Performance UpgradesNarrow moat

The most ingenious part of the installed-base business is performance upgrades: ASML can sell the owners of existing machines enhancements — software tweaks and hardware retrofits — that increase the throughput, precision, or capability of a system already running in a customer's fab. Rather than buying a whole new machine, a customer can pay ASML to make the machine they already own produce more, and in a world hungry for chip-making capacity, that is an extraordinarily attractive proposition. These upgrades are high-margin and were a notable driver of the recent beat in ASML's service revenue, as customers sought productivity enhancements to squeeze more output from their installed fleet.

Performance upgrades are moat-deepening in a special way: they let ASML monetize the installed base repeatedly, years after the original sale, without the cost or lead time of building a new system. They convert the fleet of machines in the field into a platform for ongoing, high-margin sales — a bit like a software company selling new features to its existing users. And because only ASML can offer them, and because they improve the economics of the customer's existing capital, they are eagerly bought and reinforce the customer's dependence on ASML for the full life and full potential of every machine. It is one of the clearest examples of how the installed base is not a static service obligation but an active, growing, high-margin business in its own right — margins that helped lift the company total to 54% in mid-2026¹.