ASML delivered strong third-quarter results in 2025, reporting €7.5 billion in net sales and €2.1 billion in net income. The company exceeded analyst expectations with a gross margin of 51.6% and secured net bookings totaling €5.4 billion, including €3.6 billion from extreme ultraviolet lithography systems.
Despite these robust results, ASML's CEO Christophe Fouquet issued a warning about a "significant" decline in China demand and total net sales for 2026 compared to recent years.
This caution flag reflects the ongoing uncertainties linked to global trade tensions and export regulations.
What recent results did ASML report?
In the third quarter of 2025, ASML's total net sales reached €7.5 billion with a net income of €2.1 billion. The strong sales performance was primarily driven by orders for its state-of-the-art EUV systems, which are essential for advanced chip manufacturing.
The company’s gross margin of 51.6% surpassed market forecasts, demonstrating efficient cost management and strong demand outside China.
The robust bookings secured during the quarter forecast continued momentum, yet the looming caution on China sales dampens the long-term outlook somewhat.
Did you know?
ASML's extreme ultraviolet lithography systems are crucial to manufacturing the most advanced semiconductors globally.
What factors contribute to the China sales warning
ASML faces a significant challenge due to intensifying geopolitical tensions affecting its semiconductor equipment sales to China. The Netherlands government has imposed strict export controls on ASML’s advanced EUV lithography machines, specifically to curb technology transfer amid rising U.S.-China trade frictions.
Additionally, China has imposed its own export restrictions on rare earth materials, which are essential for semiconductor manufacturing, further complicating global supply chains.
These combined factors pose a risk to ASML’s revenue generation from the Chinese market, a historically strong source of demand.
How are geopolitical tensions affecting ASML?
Rising geopolitical pressures have positioned ASML at the center of what some experts refer to as a technological cold war. The U.S. government has actively encouraged allies to restrict the export of critical semiconductor equipment to China, limiting ASML’s ability to supply its most advanced machines.
The Chinese government responded with its own export controls and has taken steps, such as acquiring chipmaker NXP Semiconductors (formerly known as Nexperia), to secure domestic chip production.
These developments have heightened market uncertainties and forced ASML to revise its expectations for China sales.
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What is ASML's outlook for 2025 and beyond
Despite the sales challenge in China, ASML maintains an optimistic outlook for full-year 2025, expecting sales growth of around 15% and a gross margin of approximately 52%.
The company projects Q4 sales between €9.2 billion and €9.8 billion, suggesting strong global demand beyond China.
CEO Fouquet indicated the company does not expect total net sales in 2026 to fall below 2025 levels.
ASML plans to provide detailed guidance for 2026 early in the new year, reflecting cautious confidence despite uncertainties.
How is ASML planning to navigate these challenges?
ASML is partly offsetting the decline in China sales with growth driven by AI-related semiconductor demand and digital transformation investments worldwide.
Wall Street analysts have upgraded ASML’s rating and raised price targets based on this diversified growth potential.
The company remains focused on technological innovation and expanding capacity for advanced EUV systems and related products.
This strategic focus aims to sustain ASML’s market leadership amid geopolitical shifts and evolving demand dynamics.
Looking ahead, ASML’s ability to balance geopolitical risks with strong technological demand will shape its trajectory in the complex global semiconductor landscape.
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