As the demand for advanced chips continues to demonstrate momentum, Samsung and Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM) just announced their commitment to use ASML Holding N.V. (NASDAQ: ASML)’s High-NA EUV lithography machines.
The news comes on the back of Intel Corporation (NASDAQ:INTC) and ASML announcing a major milestone in High-NA EUV lithography, confirming that Intel has processed over one million wafers across testing and volume production, including select Intel 18A layers.
While the TSMC-Samsung announcements may seem positive, looking at customer roadmaps show how High-NA EUV could be more of a long-term earnings driver instead of an immediate one.
Memory maker Samsung said that it plans on using ASML’s machines to produce DRAM, a key type of memory, from 2028. TSMC, on the other hand, expects to adopt the technology in 2030 for advanced chips. ASML’s High NA EUV machines cost around $400 million, which is why the broader adoption of the technology stands critical to the company’s growth.
ASML’s High-NA Demand Case is Getting Stronger
High-NA EUV lithography is gaining momentum due to the global surge in artificial intelligence. The technology helps chipmakers to pattern finer features than the current EUV systems that ASML offers, making the technology important for the next decade of computing.
Intel has already offered evidence of early production. On September 8, the company announced that it has successfully processed over one million wafers using High NA EUV. The milestone provides evidence that high-NA can operate in a production environment, with Intel saying overlay, throughput, and availability are meeting its expectations.
The planned adoption announcements coming from TSMC and Samsung further offer evidence that the technology is moving beyond a single adopter.
Back in July, the company acknowledged that nearly all of its capacity to produce EUV lithography tools has been booked through the end of 2027.
It also noted how its customers such as TSMC, Samsung, SK Hynix, Micron and Intel, are expanding capacity to meet surging demand for AI computing from companies such as Nvidia, OpenAI, Google, and more.
The Payoff May be Years Away
The timelines shared by Samsung and TSMC imply that the broader adoption of High-NA EUV lithography is still years away. The plans also do not establish details such as how many machines will be ordered, when ASML will recognize revenue, or how quickly customers will expand.
Current High-NA systems also face limitations when patterning large chips due to their smaller mask and exposure-field configuration. ASML is now working with chipmakers on larger masks. While this is a positive for the company, ASML does not expect the larger-mask pilot line until 2031, while the technology is targeted for production around 2033.
Therefore, the more useful question is when the semiconductor manufacturers will adopt the High-NA EUV technology rather than whether they will be adopting it at all.
Hedge funds have been seen becoming more interested in ASML’s story. 140 hedge funds held the stock at the end of the second quarter, up from 133 in the prior quarter. TSM sees a similar trajectory with 249 hedge funds holding the stock, up from 234. For Intel, 138 hedge funds held the stock, up from 112 in the previous quarter.
The numbers imply optimism around the stories for each of these stocks.
Overall, TSMC’s and Samsung’s announcements strengthen the bull-case for ASML’s High-NA EUV technology. The catch, however, is the timing. Much of the opportunity discussed today remains several years away, making orders and deployment the next evidence investors need to watch.
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