The Razor-and-Blades ModelWide moat

The installed base turns ASML into a razor-and-blades business of unusual quality. The 'razor' is the machine — a system sold once, for tens or hundreds of millions of euros — and the 'blades' are the years of service, spare parts, software, and support that machine consumes over its long operating life. Unlike a consumer razor, though, ASML's blades cannot be bought from anyone else: only ASML can service an EUV machine, so every system sold is a captive, multi-year revenue stream that no competitor can intercept.

This model is what gives ASML's revenue a recurring backbone beneath the lumpy equipment sales. Each machine placed in a fab is not a one-time transaction but the start of a decade-long relationship, and because the machines run continuously in high-value production, customers spare no expense keeping them at peak performance. As the installed fleet grows year after year — and it only grows, since machines are added far faster than they are retired — the base of recurring service revenue compounds. The razor-and-blades structure is the mechanism by which ASML's past sales keep paying it, converting a monopoly on equipment into a growing, annuity-like stream — €8.2 billion of it in 2025 — that persists long after each sale is booked¹.