South Korea is now ASML's largest market. The shift came in the first quarter of 2026. It alters the maker’s sales map at a crucial moment.
Strong quarter driven by AI demand
ASML reported net profit of €2.76bn for the first quarter of 2026, a rise of 15% compared with the same period last year, the company said on Wednesday. Revenue hit €8.77bn, up from €7.8bn a year earlier, and the Dutch equipment maker raised its full-year sales guidance to between €36bn and €40bn, from a prior range of €34bn to €39bn. These big numbers show how AI infrastructure growth is driving immediate orders for semiconductor equipment.
It matters for investors. ASML shares ticked higher after the figures were released.
Why South Korea surged
South Korea accounted for 45% of ASML’s system sales in the quarter, the company reported, making it the firm's single biggest market in that period. The jump reflects a rapid ramp-up of capacity by South Korean manufacturers to supply memory chips related to AI workloads — a trend ASML’s own chief executive, Christophe Fouquet, said is boosting the industry outlook. "The semiconductor industry's growth outlook continues to solidify," Mr Fouquet said, underlining that logic and memory customers are accelerating expansion plans.
That's partly because demand for large memory and advanced logic chips has been reshaped by data-centre operators and cloud providers that run AI models. When those customers buy more servers and accelerators, chipmakers respond by ordering more capacity — and that feeds directly into demand for the lithography machines ASML builds.
The sales concentration in South Korea reflects where wafer-production capacity is currently expanding. ASML's machines are the kind of capital equipment firms buy at the front end of a chip foundry or memory fab expansion. When investment flows into one country, the company supplying the tools shows the effect quickly.
China exposure falls but remains material
At the same time, ASML disclosed that sales to China had been lower as a share of revenues: China accounted for 33% of revenue in 2025, down from 41% the year before. The drop comes amid tightened export controls led by the United States and coordinated with partners, intended to limit Chinese access to the most advanced semiconductor manufacturing equipment. ASML has previously warned those measures could push Chinese sales down further this year.
Ben Barringer, head of technology research at Quilter Cheviot, pointed to the diplomatic dimension. "The Dutch prime minister met with President Trump so we can only assume that the issue came up in discussion," Mr Barringer said, noting the way political discussions can ripple into trade and export policy. The timing is noteworthy: the US President is due to visit China on 14 May, the first such trip by a US president in nearly a decade, and trade policy will probably be on the agenda.
Restructuring, margins and the cost picture
ASML said its updated forecast takes account of potential outcomes around export controls, while also reflecting the company's efforts to manage costs. The firm restructured early last year, cutting around 1,700 roles, most of them in leadership positions in the Netherlands and the United States. Management framed those moves as part of a drive to sharpen operations and preserve competitiveness as demand patterns shift.
Margins held up in the quarter, helped by higher sales volumes and the shift in product mix towards systems that command higher prices. But the business isn't immune to pressure. Supply-chain snarls, logistics costs and the complexity of installing and servicing highly specialised equipment all add friction. And when a single country accounts for nearly half of system sales in a quarter, any local policy change or funding pullback becomes a meaningful commercial risk.
What the market is pricing
Investors digested the results as largely positive. Shares rose in European trading after the figures were published, reflecting both the stronger current earnings and the lifted 2026 sales range. Analysts have been debating how much of ASML’s upside is structural — a multi-year wave of AI-led capacity expansion — and how much is cyclical, tied to pockets of inventory restocking or timing of customer orders.
ASML's own commentary stressed flexibility. Christophe Fouquet said the new sales guidance is designed to accommodate a range of scenarios around export discussions and customer rollout plans. "We aim to be realistic about geopolitical uncertainties while also reflecting the demand we see," he said, framing the forecast as cautious optimism rather than exuberant prediction.
Implications for supply chains and customers
The shift toward South Korea matters beyond ASML’s balance sheet. It shows where capital investment in chips is flowing today, and that has knock-on effects for suppliers, engineers and local ecosystems. South Korean fabs expanding capacity will need more than just lithography tools — they’ll require chemicals, metrology equipment, installation crews and long-term service contracts. ASML’s revenue mix will therefore shape who benefits across the wider supply chain.
Relying more on a single national market increases concentration risk. If policy, incentives or technical challenges slow the South Korean build-out, ASML could see order timing pushed out — and earnings would reflect that. On the other hand, if the South Korean expansion keeps accelerating, ASML stands to capture a large slice of system orders and aftermarket service revenue for years to come.
Geopolitics remains a wild card
Trade policies and export controls have become central to how ASML operates. While China remains a sizeable revenue source, regulatory steps restricting the flow of high-end tools make future sales there uncertain. ASML has publicly warned that restrictions could further reduce sales to China in 2026; management has built different scenarios into guidance to reflect that possibility.
Ben Barringer said the episode shows how geopolitics and corporate strategy are entwined. "This isn't purely a commercial story any more," Mr Barringer said. "Political decisions shape where equipment can be shipped and who can buy it, and that changes the winners and losers in the supply chain."
The coming months will be watched closely by customers and competitors alike — but the immediate read is simple: orders tied to AI and memory expansion are powering ASML’s near-term performance, and South Korea is at the centre of that demand spike.
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South Korea made up 45% of ASML’s system sales in the first quarter of 2026, the company reported.
This article was created with AI assistance.
