ASML HOLDING NV(ASML)Q2 2026 法說會逐字稿

Good day. Thank you for standing by. Welcome to the ASML 2026 Second Quarter Financial Results Conference Call on July 15th, 2026. At this time, all participants are in a listen-only mode. After the speakers' introduction, there'll 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 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.

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 second quarter 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. 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.

Thank you, Jim. Welcome everyone. 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. Roger?

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. Let me start with our second quarter accomplishments. In the second quarter of 2026, total net sales were EUR 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 EUR 6.6 billion, which included EUR 3.8 billion from EUV system sales, including sales of one High-NA system, and EUR 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 EUR 2.8 billion, almost EUR 300 million above our guidance, a result driven primarily by additional upgrade business. 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 EUR 1.3 billion, and SG&A expenses came in at around EUR 0.3 billion. The effective tax rate for Q2 was 17.5%. For the full year 2026, our expected annualized effective tax rate is around 17%. Net income in Q2 was EUR 2.9 billion, representing 31.3% of total net sales, resulting in earnings per share of EUR 7.59. Turning to the balance sheet, we ended the second quarter with cash equivalents and short-term investments at a level of EUR 7.6 billion. Our free cash flow in Q2 was EUR 1.3 billion. Moving to our cash return to our shareholders. In Q2, ASML paid the final dividend over 2025 of EUR 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 EUR 7.50 per ordinary share. In the second quarter, we purchased around EUR 1.1 billion worth of shares under the current 2026-2028 share buyback program. The first quarterly interim dividend over 2026 will be EUR 1.88 per ordinary share and will be made payable on August 5, 2026. 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 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%. With that, I would like to turn the call back over to Christophe.

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 installed 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 systems. The dynamics are very similar in both advanced logic and DRAM, 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. In logic, there is continued investment, not only to enable the expansion of 3 nm capacity in support of the latest generation of AI accelerators, but also at both the 5 nm and the 4 nm nodes to support the diverse set of chips required by AI products. At the same time, the 2 nm 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 nm 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. 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-expose 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.

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. 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 their 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. We see this heightened visibility reflected in order 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. 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.

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. These milestones mark 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. 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 solutions and increasing lithography intensity. 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. I look forward to seeing many of our investors there. With that, we will be happy to take your question.

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. Operator, can we have your final instructions and then the first question, please?

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

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. 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 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.

Well, François, I think I understand the question about the connection between High-NA and Low-NA. Let me start with High-NA. Every new generation of lithography system ASML has brought to market was introduced with the intention to reduce the cost of patterning. When you look at High-NA single-expose, the design and performance of the tool will be such that it provides a cost benefit to our customers. Of course, to reach that point, you need to have the right maturity of the platform. I mentioned that we are still working to bring the High-NA platform to the level of maturity of Low-NA. When you achieve that, the cost of High-NA will typically provide an advantage versus the existing technology. I think that logic is still true, and again, it gets implemented when the platform reaches the right maturity. Therefore, I don't see a need to compare one tool price versus the other directly, because the same logic applied when Low-NA was introduced. The key for High-NA to be cost effective versus 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 one of the strongest signs so far that we're getting there.

There is no question of Low-NA pricing. Yeah, sorry, go ahead, Roger.

I would add, François, that when it comes to Low-NA pricing, we continue to increase the productivity of the Low-NA tool. That gives us a runway for potential price improvements going forward. Value-based pricing is the concept we follow at ASML. In the current environment, the value for customers is higher than in different circumstances, which provides more flexibility for pricing than in prior periods. Given the long order lead times we have, that doesn't translate into pricing effects tomorrow. But the environment today, with the substantial value our products bring to customers, gives us greater flexibility on pricing, and we are executing on that as well.

When could that happen, Roger? I mean, to your point, it's not tomorrow. After tomorrow? When is it?

That really depends on the order situation you have with customers. As I said, it's linked to order lead time, and that varies by customer. The dynamic is clearly there, François.

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

All the capacity increases we are discussing—planned or under investigation—are based on our existing footprint. We have been working hard over the last six to nine months to increase our output, and we'll continue to do so. The numbers we are mentioning can be achieved by optimizing the existing clean room space in the right way. This is also why we can create that improvement on the short term.

Great. Thank you both.

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

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? 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?

Joe, it's the balance as we see it today between demand and supply. That balance gets us to the 30% increase. If customers ask for considerably more, we will again evaluate with our supply chain what else can be done. At this stage, given our conversations, 85 is a good representation of the balance between customer demand and what we can ask of the supply chain. If more is needed, as we've done in recent months, we'll roll up our sleeves and see if more can be done.

Maybe to add, Joe: the two times 30% increases I mentioned are based on our existing footprint. The question is the speed at which we need to execute to support customer demand. In recent months we've been very successful increasing output. We have the space and the recipe to get to these numbers, and we'll continue to stay in sync with customers and work very hard on output. Our first mission is to provide customers what they need.

Joe, to further build on that: don't just think about unit percent increases. We're talking 30% more tools, but the tool mix next year will be different. For EUV in particular, next year's mix will be Es and Fs, while this year it's a combination of Bs and Es. Given the difference in output, that 30% increase in units translates into roughly a 45% increase in wafer capacity. In addition, we're offering many upgrade packages to the installed base, which gives customers another uptick in capacity. It's the combination of improving our internal capacity, the productivity of the tools, and installed base upgrades that drives the overall capacity increase.

That's really helpful color. 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 outlook is for 2027 and 2028?

For High-NA, we follow the same principle of matching supply with customer demand and optimizing across all products. There is more work today on Low-NA and immersion than on High-NA, but we're not sacrificing High-NA supply by optimizing elsewhere. We keep flexibility to respond as customers' needs evolve. As the platform matures, High-NA can play a larger role.

Awesome. Thank you.

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

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

On your first point, as you've seen in the last few months, we haven't reached a stable state for demand for 2027 and certainly not for 2028. We revise demand with customers frequently. Our supply goal is to follow that demand. I won't say we're done with the discussion. The market dynamic remains strong, and matching supply and demand is an ongoing process. Short answer: the capacity is there to meet demand, but demand is fluctuating and conversations with customers are ongoing.

Krish, we are not waiting until we get orders. We're investigating the 110 scenario for EUV Low-NA in 2028 now because demand signals from customers, even if not translated into full purchase orders yet, are quite strong. We're preempting and preparing accordingly.

Got you. Very helpful. A quick follow-up: it seems like the 3 nm node is actually being longer and stronger than people thought. I would assume that you would still be shipping the 3600D. 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 your mix is shifting to more volumes of E and eventually F?

Krish, at a certain point we're sold out on D models because of a specific QB from ZEISS. We expect to be virtually done with D models this year, with perhaps one or two slipping into next year, but essentially done. From that point onwards, we'll build Es and Fs next year. That mix will have a higher ASP due to higher productivity and better gross margin profile. I'm not going to guide gross margin for next year, but the mix effect on EUV next year will be more positive than this year.

Thanks a lot, Roger.

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

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 units targeted? How is it covered today? Can you talk about the lead times as we speak? I have a follow-up. Thank you.

We wouldn't be investigating 110 if customers weren't signaling that the number was plausible. The fact that we already see significant order intake for 2028, two years in advance, is a strong sign of the very good market dynamics. We are not sharing coverage numbers, but the demand signals for 2028 are strong enough for us to seriously investigate 110 and the related immersion numbers.

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'm trying to understand if, with these investments, memory manufacturers are closing the gap between offer and demand or are just investing in new technologies like HBM?

The demand is a combination of higher volumes for both HBM and DDR. There has been some shift due to strong DDR pricing, but topology-wise the DRAM wafer process is similar. HBM requires more wafer volume, and additionally the number of EUV and immersion layers has increased on nodes that are ramping strongly now. Nodes such as 1c and 1b use more EUV layers. It's this combination of volume and increased layer counts that creates the strong demand for ASML on DRAM this year and likely in the coming years.

Okay. Thank you very much.

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

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 Installed Base Management, I struggle a little bit to get to the midpoint. I'm trying to understand if your ASPs are going higher in Q3, Q4 because of your Holistic Lithography attach rate on software, or is there any mix impact that is particularly meaningful? When I look at your full-year guide on gross margin, you're essentially saying that your gross margin exit rate in Q4 is around 56%-58%, which would suggest that your mix, volumes, software upgrades, etc., are very strong. Just trying to understand what's going on with ASPs and systems in particular in Q3, Q4.

Didier, it's hard to validate your numbers on the phone, but let me walk through the guidance. There is a mix effect: we had quite a few D models in the first half, and the mix will be more positive in the second half. We will also have the 230 configurations in the second half, which helps the ASPs. Immersion in the second half will be substantially higher than in the first half; we started the year with lower immersion due to ZEISS preparation, and we will make up for that in the second half. The guidance includes around 65 EUV tools with a slightly better ASP mix because of what I mentioned. Installed Base Management will grow over 30%. Combining these elements, you should be able to get to the midpoint of our guidance. Regarding gross margin, if you do the analysis by midpoint, you should be looking at roughly 56% for the second half. We guided Q3 gross margin at 55% to 57%—you should expect a similar midpoint for Q4. The improvement is driven by: more immersion and Low-NA EUV in the mix; better priced EUV in the second half; strong Installed Base Management; higher volumes giving positive fixed-cost coverage. It's the combination of those four factors that improves gross margin in the second half versus the first half.

Got it. Very clear. If I take the things you mentioned earlier, the mix of EUV tools, etc., is there any reason why your gross margin should not go higher in 2027 than the exit rate of 2026? And related to that, any color you can give us on the mix of Low-NA tools next year—whether you have predominantly the E tool or is the F tool capturing more than 50% of the value?

I'm not going to give guidance on 2027 gross margin. On the drivers I mentioned, the mix effect within EUV should be better next year because next year we'll have Es and Fs; there will be a number of Fs, but the lion's share of the tools next year are going to be Es—so the mix will be E-dominant. That mix will be better than this year and better than the second half of this year. For immersion and EUV, if we're able to achieve the planned 30% increases, that should be positive for margin given the high-margin nature of scanners. Volume effects and fixed-cost coverage will also help. Installed Base Management—the service component grows with the installed base and should be strong. The swing factor is upgrade business, which is currently strong because customers need productivity. If the market stays bullish and customers continue expanding capacity, the gross margin drivers I described should also be strong next year. But we won't provide a specific margin number.

Absolutely. Thank you so much.

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

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. Beyond productivity, the 3800F is also providing overlay improvements. In the past those were a bit more difficult in discussions with customers. I'm assuming that if I 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's my first question.

I'm not going to guide next year's business. We've said what we plan for next year, and you're capable of modeling it. Historically, we've shown customers productivity upgrades and additional value from imaging and overlay. Historically, productivity gains and ASPs correlated strongly because customers paid for the productivity upgrade and received imaging and overlay benefits effectively for free. There's no reason that will be dramatically different, except that today the market environment and the value we bring give us more flexibility to have conversations with customers on how we capture our share of that value. That is likely to translate over time but not immediately.

Very clear. Maybe a quick follow-up on install base. You've quantified the outlook for the year. This business has been trending better for a while now. We know the productivity increase of the tools, very helpful data. Maybe help us with how big the upgrade opportunity is in terms of current fleet configurations at customers. Given the strong need to increase capacity and limited clean room space, is there a plan to make install base upgrades more of an agreement with customers so you get better planned install base upgrades and more visibility to service that demand?

The key element today is customers want more capacity in existing fabs quickly, which creates strong conditions for system upgrades. We see this in our numbers and expect it to continue next year and beyond. Customers want the fastest possible tool and upgrades to increase capacity without building new fabs. Our upgrade products cover all versions of our EUV Low-NA and immersion systems, and we can implement upgrades across our fleet. We see strong acceptance of these upgrades, and customers are requesting acceleration and new products, which we plan to deliver in 2027 and 2028. As long as demand and fab constraints persist, the demand for upgrades will remain strong.

Understood. Thank you.

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

Hi. Thank you for taking my question. The first one is: investors usually compare your growth to global wafer fab equipment (WFE) spending growth. Based on my understanding, this year you have a lot of upgrades because of limited clean room space. In 2027 and 2028, there will be more clean room space from greenfield expansions. Do you think you'll be in a better position to grow compared to WFE coming into 2027 and 2028?

Tammy, the audio was not very good, but I think your question is whether ASML will outgrow WFE in 2027 and 2028 given more greenfield fabs. Roger?

Basically, 2026 has a lot of clean room constraints. 2027 and 2028 will be more clean room space-based greenfield expansion. 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'll be able to outgrow or grow more than WFE compared to 2026?

Tammy, we never comment on WFE directly. We comment on our own plans and demand as we see it. With the 30% numbers we've indicated, we're contributing to the demand our customers have. You can compare that to your WFE expectations.

The additional point: in advanced DRAM and advanced logic, litho intensity is increasing, which can help you model our relative growth because converting multi-patterning to single-expose EUV shifts more work into lithography. That may be useful in your calculations.

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 DRAM could become a bigger High-NA customer earlier than logic?

I don't know if DRAM will become a bigger customer earlier than logic. Today both segments are qualifying High-NA. Intel was first to get the technology and first to implement it in production. There's a lot of work to qualify the technology on product wafers. The DRAM opportunity is significant because of the volumes, but at this stage we see both logic and DRAM as good candidates for High-NA as both move from multi-patterning to single-expose EUV over time.

Okay. Thank you.

Thank you. Our next question today comes from the line of Chris Caso from Wolfe Research. Please go ahead.

Yes. Thank you. Good morning. The first question is about the capacity additions. How long does it take to affect the capacity additions? If you decided now to add more capacity, when would that capacity be effective for shipment? Can you go through some of the steps, since the supply chain would be a big part of any decision to add capacity?

Chris, it's a combination. We're freeing up cabins, dedicating cabins fully to output, relocating prototypes and R&D tools to other places so cabins are used for production. We're reducing cycle time and working with the supply chain to do the same. We've already invested in long-lead items in prior years; now it's about leveraging those investments. The 30% number gives a proxy for timing. Each year we increase move rates quarter-on-quarter. The end result of our current plans is the 30% increase for next year and the 30% we're investigating for 2028.

Thank you. As a follow-up on pricing and a clarification from prior comments: you were clear about the mix effect on higher throughput tools with proportionally higher ASPs. Is there potential for higher ASPs on a like-for-like basis? You're adding capacity and rolling up sleeves; would that result in higher like-for-like ASPs because your costs to do what customers ask increase?

In the current environment, where the value we provide is substantial, there is potential to capture a larger share of that value, which gives us better pricing power. Those conversations are ongoing with customers and should show up over time, but not immediately.

Understood. Thank you.

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

Yes. Thank you for squeezing me in. I have two follow-up questions for Christophe and Roger. As we think about the migration from E to F, which seems to be accelerating in the second half of 2027, how are your customers deciding between upgrading an existing E platform versus purchasing an F system? Both are similar in configuration; I want to understand how customers prefer upgrades versus new system purchases. I have a follow-up.

The answer today is that customers want both. They want the fastest possible tool, which drove the migration to the 3800E, and they also want upgrades to existing systems to increase capacity without building new fabs. Upgrades and new tools serve different parts of the roadmap and different nodes. Customers are buying both as they see fit. The transition from E to F will be defined by platform maturity and our ability to ramp from E to F.

Let me rephrase: would it be fair to say that F is more geared toward 1.4 nm or below 2 nm? Assuming 2 nm remains strong, customers might not want to bring the line down and would prefer to purchase a new tool, especially if it's for below 2 nm?

F will certainly be used for 1.4 nm as the timing matches. For 2 nm, E and F can be mixed. Imaging and overlay benefits mean customers won't see a large difference in some aspects; they will see a faster tool. If more capacity is needed for 2 nm, the F would also be an option. In short, F will be important for 1.4 nm and will be an option for 2 nm depending on customer needs.

What's the updated assumption for High-NA EUV systems recognized this year, 2026?

We've set four to five High-NA systems to be recognized this year.

Got you. Thank you.

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

Good morning. Thank you for taking the question. Operating leverage has been an increasing focus in your commentary. We're seeing top-line growth and OpEx growing much less. As you think about 2027 and beyond, should we be thinking that this 60% incremental operating margin is the target you're going after? Would love to hear your thoughts.

CJ, I'm not going to quantify a specific target. You're right that we've managed OpEx tightly. We believe that with the current R&D team and the reorganization we discussed, we can get more value out of the team. In the past we increased R&D headcount; now with the team we have, we can pursue an aggressive roadmap more efficiently. You should continue to see disciplined management of SG&A and R&D, which will support operating leverage in coming quarters and years.

Very helpful. On manufacturing footprint: what would it take for you to add footprint? And what's the fungibility around mirrors and optics between Low-NA and High-NA? If you're sold out on Low-NA, does that create a situation where customers desperate for supply might adopt High-NA sooner?

As the maturity of High-NA improves, it becomes a potential option for capacity. If the platform crosses the maturity threshold and proves its value, High-NA can be used more broadly. We are progressing on maturity and testing on product wafers, which supports that option.

On our own footprint, the capacity increases we're planning are primarily within our current parameters. We are breaking ground on a new campus this year, but that's beyond 2028 and not needed to reach the numbers we shared for 2027 and 2028. Regarding fungibility at ZEISS, the optics for High-NA versus Low-NA are totally different; there isn't fungibility where High-NA optics can be used to produce more Low-NA output.

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. If I could ask the operator to formally conclude the call, I would appreciate it. Thank you very much.

Thank you. This concludes the ASML 2026 second quarter financial results conference call. Thank you for participating. You may now disconnect.