ASML Holding N.V.

(NASDAQ Global Select)
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Very Bearish -75

Semiconductors: TSMC is Not Buying ASML’s New Machines

AI-generated analysis

πŸ“‰ ASML shares plummeted by 3% or $16.76 billion following TSMC's decision not to purchase new High-NA EUV machines.

πŸ›‘ TSMC's Co-CEO Kevin Zhang confirmed the company's A13 node does not require High-NA EUV lithography systems.

πŸ’» High-NA EUV technology is designed to print intricate layers on wafers for advanced chips used in AI and augmented reality.

πŸ”„ ASML notes that its existing DUV systems can handle most layers, with only the final intricate layers requiring EUV.

πŸš€ TSMC's new A13 node is a shrink of its 2025 A14 node, targeting high-volume production for AI and mobile applications.

πŸ“… Bloomberg reports TSMC might consider adopting High-NA EUV technology as early as 2029.

πŸ—‘οΈ ASML previously announced plans to cut 1,700 jobs and is implementing a six-week summer recruitment freeze.

🌍 The semiconductor industry faces pressure from geopolitical tensions, tariffs, and export restrictions according to McKinsey.

πŸ† TSMC maintains its market cap at roughly $1.8 trillion, making it one of the world's most valuable companies.

πŸ—οΈ ASML remains Europe's most valuable company with a market cap standing at nearly $479 billion.

⚠️ Industry observers suggest other manufacturers may increase EUV adoption to gain a competitive edge over TSMC.

πŸ’Έ The cost of advanced High-NA EUV lithography technology remains a significant concern for major chipmakers.

🀝 ASML's machines are critical for manufacturing smart devices, AR headsets, and high-performance computing chips.

πŸ‘” TSMC Chairman CC Wei emphasized their commitment to reliable silicon technologies for customers' next innovations.

Bullish Signals
  • TSMC's A13 node enables even more compact and efficient designs to address 'insatiable customer demand' in computational requirements for next-generation artificial intelligence, high performance computing and mobile applications.
  • ASML's EUV lithography systems are critical for printing the most intricate layers on chips, enabling smart technology, augmented reality, artificial intelligence and other advanced technologies.
  • TSMC's advanced process technologies lead the industry in density, performance and power efficiency, ensuring customers' success as their most reliable technological partner.
  • Despite not buying High-NA EUV machines immediately, Bloomberg reports TSMC may adopt this new lithography technology in its manufacturing process in 2029.
  • ASML remains Europe's most valuable company with a market cap standing at US$478.96bn as of the time of writing.
  • The company continues to serve major clients like Samsung Electronics for semiconductor manufacturing using advanced lithography systems.
  • Other semiconductor manufacturers may double down on EUV semiconductor manufacturing in an attempt to gain a competitive edge, suggesting continued strong demand and interest in ASML's technology.
Risk Factors
  • ASML shares dropped by US$16.76bn (3%) immediately following TSMC's decision not to purchase new High-NA EUV machines.
  • TSMC's Co-Chief Operating Officer Kevin Zhang confirmed the A13 node does not require High-NA EUV, casting doubt on immediate demand for ASML's most advanced lithography technology.
  • ASML has already initiated cost-cutting measures including plans to cut 1,700 jobs and a six-week summer recruitment freeze in January.
  • The company announced leadership role eliminations due to bureaucracy reduction efforts, indicating internal restructuring concerns.
  • McKinsey warns the semiconductor industry faces pressure from rising geopolitical tensions, new tariff policies, material shortages, and potential export restrictions.
  • ASML continues to face questions about whether its most advanced lithography technology is too expensive for customers like TSMC.
  • Competitors such as Samsung Electronics may double down on EUV manufacturing to gain a competitive edge over TSMC, potentially impacting ASML's market position.
Full Analysis
TSMC has announced it will not purchase ASML's new High-NA EUV lithography machines for its upcoming A13 semiconductor node, citing that the specific technology is not required to produce the chips. Co-Chief Operating Officer Kevin Zhang stated in a Bloomberg report that the A13 node, which TSMC Chairman and CEO Dr. CC Wei described as meticulously engineered for high-volume production, can achieve necessary density, performance, and power efficiency using existing DUV systems for non-intricate layers. The new machines are typically reserved for printing the most intricate layers required for AI and augmented reality devices, a technology ASML markets as critical for enabling next-generation computational requirements in mobile applications and artificial intelligence. This decision was communicated after TSMC revealed that its A13 node is a direct shrinking of its A14 node, which was originally announced in 2025, with Bloomberg noting potential adoption of the new High-NA EUV technology might not occur until 2029. The financial impact of this decision has been immediate and significant for ASML, as shares plummeted following the announcement. The Wall Street Journal reported that ASML's share price slid by 3%, translating to a loss of US$16.76 billion in market value, although the company remains Europe's most valuable firm with a market cap standing at roughly US$478.96 billion. This comes amidst ASML's own operational adjustments; in January, the Dutch company announced plans to cut approximately 1,700 jobs to reduce bureaucracy and slash leadership roles it deemed no longer required, and recently added a six-week summer recruitment freeze according to Business Insider. The company previously highlighted its role as a global provider of lithography systems used by major manufacturers like Samsung Electronics and TSMC to advance smart technology and high-performance computing. Broader industry dynamics are also influencing this strategic shift, with McKinsey noting that the semiconductor sector is facing pressure from rising geopolitical tensions, new tariff policies, material shortages, and potential export restrictions. This uncertainty has created a landscape where the highly interdependent global value chain for semiconductors is under strain, potentially pushing other manufacturers to adopt EUV technology earlier than TSMC to gain a competitive edge. Despite the A13 node's apparent capability without High-NA EUV machines, the core question remains regarding why the entity producing the world's most advanced semiconductors for AI has deemed ASML's most advanced lithography technology too expensive or unnecessary, leaving open the possibility that other chipmakers will double down on EUV production to secure market leadership in this rapidly evolving technological landscape.