ASML, the Netherlands-based equipment supplier to the semiconductor industry, said on Wednesday that its current production plans would fall short of customer demand in 2027 and 2028, as AI investment continues to drive up orders.
The company also posted its highest-ever quarterly sales, at €11.7 billion in the third quarter, and raised the bottom of its sales forecast for 2026.
ASML said customers are still increasing their forecasts for equipment demand, largely based on how big and long-lasting they expect AI investment to be. Some even want to book machines now for 2029 or 2030.
In July, the company said it would expand capacity by 30% in 2027 for both its low-NA extreme ultraviolet (EUV) and deep ultraviolet (DUV) immersion machines. ASML is the only company that makes EUV systems, which are used for the most advanced chips. It was also looking at a further 30% rise in 2028.
"We are investigating ways to increase capacity for 2028 beyond the 30% increase we previously communicated," CEO Christophe Fouquet said in a statement.
"Customers are asking us every single day to get more tools," Fouquet stated in a video interview released alongside the results.
Record quarter
Third-quarter sales of €11.66 billion were up 55% from a year earlier, towards the top of ASML’s €11-12 billion forecast and broadly in line with the €11.7 billion average of analysts’ estimates compiled by Bloomberg.
Net income more than doubled to €5 billion, helped by a €510 million gain on stakes ASML holds in other companies.
Gross margin, the share of sales left after production costs, beat ASML’s forecast at 57.5%, mainly lifted by €3.3 billion in sales from servicing and upgrading customers’ existing machines.
ASML now expects 2026 sales of €44-45 billion, up from €43-45 billion, with a gross margin of around 56%, up from 54-56%. It also forecasts fourth-quarter sales of €14.2-15.2 billion.
"ASML delivered a strong set of numbers, but realistically, they have only caught up to where the market already was with its expectations," explained Ben Barringer, head of technology research at UK wealth manager Quilter Cheviot.
A test for the AI trade
The results follow a jittery week for AI-linked stocks.
Last Thursday, chipmakers fell after a Financial Times report suggested ChatGPT maker OpenAI’s annualised revenue was running about $20 billion (€17.8bn) below figures reported late last month, a gap largely down to how they are counted.
On Tuesday, Asian chip stocks tumbled after Hock Tan, head of US chipmaker Broadcom, said many AI investors did not understand what they were investing in. This came as reports of progress by Chinese memory chipmaker CXMT towards denser memory chips raised concerns over future competition and pricing pressure.
ASML’s Amsterdam-listed shares were up by more than 3% at around 10:00 CEST on Wednesday.
Since chipmakers order ASML’s machines well in advance, investors watch its outlook for clues on whether AI spending plans are holding up.
"Durable growth will continue into 2027 and 2028, however, the market will begin asking the question of whether or not there will be any sign of a downturn from 2029 and what impact that has for ASML," Barringer said.
ASML’s investor call is at 15:00 CEST on Wednesday. Taiwan’s TSMC, the world’s biggest contract chipmaker and a major ASML customer, reports on Thursday.