ASML Weighs 110-Plus EUV Systems for 2028 as India Bet Offsets China Headwinds

ASML shares rose 2.2% to EUR 1,490.80 as AI demand fills 2027 EUV capacity; 2028 output may top 110 machines, with India and China risks in focus.

Shares of ASML advanced 2.2% on Monday to close at EUR 1,490.80, extending a run that has lifted the Dutch lithography specialist by 62% since the start of the year. The gains reflect a semiconductor equipment market that keeps finding fresh reasons to spend, with artificial intelligence hardware demand doing most of the pushing.

Finance chief Roger Dassen has been direct about the shift in mood. The AI boom, he said, has visibly improved sentiment among customers, and appetite for the company's most advanced production tools keeps climbing.

Capacity Sold Out Through 2027, Expansion Eyed for 2028

JPMorgan analysts came away from a September 14 meeting with Dassen describing a book that is effectively closed. Manufacturing slots for 2027 are nearly fully committed, with at least 80 systems already spoken for. Attention inside Veldhoven has therefore turned to the following year, where management is weighing whether it can build more than 110 EUV lithography machines in 2028.

The groundwork for that scale-up is already being laid. On September 8, ASML broke ground on a sprawling production campus in the Netherlands, designed to carry the capacity needed for future demand. Two days earlier, Reuters reported that the company intends to work with leading customers on the most advanced tools for building larger data-center components — the kind of chips designed by Nvidia and its peers.

A Valuation Test as Spending Hits Record Territory

Whether those ambitions translate into earnings depends on one variable: does the investment cycle in chips and cloud computing hold? The four largest US technology firms — Amazon, Alphabet, Microsoft and Meta — have earmarked roughly USD 725 billion in combined capital expenditure for 2026, with more than three-quarters of that reserved for AI infrastructure. Industry-wide, wafer fab equipment spending for the full year is projected at about USD 143.9 billion.

That kind of money flows straight into demand for leading-edge machinery, and because accelerator complexity keeps rising, chipmakers' expansion plans hinge on what lithography suppliers can actually deliver. Any doubt about the profitability of those enormous infrastructure projects lands hardest on the equipment vendors at the front of the line.

ASML's answer rests on its EUV monopoly. With that leverage, the board raised its 2026 revenue guidance to EUR 43–45 billion from a prior range of EUR 36–40 billion, and management plans to grow manufacturing capacity by 30% in each of the next two years. TSMC, Samsung and Intel remain anchor customers, while fresh partnerships bring emerging fabrication hubs into the fold.

India Adds a Second Growth Axis

One of those hubs is India. ASML has begun official operations there to support Tata Electronics' planned 300-millimeter wafer fab in Gujarat — the country's first commercial facility of its kind. By building local customer support and engineering capacity, the company ties itself early to India's semiconductor incentive program.

The Tata plant in Dholera carries an investment tag of USD 11 billion, with production slated to begin in 2028. If ASML can lift delivery cadence on its high-end systems on schedule, the Indian venture becomes another pillar under long-term earnings growth.

Caution Flags From Regulators and China

Not everything points one way. Since January, the stock has added 61%, pricing in a great deal of optimism — and supervisors are taking notice. The European Securities and Markets Authority has flagged growing correction risks across EU financial markets, pointing to a widening gap between technology-sector enthusiasm and macroeconomic fundamentals. ECB board member Fabio Panetta has likewise warned that overoptimistic expectations for AI profitability leave the sector exposed to sharp pullbacks.

China presents a more concrete headwind. ASML already expects lower demand from the region in 2026 as export restrictions curb sales of advanced lithography systems. Chinese manufacturers are also making their own strides: memory producer CXMT recently reported volume production of advanced DRAM using alternative exposure techniques — no ASML EUV tools required. Should key Asian customers pursue substitutes, or should supply curbs tighten further, the volume business could feel it.

What Investors Are Watching Next

The picture for shareholders is split. As long as the big cloud providers hold capital budgets at record levels and orders for high-performance systems stay steady, the re-rating has a fundamental floor beneath it. If sentiment around AI monetization turns, or macro strain forces chipmakers to trim equipment budgets, the elevated valuation could give way to a meaningful correction.

A first read on industry spending appetite arrives in mid-October, when US peer Applied Materials holds its investor day — likely to offer fresh visibility into global equipment orders.