Paul van Gerven
5 October 2021

A 5G-enabled explosion of applications at the edge and the drive for technological sovereignty could lift ASML’s revenue as high as 50 billion euros at the end of the decade.

CEO Peter Wennink, speaking at ASML’s investor event recently, made two overlapping predictions. One: the company’s revenue will grow to 24-30 billion euros in 2025. And two: revenue will increase by around 11 percent in the 2020-2030 period. Taken together, depending on whether you pick the lowest or highest number for 2025, that means ASML’s revenue will at least pass 40 billion euros in 2030, and possibly even top 50 billion. Posting almost 14 billion euros in revenue last year, tripling business this decade is in the cards.

Wennink explained in his presentation what’s driving this rather spectacular growth, although his predictions didn’t venture past 2025 much. He did say that there’s no reason why an estimated 2015-2025 7.4 percent CAGR for the semiconductor industry shouldn’t continue through 2030. If that’s believed to be the case, getting near that 50 billion euros in revenue isn’t a totally outlandish perspective either.

Tons of data

Where does the optimism come from? One important growth driver is the fact that the connected world has only just begun to take shape. On one end, there’s the devices. Our smartphones and laptops will get company from appliances-made-smart, sophisticated traffic systems, sensor networks and countless other applications. “Tens of thousands of companies are trying to create new services,” Wennink said. According to the International Data Corporation (IDC), the number of connected devices on the planet will grow from 40 to 350 billion in 2025.

Many of those won’t require leading-edge semiconductors. A sensor node, for example, typically needs an analog-to-digital converter, power management, RF and a microcontroller for pre-processing. These functions are easily handled by mature chip nodes. Hence the explosion of demand for mature semiconductors, which, Wennink previously acknowledged, has caught ASML off guard.

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On the other end, there’s the cloud. All those devices generate tons of data – 175 zettabytes by 2025, according to IDC. That will require massive amounts of storage capacity, and (AI) processors to crunch the numbers. In between, there’s 5G, facilitating the exchange of data between the cloud and the intelligent edge and/or humans. As 5G is rolled out this decade, it will enable more and more edge applications. “We’ll just keep growing. We’ve just begun,” Wennink said.


Another factor propelling ASML’s growth is the global push for technological sovereignty. On top of the industry’s capex of 150 billion dollars per year, ASML estimates that governments have set aside another 150 billion dollars to support local semiconductor activities, particularly manufacturing operations. According to Wennink, the industry desperately needs those kinds of investments. “Our industry, ASML and its customers, has structurally underestimated the required capacity,” the CEO said, echoing previous remarks.

Wennink admitted the investment spree could lead to overcapacity and/or cyclicality. That doesn’t pose a big risk, however, as it’s established players doing the expanding. “No matter how you look at it, they’re going to be rational. Yes, we’ll probably have some cyclicality, but it will be controlled.”

semiconductor market
With a projected CAGR of 7.4 percent, the semiconductor market in 2030 would double with respect to 2020. Source: ASML

Keeping up

Together, the growth of end-markets and the technological sovereignty ambitions will boost wafer capacity by 5.2 percent (CAGR) across the 2020-2025 period. This drives demand for wafer fab equipment (WFE), with the capex of semiconductor manufacturing companies growing 5.9 percent (CAGR) over 2017-2025. Lithography capex, coming in at 13.8 percent, outpaces WFE capex by more than a factor of two (this is a result of increased lithography intensity). For comparison, in 2018 ASML projected 3.5 percent WFE capex and 7.5 percent litho capex growth.

The demand for additional wafer capacity will partially be addressed by increasing the productivity of ASML’s systems. But that won’t nearly be enough. Compared to 2020, ASML will also have to increase annual manufacturing capacity by 50 percent for DUV systems and by 100 percent for EUV systems in the next five years. Sales of metrology and inspection equipment as well as service and field options will probably follow suit.

The market won’t be a problem for ASML this decade. Keeping up with it will be.