ASML sits at the heart of a bottleneck it controls
ASML has positioned itself as the linchpin of the semiconductor supply chain by controlling access to extreme ultraviolet (EUV) lithography systems. These machines are essential for manufacturing the world’s most advanced chips, and their high cost is expected to climb as the company continues to raise prices. The low-NA (0.33 numerical aperture) systems currently sell for about $200 million, but a new round of hikes is likely to come soon.
Foundries such as TSMC, Samsung, and Intel rely entirely on ASML for their most advanced chip production. Despite efforts to stretch the capabilities of older models, these customers have no alternative. The Dutch company’s monopoly gives it pricing power that few firms in any industry can match. The result is a steady flow of revenue that ASML expects to grow into the mid- to upper-60s in euros by 2030.
New systems demand even more investment
The high-NA (0.55 numerical aperture) systems, which can etch even smaller features onto silicon, cost more than $400 million each. These models are already in use at Intel for its 18A chips, and Samsung plans to deploy them in 2027. TSMC, however, has taken a more cautious approach, planning to push the limits of its low-NA systems until 2029. The longer they delay the shift, the more they may end up paying when ASML hikes prices again.
ASML justifies these increases by pointing to the complexity and cost of maintaining EUV systems. The technology requires precision optics and lasers that are not only expensive to make but difficult to source. The company also argues that the surging demand for advanced chips, particularly in AI, means customers are willing to absorb higher costs to stay competitive.
Pricing power backed by long-term demand
The EUV market is projected to grow at a 11.4% compound annual rate through 2032, according to Research and Markets. As the sole provider, ASML is in a unique position to raise prices without losing market share. This strategy allows it to collect a premium while maintaining a steady flow of orders. Unlike many other semiconductor firms, it does not rely on volume alone to drive growth.
For investors, ASML offers a more stable path to profit than high-growth AI companies like Nvidia. While it lacks the explosive returns of a disruptive startup, it provides a repeatable business model that benefits from the relentless push for faster and more powerful chips.