ASML told investors on Wednesday that its customers want more lithography machines than it can build in 2027 and 2028, and it raised its full-year 2026 sales outlook to between €44 billion and €45 billion. On a call with reporters afterward, its chief financial officer argued against a bill in the US Congress. Read those two facts together. The coverage of the record quarter has treated the bill as a footnote, yet the bill reaches the part of ASML that does not depend on building a single new machine: servicing the ones already sitting in Chinese fabs.
What the Quarter Showed
The numbers in ASML’s third-quarter filing were strong. Net sales hit a record €11.66 billion, up from €9.33 billion in the second quarter. Gross margin rose to 57.5% from 54.0%, net income reached €4.96 billion, and new system sales climbed to 113 units from 86.
Chief executive Christophe Fouquet put the forecast in plain words: the company’s supply “as currently planned for both 2027 and 2028 will not fully meet the demand of our customers,” and some of them want to place orders for 2029 and 2030. The Amsterdam shares were up about 1.6% by mid-morning.
Now do two pieces of arithmetic the release leaves to you. Installed Base Management, ASML’s service and upgrade line, brought in €3.29 billion, which is 28% of the quarter’s sales, and Fouquet credited it with pushing margin above guidance. And to land inside the full-year range, fourth-quarter sales have to come in at €14.2 billion to €15.2 billion, 22% to 30% above a quarter that was already a record.
What the Bill Actually Says
The Multilateral Alignment of Technology Controls on Hardware Act, S. 4281 as introduced on April 13 by Senators Pete Ricketts, Andy Kim, Jim Risch and Chuck Schumer, covers “all deep ultraviolet immersion photolithography machines.” It names five Chinese chipmakers: ChangXin Memory Technologies, Hua Hong, Huawei, SMIC and Yangtze Memory. CXMT is the memory maker whose roadmap knocked 5.5% off the KOSPI on Tuesday.
The bill gives allies 150 days to adopt matching controls. If the Netherlands does not, the Commerce Department must do it from Washington, and the remedy is written out:
“require a license for the servicing of any applicable item that is also subject to the jurisdiction of the allied supplier country in any covered facility located in a country of concern and implement a policy of denying the license for such servicing”
A sales ban costs ASML future orders. A licensing regime built to deny servicing reaches machines that are installed, paid for and earning service revenue every quarter. The bill rode into the Senate’s defense authorization through the manager’s amendment in July, and the Dutch government protested it in June.
Roger Dassen, the CFO, told reporters on Wednesday that passing it after the midterms would accelerate China’s development of its own tools, and that he was optimistic “common sense will prevail.” Congress is moving the opposite way from a White House that let Nvidia’s H200 back into China for a price.
Test the China Number Against ASML’s Own Record
ASML has a forecasting habit worth knowing. In October 2024 it said China would fall back to around 20% of 2025 sales. China finished 2025 at 33%, down from 41%. Then, in January, Dassen set the same 20% for 2026.
The figure he tied it to, China’s share of the backlog, is one the quarterly release does not let you check. The third-quarter release carries no bookings number at all. What it gives you is Fouquet’s description of an order book with “momentum that continues to increase.”
Our Read
The shortage is probably real. ASML’s own customers are asking for 2029 and 2030 slots, and nobody else makes EUV machines.
The shortage is also convenient. A company that cannot build enough tools for its Western customers can tell you losing China barely matters, and Amsterdam took that deal this morning.
We would not. ASML’s China guidance ran low last year, the MATCH Act’s servicing clause aims at the business line that just carried the margin, and the history cuts against Dassen’s argument. China went from 14% of ASML’s sales in 2022 to 29% in 2023 and 41% in 2024, because Chinese fabs could see the restrictions coming and bought ahead of them.
ASML should publish what share of its installed-base revenue comes from the five named companies. That is the single figure that would let you price this bill, and ASML is the only one who has it. Until then, watch the defense bill’s conference committee more closely than the 2028 shortage, because the shortage protects next year’s orders while the bill reaches the fees ASML already earns.