ASML Pours €1.3 Billion Into AI Partnership as EUV Production Targets Hit Record Levels

ASML ramps EUV output to 80 systems by 2027, invests €2.2B, and partners with Mistral AI for €1.3B, as TSMC delays High-NA adoption until 2029.

ASML is racing to double down on chipmaking capacity while simultaneously placing a massive bet on artificial intelligence, as the Dutch lithography giant navigates a landscape of surging demand, geopolitical headwinds, and a cautious stance from its biggest customer.

The company’s CEO Christophe Fouquet used the annual general meeting to deliver a blunt message to investors: the supply-chain bottlenecks that crippled output during the pandemic will not be repeated. “We will avoid that by all means; it is critical for our current position,” he said, recalling how ASML could only fulfill roughly half of orders at the height of the Covid boom. The capacity expansion launched in response is now running at full throttle.

The numbers behind that ramp-up are stark. CFO Roger Dassen confirmed that ASML expects to deliver 60 low-NA EUV systems in 2026 — a 25 percent increase from the prior year — and has line of sight to capacity for 80 machines in 2027. That represents a roughly 36 percent jump from the five-year average of about 44 systems. To get there, the company is investing €2.2 billion in new facilities and infrastructure, a 20 percent increase from last year, fueled by multi-billion-dollar orders from Samsung, SK Hynix, and Micron.

The urgency is driven by an estimated $2.5 trillion in AI infrastructure spending expected over the next two to three years. Fouquet identified delayed deliveries as the single biggest operational risk, warning that customers facing shortages would be strongly tempted to look elsewhere. He dismissed emerging startups such as Substrate, xLight, and Lace as “ideas, not competition today.”

TSMC Puts the Brakes on High-NA

A cloud appeared over the outlook when TSMC, ASML’s largest customer, signaled it will not deploy the next-generation High-NA EUV systems in mass production until at least 2029. The stock dropped 3.3 percent on the news, and losses over the past seven days now total roughly four percent, with the shares trading around €1,199.

Bernstein analysts took the news in stride, noting that TSMC had already indicated a year ago that it would not use High-NA for its A14 node. The base case, they argued, has always been the A10 node starting in 2030. In fact, Bernstein suggested that a slower High-NA rollout could be neutral to slightly positive for ASML, as it would extend demand for existing systems. ASML had shipped eight High-NA machines in total by the end of 2025, each costing around $400 million.

Memory chipmakers, by contrast, are integrating the next-generation tools into their roadmaps. The divergence in adoption rates means the product mix will shift, but analysts emphasize that structural demand for lithography capacity keeps the overall market stable.

A Surprise €1.3 Billion Bet on Mistral AI

In a move that caught many off guard, ASML disclosed a €1.3 billion strategic partnership with French AI company Mistral AI. Dassen offered a concrete example of the collaboration’s potential: a wafer-defect diagnostic process that previously took more than ten hours can now be reduced to eight minutes using a Mistral model.

The partnership comes as ASML’s revenue mix shifts geographically. China’s share of sales fell from 41 percent in 2024 to 33 percent in 2025, and the company expects it to drop to around 20 percent in 2026. Dassen argued that in an undersupplied market, restrictions in one region are offset by higher investment elsewhere.

Strong Quarter, Steady Returns

ASML’s first-quarter results underscore the strength of the underlying business. Revenue reached €8.8 billion with net income of €2.8 billion, while the gross margin came in at 53.0 percent — the top end of the company’s own forecast. Full-year revenue guidance was raised to a range of €36 billion to €40 billion, supported by solid growth in both logic and memory segments.

The order book stands at €38.8 billion, providing high revenue visibility for the coming quarters. Management is targeting a gross margin between 51 and 53 percent for the full year.

The stock currently trades at €1,220, slightly below the previous close, partly reflecting the ex-dividend date of April 27. Shareholders will receive a final dividend of €2.70 per share on May 5, bringing the total dividend for fiscal 2025 to €7.50. ASML also repurchased roughly €1.1 billion worth of its own shares in the first quarter as part of a buyback program running from 2026 through 2028.

On a 12-month basis, the stock has more than doubled. But the central risk remains the ongoing export-control debate: how far political restrictions will limit sales into certain markets may shape the valuation more than the operational metrics themselves in the months ahead.