AI demand to exceed supply for 2 more years, says ASML

ASML said it was exploring new ways to expand production of its advanced chipmaking machines, as AI-driven demand is forecast to run ahead of supply into 2028.

Europe’s most valuable company, the only supplier of the sophisticated machines that make the world’s most powerful semiconductors, raised its fourth-quarter sales guidance on Wednesday as sales boom at AI chipmakers such as Nvidia, Broadcom and AMD.

The Netherlands-based company now expects total net sales in the fourth quarter of €14.2bn to €15.2bn, compared with consensus forecasts of around €14.3bn, according to Visible Alpha.

ASML said in July that it planned to raise production capacity of its most advanced “extreme ultraviolet” lithography machines by 30 per cent next year and was considering a similar increase in 2028.

But on Wednesday, chief executive Christophe Fouquet said that it was “investigating ways to increase capacity for 2028 beyond the 30 per cent increase we previously communicated”, as the AI infrastructure boom pushes some customers to show “interest in placing orders with us for 2029 and even 2030”.

“We now expect that our supply as currently planned for both 2027 and 2028 will not fully meet the demand of our customers,” he said.

ASML said in July that customers had not been placing orders so far in advance since the semiconductor supply-chain crunch during the Covid-19 pandemic.

Fouquet said on Wednesday that its customers, which include Taiwan Semiconductor Manufacturing Company and Intel, were seeing “very, very strong demand” from their own clients, and so were “accelerating their plans” to expand production capacity.

That was leading to “a lot of order intake for 2028 [at ASML] but also some strong interest to already place orders for 2029 and sometimes even 2030”, he added in a pre-recorded video interview.

To extend capacity, ASML is looking at ways to upgrade customers’ existing chipmaking machines as well as increasing production.

ASML’s shares have risen by 78 per cent over the past 12 months, even after a sell-off in October alongside volatility in the wider semiconductor sector.

Semiconductor supply-chain bottlenecks are seen as a key constraint on the continued growth in AI infrastructure spending, which Goldman Sachs has forecast will exceed $1tn this year.

ASML is also working to launch its next-generation “High NA” chipmaking machines.

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TSMC, the world’s leading chipmaker, has “basically confirmed” it will introduce High NA into high-volume manufacturing “around 2030”, Fouquet said, joining Samsung and Intel as customers. The complex new system has been in development for more than a decade.

ASML said total net sales increased 55 per cent year on year in the third quarter to €11.7bn, broadly in line with consensus expectations according to Visible Alpha. Net income rose 134 per cent to €5bn, including a €500mn boost from the revaluation of its stake in French AI developer Mistral.

The company now expects total net sales this year of between €44bn and €45bn, nudging up the bottom end of that range from the €43bn it indicated in July.

ASML said also that it had completed a new round of price negotiation with customers, which it expected to “become visible partly” in its results next year.