How Do They Make Money?

ASML is the hidden giant powering the semiconductor industry. Without its machines, Moore’s Law would have already hit a wall. Here’s how the company makes money:

Selling advanced lithography systems (EUV/DUV scanners) to the world’s leading chipmakers (TSMC, Intel, Samsung, etc.):
These machines are critical for shrinking transistors and essential to pushing Moore's Law forward by enabling ever smaller, faster, and more energy-efficient chips. A single new-generation machine can cost up to ~€400 million. ASML is the only company worldwide capable of producing EUV lithography systems, giving it a near-monopoly in this critical step of semiconductor production with extremly high entery barriers, more than 5000 specialized suppliers, decades of accumulated know-how and very long R&D cycles.
Installed base management:
Recurring revenue from complex on-site service at customer fabs, upgrades, repalcement parts, software that extends the system lifetime, enhance performance and add new capabilities. This segments generates stable, high margin cash flows and mitigates cyclical risk.
Holistic lithography solutions:
Integration of software, metrology, and inspection tools with hardware to ensure optimal system performance, reduce defects, and improve chip yield. This includes AI-driven process control, metrology solutions in fabs and inspection systems – enabling customers to maximize value per wafer produced.
Innovation with customers, own research, networking effect, development and decades of partnerships:
ASML co-develops next-generation tools (e.g., High-NA EUV, advanced computational lithography) with customers to stay ahead of semiconductor complexity. Leading chipmakers such as Intel and TSMC partly finance these R&D efforts, providing ASML with cost-sharing, long-term agreements, and guaranteed adoption of new platforms. ASML itself invests double-digit billions of euros annually in R&D and profits additionally from network effects: more installed systems create stronger customer lock-in through service and software.

Revenue split:~70-80% from system sales and ~20-30% from installed base management with a rising proportion