- Supply gap. ASML said on October 14 that its current production plans for 2027 and 2028 will not fully meet customer demand, driven almost entirely by the AI buildout. The company is investigating ways to expand 2028 capacity beyond the 30% increase already planned.
- Scale. ASML’s third-quarter net sales reached €11.66 billion, with a 57.5% gross margin and €4.96 billion in net income. It raised its 2026 full-year revenue guidance to €44–45 billion, up €1 billion at the lower end.
- Pricing. ASML completed new price negotiations with major customers, with financial effects beginning in 2027 and growing through 2028, adding a revenue tailwind on top of volume growth.
Demand Running Ahead of Plan
ASML, the Dutch company whose extreme ultraviolet lithography machines are required to manufacture the most advanced chips anywhere in the world, reported third-quarter results on October 14 that beat analyst expectations on both revenue and margin. Net sales of €11.66 billion fell within the high end of the €11–12 billion guidance range the company had set for the quarter. Net income reached €4.96 billion on a gross margin of 57.5%, above the 55–57% guidance range.
The more closely watched signal came in the demand outlook, where ASML said its planned supply capacity for 2027 and 2028 will fall short of what customers are asking for. The company had earlier this year committed to a 30% increase in low-NA EUV machine output for 2027 relative to its 2026 base of around 65 units, and was investigating a further 30% increase for 2028. As of October 14, it is now investigating ways to expand 2028 capacity beyond that second 30% step. According to Seeking Alpha’s summary of the results, some customers have begun placing orders for 2029 and even 2030, an unusual degree of forward visibility in an industry that has historically struggled to forecast two years ahead.
AI as the Structural Demand Driver
ASML CEO Christophe Fouquet in the July quarter said AI-related investments and continued progress in AI technologies were driving demand for advanced logic and memory chips. The October results reinforced that framing. Chip manufacturers are racing to expand their most advanced nodes — the processes that produce the graphics processing units and custom AI accelerators at the heart of the data-centre buildout — and each generation of those fabs requires newer EUV systems. Fourth-quarter guidance set revenue at €14.2–15.2 billion, implying a full-year total that would confirm 2026 as a record year for the company.
ASML has also completed a round of price negotiations with major customers. The adjustments will begin showing up in revenues from 2027 onward, including a 10% increase on replacement parts, adding a margin tailwind on top of the volume growth already baked into the order book.
China and Export Controls
Rising ASML sales to China represent a risk factor the company has flagged repeatedly. US export-control rules already bar ASML from shipping its most advanced EUV machines to Chinese customers, but commerce in older deep-ultraviolet systems has continued under existing licences. Tighter US restrictions, which analysts say Washington is actively deliberating, could reduce the Chinese order book and accelerate Beijing’s effort to develop domestically competing lithography technology. ASML acknowledged in its October commentary that this risk is real and growing.
This supply constraint comes as the broader equipment industry is absorbing parallel pressures. Applied Materials’ newly opened $5 billion research hub is one signal that the equipment sector treats the AI-driven demand surge as structural rather than cyclical. ASML’s guidance upgrade and its supply-gap acknowledgment reinforce that message: the machines that make AI chips are themselves in short supply, and the bottleneck is not expected to ease before 2029.