According to reports, ASML Holding N.V. (ASML.US) will raise prices for replacement parts supplied to its South Korean clients for their extreme ultraviolet (EUV) and deep ultraviolet (DUV) lithography systems by 10%. The report stated that following negotiations with Samsung Electronics Co., Ltd. and SK hynix Inc. (SKHY), the new prices will apply to parts delivered from January 2027.
Growing demand for equipment and components, driven by increased investment in artificial intelligence (AI) data centers and semiconductor capacity expansion, has intensified pressure on suppliers. This price increase covers consumables and major components used for equipment maintenance, marking a rare across-the-board price hike by ASML for various related parts. An industry insider said, "Prices for the various components that make up these parts are generally rising, but ASML also appears to be seeking a larger share of the profits earned from its customers."
The Installed Base Management business, which includes after-sales service, spare parts replacement, software upgrades, and performance upgrades, is a very important recurring business for ASML, as its profit margins can be higher than those of new equipment sales. This business has very high gross margins (service business gross margin is approximately 70%), and high-margin components and upgrade services significantly boost the overall gross margin. Meanwhile, new equipment sales represent an "incremental business," while Installed Base Management is a "recurring business" 鈥?the more equipment sold in the past, the larger the future "base" available for maintenance and upgrades, creating long-term stable cash flow.
As more and more ASML equipment enters operation in customer factories, the Installed Base Management business will also benefit. Data shows that ASML's second-quarter revenue was 9.33 billion euros. Among this, Installed Base Management business revenue reached 2.76 billion euros, accounting for nearly 30% of total revenue, exceeding management's previous forecasts and driving the gross margin up to 54%. The company expects third-quarter revenue to be between 11 billion and 12 billion euros, with Installed Base Management business revenue reaching approximately 2.9 billion euros.
It is worth noting that ASML is scheduled to release its third-quarter results before the U.S. market opens this Wednesday. This Dutch semiconductor equipment manufacturer has become one of the biggest beneficiaries of the AI infrastructure boom, with its extreme ultraviolet (EUV) lithography machines being indispensable equipment for Taiwan Semiconductor Manufacturing Company Limited, Samsung, and Intel Corporation in producing the most advanced semiconductors. As semiconductor manufacturers expand capacity for AI accelerators, high-bandwidth memory, and advanced logic chips, ASML's U.S. shares have risen more than 67% year-to-date.
This latest earnings report will allow investors to judge whether demand for the company's advanced lithography systems remains strong enough to support its AI premium valuation. The market currently expects ASML's third-quarter revenue to be approximately 11.66 billion euros, or about 13.2 billion U.S. dollars, with earnings per share expected at approximately 12.47 U.S. dollars. With the market already holding high expectations for its exceptional growth performance, revenue figures are certainly important, but order intake and guidance for 2027 may have a greater impact on the stock's post-earnings movement.