Positive ASML roadshow feedback: improved demand visibility, capacity concerns overstated

Overview

This report summarizes the key feedback following UBS's CEO/CFO roadshow with ASML. The core conclusion is that ASML's demand visibility is improving, and market concerns about capacity constraints may be excessive; although lithography demand in China is weak in the short term, demand from advanced logic and memory outside China is sufficient to offset the near-term gap.

Core views

UBS's core views include: first, the recovery in lithography demand in China is delayed, more likely to be reflected in 2027 rather than 2026; second, the market underestimates ASML's manufacturing flexibility and improvements in tool mix productivity; third, the High NA adoption path remains on track for 2028E/2029E; fourth, upgrade demand and an improved immersion lithography product mix are expected to support gross margin near or above the upper end of guidance.

Analysis framework

The report combines management roadshow feedback, industry conference information, company guidance, UBS forecasts, and valuation models to assess demand timing, capacity constraints, High NA techno-economics, gross margin, and DCF valuation.

Methodology notes

• Valuation methodsDCF

  discounted cash flow valuation

  UBS states that ASML's valuation is based on the DCF method, using a 9% WACC and a 3% terminal growth rate.

• industry_analysisWFE cycle analysis

  wafer fab equipment capital expenditure cycle analysis

  The report uses the demand timing of China WFE and lithography, deposition, and etch to assess the recovery path of ASML's China revenue.

• technology_assessmentHigh NA adoption economics

  economics of High NA technology adoption

  The report compares High NA with low-NA EUV multipatterning in terms of cost, availability, and process steps to assess the certainty of adoption in 2028E/2029E.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• ASML HOLDING NV / ASML.AS

  core covered name

  Strengths

  A leading supplier of semiconductor lithography equipment, with high barriers in EUV and High NA technologies, serving major semiconductor manufacturers such as Samsung, TSMC, Intel, and Hynix.

  Weaknesses

  The recovery in lithography demand in China is slower than expected in the short term, and the business is significantly affected by the semiconductor capex cycle.

  Comparison

  Competition mainly comes from Nikon and Canon, but ASML holds a significant lead in advanced-process lithography, especially EUV.

  Risks

  Macro slowdown, weakness in end semiconductor demand, delays in customer capex, EUV/High NA execution risk, and changes in valuation assumptions.

• Semiconductor Equipment & Materials

  industry mapping

  Strengths

  Advanced logic, memory, and the High NA upgrade cycle support medium- to long-term equipment demand.

  Weaknesses

  Industry capital expenditure is cyclical, and regional demand and product mix may be mismatched at times.

  Comparison

  The timing of demand differs across lithography, deposition, and etch; the report believes that high lithography spending in China in 2H25 is more likely to first support deposition/etch in 2026 rather than immediately drive upside for lithography.

  Risks

  Fab construction progress, delivery cycles, geopolitical restrictions, and sanctions policies may alter the timing of demand realization.

Key data

• 12-month ratingBuyThe table discloses a 12-month rating of Buy.
• Target price€1,600.0012-month target price.
• Current price€1,242.80Price as of 17:36:18 CEST on April 21, 2026.
• China WFE assumption+10% y-o-y in 2026EUBS expects China WFE to grow 10% year-on-year in 2026E, but lithography demand recovery is slower than expected.
• ASML China revenue forecast2026E -10%；2027E +9% y-o-yIn the short term, affected by a mismatch between fab readiness and delivery cycles, with recovery deferred to 2027.
• Potential EUV capacity80+ units in 2027Management reiterated potential capacity, but it remains linked to demand and subject to disciplined avoidance of overexpansion.
• High NA cost savings20%-40%Relative to low-NA EUV double/triple patterning.
• High NA tool availabilityabove 90% in 2H26EFrom SPIE conference feedback.
• Q1 gross margin53%The company's FY guidance is 51%-53%.
• UBS FY26 gross margin forecast53.8%UBS believes upgrade demand and an improved immersion product mix support gross margin.
• 2026E EPS€34.25UBS forecast, above consensus of €31.22.
• 2027E EPS€44.75UBS forecast, above consensus of €41.37.

Impact & implications

For investors, the implication is that short-term weakness in lithography demand in China should not be interpreted as structural deterioration in ASML's demand; more important drivers come from advanced logic and memory outside China, improved EUV productivity, and High NA adoption. If gross margin and capacity flexibility continue to deliver, support for ASML's valuation may strengthen.

Risks

• A slowdown in the end semiconductor market may cause customers to cut or delay capital equipment spending.
• Constraints on China fab readiness and mismatches in delivery cycles may continue to drag on near-term lithography demand.
• There are execution risks associated with next-generation EUV and High NA technologies.
• ASML's customers are highly cyclical, and revenue and orders may fluctuate significantly.
• DCF valuation is sensitive to assumptions such as a 9% WACC and a 3% terminal growth rate.
• UBS and its affiliates may have market-making activities, positions, or other potential conflicts of interest in the relevant securities.

What to watch

• Whether High NA tool availability exceeds 90% in 2H26.
• Whether potential EUV capacity of 80+ units in 2027 is delivered without significant overexpansion.
• Whether lithography demand in China recovers in 2027 as UBS expects.
• Whether advanced logic and memory demand outside China can continue to offset the short-term gap in China.
• Whether upgrade revenue and immersion product mix drive FY26 gross margin near or above the upper end of guidance.
• Whether 2026E and 2027E EPS continue to exceed consensus expectations.