The Installed Base & Service AnnuityWide moat

For all the drama of the EUV monopoly, one of ASML's most valuable and least appreciated assets is quieter: the recurring, high-margin annuity thrown off by the thousands of machines already installed in customers' fabs around the world. ASML calls this 'Installed Base Management,' and it is the razor-and-blades model applied to the most expensive razors on earth — a large, sticky, growing stream of service, upgrade, and spare-part revenue that turns a lumpy equipment maker into something with a substantial recurring core.

The logic is beautiful. Every machine ASML sells — a system costing tens or hundreds of millions of euros — runs for many years, often a decade or more, and throughout its life it requires ASML's service to keep running: maintenance, spare parts, software, and the deep technical support only the maker can provide for a machine this complex. The customer cannot service an EUV machine themselves and cannot turn to anyone else; ASML is the sole source of the care its own machines need. So every system sold plants a seed that yields recurring revenue for years afterward, and as the installed base grows — more machines, more advanced, in more fabs — the annuity grows with it.

The numbers show how substantial this has become. Installed Base Management generated €8.2 billion in 2025 and grew 26%¹ in 2025 after 16% the year before, driven by the expanding fleet of EUV machines and by high-margin performance upgrades. This is not a rounding error on the equipment business; it is a quarter of the company's revenue, and the most predictable, highest-quality quarter — recurring, sticky, and less exposed to the boom-and-bust of new system orders. In the depths of an equipment downturn, when customers defer buying new machines, they still must service and run the machines they already own, so the installed-base revenue provides a stabilizing floor beneath the cyclical peaks and troughs of system sales.

The most attractive twist is performance upgrades: ASML can sell the owners of existing machines enhancements — software and hardware — that increase the output or capability of a system already in the field, letting the customer get more from their installed fleet without buying a whole new machine. These upgrades are high-margin and, crucially, in a supply-constrained, capacity-hungry world, customers eagerly pay for them to squeeze more production out of what they have. It is a way to monetize the installed base again and again, years after the original sale.

Taken together, the installed base transforms the quality of ASML's business. The equipment sales are the monopoly and the growth; the service annuity is the recurring, defensive, high-margin ballast — and it deepens the customer lock-in with every year, since a fab full of ASML machines dependent on ASML's service is a customer bound to the company for the entire multi-decade life of its equipment. The razors sell the monopoly; the blades compound the moat.