ASML has secured large-scale customer orders and has strengthened its position as the industry leader through new technologies
The demand for AI chips supports the use of lithography equipment. ASML is expanding production, and several leading chip manufacturers have finalized plans to purchase new-generation high-NA equipment.
ASML initiates domestic capacity expansion.
The Dutch leader in lithography equipment - ASML, launched a new factory expansion project in Eindhoven recently. The market boom brought about by AI chips has changed the purchasing mindset of chip manufacturers. In customer communications, the most frequently raised request is for expedited delivery, with a desire to obtain more equipment. Today, an ASML EUV lithography machine costs $200 million. These devices are the core tools for manufacturing high-end AI chips. According to the order schedule, the current version of EUV has almost fulfilled its production capacity by 2027.
At the same time, customers are beginning to shift to the next-generation high numerical aperture equipment. This new equipment costs $400 million per unit. According to JPMorgan Chase's data analysis, ASML's share in the global lithography market will reach as high as 94% in 2025. This company has no commercial rivals in the cutting edge EUV field. Nikon and Canon's products are still on the DUV technology path, and can not enter the most advanced chip manufacturing process.
The high NA equipment is a second-generation EUV product that was released in 2023. With this equipment, chip makers can etch circuits 40% smaller than traditional EUV. The new process is also expected to simplify the chip manufacturing process, and improve the efficiency of the production line, but the high procurement cost has always been the focus of the market debate. ASML CEO said the AI-driven chip demand wave is not over, which gives investors confidence in the semiconductor equipment sector.
Major chip giants have all joined the ranks.
Over the past period, there has been continuous discussion within the industry. Many manufacturers have been evaluating 3D stacking and advanced packaging solutions for chips, hoping to see if they can bypass the expensive high NA lithography machines. Including TSMC, initially, they had repeatedly weighed the pros and cons, assessing whether the $400 million unit price of high NA technology was a cost-effective investment. However, the latest developments show that the world's leading wafer fabrication plants have successively finalized their implementation plans and chosen to embrace high NA processes. Chip circuits will continue to evolve towards smaller sizes, and the demand for advanced processes still exists.
Intel was the first enterprise in the industry to test high NA equipment. The company disclosed that it has used this equipment to process over one million wafers. The source said the capacity and stability of the equipment have reached the basic level for mass production. Samsung's schedule is 2028 and it will use the high NA equipment to produce storage chips, earlier than most institutions had previously estimated. SK Hynix is also preparing to launch this process in 2028. Micron has placed orders for its equipment but has not announced an official date to start production. TSMC's implementation time is slightly later, and they plan to activate high NA lithography machines in 2030.
The storage industry is undergoing process upgrades, and the semiconductor industry chain is deeply integrated.
The investment decisions in the semiconductor industry have a strong forward-looking nature. Several years before the official mass production of chips, manufacturers need to finalize the equipment, materials and process plans. Wafer factories and equipment suppliers need to establish long-term cooperation to ensure that after the new equipment is put into use, all the supporting materials such as photoresist, special gases and detection materials can be used in conjunction. The implementation of high NA technology will benefit the entire semiconductor industry chain. Suppliers of photoresist and wafer inspection equipment can also obtain orders as the new production lines are constructed. The total investment cost of the entire industry chain will eventually be passed on to the chip products.
How the stock market views ASML's monopoly advantage and what uncertainties lie beneath.
ASML's stock price is closely tied to the expected capital expenditure for advanced manufacturing processes. It almost monopolizes the EUV equipment market, and this high barrier has led institutional funds to have a long-term positive outlook on this stock. Full orders indicate short-term performance security, but risks also exist.
First, after the high NA equipment is put into production, can the yield be maintained at the standard level? If there are frequent malfunctions during the equipment production stage, the expansion of wafer fabrication will be delayed, and the order delivery plan will also be postponed. Second, the fluctuation of customer capital expenditure. Once the demand for AI chips slows down in the future, major chip manufacturers will re-evaluate their expansion plans and postpone equipment purchases. Third, the high equipment prices will suppress the profits of downstream chip enterprises. The increase in chip manufacturing costs will be passed on to end AI chips.