ASML: TSMC’s Contradictory Signals — Delayed High-NA but $1.5 Trillion Semiconductor Outlook

ASML stock recovers from TSMC's High-NA EUV delay until 2029, hitting new highs as AI demand and Low-NA systems sustain growth. Analysts remain bullish.

ASML shareholders have had a whipsaw week as contrasting signals from its most important customer, Taiwan Semiconductor Manufacturing Co. (TSMC), sent the stock on a brief slide before it rebounded to fresh highs. The underlying narrative remains intact: artificial intelligence is driving unprecedented demand for advanced chipmaking, though the timing of the next leap in lithography technology has just been pushed further out.

The Dutch lithography specialist’s shares touched a new 52-week high of €1,362.80 on Thursday, having gained 37.89% since the start of the year. That rally briefly hit a speed bump on May 12, when the stock lost 4.5% in New York, closing at $1,520.94, after TSMC indicated it would not adopt the next-generation High-NA EUV systems until 2029 — later than many had anticipated.

High-NA Delay: A Blow, Not a Breakdown

TSMC’s reluctance stems from two key factors: the eye-watering cost of more than €350 million per High-NA machine, and what the company describes as “exceptionally effective” research and development that allows it to squeeze more performance from existing Low-NA EUV tools. Kevin Zhang, TSMC’s deputy co-chief operating officer, said the current generation remains capable of reaching the next scaling step without an immediate upgrade.

The delay primarily impacts the timing of High-NA orders, not the overall EUV demand. Bernstein analysts noted the move came as no surprise, as TSMC had previously signalled that High-NA would not be used for its A14 node. The chipmaker’s roadmap now includes multiple variants in the 1-to-2-nanometer range — A12 and A13 — that become relevant in 2028–2029, aligning with the later High-NA adoption.

Quick Reversal and Analyst Support

The market’s initial panic was short-lived. The following day, ASML shares bounced 3.06% in New York, outperforming the broader tech sector’s 1.76% gain. Support came from a major investment bank that reiterated its buy rating and lifted its price target — a reference to Goldman Sachs, which on May 13 reaffirmed its buy recommendation with a €1,600 price target. Analyst Alexander Duval sees the structural role of ASML in the chip industry as the key driver, beyond any quarterly noise.

In euros, the stock closed Wednesday at €1,350.20, matching its 52-week high. Over twelve months, the share price has more than doubled, surging 96.31%.

Low-NA: The Revenue Backbone for Now

While High-NA grabs headlines, the current Low-NA EUV generation remains the workhorse of ASML’s revenue. Chief Financial Officer Roger Dassen has targeted at least 60 Low-NA systems in 2026, rising to around 80 in 2027. This base load is crucial for ASML’s ambition to generate up to €60 billion in revenue by 2030.

TSMC’s own bullish long-term outlook bolsters that case. The world’s largest contract chipmaker now expects the global semiconductor market to exceed $1.5 trillion by 2030, up sharply from earlier estimates of around $1 trillion. The catalyst is clear: AI infrastructure demand, with AI wafer demand expected to increase elevenfold between 2022 and 2026. For foundries, the 3-nanometer process is set to become the biggest revenue driver this year, while the next-generation A16 node with backside power delivery is slated for the second half of 2025.

Capacity Expansion and Research Push

TSMC’s investment cycle is broadening. The company plans to build 18 new factories and advanced packaging facilities worldwide, with AI-related packaging capacity rising 80% by 2026. In another sign of long-term commitment, TSMC has joined Applied Materials’ EPIC Center as a founding partner — a €5 billion research initiative focused on materials and equipment for 3D transistors and novel interconnect technologies, set to begin operations in 2026.

Headwinds from Geopolitics

Not all tailwinds blow in ASML’s direction. Export controls on China remain a live risk. Proposed US rules could further restrict the sale and servicing of DUV systems to Chinese customers. The impact is already visible: China’s share of net system sales dropped from 36% in the fourth quarter of 2025 to 19% in the first quarter of 2026.

Fundamentals Underpin the Story

Despite the volatility, ASML’s financials remain solid. In the first quarter, net sales reached €8.8 billion with a gross margin of 53.0% and net profit of €2.8 billion. The full-year outlook calls for net sales between €36 billion and €40 billion and a gross margin of 51%–53%. The next quarterly report, due in July, will be closely watched for order intake and early clues on whether other major chipmakers will step in to absorb TSMC’s delayed High-NA order.