ASML is investigating a further increase in lithography equipment manufacturing capacity as semiconductor customers extend their forecasts for future production investment. The Dutch manufacturer expects its currently planned supply of low numerical aperture extreme ultraviolet and deep ultraviolet immersion systems to fall short of projected demand in both 2027 and 2028.
The capacity assessment follows record third-quarter results announced on 14 October. ASML reported net sales of €11.7 billion and net income of approximately €5 billion, compared with €9.3 billion and €2.9 billion respectively in the preceding quarter. The company sold 113 new lithography systems and eight used machines during the period.
Chief executive Christophe Fouquet said customers were increasing their short- and medium-term demand forecasts, driven primarily by expectations for sustained investment in artificial intelligence infrastructure. Some customers have expressed interest in ordering equipment for delivery during 2029 and 2030, although such expressions of interest do not establish confirmed future orders.
ASML had already announced plans to increase its 2026 manufacturing capacity for low-NA EUV and DUV immersion systems by 30% in 2027. It was also investigating another increase for 2028. The latest assessment concerns options for expanding 2028 capacity beyond the additional 30% previously communicated.
No revised production target has yet been confirmed. The scale of any additional investment, the location of new facilities and the final equipment output will depend on ASML’s assessment of customer requirements and its ability to expand production across the relevant manufacturing and supplier operations.
Lithography systems play a central role in semiconductor fabrication by transferring patterns onto light-sensitive material deposited on silicon wafers. The resulting patterns establish the positions of structures subsequently formed through etching, deposition and other processing operations.
Chip production involves repeated lithography steps because integrated circuits are constructed from multiple patterned layers. Each layer must be positioned accurately relative to structures produced earlier in the process, making overlay performance and control of the wafer’s position important characteristics of the equipment.
ASML produces systems using different wavelengths of light for different manufacturing requirements. Deep ultraviolet immersion equipment uses optical arrangements suited to a range of advanced production processes, while EUV systems operate at a wavelength of approximately 13.5 nanometres to support the formation of particularly fine patterns.
EUV equipment requires a highly complex combination of light generation, reflective optics, wafer positioning and measurement systems. The optical path must maintain the conditions required for accurate exposure, while mechanical assemblies move and position wafers during successive processing operations.
Increasing the output of such systems depends on more than adding floor space to a final assembly plant. Precision optics, mechatronic equipment, electrical systems and specialist components must be produced and tested before they can be integrated into a completed machine.
The manufacturing network must therefore expand in a coordinated way. Additional final assembly capacity provides limited benefit where a critical component supplier cannot increase output at the same rate or maintain the tolerances required for system integration.
Inspection and testing also affect manufacturing throughput. Subassemblies and completed machines need to meet demanding mechanical, optical and electrical specifications, with defects potentially requiring further adjustment before equipment can be prepared for delivery.
Production planning consequently involves lead times extending beyond the work required at ASML’s own facilities. Specialist suppliers may need additional machinery, trained personnel or manufacturing capacity to support higher volumes, with those changes themselves requiring investment and qualification.
The July capacity plan provides a reference point for the latest assessment. ASML identified a 2026 baseline of approximately 65 low-NA EUV systems and 130 DUV immersion systems and planned to increase capacity for each by 30% during 2027.
The company was already investigating another 30% increase in 2028. Its October statement indicates that this would no longer be sufficient against the latest customer forecasts, prompting examination of further capacity options without establishing a final numerical target.
Customer manufacturing investments influence these calculations because a semiconductor fabrication plant requires coordinated delivery of numerous equipment types. Lithography systems must be integrated with deposition, etching, inspection and other process machinery, and the timing of their installation is influenced by the factory’s construction and production ramp-up schedules.
Delivery of a scanner does not necessarily mean its customer has immediately increased commercial wafer output. Installation, acceptance testing and integration with the factory’s production processes must be completed before the equipment can contribute to routine manufacturing.
ASML is also increasing the productive capability of systems already operating at customer sites. Its Installed Base Management activities generated approximately €3.3 billion in third-quarter sales, up from €2.8 billion in the preceding period, with strong demand for productivity upgrades contributing to the result.
These activities include service and field options for installed equipment rather than newly manufactured scanners. Upgrades can improve the performance of an existing system, potentially increasing the number of wafers processed or supporting other operational improvements without requiring the same level of additional equipment installation.
The improvement available depends on the characteristics of the original machine and the upgrade being applied. A change to one lithography system will not automatically increase a factory’s total production if surrounding processing stages cannot accommodate the additional throughput.
Capacity planning therefore involves both the manufacture of additional scanners and the improvement of equipment already in service. The two approaches address different constraints, with new systems contributing installed capability and upgrades seeking greater productivity from existing assets.
ASML’s third-quarter gross margin reached 57.5%, compared with 54% in the second quarter. The company attributed the stronger performance partly to Installed Base Management sales exceeding its guidance, demonstrating the commercial contribution of upgrades and service activities alongside new equipment deliveries.
For the full 2026 financial year, ASML now expects sales of €44 billion to €45 billion and a gross margin of approximately 56%. Fourth-quarter sales are forecast at between €14.2 billion and €15.2 billion, with a margin around 57%. These remain management projections rather than completed financial results.
The demand outlook is closely linked to investments in advanced logic and memory manufacturing. AI systems require processors and memory produced through complex semiconductor processes, with chipmakers expanding capacity in response to expected computing demand.
Those forecasts do not eliminate uncertainty over the timing of individual equipment orders. Semiconductor investment plans can change with demand, financing conditions, export restrictions and the readiness of factory construction or process technologies.
ASML’s immediate decision is how much additional manufacturing capacity can be developed without committing to a final 2028 expansion level before the necessary technical and commercial conditions are established. The company has confirmed that its existing plans are insufficient against current customer forecasts; the next milestone will be a quantified production plan and the investment needed to deliver it.
