The AI boom ignites demand for lithography machines! ASML wants to take the opportunity to raise prices, but Taiwan Semiconductor says "no."

According to media reports citing informed sources, ASML (ASML.US) plans to raise the prices of its chip manufacturing equipment, which may lead to a disagreement with its largest customer, Taiwan Semiconductor (TSM.US). Reports indicate that Taiwan Semiconductor has expressed opposition to the Dutch equipment manufacturer's price increase plan.

ASML produces cutting-edge extreme ultraviolet (EUV) lithography machines essential for manufacturing advanced semiconductors. Driven by the AI boom, demand for the company's equipment is significantly increasing. Analysts at RBC Capital Markets, including Srini Pajjuri, stated in a report released on Monday that the strong performance of ASML's customers, including Taiwan Semiconductor, Samsung Electronics, and SK Hynix, indicates that the current environment is "mature" for raising equipment prices.

ASML's Chief Financial Officer Roger Dassen mentioned the possibility of adjusting the prices of the company's lower-spec EUV equipment—low numerical aperture EUV lithography machines (low NA EUV)—during the earnings call on Wednesday. He stated, "We are continuously improving the production efficiency of low NA EUV, so this naturally provides ample room for further price increases in the future." He also added that due to the long delivery cycle of equipment orders, any price adjustments would not "immediately reflect as a price impact tomorrow."

ASML also stated that one of its customers, Intel (INTC.US), has begun using the company's most advanced lithography machines for chip production. It is reported that Intel has utilized ASML's high numerical aperture extreme ultraviolet (High NA EUV) lithography technology for mass production of some Intel Core Ultra Series 3 processors (code-named Panther Lake) on its Intel 18A process node, becoming the first company in the world to achieve high-volume shipments of High NA EUV logic chips.

High NA EUV is ASML's most advanced lithography technology, capable of providing more precise patterning to manufacture more advanced chips. ASML's CEO Christophe Fouquet stated that this indicates the equipment has good commercial viability. Previously, Taiwan Semiconductor had stated that the price of such equipment exceeds 350 million euros (approximately 410 million USD) per unit, making it too costly for mass production; however, the company would still use it for research and development. Intel's early adoption helps to reverse market skepticism about this technology.

On Wednesday, ASML announced its second-quarter financial results for 2026 and announced a second upward revision of its full-year performance guidance for the year. The financial report showed that ASML's second-quarter sales increased by 21% year-on-year to 9.33 billion euros, far exceeding analysts' average expectation of 8.85 billion euros; net profit was 2.92 billion euros, also higher than the market expectation of 2.64 billion euros. The gross margin was 54.0%, better than the expected 52%, mainly driven by the increase in the proportion of service revenue with relatively high gross margins.

Based on strong performance momentum, ASML raised its full-year net sales expectation for 2026 to 43 billion to 45 billion euros, and the gross margin expectation was raised to 54% to 56%. This is the company's second upward revision of its full-year expectations this year, following the increase from 34 billion-39 billion euros to 36 billion-40 billion euros in April The new guidelines imply that the company's revenue growth rate for the second half of the year will increase to around 45-55%, significantly higher than the 21% in the second quarter, indicating that the company will enter a period of high performance growth in the second half of the year. At the same time, ASML announced plans to expand production capacity to meet the growing market demand for its lithography machines