Good day, and thank you for standing by. Welcome to the ASML 2026 Third Quarter F inancial Results Conference Call on October 14, 2026. At this time, all participants are in a listen-only mode. After the speakers' introduction, there will 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 then 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 call 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 third quarter results. The length of the call will be 60 minutes, and questions will be taken in the order that they are received. This call is also being broadcast live over the internet at 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 in ASML's annual report on 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, and thank you for joining us for our third 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 third 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 third quarter 2026 financial accomplishments and then provide guidance on the fourth quarter and the full year of 2026. Let me start with our third quarter accomplishments. Total net sales in the third quarter of 2026 were a record at EUR 11.7 billion towards the high end of our guidance and reflecting strong execution of our capacity ramp. Net system sales were EUR 8.4 billion, which includes EUR 4.1 billion from EUV system sales, including the sale of one High-NA EUV system, and EUR 4.3 billion from non-EUV system sales. Net system sales were split between logic at 54% and memory at 46%. Installed base management sales for the quarter were EUR 3.3 billion, exceeding our guidance by almost EUR 0.4 billion, primarily due to the strong demand for our productivity upgrade products in both EUV and Deep UV.
Gross margin for the quarter was above guidance at 57.5%, primarily due to the contribution of very high-margin components within our installed base management business. Our operating expenses were as guided, with R&D expenses at around EUR 1.2 billion and SG&A expenses at around EUR 0.4 billion. The effective tax rate for Q3 was 16.1%. For the full year 2026, the expected annualized effective tax rate is around 17%. Net income in Q3 was EUR 5 billion, which includes around EUR 0.5 billion as a result of an increase in the valuation of our initial investment in Mistral AI, representing 42.5% of total net sales and resulting in earnings per share of EUR 12.95. Turning to the balance sheet. We ended the third quarter with cash equivalents, and short-term investments at a level of EUR 12.7 billion.
Our free cash flow in Q3 was EUR 11.4 billion, underpinning the strong order momentum of our customers and the related down payments. Moving to the cash return to our shareholders. In Q3, ASML paid the first interim dividend over 2026 of EUR 1.88 per ordinary share. Further, we purchased in Q3 around EUR 4.1 billion worth of shares under the current 2026-2028 share buyback program. The second quarterly interim dividend over 2026 will be EUR 1.88 per ordinary share and will be made payable on November the fourth, 2026. With that, I would like to turn to our expectations for the fourth quarter and the full year 2026. We expect Q4 total net sales to be between EUR 14.2 billion and EUR 15.2 billion, with a gross margin of around 57%. We expect our Q4 installed base management sales to be around EUR 3.7 billion.
The expected R&D expenses for Q4 are around EUR 1.2 billion, and SG&A is expected to be around EUR 0.4 billion. Regarding our full-year expectations, we expect our full year 2026 total net sales to be between EUR 44 billion and EUR 45 billion, with a gross margin of around 56%. This anticipated year-over-year total net sales increase of around 36% reflects our expectation of over 45% growth in EUV, around 20% growth in non-EUV related system sales, and around 50% growth in installed base management sales. Turning to end use, this year, we expect logic net system sales to grow around 10% and memory net system sales to grow around 75%. The growth in memory is driven by the combination of capacity expansion of our customers and the increasing adoption of EUV on advanced DRAM nodes.
As previously mentioned, we continue to expect the China region to account for around 20% of our total net sales this year. In summary, the third quarter was a record for both total net sales and gross margin, and we expect our business to continue to accelerate in the fourth quarter as we execute against a backdrop of very strong customer demand for all our products and services.
With that, I would like to turn the call back over to Christophe.
Thank you, Roger. If we take a step back to look at the market environment, we see that the pace of the AI build-out continues to be very robust. Supply shortages across advanced logic and memory nodes continue to increase in size and in time horizon. Against this backdrop, we had very constructive discussions with our customer throughout the quarter, and the demand signals we have received have continued to strengthen. Our leading edge high volume customers are sharing very good visibility as a result of the increasing number of long-term commitments they are securing with their customers. This extended visibility has led them to conclude that demand for their product will outpace supply through at least 2028.
As a result, customers are accelerating capacity build-out plans and preparing for further expansion beyond 2028 in order to better meet the anticipated level of demand. For us, their drive to add capacity is translating into not only greater short-term demand across our entire holistic lithography portfolio, but also improved longer term visibility and demand, especially for our EUV products. As customers shift focus to their needs beyond 2027, our order momentum continues to build. We are increasingly receiving orders for 2028, and customers are also expressing interest in placing orders for 2029 and even 2030. As our customers are preparing to meet rising demand, we, in turn, continue our focus on adding capacity to support their needs.
Roger will now share further details on our latest plans on providing our customers additional capacity. Roger?
Thank you, Christophe. We have been very successful in ramping capacity this year. For low-NA EUV, we anticipate output of roughly 65 systems for 2026, which is nearly 50% more than the 44 systems that we shipped last year. For Deep UV immersion systems, while our initial output target for these systems was well below the prior year, we now expect we will deliver a similar quantity in 2026 as we did in 2025. Looking further ahead, we shared our intent last quarter to increase our capacity in 2027 by 30% for both low-NA EUV and Deep UV immersion systems, as well as to investigate adding a further 30% in 2028. However, given the dynamics of this quarter, we now anticipate that our current planned levels of output in 2027 and 2028 will not fully meet the demand of our customers.
Therefore, we continue to strengthen our efforts to produce more systems, especially beyond 2027, and with that goal in mind, are now looking into expanding our 2028 capacity even above the 30% year-on-year growth target that was under investigation last quarter for both low-NA EUV and immersion systems. In addition to shipping new systems, we support customer needs for more wafer capacity through productivity upgrades across our EUV and Deep UV installed base, as well as with the introduction of new products. The ability to enable an increase in capacity through upgrades on the same footprint is very compelling for our customers as the effect is an immediate increase in output capability. We will continue to work on this important value driver, expanding the upgrade portfolio offering new productivity options to our customers in the coming years.
The introduction of new products is the other lever that we have to support increased wafer capacity. We plan to introduce our next generation low-NA EUV system, the NXE:3800F, starting in small quantities at the beginning of 2027. This system is specified at a throughput of 260 wafers per hour, compared to the 230 wafers per hour capability of the NXE:3800E system. We also plan to introduce the next generation critical Deep UV immersion, running at 330 wafers per hour. These new products will provide incrementally more wafer capacity to the industry as they ramp in the coming years.
With that, I will hand it back over to Christophe for a technology update.
Thank you, Roger. This quarter, we saw meaningful momentum around High-NA EUV, with several industry announcements providing evidence of the technology's progress from development towards production. Intel announced that it has exposed more than 1 million wafers using its High-NA EUV systems, with performance that meets or exceeds comparable layers pattern using low-NA EUV. Additionally, Samsung and TSMC announced plans to introduce High-NA EUV into high volume manufacturing in 2028 and 2030 respectively. With availability across the existing High-NA EUV fleet approaching 90%, we now expect to see adoption increase node and node moving forward. To further ensure chip makers can fully leverage the advantage of High-NA EUV, we also, in collaboration with TSMC, began an industry-wide initiative to develop larger formats EUV photomask. This collaborative effort aims to establish a 12-inch mask pilot line by 2031 and enter production in 2033.
The broad support for this transition reflects customer interest in maximizing the value of High-NA EUV and in investing in the next generation of this technology. In closing, the combination of very strong demand fundamentals, improved visibility, and rising litho intensity reinforce our confidence in the trajectory of our business. Our focus continue to be on supporting our customer as they ramp their logic and memory nodes by continuing to expand our capacity over a multi-year horizon, while also delivering enhanced productivity by executing our technology roadmap. In Q3, we have also shipped the first YieldStar 550 metrology system. This overlay measurement system is designed with improved accuracy and precision to support the tighter process control requirements of the 14 angstrom node in logic and the 1D node in DRAM.
The system is designed to deliver more than 60% greater productivity over the previous generation YieldStar, allowing customers to measure more wafers and therefore more quickly drive yield improvement in their processes. This latest generation system continues to support major adoption of YieldStar customer with a demand that is expected to more than double for the coming years versus 2025. Finally, the transition of High-NA EUV into high volume manufacturing creates a compelling opportunity for customer to enhance the economics of their future roadmap, and we remain fully committed to helping them execute a successful insertion.
With that, we will be happy to take your questions.
Thank you, Roger, and thank you, Christophe. The operator will instruct you momentarily on the protocol for the Q&A session. Before, I would like to ask you to kindly limit yourself to one question, with one short follow-up if necessary. This will allow us to get to as many callers as possible. Now, operator, could 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. And your first question today comes from the line of Joe Quatrochi from Wells Fargo. Please go ahead.
Yeah. Thanks for taking the questions. I was wondering if you could provide maybe just a little additional color on the capacity expansion that you need beyond the 30% previously talked about. And just what do you think you can do in 2027, relative to that kind of mid-80s that we talked about last quarter?
Well, I think that we are basically working very hard to increase capacity, and I think this is true now. As Roger explained, we have done a lot of that this quarter. That is going to be true next year, and that is going to be true in 2028. And the reason for that, as we explained, is we continue to see customer asking for more tools. If we look at some of the opportunity we see, of course, it is a bit easier for us to enable those opportunity later, so mostly in 2028, rather than on the shorter term. This is what we are focusing on. I will not give new number for 2027 or 2028, because it is far too early to give those number as we continue to basically do everything we can to get extra capacity.
As a follow-up, you talked about in the prepared remarks or in the transcript, value-based pricing impacting more 2027, 2028. Can you share just a few more additional details on that? How to think about just kind of the trajectory of gross margin from here?
Yeah. So those are two questions, right? So first, on the pricing. As we mentioned in July, at that point, we were entering into conversations with customers on price increases. Those conversations have been completed and have indeed led to pricing increase for what we call the most critical products for our customers. So that has been done. As we also, and you made reference to it as we said in the prepared remarks, this is not going to have an impact on 2026.
You will see some impact on 2027, but I would say that the full impact of that is really going to start in 2028. From 2028 onwards, you are going to see the sustained impact of that, but you will see, in the course of 2027, you will see that starting to manifest itself in a positive way in both our revenue and the ASPs and in the gross margin.
Your second question on gross margin is obviously a much broader question, but let me take that one then. What are the puts and takes on the gross margin? As you have seen in gross margin this quarter, very, very strong. And stronger than we anticipated, I would say primarily as a result of the EUR 400 million more upgrade business that we have. But we should also not forget that if you look at the total year at 56%, it's not just the upgrade business, right? It's also higher volume. It's also the fact that we had a very strong low-NA EUV business in there, very strong immersion business in there. Those are all things that help. Then obviously, the question is how will that develop into the years beyond this year, right? What's the implication for 2027 and beyond?
Of course, we're not going to give you a gross margin percentage for 2027. That will come in January of 2027. But if you look at the key drivers of the gross margin this year, you have to ask yourselves, how much of that can be sustained into 2027. First off, volume with everything that Christophe just told you on the 30% increase in 2027, of course, volume should help, right? And volume, as long as we're able to control the cost of the increase in capacity, volume should give you better fixed cost coverage. So that should be a positive in that regard. The second element is mix. And there too, again, key drivers of the volume are the 30% extra in immersion and low-NA EUV. Both of them are obviously very positive from a gross margin perspective.
Of course, there will be quite some dry business that we continue to increase this year, but also next year. But I would say that also mix with the strength in EUV demand and immersion demand, that should help. Then to your point, we have the price increase, which as I mentioned, will have some effect in 2027. The larger effect you will see in 2028, but it will have some effect in 2027, so that's going to be helpful. And then finally, in the positive sense, I would probably call out the mixed effect within EUV, right? Where the mix effect next year is going to be better than this year, because this year we still have quite some D models in the mix. That won't materially be the case anymore next year. And we will have a few Fs in there as well.
So that's going to be helpful in the total EUV mix. Those are key elements. And then what are the things that we need to watch out for? Well, one as I mentioned is the ramp cost, right? So how much costs are we incurring to ramp not just for 2027 but also for beyond. So that's one thing that we simply need to manage those costs well. And then there is the swing factor of the upgrades, right? Because as we mentioned, the upgrades are very, very strong this year. So that really begs the question, how sustainable is the upgrade business? And if you look into that, the sustainability of the upgrade business, there's a few elements to bear in mind there. First off, we still see as of today, that there is quite some addressable market for us on the upgrade business.
If you look at the number of upgrades that we have performed in the field, it is quite a few tools, but there are still quite a few tools out there that have not yet been upgraded. That gives you good potential for the coming quarter, but also for the year thereafter. Second, as we mentioned on the video, we are also aggressively pushing upgrade products. We will bring new upgrade products to the market. And of course that would open an entirely new addressable market for us in the installed base. That is helpful. And then of course, there is the question, how will the market continue? In the current market environment with the demand that is out there, as we just said, there is a lot of appetite for these upgrades.
I would say upgrades is an important swing factor for us in the gross margin development as we see it in 2027 and beyond. Very strong this year. But I think we are at least from our side, doing whatever we can to create as much opportunity for upgrade business on a go-forward basis as we can.
Appreciate all the detail. Thank you.
You are welcome.
Thank you. Your next question today comes from the line of Krish Sankar from TD Cowen. Please go ahead.
Yeah. Hi. Thanks for taking my question. Christophe, Roger, my first one, I understand you don't want to give exact capacity numbers. I'm just wondering, under this strong demand environment, is there a natural ceiling on your EUV output, either due to pace at BIC or Carl Zeiss capacity? Or in other words, if the demand is there, can you do 140 or 150 units in 2028? Along the same line, do you worry that customers are pulling in orders or giving you bigger forecasts just to secure a slot? I had a quick follow-up after that.
Yeah. Maybe let me try to answer both questions. First on maybe what we are doing to increase the capacity. I think I mentioned that before. This is a task really started several months ago, and I think there are really three elements to it. The first one is to optimize the footprint we have here in order to basically build our machines. We have, as you know, a pretty important footprint, and we started to make sure that most of that footprint can be used for output. That is true for low-NA EUV, that is also true, by the way, for Deep UV, including immersion. And this creates already some opportunity that we can use and build up again this year, next year, and in 2028.
The second one, which I think is a very big opportunity and still a major parameter, is the cycle time, meaning the time we spend in our factory with certain given machines. As we gain in maturity, for example, on the NXE:3800E, we are capable to shorten the cycle time for a certain given sequence, but we are also capable to further optimize the sequence, meaning there are things that we needed to do initially in order to qualify a tool, which over time, in agreement with our customer, we believe we don't have to do anymore. I would say that this approach, we can take pretty far moving forward, and this is one of the really key opportunities we see basically moving forward. As I mentioned before, as we go over time, the opportunities continue to materialize, which give us some more hope and opportunity.
On the supply chain, of course, indirectly your question is, or your remark is that we have to supply the supply chain. This is something that we take into account, starting with Zeiss. We do not see Zeiss today as a bottleneck for the capacity expansion we are discussing, even beyond the 30% we mentioned for 2028. We have done, in the recent years, many work with all the supply chain to make sure that the supply chain will not be an issue for us. We continue, of course, to watch that very carefully. You understand that every time you have capacity, of course, we create more challenges there. We do that, and the last thing I will say is that we have time. If you look at the progress we have done this year, I think they are very significant.
We are feeling pretty good about next year. The time we have, again, for next year, for 2028, is still significant for us to continue to be very creative on all those fronts. That's, I would say, the answer to your first question. On the second one, I think I mentioned in the introduction, we have very good conversations with our customers. The conversation is not only about how many tools they need, it's also about exactly when those tool will be hitting the ground in their factories. When it comes to the demand we are referring to, the increased demand we are referring to, I think we are very much capable to validate that demand with some more detailed plan our customers are sharing with us in term of fab construction, release, et cetera.
I think that when we talk about demand, when we refer to demand in those discussion, we really refer to demand we believe is real and not inflated by any potential buying behavior from our customer.
Got you. That's super helpful, Christophe. Then a quick follow for Roger. On the value pricing, is this across the board? Is it for systems, services, spare parts, everything? I'm guessing, based on your commentary, you're not repricing the backlog. Can you just clarify that? Thank you.
Yeah. Exactly how we do it, Krish, I am not going to share. But as I mentioned, we are increasing prices for what we call the most critical products, those products that bring most value to our customers. These are the high range, high volume manufacturing products. Those are the ones that provide most value to customers in the current environment, and those are the ones that we put the pricing increases on it. And you will also understand that upgrade prices are closely associated with the prices of the tools. They will also follow, upgrade prices will also follow this pattern.
That is how we do it, and exactly how we do it, when we do it, et cetera, I do not want to go into any detail. But the bottom line is that you will start to see the effect on that in the course of 2027, but the full effect you will start to see from 2028 and onwards.
Thanks a lot, Roger.
You are welcome.
Thank you. Your next question today comes from the line of Sandeep Deshpande from J.P. Morgan. Please go ahead.
Thank you for letting me on. My question is back again to the question of your indication that you are looking at adding more capacity than the 30% into 2028. There are multiple components that you need to be able to add capacity, and some of these suppliers of ASML will need to add physical capacity to be able to supply you with this kind of huge volume increases, given that there is already a 30% increase in 2027. Have these discussions started with customers? Does ASML need to make any substantial payments to these suppliers in terms of adding this capacity?
Are there any particular impediments? Given that you yourself do not have any additional physical capacity till 2029, how is this whole supply chain being managed to be able to produce more capacity in 2028? I have a quick follow-up after that. Thank you.
I will try to add a bit to what I said before. I think that the only real challenge we have with the supply chain is to make sure they can ramp. I think that there is no question on their side on the, you say the strength of the demand, on the strength of the ramp. I think that the main challenge with all our suppliers, because in this case, with all the suppliers, is make sure that they can go up 30% every year. Roger mentioned it before, in the introduction, we went up this year by 50% on EUV, which is the sign basically that these are the kind of things we are capable to do with the suppliers.
As you can imagine, that is a discussion that we have with them on a very regular basis. Us mentioning 30% growth in 2027, more than 30% growth in 2028, is the result of the confidence we have that this entire supply chain can, of course, follow our own demand, both on EUV and Deep UV. That exercise, I will say, of course, could be expanded as far as needed, because we are continuing also to add, I will say, suppliers. We are continuing to make sure that we have more and more people who can produce some of our parts, especially the non-critical ones.
When it comes to the very critical one, Zeiss comes to mind again, we are absolutely strategically aligned on the trajectory of the industry and therefore the trajectory of the demand. These are very detailed, intense discussions. Again, every number we share with you is the result of us having validated that the supply chain can, of course, follow those numbers.
Thank you, Christophe. Quickly, Roger, on the gross margin, your guidance on gross margin in the fourth quarter is down from the current quarter, even though your revenues are going up significantly. Then, just again, regarding a response you made earlier about the value-based pricing, should we assume that most of the value-based pricing related increases will go straight down to the gross margin line, or is there a margin number on these increases that you will be putting through?
On the first one, the gross margin in Q4, a little bit lower from Q3. That is primarily related to the fact that we are seeing some ramp costs. We are ramping up for the increases that Christophe was just talking about. That has a bit of a bearing on the gross margin expectation, and that is why the fixed cost coverage that you would expect to benefit from the higher volume is a little bit compensated, and a bit more compensated by the extra cost that we incur in the ramp as we see it now in Q4. That is the main reason that we have there. In terms of the price increase, and to what extent is the price increase completely accretive to the gross margin? Of course, there the same applies, right?
One of the arguments that we had also in our conversations with our customers is that we are incurring costs in order to ramp. Ramp costs will give you some additional cost. It will definitely be accretive to the gross margin. Again, you will see some ramp costs that we are incurring in 2027 in order to get to the elevated numbers that Christophe was just talking about. This is both for ourselves, but also into the supply chain for the reasons that Sandeep, you just mentioned. We need to make sure that the supply chain is completely attuned to what we are looking for. Of course, that also means that in some places, there is some help needed to get that done.
There is some portion of the price increase that we need to cover for the extraordinary ramp that we are going through. But I would say that still a significant part of it is directly accretive to the gross margin.
Thank you, Roger.
Thank you. Our next question today comes from the line of François Bouvignies from UBS. Please go ahead.
Thank you very much. I just wanted to follow up a bit on this shortage situation. Obviously, we are in a very unprecedented time with this capacity constraint for your customers, but also today you are claiming that on your side as well, the demand will be higher than supply. The behavior usually is that people order as much as they can, especially if you start seeing some ramp to make sure they have the tools. We've seen other industries, some long-term agreements, some prepayment, try to get a more true sense of the demand. I was wondering if you were considering any change of the way you want to contract with your customers in those times. For example, increasing the prepayment, or also, adding more the firm orders earlier, to make sure you know that your customers are committed.
Yeah, François. If we take that, and we said it before, if you put an order with ASML, that's not a frivolous piece of paper that you put your name under. It comes with two serious commitments. One serious commitment is a commitment to make a down payment. As I qualified it before, it's a down payment that is enough to hurt, right? So that's one element. Secondly, a PO is a real commitment on both sides of the equation, and it also means that if you want to get rid of that commitment, that's not going to be easy. That comes at a price, not just the down payment, but more than that. Therefore, before customers sign a PO with ASML, they've made up their mind, and they're not doing this frivolously.
In terms of will you accept orders early on? Well, as Christophe mentioned, we are getting the request of customers for us to accept their orders, their POs, already for 2029 and 2030. The only reason why Christophe worded it in that way, that customers are requesting us, and therefore we have not yet accepted those, is that we want to make sure that we have a good picture of what the overall demand in 2029 and 2030 looks like that customers are currently signaling, and mirror that against the capacity expansion as we see it at that point in time.
We want to do that because we don't want now to accept orders from customer A, B, and C, and then to tell customer D, who hasn't given orders yet for 2029 and 2030, "Sorry, we're sold out." That would be totally inappropriate for customers that have been business partners for us for a very long period of time. We're now really using this period of time to mirror, to get a good understanding, what is the total demand that our customers are signaling for the 2029, 2030 timeframe? What does it look like? What is, for us, a reasonable expectation of capacity as we see it in the 2029, 2030 timeframe? Once we have that picture ready, then we are ready to accept orders.
Also accept the commitments from our side to execute on those orders. The only hesitation we have at this stage is that we really want to do our homework, be very diligent on the acceptance of the orders that customers are offering us to make sure that no single customer feels left out.
Great. Thank you, Roger. Very good answer, detailed. The second one is on the High-NA news flow. Christophe, you mentioned this high-volume manufacturing in 2028 with the memory guys, and also TSMC in 2030. I was wondering if we should think about High-NA shipments in 2028 to increase significantly on the back of it, and potentially a double-digit number of High-NA shipments as we go forward.
Well, we're still looking at the very initial ramps. I think that you are going to see that every year our customer are going to need more tool, as they validate in manufacturing that they like High-NA, and that most probably, they plan over time, more layers. I think the announcement, and the drive of TSMC first on the 12-inch critical mask, is very interesting there. Because the first signal it gives is that, in the mind of the customer, there will be more and more use of High-NA. Because if it was not the case, no one will really bother to go to 12-inch mask on High-NA. The 12-inch mask drive and very wide adoption by customer in the consortium, is just a sign that everyone has in mind over time to develop basically more and more adoption of High-NA.
With that, it's always difficult to say exactly how this will basically manifest itself. We also have, of course, a very big ramp, so there's a lot of focus on building up capacity, which sometimes can have a positive or negative impact on the High-NA rollout, depending if customers see High-NA as additional capacity or potentially a bit of a slowdown. But the number will grow for sure year after year. Again, the message I think all our customers have given this quarter with their participation into the 12-inch consortium is that they believe over time, this really become a very important technology, and the number of layers will grow over time for sure.
Great. Thank you very much.
You're welcome.
Thank you. Your next question today comes from the line of Lee Simpson from Morgan Stanley. Please go ahead.
Hi. Good morning. Thanks for squeezing me in. Maybe just follow up to the last answer set. I thought it was quite interesting that, if you look at the non-current liabilities, there's quite a material jump Q- on- Q. We're of the order of about EUR 5 billion. And typically, the bulk of that is down payment. So can we make a read-through to a relative size of big order intake, in Q3? That's question number one. And I think maybe alongside that, it did seem to infer, Christophe, in your answer to last question, that it's perhaps new customers that are bringing you to sort of thinking about the 2029 and 2030 framework. As you say, you still want to keep your marginal buyers still in the mix here. Are we right in saying that most of this is coming from new customers as a result? Thanks.
Yeah. On the first one, the non-current liabilities, does that include down payments? Yes, it does. So, in that way, it is an interesting gauge of how order intake is developing. I should say it's a bit of a lagging indicator, because typically the down payment and the receipt of the money lags a little bit the actual signing of the PO. It is a bit of a lagging indicator. But for lack of any PO numbers that you get from ASML, it's a nice proxy.
Yeah, I'm not sure I've fully understood the second question.
I think the second question was on the customers in 2029, 2030 that expressed an interest. I think your question is, Lee, is that a totally new customer that might potentially start with a T? And might this be that this customer is, in that way, sort of locking out existing customers?
You put it better than I would.
The answer is that the interest that is being expressed is much broader. Much broader. This is not linked to one specific customer. There is a far broader interest in customers to have, to place POs for that time period.
Yeah. Maybe to add to that, because you mentioned a new customer indirectly. I think what's interesting on low-NA EUV, we've talked about increased adoption of EUV. We continue to see, in fact, new customer on low-NA EUV, especially when it comes to DRAM. I would say these go a bit beyond the T customer. That's another interesting dynamic that we have to indeed take into account for 2028, 2029, 2030. That's another, of course, challenge when it comes to the capacity discussion we're having. But I think it's a great news when it comes to the validation of how EUV will be used moving forward.
The last thing I will say is that we see a similar trend on High-NA. So that's, I think also a very good set of news we get from our potentially new customers.
Great. Thanks for that.
You're welcome.
Thank you. Our next question today comes from the line of Alexander Duval from Goldman Sachs. Please go ahead.
Yes, many thanks for the question. Just wanted to pivot a bit and talk about immersion DUV. You talked today about how you'll reach a throughput of 330 wafers per hour, so I wondered what that could directly mean for pricing in 2028, and whether we should be thinking about the kind of ASP step-ups we saw historically on EUV tools when we think about the innovation you're delivering on immersion. Then, would like to think also secondarily as a follow-up on logic versus memory. I wondered if it's fair to say that in the prior quarter, the incremental demand seemed to be very much related to memory. But now you seem to be seeing quite a strong balance across both logic and memory.
Curious to what extent you would agree with that statement and what is driving this, whether it might be across drivers like agentic AI, or it could be progress either with existing customers or new customers. Many thanks.
Yeah, I can start. I appreciate the question on the 330 wafers per hour, because this is one of the, I would say, the very short-term action we have taken to increase capacity. We are going to bring the different immersion product to 330 wafers per hour. You know that we have slightly different version of our immersion tool depending on the overlay requirement of our customer. But all of them, to the beginning of next year, will go to 330 wafers per hour. When it comes to value and therefore to pricing, as we discussed many time for EUV, the price, the value scale basically with the throughput. I think what is true for EUV will be true also for Deep UV. This is both an opportunity on value, margin, pricing.
It is also, of course, very helpful when it comes to capacity because you look at, of course, providing the same capacity with potentially less tool. It does not mean that we need less tool, it means that we get more capacity for our customer, of course. That is another, I would say, creative move we have made on our portfolio to get more capacity out. We expect, again, the value to come to us in the same way it has always come with productivity. That is for Deep UV.
On the second question, I think that Roger gave some number. If you look at the increase compared to last year, memory has gone up very much. We are still on trend where memory become more and more important, 75% increase, which is of course significant. You start to see the results of this huge memory investment. That, by the way, is mostly DRAM, to be clear. We continue to see that moving forward. I think we have said in the past that the ratio between logic and memory will most probably increase towards memory.
Still, I would say that logic is also very strong. To be able to predict exactly where this is going to land is difficult because I like to stress that we see also a very strong demand on the logic side, because of course, as you know, the two are very much coupled when it comes to delivering AI capacity to the market.
Yeah. Just to give you one more data point there. So indeed, as I mentioned, logic went up around 10%, but the advanced logic piece, included in there is far better. So that grew over 25%, is expected to grow over 25% in this year. You are right, memory is getting closer to logic, but logic remains very important. When we look at 2027, memory comes close. But I still believe that logic will outweigh memory in the total book of business for next year.
Okay, thanks.
Thank you. The next question today comes from the line of Chris Caso from Wolfe Research. Please go ahead.
Yeah, thank you. Good morning. My question is with regard to your customer clean room constraints. Perhaps you could discuss that with respect to your decisions to expand capacity into 2028. Do you expect that clean room is still a constraint on your customers' ability to add tools and add capacity? What does that mean as you go into potentially 2029?
Well, I think there's still some, what I would call, tactical constraints. It could be that one system will move from the end of a quarter to the beginning of another one. We don't see too much of that, to be honest. But that's still possible because our customer has been ramping their clean room facility extremely fast. If we look at the longer term, as I said before, beyond those little move or those tactical move, we have confirmed that the number our customer are giving us are really lined up with their plan.
In fact, in many cases, when the supply is tight, we make sure before we fully allocate a tool to a customer that the space will be there, the facility also will be there, so that we don't ship a tool that will be waiting for weeks for a customer to use it, because, of course, other customer will be very disappointed with that. We do a lot of work to make sure that in all the plans we have at ASML, we don't have delay of more than a few days or weeks, I would say, in shipping our product. Short answer is, I think, no. We don't see our customer clean room constraint being a major factor on our demand.
But to your point, Chris , it's very clear that with everything that is being built today, it is such a massive scale. On the one hand, that opens significant opportunities, but it also means that our customers have to manage the execution of all that construction in 2027, 2028 very diligently, right? They're looking at a huge expansion of their footprint, but of course, that requires very diligent execution. And that's obviously something that we need to monitor very carefully. So in that way, conceptually, a lot of opportunity and not a constraint, but in reality, we need to make sure that they execute well, such that it doesn't become a constraint.
Thank you. As a follow-up question is with regard to China, and you talked about that at 20% of your system revenue this year. What should we expect going forward with respect to China? Do you expect it to maintain those levels as you go into next year?
I think the intrinsic demand in China is strong, right? If you look at what China needs in terms of mainstream logic, in terms of memory, there is very strong demand in China for their domestic consumption. If you look at the fabs that are being built in China, there is a lot coming online there. Therefore, we would expect the demand in China to be strong. This year, 20%. I would argue that also for 2027 and beyond, based on the intrinsic drivers, it seems that the demand situation in China remains very strong.
Thank you.
Thank you. Your next question today comes from the line of Tammy Qiu from Berenberg. Please go ahead.
Hi. Thank you for taking my question. Firstly, it's on your value-based pricing. This year, you are increasing pricing. Going forward, let's say this tightness in the industry continues, do you think you'll be able to negotiate price increase every single year?
Well, Tammy, that wasn't the plan, to be honest, right?
We were smiling.
We were smiling.
Our customer are listening, so.
Yes, exactly. That wasn't the plan. We've had these conversations with customers that, given everything that the ecosystem is going through, and given the efforts that we're all going through to meet the ramp requirements, we thought that we were entitled to a higher percentage. We were able to get there with customers, and we would see that as something that is possible within our value-based pricing model. But we would not be looking at repeating this every year or so. That is not the plan.
No, I would add to Roger. I think mostly you notice this, mostly one of the very first time we have this discussion with customer. If you go back many years back, this is something we never did. Roger mentioned in the introduction, the discussion were constructive. I think they were more than constructive, meaning there was a clear acceptance that maybe the overall value in the ecosystem is shifting. That's triggered by, of course, AI to some extent. I would say, we will see what the future brings, but at least we have been able to have a very good, very mature discussion, which I think is very important.
Something we never did before, we don't want to do that every year because that's not the purpose. But I think that it's very good that in principle, at least we have the ability, and mostly once a while, to discuss again what's the real value of lithography in the entire ecosystem.
Absolutely. Tammy, as you know, one of the key objectives for us in the pricing conversation is to make sure that we never depart from the concept of value-based pricing, because we don't want to be in a position that if the market goes down, that we're actually having discussions with customers on price decreases. That is very well understood in the conversations with our customers as we've had it. To Christophe's point, these have been conversations on fairness. But the premise that we are able to capture value of the next generation of tools, and that as a result of that, we're able to continue to increase the pricing commensurate with the value that it brings.
That is a principle that we want to sustain even if the market goes backward a bit. That's the reason why we're not opportunistically pricing, why we're not opportunistically seizing the opportunity, and why we're executing along the lines of what Christophe just described.
Okay, thank you. That's really clear. Secondly, regarding your exposure in China. I understand that China will never be able to compete with you from a technology perspective. But going to, let's say, 2029-ish, when they work out, let's say, a low-end version of immersion tool, do you think that will decrease your potential to price at a premium versus the Chinese local players, or your potential margin in Chinese market may need to come lower?
Well, I think, there's a lot of course, speculation in the question. But where we are today, I think, with our Chinese customer, is that they all want to work with us. I think this is very clear. I won't give any market share number, but you can imagine it's extremely high, especially on immersion. Therefore, as long as we have a good market access, as long as our customer can trust they can work with us, I think that the likelihood of a major competition in China is still pretty low. That's the first thing I will say.
The second is, of course, if they were to not have access to some of our tools, then you get a lot more motivation. But it's still a very, very long way to go. I think that we have been having this discussion about China having a tool to compete with us for the last 25 years, and every other years, we get the news that this is coming. If you stick to fact, I think the fact this year are not different from the fact a year ago or even five years ago. So I think that the progress is not very strong.
The motivation is not strong at all, and I think that as long, again, as we preserve market access in reasonable means, we should be fine.
Okay. Thank you.
You're welcome.
Okay. I just wanted to remind, we've got time for one last question. Sharon, can I ask you to ask the final question, please? Then if there are follow-on questions, please contact ASML Investor Relations, and we'll do our best to follow up. Operator, can we have that last question, please?
Thank you. Your final question today comes from the line of Stephane Houri from ODDO BHF. Please go ahead.
Yes. Well, thank you for taking my question. Actually, my question was on China initially, but just to understand the discussions that you have on 2029 and 2030, if it is more because you seem to be very positive at the moment on memory. If it is very balanced between memory and logic, or if it is still memory manufacturer who are giving you some visibility on 2028-- 2029, sorry, and 2030. Thank you.
Well, I think you need both memory and logic to get some AI chips. I think we have discussion with both customers because they get the same message from their own customer. I think today, DRAM is a bit more aggressive on the buildup of those capacity. But yeah, we have discussion with both. I think we see equal interest, equal, I would say, demand trajectory for both DRAM and logic, because we need both basically to get the product out.
DRAM, is it at the same time the U.S., Korea, and even China, or is it more concentrated from a geographic standpoint?
No, I think that we are mostly talking about EUV in this case. So this excludes China.
Okay. Yeah. Good. Thank you.
Okay. Thank you, everyone. On behalf of ASML, I would like to thank you for joining the call today. Operator, if you could formally conclude the call, that would be very much appreciated. Thank you.
Thank you. This concludes the ASML 2026 third quarter financial results conference call. Thank you for participating. You may now disconnect.