The AI chip supply crunch is now shaking up the semiconductor equipment market. As Dutch semiconductor equipment manufacturer ASML pushes to raise prices on its extreme ultraviolet (EUV) and deep ultraviolet (DUV) lithography systems, Taiwan’s TSMC \u2014 the world’s largest foundry and ASML’s biggest customer \u2014 is pushing back hard. ASML, which holds a virtual monopoly on the lithography market, is using the surge in AI chip demand as justification, but for TSMC, which controls 73% of the foundry market, higher equipment costs translate directly into higher production expenses. The standoff between the two giants is unlikely to be resolved easily.<\/p>\n
According to a report by tech publication The Information on the 15th (local time) citing sources, ASML is seeking to raise prices on EUV and DUV lithography equipment, and TSMC is resisting. Roger Dassen, ASML’s Chief Financial Officer, formalized the company’s intentions during a conference call that day, stating there is “considerable room for price increases.”<\/p>\n
Lithography, the core process in semiconductor manufacturing, uses light to etch microscopic circuits onto wafers. It is essential for producing AI processors as well as memory chips like DRAM and NAND flash. Due to high technological barriers and per-unit costs reaching hundreds of billions of won, ASML effectively monopolizes the global market. EUV, with its shorter wavelength, is used for cutting-edge processes at 5 nanometers (nm) and below, while DUV is employed for chips with wider line widths. TSMC, Samsung Electronics, and SK Hynix are among ASML’s major customers.<\/p>\n
ASML has already notified Chinese semiconductor companies of a 10% price increase on DUV equipment, and some Chinese firms are reported to have accepted the higher prices. China, which cannot procure EUV equipment due to U.S. export restrictions, has little choice \u2014 if DUV imports also become difficult, its entire semiconductor fabrication process could grind to a halt.<\/p>\n
TSMC, however, is strongly resisting the price hikes. The Taiwanese foundry, which manufactures AI chips on a massive scale for major tech companies including Nvidia, Apple, and AMD, argues that DUV price increases are particularly difficult to accept because the equipment plays a critical role in its advanced “Chip on Wafer on Substrate” (CoWoS) packaging process. TSMC is seen as the only customer with enough bargaining power to stand up to ASML, thanks to its overwhelming dominance in the foundry market.<\/p>\n
ASML is ratcheting up the pressure by invoking TSMC’s rival Intel. ASML noted that Intel is set to begin producing 1.8nm-class process chips using the latest High Numerical Aperture (High NA) EUV equipment. These tools cost well over $400 million (~590 billion won) per unit \u2014 roughly double the price of standard EUV systems. ASML is highlighting Intel’s acceptance of such steep price increases as leverage against TSMC.<\/p>\n
ASML’s push for higher prices coincides with the “chipflation” phenomenon, where AI-driven demand for semiconductors has outstripped supply for an extended period. ASML reported Q2 revenue of \u20ac9.326 billion (approximately $10.1 billion), significantly exceeding the LSEG consensus estimate of \u20ac8.8 billion. Net profit reached \u20ac2.918 billion, also beating market expectations of \u20ac2.62 billion. New lithography system sales totaled 86 units, up 28% from the previous quarter’s 67 units. The company also sharply raised its full-year revenue outlook to \u20ac43\u201345 billion, up from the \u20ac36\u201340 billion range provided during its Q1 earnings release.<\/p>\n
“Sustained AI infrastructure investment and technological advancements are driving demand for advanced logic and memory chips,” ASML stated, adding that “customers’ capacity expansion plans are accelerating.” The company disclosed it is considering boosting Low NA EUV production capacity \u2014 currently around 165 units this year \u2014 by 30% next year and an additional 30% by 2028. DUV immersion lithography system capacity, currently at roughly 130 units, is also slated for expansion at the same rate.<\/p>\n
Meanwhile, TSMC’s Q2 results reaffirmed the robustness of AI semiconductor demand. The company posted net profit of NT$706.56 billion (approximately $21.9 billion), surging 77% year-over-year and marking its ninth consecutive quarter of double-digit net profit growth. Advanced processes at 7nm and below accounted for 77% of total wafer revenue, while the high-performance computing (HPC) segment, which includes AI chips, represented 66% of revenue \u2014 up 20% from the prior quarter.<\/p>\n
TSMC Chairman C.C. Wei announced during the earnings conference call that the company will invest an additional $100 billion in Arizona over the coming years. This brings TSMC’s total U.S. investment commitment to $265 billion, up from the previous $165 billion. According to Reuters, TSMC’s market capitalization stands at approximately $1.97 trillion \u2014 roughly double that of Samsung Electronics.<\/p>\n
The semiconductor industry is closely watching whether ASML’s price increases will ultimately lead to higher foundry prices. If TSMC accepts ASML’s hikes, the costs will inevitably be passed on to end customers like Nvidia and Apple. Conversely, if TSMC succeeds in blocking or reducing the increases through negotiation, it could pressure ASML’s profitability. Market attention is now focused on the outcome of the pricing battle between these two pivotal players in the global semiconductor supply chain.<\/p>\n","protected":false},"excerpt":{"rendered":"The AI chip supply crunch is now shaking up the semiconductor equipment market. As Dutch semiconductor equipment manufacturer…\n","protected":false},"author":2,"featured_media":31720,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[65,20799,2114,522,20798,11713,2619,5329,504,1454],"class_list":["post-31719","post","type-post","status-publish","format-standard","has-post-thumbnail","category-asml","tag-asml","tag-chipflation","tag-duv","tag-euv","tag-foundry","tag-high-na-euv","tag-intel","tag-roger-dassen","tag-semiconductor-equipment","tag-tsmc"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/posts\/31719","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/comments?post=31719"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/posts\/31719\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/media\/31720"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/media?parent=31719"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/categories?post=31719"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/netherlands\/wp-json\/wp\/v2\/tags?post=31719"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}