10.15.25
Sales in the third quarter of 2025 were €7.5B, near the low end of the guided range of €7.4B to €7.9B. This is down €200M from the prior quarter. The last three quarters of ASML’s sales have been flat to down. The company is guiding for a large step up in revenue in the fourth quarter, to a range between €9.2B and €9.8B. The midpoint of that range would bring total 2025 sales in at €32.4B. This will nearly match what the company said they would do in sales growth year-over-year from 2024 to 2025.
Memory sales in the quarter were €1.95B, an increase from the prior quarter but still below the level of equipment sales in the four quarters prior. Looking back across the last few years of lithography sales to memory customers, one does not see a clear relationship with the upturn-downturn cycles over that time. Q4 has been an outlier in each of the last two years, with inflated sales to China as customers there make purchases ahead of tariffs. There was a drop off from Q2 of 2023 through Q1 of 2024, with the aforementioned sino-spike in the Q4 of that period. I wonder if the long lead-time of lithography equipment is the reason that the memory cycles and ASML’s tool sales are not synchronized. It was around Q2 of 2022 that the downturn was clear. If lead time was twelve months at that time, that would explain the drop off in ASML memory sales that started in Q2-23. While that would explain the timing disconnect of the downturn drop, one has to layer in another assumption to explain why sales recovered to a new record high in Q2 of 2024. That could be that lead times shortened during the downturn. There may be some truth to what I’m speculating happened. Clearly there are other factors at work. Looking at more recent times, the last two quarters are still lower than the prior four, by about 25%. This DRAM upturn is now nine quarters old. Over that time, ASML’s memory customer spending has averaged €2.0B per quarter. In the prior upturn, also nine quarters in length, average memory spending on lithography was €900M. More than 2x the level of CapEx spending has gone into the memory industry so far this upturn than did in the entire 2020 through 2021 upturn. The belief that AI demand is insatiable is driving a great deal of investment in memory capacity.
Bookings to memory companies took a big step up this quarter, to €2.54B from less than €1.0B last quarter. Bookings kind of line up with the memory cycle, but the fit is not great. Most of 2023, the bottom of the last downturn, saw the lowest levels of memory customer bookings with ASML in the last five years. There have been surges in the fourth quarters of both 2023 and 2024, orders I bet are related to pending export restrictions to China. This most recent quarter stands out as it is the highest booking level in a quarter—excluding Q4-23 and Q4-24—that has happened going back to the second quarter of 2022. Still, even with Q3 being a strong bookings quarter, there is not a level of activity in ASML’s memory book that foretells a surge of deliveries coming. The last four quarters have averaged €1.94B of memory bookings. The last eight quarters have averaged €2.14B. On the deliveries end, the last four quarters have averaged €2.22B in memory deliveries. This makes sense as lead times have been shortening over this time. The ASML executives said last quarter that they don’t see bookings as a good indicator of the health of a given part of their business.
Which brings me to their commentary. The positive momentum around AI is extending to more customers in both leading-edge logic and advanced DRAM. Both logic and DRAM are also adopting more EUV layers. China total net sales in 2026 will “decline significantly” compared to their “very strong business there in 2024 and 2025.”
The rest of this is from the Q&A portion of the earnings call. In 2026, they expect China to go back to a more “reasonable” level of business. The company doesn’t believe that the transition from 6F2 to 4F2 DRAM cell architecture will reduce EUV layer content. 900,000 WSPM of HBM LOI between Samsung, Hynix and Sam Altman, which one analyst said he estimates is double the current volume. This was in the press recently during an Altman visit to Korea. Sounds like a press release vs. future reality to me. For quite some time, they have been eating into a large backlog of orders from customers in China. They have been surprised that China sales have been as strong as they have been in 2025. The China market is “mainstream logic.” He didn’t mention memory. That doesn’t mean memory isn’t part of it, but that wasn’t top of mind for him. A lot of what they ship to China is immersion today, so lower sales to China means lower immersion in the mix. The bookings they are seeing today are partially for 2026 and partially for beyond (mostly 2027?).
– Smooth Hughes (short MU)