Physics and Governments: The Only Things That Have Stopped ASMLNarrow moat

The honest way to describe ASML's competitive position is that it has never lost a customer to a competitor. It has lost business twice, and neither time to a rival: once to export controls, which forbade selling advanced tools into China and cut China from 36% of ASML's sales in 2024 to 16% in the first half of 2026¹, and continuously to the physics of making light shorter and lenses more precise.

Export policy is the sharper constraint and has its own root threat on this company. What matters here is the structure it creates: ASML's addressable market is set in The Hague, Washington and Tokyo rather than by its sales force, and no product improvement changes that. A machine that cannot be shipped is not a competitive loss; it is a market that has been removed.

Physics is the slower one. Each generation — EUV, High-NA, and eventually Hyper-NA — costs more, delivers less incremental benefit and takes longer than the last. The monopoly is safe for as long as the roadmap continues; the question that has no answer yet is what ASML sells when the roadmap stops, since the installed-base service annuity depends on fabs continuing to buy new tools as well as maintaining old ones.

Watch the interval between generations. Lengthening intervals mean the engineering is getting harder relative to the benefit — the earliest signal that ASML's growth eventually becomes an annuity on a static installed base rather than a monopoly on progress.