Shares of ASML Holding fell 3.7% on Wednesday afternoon after reports emerged that Taiwan Semiconductor Manufacturing Co. (TSMC) will not incorporate ASML’s most advanced lithography systems into chip production through 2029.
Bloomberg reported, citing supply-chain data, that TSMC - ASML’s largest customer by those measures - has no present plans to deploy the developer’s high numerical aperture extreme ultraviolet equipment, commonly referred to as high-NA EUV, for production before 2029. The machines carry a list price above c350 million, approximately $410 million per unit.
Speaking to reporters, TSMC Deputy Co-Chief Operating Officer Kevin Zhang said the company will continue to rely on its existing EUV technology, calling the next-generation high-NA EUV machines "very, very expensive." Zhang made the remarks while announcing that TSMC’s leading-edge A13 chip is expected to enter production in 2029.
The shift in plans from TSMC presents a notable development for ASML, which has guided markets to expect high-NA EUV systems to reach high-volume production in 2027 and 2028. ASML has set an ambition of generating as much as 360 billion in revenue in 2030, and investor attention has been focused on the pace at which customers adopt the new equipment.
Key points
- ASML stock slipped 3.7% following reports that TSMC will defer high-NA EUV adoption through 2029.
- TSMC characterized next-generation high-NA EUV machines as "very, very expensive" while confirming A13 production in 2029.
- ASML projects high-volume production for high-NA EUV in 2027-2028 and targets up to 360 billion in revenue by 2030; investors are monitoring equipment adoption closely.
Risks and uncertainties
- Customer adoption timing: Slower than expected uptake of high-NA EUV by major customers could challenge ASML's pathway to targeted revenues; this affects markets tied to semiconductor capital equipment demand.
- Capital cost sensitivity: The high per-unit cost of high-NA EUV systems could influence procurement decisions by chipmakers, impacting demand for advanced lithography tools.
- Execution timelines: Differences between ASMLs anticipated production ramp and customer deployment plans create uncertainty for revenue visibility in the near term.
The market reaction highlights the sensitivity of ASML's outlook to large customers' purchasing decisions. Investors and market participants will continue to watch statements from both equipment suppliers and major chipmakers for confirmation of deployment schedules and their potential effect on sales expectations.