ASML Raises 2026 Sales Forecast as AI Chip Demand Outruns Expansion Plans

Record sales meet a growing equipment shortage

ASML raised its 2026 sales forecast for the third consecutive quarter on October 14, while warning that its planned production capacity for 2027 and 2028 would still fall short of customer demand. Some chipmakers are already expressing interest in ordering equipment for 2029 and 2030, extending the planning horizon for the machines needed to make advanced artificial intelligence chips.

The company, based in Veldhoven in the Netherlands, recorded net sales of €11.662 billion in the quarter ended September 27, up about 55% from a year earlier. Net income reached €4.960 billion, while its gross margin rose to 57.5%. The announcement came a day before Taiwan Semiconductor Manufacturing Co. (TSMC), a major ASML customer, was scheduled to present its own results on October 15.

ASML's third quarter earnings release puts expected annual sales at €44 billion to €45 billion, raising the lower end from €43 billion. The company expects an annual gross margin of about 56% and fourth quarter sales of €14.2 billion to €15.2 billion.

ASML occupies a crucial position in the chip industry because it is the world's only producer of extreme ultraviolet lithography systems, known as EUV. These machines use light to print extremely small circuit patterns onto silicon wafers, the discs on which chips are made. Chipmakers need the equipment to expand production of their most advanced semiconductors.

The earnings announcement connects three developments: factories are buying more new machines, existing customers are spending more on upgrades, and equipment demand is extending further into the future. ASML is now trying to increase both the number of machines it can deliver and the output customers can obtain from equipment already installed.

What changed in the financial results?

ASML's quarterly sales rose from €9.326 billion in the second quarter to €11.662 billion in the third, an increase of about 25%. New lithography systems sold increased from 86 to 113, while used systems sold rose from five to eight. The company also sold 17 EUV systems during the quarter.

Net income rose from €2.918 billion in the previous quarter to €4.960 billion, an increase of about 70%. Compared with a year earlier, profit grew about 134%. Basic earnings per share climbed from €7.59 to €12.95.

The profit result exceeded the €4.1 billion analyst consensus compiled by the London Stock Exchange Group (LSEG) by about €860 million, or 21%. Revenue was close to expectations, although slightly below LSEG's €11.72 billion estimate.

ASML's profit also included a €510 million gain on investments in other companies. That contribution belongs alongside the increase in equipment deliveries and service revenue when explaining why earnings rose so quickly.

Gross profit reached €6.7 billion, up from €5.035 billion in the previous quarter. Gross margin measures how much sales revenue remains after the direct costs of providing products and services. ASML's margin of 57.5% means it retained about €57.50 from every €100 of sales before expenses such as research, administration and taxes. The margin rose by 3.5 percentage points from the second quarter's 54%.

Upgrades are helping customers produce more chips

ASML's Installed Base Management business generated €3.289 billion in quarterly revenue, compared with €2.762 billion in the previous quarter. The business covers services and upgrades for machines customers already operate.

That increase of about 19% meant services and upgrades accounted for roughly 28% of total quarterly revenue. Chief executive Christophe Fouquet said demand for productivity upgrades pushed this business above guidance and helped lift the company's gross margin.

For a chipmaker waiting for additional machines, improving an existing system can provide another route to greater production. A productivity upgrade helps equipment process more wafers or operate more efficiently, allowing a factory to increase output from its installed machinery.

ASML is pursuing these upgrades alongside new equipment deliveries. The financial results show that customers are already spending heavily on this route, giving the company a substantial source of revenue while its manufacturing expansion continues.

Why the planned 30% expansion is no longer enough

ASML's expansion plan covers both conventional EUV equipment, called low numerical aperture EUV, and immersion deep ultraviolet equipment, known as DUV. DUV machines use a different wavelength of light and remain important across many chipmaking processes.

The company's official release explains that its earlier plan was to increase capacity for both categories by 30% in 2027 relative to 2026. It was also investigating a further 30% increase in 2028. The planned EUV expansion would bring the annual shipment target for conventional EUV systems to about 85 units.

Fouquet, ASML's president and chief executive, said rising customer forecasts and stronger order momentum had changed the company's assessment of how much equipment it would need to supply.

With such strong visibility and an order book momentum that continues to increase quarter on quarter this year, we now expect that our supply as currently planned for both 2027 and 2028 will not fully meet the demand of our customers.

ASML is therefore investigating an increase in 2028 capacity beyond the previously communicated 30%. The company has not announced a revised capacity target or a date for deciding it.

ASML is also working to shorten the time between starting production of a machine in its clean rooms and shipping the completed system. Construction has begun on a second industrial campus in the Netherlands, with its first phase scheduled for completion in 2029. Faster production and additional facilities address different parts of the same problem: getting more equipment to customers sooner.

Customers are planning purchases through 2030

ASML's advanced equipment takes more than a year to move from order to delivery. Chipmakers therefore have to arrange purchases well before the production capacity is needed, making the company's demand forecasts a useful window into factory investment plans.

Fouquet said customers were raising equipment forecasts primarily because of their expectations about the scale and duration of spending on AI. In the official earnings statement, he described how those expectations were extending into later years.

In light of their demand visibility, some customers are expressing an interest in placing orders with us for 2029 and even 2030.

ASML described the discussions for those years as customer interest in placing orders. The next commercial step is for customers to agree on purchases and delivery schedules. Its earnings release lists order timing, cancellations, customer investment plans and the availability of components and employees among the risks affecting future sales.

The timetable now stretches from immediate earnings announcements to factory and technology plans several years away:

• October 14, 2026: ASML announced its third quarter results and scheduled its investor call for 15:00 in Central Europe.
• October 15, 2026: TSMC was scheduled to present its quarterly results.
• November 4, 2026: ASML plans to pay an interim dividend of €1.88 per ordinary share.
• 2027: ASML plans a 30% capacity increase for conventional EUV and immersion DUV systems.
• 2028: ASML is investigating expansion beyond its earlier plan; Samsung targets chip production using High NA EUV.
• 2029: The first phase of ASML's second industrial campus is due for completion.
• 2030: TSMC intends to introduce High NA EUV into advanced chip production.

What the announcement means for Taiwan

Taiwan remained the largest destination for ASML's new lithography equipment shipments in the third quarter. That puts the island at the centre of the expansion described in ASML's results and makes TSMC's October 15 earnings presentation an immediate point of interest.

TSMC, the world's largest contract chipmaker, manufactures chips designed by other companies. Its factory investment decisions create demand for equipment, modules, materials and services throughout the semiconductor supply chain.

ASML's strong demand outlook points to continued investment by its customers, including TSMC, Samsung, Intel, SK Hynix and Micron. Taiwan's position as the largest shipment destination adds a geographic detail to that picture, while TSMC's own results provide the next opportunity for the company to explain its production and investment plans.

ASML's expansion also reaches Taiwanese suppliers. Marketech International manufactures subsystem modules for ASML's EUV machines. Gudeng and its subsidiary are investing in equipment for handling the masks used to transfer circuit designs onto wafers. More lithography equipment requires a wider production network, extending the workload beyond ASML's own assembly facilities.

High NA brings a second investment timetable

ASML's most sophisticated machine, High NA EUV, costs about $400 million per unit. Numerical aperture describes an optical system's ability to collect light and resolve fine detail. A higher numerical aperture helps the machine print smaller circuit patterns.

Samsung and TSMC have committed to adopting the technology, with reported plans for production starting in 2028 and 2030 respectively. Intel said in September that it had already processed more than one million wafers using High NA EUV.

TSMC's planning also includes a later programme involving larger masks. The company intends to establish a pilot line for masks measuring 12 inches by 2031, in preparation for using the associated High NA lithography system in advanced production in 2033. Its stated 2030 adoption goal and the later mask programme therefore involve different stages of its technology plans.

Gudeng's subsidiary is developing storage, transfer and automation equipment for the next generation of masks. A mask carries the circuit pattern used during lithography, and handling it requires equipment that protects it from contamination and damage.

Gudeng expects to complete construction of its Kurume facility in Japan in 2027, then begin mass production gradually according to customer demand. Its Arizona processing line for aerospace and semiconductor components is expected to start operating in the fourth quarter of 2026. Initial activity will focus mainly on aerospace demand, with potential to expand semiconductor manufacturing work later.

Investors weigh growth against delivery constraints

ASML shares rose about 2% in early Amsterdam trading after the results. Investors received a stronger annual forecast and evidence that customers were planning equipment purchases years ahead, while also confronting limits on how quickly the company can deliver.

Ben Barringer, head of technology research at wealth manager Quilter Cheviot, said the strong results largely brought ASML into line with market expectations.

ASML delivered a strong set of numbers, but realistically, they have only caught up to where the market already was with its expectations.

Barringer also described a difference between the nearer investment cycle and the period after it.

Durable growth will continue into 2027 and 2028, however, the market will begin asking the question of whether or not there will be any sign of a downturn from 2029 and what impact that has for ASML.

Nigel Green, chief executive of financial advisory group deVere, focused on the physical limits facing AI investment. He argued that equipment availability, electricity grid connections, power equipment and shortages of personnel to operate data centres could delay projects and investment returns. He also said companies that secure equipment delivery schedules early could gain an advantage over competitors.

ASML's own warning concerns its equipment supply. Green's assessment extends the discussion to the other resources needed to put AI infrastructure into operation. For investors, both spending commitments and the pace of construction matter: a factory or data centre starts producing value when the necessary equipment and services are ready.

China sales face another policy risk

ASML maintained its forecast that China would account for about 20% of its total business in 2026. The company already faces restrictions on selling EUV machines and some DUV systems to China, while Chinese manufacturers are working to develop domestic equipment.

A proposed US law, the Match Act, would add restrictions on DUV sales and on servicing machines already installed in China. Senators Pete Ricketts and Andy Kim introduced the proposal, which would give the Netherlands and Japan 150 days to align their export rules with Washington's requirements or face unilateral US action.

ASML chief financial officer Roger Dassen opposed the proposal, arguing that passage could accelerate China's development of competing technology. Speaking after the results, he expressed hope that lawmakers would change course.

optimistic that common sense will prevail.

China has accounted for roughly 70% of ASML's immersion DUV unit sales by volume in recent years. That figure measures the number of machines in one equipment category, whereas the 20% forecast measures China's share of the company's total business. The proposed servicing restrictions would also reach equipment customers already own, making the debate relevant to ASML's recurring service revenue.

ASML's fourth quarter forecast calls for a gross margin of about 57%, alongside approximately €1.2 billion in research and development spending and €400 million in selling and administrative expenses. The company repurchased about €4.1 billion of shares in the third quarter, and ended the period with €12.735 billion in cash, cash equivalents and short term investments. Its financial statements through September 27 were unaudited.

Key Points

• ASML recorded quarterly sales of €11.662 billion, net income of €4.960 billion and a gross margin of 57.5%.
• The company raised its 2026 sales forecast to €44 billion to €45 billion, its third consecutive quarterly increase.
• Planned equipment supply for 2027 and 2028 will fall short of customer demand, according to ASML.
• ASML is investigating a larger capacity increase for 2028, while some customers are expressing interest in orders for 2029 and 2030.
• Services and upgrades generated €3.289 billion, helping customers increase output from installed machines.
• Taiwan was the largest destination for new lithography equipment shipments, with TSMC scheduled to report results on October 15.
• High NA adoption and supplier expansion extend the investment timetable into the next decade.
• ASML expects China to account for 20% of its business in 2026 and opposes proposed US restrictions on DUV sales and servicing.