ASML says South Korea surpassed China as its largest market in Q1 2026, with shipments hitting 45% of net system sales, or €2.84B, up from 22% in Q4 2025
But Supply Constraints Linger
Context & Ripple Effects
ASML’s China exposure had been unusually high in earlier coverage: China accounted for 49% of system sales in Q1 and Q2 2024 and remained its largest market for four consecutive quarters. By early 2026, ASML was already guiding that China would represent about 20% of full-year sales after warning of a significant decline.
The Q1 shift to South Korea therefore marks a sharp reallocation of ASML’s shipment mix rather than a routine quarterly fluctuation. It coincides with an increased 2026 sales outlook and reports of higher DUV pricing and EUV price discussions with TSMC, while supply constraints remain.
First-order effects
- South Korea becomes ASML’s largest Q1 destination, absorbing 45% of net system sales (€2.84B), displacing China as the immediate center of ASML’s shipment allocation.
- ASML has more room to monetize constrained tool demand: it raised its 2026 sales forecast and is reportedly pursuing higher DUV prices while discussing EUV pricing with TSMC.
Second-order effects
- Chipmakers receiving ASML tools in South Korea gain a larger near-term share of scarce lithography capacity, while customers with lower allocations must adjust fab expansion schedules or equipment budgets.
- Higher tool prices and constrained deliveries can raise the capital intensity of leading-edge capacity additions, pushing equipment-cost pressure downstream to semiconductor customers.
Third-order effects
- If the mix persists, ASML’s revenue will become less dependent on China and more tied to the investment cycles of markets able to absorb advanced lithography systems.
- The combination of concentrated demand, limited tool supply, and price increases points to lithography availability—not just chip demand—as a continuing constraint on industry capacity growth.
The trend: This is a data point in the AI-era semiconductor capacity cycle, in which scarce advanced lithography tools increasingly determine where new chip capacity can be built and at what cost.