This stagnation in European sales underscores a broader challenge for the EU’s semiconductor strategy. For years, European governments have focused on subsidizing the construction of new fabrication plants to lure major manufacturers like Intel and TSMC. However, ASML argues that supply-side subsidies alone are insufficient. Heemskerek noted, “We are selling absolutely nothing in Europe… because Europe is not investing and because no chip factories are being built in Europe.” The company is now calling on EU authorities, including Commission President Ursula von der Leyen, to harness the market power of European consumers to guarantee demand for locally produced chips. The goal is to encourage major chip consumers to source components from European manufacturers, thereby providing the economic incentive necessary for semiconductor firms to build or expand facilities in the region.
The technological stakes of this shift are high. ASML’s EUV systems are indispensable for manufacturing the smallest and fastest chips used in smartphones, data centers, and AI infrastructure. In fiscal 2025, ASML’s global revenue reached nearly $37.5 billion, a 15.6% increase from the previous year, driven largely by demand outside of Europe. The company’s financial health remains robust, with a net margin of approximately 29.4% and free cash flow of nearly $12.2 billion. However, the zero-revenue figure for Europe signals that the continent is missing out on the tailwinds of the global push for higher computing power and advanced chip manufacturing capacity.
While ASML paints a pessimistic picture of European demand, some infrastructure projects suggest a more complex reality. Intel operates its massive Fab 34 near Leixlip, Ireland, and has announced plans to invest €5 billion in the facility to expand production of CPUs on its Intel 4 and Intel 3 process technologies. Additionally, ESMC, backed by TSMC, Bosch, Infineon, and NXP, is constructing a new fab near Dresden with an estimated cost of €15 billion, capable of producing 12nm/16nm-class FinFET and 22nm/28nm planar transistors. Infineon also opened its new €5 billion Smart Power Fab in Dresden in July 2026. Yet, these facilities often target specific automotive or power semiconductor applications rather than the high-end logic chips that drive the most acute demand for ASML’s most advanced lithography tools.
The European challenge is mirrored by the global industry’s focus on future-proofing its manufacturing processes. In September, ASML and TSMC announced a collaborative initiative to transition the sector to a 12-inch Extreme Ultraviolet photomask format. Currently, chipmakers use 6-inch masks for High NA EUV systems, which forces manufacturers to stitch together smaller exposure fields, adding cost and complexity. Shifting to 12-inch masks aims to boost scanner productivity and lower long-term manufacturing costs for ultra-large AI chips. This initiative targets a pilot line by 2031 and full production by 2033, a roadmap that reinforces ASML’s long-term economic case but requires the entire global supply chain to retool.
While TSMC and other Asian giants are moving forward with next-generation architectures, Europe faces a dual challenge: attracting the capital required for leading-edge fabs and creating a stable local market for the chips they produce. ASML’s call for the EU to aggregate demand suggests that the next phase of Europe’s semiconductor strategy must look beyond factory construction to the end-users of the technology. Without a coordinated effort to ensure that European industries, particularly in AI and automotive, prioritize local sourcing, the region risks remaining a peripheral player in the high-value segments of the global chip market. The next confirmed development in this trajectory will hinge on whether EU policy shifts from pure infrastructure subsidies to market creation mechanisms in the coming year.
