ASML's Q2 2025 Earnings Call: Unpacking Contradictions in EUV Growth, Geopolitical Impacts, and China Revenue

EUV revenue growth expectations, impact of geopolitics and tariffs on customer investments, high NA tool adoption timeline, impact of tariffs on customer behavior, changes in China revenue share are the key contradictions discussed in ASML's latest 2025Q2 earnings call.



Revenue and Order Book Trends:
- ASML reported total net sales of EUR 7.7 billion for the second quarter of 2025, at the upper end of guidance, primarily due to revenue recognition of one High NA system and additional upgrade business.
- Net system bookings came in at EUR 5.5 billion, with EUR 2.3 billion from EUV and EUR 3.2 billion from non-EUV sales, skewed towards Logic at 84%.
- The growth in revenue and bookings was driven by strong demand in Logic and Memory sectors, particularly due to AI-related investments.

EUV and Deep UV Segment Dynamics:
- EUV revenue is expected to increase by 30% in 2025 compared to 2024, with an additional 2.7 billion from High NA system revenue recognition.
- The lower EUV growth rate compared to initial expectations is attributed to a shift in revenue recognition from system sales to the upgrade business.
- Deep UV revenue faced a shift, with China contributing over 25% of sales, reflecting stronger demand in the Chinese market.

Gross Margin and Revenue Predictions:
- Gross margin for Q2 2025 was 53.7%, driven by an increase in upgrade business and one-off items, partially offset by High NA system revenue recognition.
- For 2025, ASML guides full-year revenue to increase by 15%, with a gross margin of around 52%.
- The second half of the year is expected to see a lower gross margin due to more High NA systems and a decline in certain upgrade revenues.

Geopolitical and Tariff Uncertainties:
- ASML faces uncertainties related to tariffs, impacting system sales to the U.S. and potential indirect impacts on overall market demand.
- The company's customers are cautious about capital expenditure due to these uncertainties, impacting their investment decisions.
- The removal of AI chip export restrictions to China is viewed as a positive development for the global ecosystem, though its direct impact on ASML's revenue is limited.