. So we're freeing up cabins, so making sure that cabins are fully dedicated to output.

Roger Dassen: Yeah, Chris, it's a combination, right? We have, as Christophe said, obviously we're doing work here, so we're freeing up cabins. Making sure that cabins are fully dedicated to output. Right now, we also have prototypes and R&D tools in cabins, so we're finding another home for those tools such that all the cabins that we have here are fully dedicated to output. We're looking at reducing cycle time. Those are the key things that we're doing here within ASML. Of course, we're working with our supply chain to, in essence, make sure that they do the same things. Christophe said they've made, as we did, they've made big investments in the past on what we call the long lead time items. Now it's just leveraging those investments from the past and making sure that we get the maximum out of that capacity.

Speaker #1: Right now, we also have prototypes and R&D tools in cabins. So we're finding another home for those tools such that all the cabins that we have here are fully dedicated to output.

Speaker #1: We're looking at reducing cycle time so those are the key things that we're doing here within ASML. And of course, we're working with our supply chain to an essence and make sure that they do the same things.

Speaker #1: Christophe said, they've made as we did, they've made big investments in the past in what we call the long lead time items. So now it's just leveraging those investments from the past and making sure that we get the maximum out of that capacity.

Speaker #1: And in terms of how long does it take? Well, I think the 30% that we talked about gives you a good proxy for that. You will, in essence—as we've said before—every year, you will see us end with a move rate that is higher than the move rate that we entered the year with.

Roger Dassen: In terms of how long does it take? Well, I think the 30% that we talked about gives you a good proxy for that. You will, in essence, as we've said before, every year, you will see us end with a move rate that is higher than the move rate that we entered the year. We're continuously building up move rates quarter on quarter. The end result of the plans as we currently have it, is the 30% that we mentioned for next year and the 30% that we're investigating for 2028. That's the answer, I think, to the timing question that you just said.

Speaker #1: So, we're continuously building up move rate, quarter on quarter. The end result of the plans, as we currently have it, is the 30% that we mentioned for next year, and the 30% that we're investigating for 2028.

Speaker #1: So that's the answer, I think, to the timing question that you just wrote.

Speaker #6: Thank you. As a follow-up of a question on pricing and a clarification from some of your prior comments. And I think you were very clear about the mix effect of low NA EUV on the higher throughput tools where you get higher AS proportionally higher ASPs.

Chris Caso: Thank you. As a follow-up of a question on pricing, a clarification from some of your prior comments, I think you were very clear about the mix effect of Low-NA EUV on the higher throughput tools where you get proportionally higher ASPs. Is there also any potential for higher ASPs on a like-for-like basis? The reason why I ask is because you are taking steps to add capacity. You're rolling up your sleeves, as you say. Would that potentially result in higher like-for-like ASPs as you increase your cost to do what the customers are asking?

Speaker #6: Is there also any potential for higher ASPs on a like-for-like basis? And the reason why I ask is because you are taking steps to add capacity you're rolling up your sleeves, as you say.

Speaker #6: Would that potentially result in higher like-for-like ASPs as you increase your costs to do what the customers are asking?

Speaker #1: Well, as I mentioned before, in the current environment where there is a lot of value for customers in what we bring them, we believe the potential to capture a larger share of that value—or at least to capture our share of that larger value—gives you better pricing power.

Roger Dassen: Well, as I mentioned before, in the current environment where there is a lot of value for customers for what we bring them, we believe the potential to capture a larger share of that value, or at least to capture our share of that larger value, gives you better pricing power. Those are the conversations that we're currently having with customers. As I mentioned, not tomorrow, but over time, you should be able to see the improvement there.

Speaker #1: So those are the conversations that we're currently having with customers. So as I mentioned, not tomorrow, but over time, you should be able to see the improvement there.

Speaker #6: Understood. Thank you.

Chris Caso: Understood. Thank you.

Speaker #1: You're welcome.

Roger Dassen: You're welcome.

Speaker #2: Thank you. Next question today. Comes from the line of Mehdi Hussaini from Susquehanna, please go ahead.

Operator: Thank you. Your next question today comes from the line of Mehdi Hosseini from Susquehanna. Please go ahead.

Speaker #4: Yes, thank you for squeezing me in. I have two follow-up questions, and this is for the team—Christophe, Roger. As we think about this migration from E to F, which seems to be accelerating in the second half of '27, how are your customers deciding between upgrading an existing E platform versus purchasing an F system?

Mehdi Hosseini: Yes. Thank you for squeezing me in. I have two follow-up question, this is for the team, Christophe, Roger. As we think about this migration from E to F, which seems to be accelerating in H2 of 2027, how your customers are deciding between upgrading an existing E platform versus purchasing an F system? I'm asking this question because both of these have a similar configuration. The base system is very much similar, and I just want to understand how customers would prefer upgrade or just go for a complete new system purchase. I have a follow-up.

Speaker #4: And I'm asking this question because both of these have a similar configuration. The base system is very much similar. And I just want to understand how customers would prefer upgrade or just go for complete new system purchase.

Speaker #4: And I have a follow-up.

Roger Dassen: Well, I think the answer to this question today is very simple. It's really and. I think that our customer wants to buy the fastest possible tool. This is why we had a pretty fast migration towards the 3800E. I think this has become today the tool customer really wants. They also want to upgrade existing system because typically they sit on different technologies. The new tool moving forward are going to 2-nanometer, and then they will go to 1.4, while a lot of the upgrade will be for the nodes that come before that. We are really in the and situation today. The appetite for both upgrade but also for faster tool is high.

Roger Dassen: Well, I think the answer to this question today is very simple. It's really and. I think that our customer wants to buy the fastest possible tool. This is why we had a pretty fast migration towards the 3800E. I think this has become today the tool customer really wants. They also want to upgrade existing system because typically they sit on different technologies. The new tool moving forward are going to 2nm, and then they will go to 1.4nm, while a lot of the upgrade will be for the nodes that come before that. We are really in the and situation today. The appetite for both upgrade but also for faster tool is high.

Speaker #1: Well, I think the answer to this question today is very simple. It's really an end. So I think that our customer wants to buy the fastest possible tool this is why we had a pretty fast migration towards the 3800E.

Speaker #1: I think this has become, today, the tool customers really want. And they also want to upgrade existing systems because typically they sit on different technologies.

Speaker #1: So the new tool moving forward are going to two nanometers, and then we'll go to 1.4. While a lot of the upgrade will be for the node that come before that.

Speaker #1: So we are really in the end situation today. And the appetite for both upgrade, but also for faster tools, is high. So what will define the transition from E to F is going to be, again, the maturity of the platform and then our ability to ramp going from E to F.

Roger Dassen: What will define the transition from E to F is going to be again, the maturity of the platform and then our ability to ram going from E to F. That's very, I would say, very normal. That's what we have done with the E. Today our customer, I think short answer, they want both, and they want as much as both as possible.

Speaker #1: But that's very I would say very normal. That's what we have done with the E. But today, our customer, I think short answer, they want both.

Speaker #1: And they want as much of both as possible.

Speaker #4: Let me rephrase the question. Would it be fair to say that F is more geared towards 1.4 or below two nanometers? And assuming that the two nanometers remain strong, your customers don't want to bring the line down and would prefer to actually purchase a new tool, especially if it's for below two nanometers?

Mehdi Hosseini: Let me rephrase the question. Would it be fair to say that F is more geared towards 1.4-nanometer or below 2-nanometer? Assuming that the 2-nanometer remains strong, your customers don't want to

Mehdi Hosseini: Let me rephrase the question. Would it be fair to say that F is more geared towards 1.4nm or below 2nm? Assuming that the 2nm remains strong, your customers don't want to bring the line down and would prefer to actually purchase a new tool, especially if it's for below 2nm?

Mehdi Hosseini: bring the line down and would prefer to actually purchase a new tool, especially if it's for below 2-nanometer?

Speaker #1: Well, I think the F will certainly be used for 1.4 nanometer because the timing is matching—basically, the timing of the F. For 2 nanometers, I think what we also allow between the E and the F is what we call mix and match the product.

Christophe Fouquet: Well, I think the F will certainly be used for 1.4-nanometer because the timing is matching basically the timing of the F. For 2-nanometer, I think what we also allow between the E and the F is to, what we call mix and match the product. When it comes to imaging overlay, the customer won't see a difference. They will just see a faster tool. That also means that when the tool is ready, if there's need for more capacity for 2-nanometer, then the F will definitely be an option as well.

Christophe Fouquet: Well, I think the F will certainly be used for 1.4nm because the timing is matching basically the timing of the F. For 2nm, I think what we also allow between the E and the F is to, what we call mix and match the product. When it comes to imaging overlay, the customer won't see a difference. They will just see a faster tool. That also means that when the tool is ready, if there's need for more capacity for 2nm, then the F will definitely be an option as well.

Speaker #1: So when it comes to imaging, overlay, the customer wants to see a difference. They will just see a faster tool. So that's also means that when the tool is ready, if there's need for more capacity for two nanometers, then the F will definitely be an option as well.

Speaker #4: Okay. And what's the updated assumption for high-NA EUV system and revenue recognized this year, 2026?

Mehdi Hosseini: Okay. What's the updated assumption for High-NA EUV system and rev recognized this year, 2026?

Speaker #1: You mean the number of tools that we rev rec this year?

Roger Dassen: You mean the number of tools that we rev rec this year?

Speaker #4: Yes.

Mehdi Hosseini: Yes.

Mehdi Hosseini: We've set four to five.

Christophe Fouquet: We've set four to five.

Speaker #1: We've set four to five. Four to five. It's still a review for this year. Yeah.

Roger Dassen: Yes.

Roger Dassen: Yes. Yeah, four to five is still our view for this year. Yep.

Roger Dassen: Yeah, four to five is still our view for this year. Yep.

Speaker #4: Gotcha. Thank you.

Mehdi Hosseini: Got you. Thank you.

Speaker #1: You're welcome.

Roger Dassen: You're welcome.

Speaker #2: Thank you. Our next question today comes from the line of CJ Mews from Cantor Fitzgerald. Please go ahead.

Jim Kavanagh: Thank you. Our next question today comes from the line of C.J. Muse from Cantor Fitzgerald. Please go ahead.

Operator: Thank you. Our next question today comes from the line of CJ Muse from Cantor Fitzgerald. Please go ahead.

Speaker #6: Yeah. Good morning, good afternoon. Thank you for taking the question. Operating leverage has been, I think, an increasing focus in terms of how you've been talking to the Street, and we're clearly seeing it in the numbers here, with top-line 35% growth and OPEX implicitly growing only about 6%.

C.J. Muse: Yeah. Good morning, good afternoon. Thank you for taking the question. Operating leverage has been, I think, an increasing focus in terms of how you've been talking to the street, we're clearly seeing in the numbers here with top line 35% growth and OpEx implicitly growing only about 6%. I'm curious, as you think about looking into 2027 and beyond, should we be kind of thinking that this 60% incremental op margin is the target that you're going after? Would love to hear your thoughts on that.

CJ Muse: Yeah. Good morning, good afternoon. Thank you for taking the question. Operating leverage has been, I think, an increasing focus in terms of how you've been talking to the street, we're clearly seeing in the numbers here with top line 35% growth and OpEx implicitly growing only about 6%. I'm curious, as you think about looking into 2027 and beyond, should we be kind of thinking that this 60% incremental op margin is the target that you're going after? Would love to hear your thoughts on that.

Speaker #6: And so I'm curious, as you think about looking into '27 and beyond, should we be kind of thinking that this 60% incremental op margin is kind of the target that you're going after?

Speaker #6: And would love to hear your thoughts on that.

Speaker #1: Yeah. CJ, we're not going to quantify that guidance, but you are right that we have been managing our OPEX quite nicely. So as Gina and R&D, you also know that we said that we believe that if we look at the R&D team that we have today, we believe that also with the reorganization that we talked about before, that we can get even more value out of the team than what we enjoyed so far.

Roger Dassen: Yes, CJ, we're not going to quantify that guidance, but you are right that we have been managing our OpEx quite nicely, SG&A and R&D. You also know that we said that we believe that if we look at the R&D team that we have today, we believe that, also with the reorganization that we talked about before, that we can get even more value out of the team than what we enjoyed so far. We believe that with the current team that we have in R&D, there is a lot of value and a lot of innovation roadmap that we can still pursue. If you contrast the way we've done it in the past, in the past we increased the headcount of R&D quite substantially.

Speaker #1: So, we believe that with the current team we have in R&D, there is a lot of value and a lot of innovation in our roadmap that we can still pursue.

Speaker #1: If you contrast the way we've done it in the past—in the past, we increased the headcount of R&D quite substantially. I would say that today, we believe that with the team we have now, we can really entertain a very aggressive roadmap going forward.

Roger Dassen: I would say that today we believe that with the team that we have today, we can really entertain a very aggressive roadmap going forward. All in all, I think you will continue to see us manage both R&D and SG&A quite nicely. As a result of that, the operating leverage that you imply, I think the operating leverage will indeed become better in the quarters and the years to come.

Speaker #1: So all in all, I think you will continue to see is manage both R&D and SG&A quite nicely. And as a result of that, the operating leverage that you imply I think the operating leverage will indeed become better in the quarters and the years to come.

Speaker #6: Very, very helpful. And then, I guess on your manufacturing footprint, I have a couple of quick questions. Number one, what would it take for you to actually look to add there?

C.J. Muse: Very helpful. I guess, on your manufacturing footprint, I guess a couple quick questions. Number one, what would it take for you to actually look to add there? Then I guess number two, what's the fungibility around mirrors and other optics between Low-NA and High-NA? Just curious if you are kind of sold out on Low-NA, does that create the situation where customers really desperate for supply might adopt High-NA sooner? Thanks so much.

CJ Muse: Very helpful. I guess, on your manufacturing footprint, I guess a couple quick questions. Number one, what would it take for you to actually look to add there? Then I guess number two, what's the fungibility around mirrors and other optics between Low-NA and High-NA? Just curious if you are kind of sold out on Low-NA, does that create the situation where customers really desperate for supply might adopt High-NA sooner? Thanks so much.

Speaker #6: And then, I guess, number two: what's the fungibility around mirrors and other optics between low NA and high NA? And just curious, if you are kind of sold out on low NA, does that create a situation where customers really desperate for supply might adopt high NA sooner?

Speaker #6: Thanks so much.

Speaker #1: Well, I think maybe starting with the second question. I think that as the maturity of the ANA platform improves, then of course ANA becomes a potential option also for capacity.

Christophe Fouquet: Well, I think maybe starting with the second question, I think that as the maturity of the NA platform improve, then of course High-NA become a potential option also for capacity. I think that's an option that will become more and more valid over time, because the tool at some point of time will cross this maturity threshold. If it does, it can do the job, and as I explained before, can even provide some benefit. I think that's, I would say, potentially another opportunity moving forward, assuming that we continue the good progress we have seen on maturity. It's one of the reasons also our customer are testing the tool on product, as you have seen with the press release about Intel today. That's maybe for the second question.

Speaker #1: And I think that's an option that will become more and more valid over time, because the tool, at some point in time, will cross this maturity threshold.

Speaker #1: And if it does, it can do the job. And as I explained before, can even provide some benefits. So I think that's I would say potentially another opportunity moving forward, assuming that we continue the good progress we have seen on maturity.

Speaker #1: So, one of the reasons also, our customers are testing the tool on product—as you have seen with the press release about Intel today.

Speaker #1: So that's maybe for the second question. For the first question, so in terms of our own footprint, as Christophe said, the way we try to increase our capacity is primarily within the current parameter.

Roger Dassen: For the first question, in terms of our own footprint, as Christophe said, the way we try to increase our capacity is primarily within the current parameter. We expect to break ground this year on a new campus that many of you are aware of. That really is, I would say, beyond 2028, right? That is not what we're doing in order to get to the 2028 numbers that we shared. In essence, the capability improvement that we were talking about, we want to achieve that within the current parameter. In terms of the fungibility of equipment for High-NA and Low-NA, particularly when it comes to ZEISS, because that's the way, C.J., I interpret your question, that really isn't there.

Speaker #1: So we are building, we are breaking ground this year. We expect to break ground this year on a new campus that many of you are aware of.

Speaker #1: But that really is, I would say, beyond 2028, right? So that is not what we're doing in order to get to the 28 numbers that we shared.

Speaker #1: So, in essence, the capability improvement that we were talking about—we want to achieve that within the current parameters. In terms of the fungibility of equipment for high NA and low NA, particularly when it comes to Zeiss—because that's the way, CJ, I interpreted your question—that really isn't there.

Roger Dassen: In terms of the fungibility of equipment for High-NA and Low-NA, particularly when it comes to ZEISS, because that's the way, CJ, I interpret your question, that really isn't there. It's totally different tools that ZEISS needs to produce a High-NA optic versus a Low-NA optic. It's not that there is fungibility that you can use High-NA tools to get more Low-NA output. That's not going to work.

Speaker #1: It's totally different. It's totally different tools that you need— that Zeiss needs— to produce a high NA optic versus a low NA optic. So it's not that there is fungibility, that you can use high NA tools to get more low NA output.

Roger Dassen: It's totally different tools that ZEISS needs to produce a High-NA optic versus a Low-NA optic. It's not that there is fungibility that you can use High-NA tools to get more Low-NA output. That's not going to work.

Speaker #1: That's not going to work.

Speaker #6: Okay. Then thank you, Christophe. Thank you, Roger. Thank you, everybody participating and asking the questions. If you were unable to get through on the call and still have questions, please feel free to contact ASML Investor Relations with your question.

Jim Kavanagh: Okay, thank you, Christophe. Thank you, Roger. Thank you for everybody participating and asking the questions. If you are unable to get through on the call and still have questions, please feel free to contact ASML Investor Relations with your question. Again, thank you all for joining us, and if I could ask the operator to formally conclude the call, I would appreciate it. Thank you very much.

Speaker #6: So again, thank you all for joining us. And if I could ask the operator to formally conclude the call, I would appreciate it. Thank you very much.

Operator: Thank you. This concludes the ASML Q2 2026 Financial Results Conference Call. Thank you for participating. You may now disconnect.

Q2 2026 ASML Holding NV Earnings Call

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