Key takeaways
- ASML expects equipment demand to exceed supply through 2028
- EUV production capacity could surpass 110 machines annually
- Nvidia and TSMC depend on expanding advanced manufacturing capacity
ASML (NASDAQ: ASML) expects demand for its advanced chipmaking equipment to exceed production capacity through 2028, even as the Dutch semiconductor giant prepares to substantially increase output.
The company is targeting a 30% expansion in manufacturing capacity for 2027 and investigating another increase in 2028, potentially lifting annual production of extreme ultraviolet (EUV) lithography machines above 110 units.
ASML Plans More Than 110 EUV Machines as AI Demand Outpaces Supply
According to ASML's October 14 earnings announcement, the company no longer expects its current production plans to satisfy customer demand in either 2027 or 2028.
CEO Christophe Fouquet said customers are already expressing interest in securing equipment deliveries for 2029 and even 2030, reflecting expectations of sustained AI infrastructure investment.
ASML previously established an annual capacity baseline of approximately 65 low-NA EUV machines for 2026. A planned 30% increase in 2027 would lift that figure to roughly 85 systems.
A further 30% expansion in 2028 could raise theoretical annual capacity to approximately 110 units. ASML is now examining whether it can exceed that target.
These figures represent planned manufacturing capacity, not confirmed deliveries or guaranteed production volumes.
The company also intends to increase the productivity of machines already installed at customers' factories, potentially expanding chip output without requiring entirely new production systems.
Why Nvidia and TSMC Depend on ASML's Manufacturing Capacity
ASML occupies an unusually important position in the semiconductor industry because it is the only commercial manufacturer of EUV lithography systems used in leading-edge chip production.
These machines enable manufacturers to print extremely small circuit patterns onto silicon wafers, supporting increasingly powerful and energy-efficient processors.
Taiwan Semiconductor Manufacturing Company (TSMC) uses advanced manufacturing equipment to produce chips for customers including Nvidia and AMD.
Consequently, limited availability of ASML machines could constrain how quickly semiconductor manufacturers increase their production capacity, even when demand for AI accelerators remains strong.
The bottleneck becomes particularly relevant as TSMC expands its manufacturing operations. Its latest AI chip outlook includes substantial capital spending to support advanced chip production.
Samsung and Intel are also investing in next-generation manufacturing technology, adding to competition for sophisticated lithography systems.
However, equipment shortages do not necessarily translate immediately into fewer Nvidia GPUs. Actual chip production also depends on factory utilization, packaging capacity, memory availability and equipment productivity.
ASML Stock Rallies Nearly 70% Despite AI Spending Concerns
The anticipated equipment shortage highlights a striking contrast between semiconductor fundamentals and stock-market sentiment.
ASML shares have gained nearly 70% in 2026, supported by expanding demand and expectations of further earnings growth.
Its third-quarter net income reached approximately €5 billion, while the company raised the lower end of its annual revenue forecast to €44 billion.
Nevertheless, broader semiconductor stocks have recently faced selling pressure as investors question whether enormous AI infrastructure expenditures will generate sufficient returns.
ASML's limited equipment capacity could support pricing power, but expansion also requires manufacturing investment and complex supplier coordination.
