ASML reported record third-quarter sales of €11.7 billion on October 14 and said its planned production capacity would fall short of customers’ demand in 2027 and 2028. It is investigating a further expansion.
The Dutch chipmaking-equipment supplier’s results show net income of €4.96 billion, compared with €2.92 billion in the previous quarter. Its gross margin, the share of sales left after production costs, reached 57.5%.
ASML supplies machines that print microscopic circuit patterns onto silicon wafers. Those wafers are subsequently processed and divided into chips used in computers, phones and other equipment.
Customers are planning further ahead
Chief Executive Christophe Fouquet said customers were increasing their equipment forecasts, principally because of expected artificial intelligence investment. Some have expressed interest in ordering equipment for 2029 and 2030.
Interest in a future order is not a completed sale. For an equipment manufacturer, though, customers’ longer planning horizons can help determine when to expand factories, recruit staff and commission parts from suppliers.
ASML is examining ways to increase 2028 capacity beyond a previously discussed 30% expansion. The company’s assessment of a supply shortfall reflects customers’ forecasts, which can still change before machines are delivered.
Adding capacity takes coordination across the production chain. A chipmaker needs equipment delivered, installed and operating before a new factory can produce saleable chips. A delay in one stage can affect the return on a much larger investment.
Upgrades add output to existing machines
Sales from servicing and upgrading installed equipment reached €3.29 billion.
The equipment’s job helps explain why throughput matters. In photolithography, light carries a circuit pattern through an optical system onto a light-sensitive wafer. The system repeats the process across the wafer, with chip production requiring many patterned layers.
Getting more output from equipment already installed gives a manufacturer another route to additional production. It still needs the rest of the factory to keep pace, including the processes that prepare, test and package its chips.
We previously reported on TSMC’s accelerating chip sales. ASML’s results describe a different part of that supply chain: the machinery and services manufacturers buy to produce those chips.
The annual forecast narrows
ASML expects fourth-quarter sales of €14.2 billion to €15.2 billion and full-year sales of €44 billion to €45 billion. These are management forecasts.
Its July outlook put annual sales at €43 billion to €45 billion. The latest revision lifts the lower end by €1 billion while leaving the upper end unchanged. July’s forecast for third-quarter sales was €11 billion to €12 billion.
Customers’ investment plans will determine whether expanded equipment production is eventually needed. ASML must commit resources ahead of delivery, while managing the risk that spending plans or trade restrictions change during that lead time.
