ASML Warns of Equipment Shortages Through 2028 as AI Demand Surges

An extreme ultraviolet (EUV) lithography system manufactured by ASML Holding. (ASML) As demand for artificial intelligence (AI) chips surges, competition among global semiconductor manufacturers to secure production equipment is expected to extend well into the next decade. Dutch lithography equipment giant ASML has warned that its currently planned production capacity will be insufficient to fully meet customer demand in 2027 and 2028. ASML reported revenue of 11.66 billion euros, or approximately 17.45 trillion won ($13.10 billion) and net income of 4.96 billion euros in its third-quarter earnings released on Oct. 14. Revenue surged 55.2% year on year, while net income jumped 133.4%, marking record quarterly results. Revenue from memory chip equipment reached 3.8 billion euros, up 98% from a year earlier, significantly outpacing growth in equipment sales for logic chips. Beyond the record earnings, market attention has turned to ASML's long-term demand outlook. CEO Christophe Fouquet said some customers had expressed interest in placing orders for equipment needed in 2029 and even 2030. He also warned that the company's planned supply capacity for 2027 and 2028 would fall short of customer demand. ASML is consequently exploring ways to expand its 2028 production capacity beyond the previously announced 30% increase. Competition for equipment is no longer limited to securing production volumes, with customers increasingly discussing specific delivery schedules and factory locations. Park Yu-ak, an analyst at Kiwoom Securities, noted that some customers are placing equipment orders based on concrete production plans. He warned that supply constraints could prolong the imbalance between supply and demand as AI-driven growth continues to fuel demand for memory chips. South Korea's semiconductor industry is also accelerating its investments. The country emerged as ASML's largest market for new equipment sales in the third quarter, overtaking Taiwan and China. Samsung Electronics and SK Hynix are expanding production capacity for high-bandwidth memory (HBM) and next-generation DRAM to meet growing AI chip demand. Samsung, in particular, plans to introduce next-generation High-NA EUV lithography systems, priced at approximately 530 billion won (about $395.5 million) per unit, into mass production by 2028. Another potential source of competition is emerging from Elon Musk's semiconductor ambitions. Musk has been accelerating plans for Terafab, a joint chip manufacturing initiative involving Tesla and SpaceX, with volume production targeted for 2028. The project could add to demand for advanced semiconductor manufacturing equipment, potentially increasing procurement pressure on established chipmakers such as Samsung Electronics and SK Hynix. ASML has also confirmed plans to raise equipment prices following negotiations with major customers. The increases are expected to begin affecting financial results in 2027, with a more substantial impact from 2028 onward. Although ASML is working to shorten equipment production lead times and expand manufacturing capacity in the Netherlands, industry observers believe these efforts may still struggle to keep pace with rapidly growing AI-driven demand.