The order book told the story before the executives did. ASML, the Dutch company that makes the lithography machines used to print the world’s most advanced chips, reported second-quarter results on July 15 that beat expectations, with total net sales of 9.3 billion euros and net income of 2.9 billion euros, a gross margin of 54%. Then the company raised its full-year outlook and, for the first time, gave the market a look at 2027.
The guidance was strong. ASML now expects 2026 total net sales of 43 billion to 45 billion euros, up from its previous range, with a gross margin of 54% to 56%. It guided third-quarter sales of 11 billion to 12 billion euros. The company also said it plans to add 30% to its low-NA EUV capacity, which will reach around 65 systems this year, and is studying another 30% increase for 2028. The increases reflect orders from customers who are locking in capacity under long-term agreements that stretch beyond 2026.
The demand is coming from the AI build-out. TSMC, Samsung and Intel are all expanding advanced capacity, and each expansion requires ASML’s extreme ultraviolet lithography machines, the most complex and expensive pieces of manufacturing equipment in the semiconductor industry. ASML also raised prices on its machines, according to reports, citing capacity constraints and higher costs for titanium and optical components.
The company’s position has made it the most direct barometer of the chip industry’s health. ASML sells to every major chipmaker, its backlog spans years, and its order flow is a leading indicator of how much capacity the industry believes it will need. The raised guidance, coming in the same week that TSMC posted record profits and announced a $100 billion expansion, reinforced the message that the AI chip build-out has not slowed.
China remains a complicating factor. ASML said Chinese customers would account for around 20% of 2026 sales, and Chinese buyers continue to purchase its older DUV machines for mature-node production. But sales of advanced EUV systems to China are restricted by export controls, and high-end DUV sales require licenses. The company has been caught in the middle of the U.S.-China technology conflict since the first restrictions were imposed.
The export questions grew sharper the same day. The Trump administration alleged that ASML was involved in secretly shipping EUV-compatible components to China, according to reports, an accusation that would, if substantiated, put the company in violation of export controls. ASML did not confirm the allegation, and the details were not immediately clear, but the report pushed the company’s compliance practices into the spotlight just as it raised its outlook.
The contradiction is not lost on investors. ASML is selling every machine it can make, raising prices and extending its order book, and at the same time facing escalating scrutiny over where its machines and components end up. Each tightening of export rules removes a slice of its addressable market, even as demand from non-Chinese customers more than compensates. The company’s valuation has been forced to carry both the boom and the risk.
The technology trajectory adds to the pressure. ASML’s High-NA EUV machines, the next generation of its flagship product, are in a validation phase, with Intel the first customer to use them in high-volume production. High-NA machines cost around 400 million dollars each and are expected to become a revenue driver later this decade as chipmakers move to the nodes that require them. ASML’s 2027 outlook, the first it has given, is built partly on that ramp.
The competitive position is unusual. ASML has no real rival in EUV lithography; it is the only company in the world that makes the machines, a monopoly protected by decades of research and a supply chain no competitor has replicated. That position has made it one of the most valuable companies in Europe and a fixture in every discussion of chip supply chain security.
The risks are equally unusual. A company with a monopoly on the industry’s most critical equipment attracts policy attention, and the export-control fight between the United States and China has made ASML a weapon in a conflict it did not choose. The allegations reported this week, if pursued, could lead to new restrictions, fines or changes in how the company handles its China business.
For the industry, ASML’s guidance is the most reliable signal available. The company’s customers do not order its machines speculatively; each system is tied to a fab expansion that someone is paying for. When ASML raises its outlook, it means the world’s chipmakers have committed real money to building capacity, and when it points at 2027, it means that commitment extends years into the future.
The market’s reaction was muted, a pattern repeated across the semiconductor sector this week as investors digested strong results from multiple companies while questioning how long the boom can last. ASML’s stock has risen with the AI trade, and its valuation leaves little room for disappointment.
The question for ASML is not whether the demand is real. The order book says it is. The question is whether the company can keep building machines, keep selling them and keep the regulators satisfied at the same time. The raised guidance answers the first two; the export allegations leave the third open.
