ASML warns 2027-2028 supply won't meet demand as Q3 sales hit record

The two markets took different views: Amsterdam saw a small early gain, while Nasdaq traded soft, suggesting investors had largely absorbed the strong quarter following the shares' advance this year (Nasdaq was heavy after a surge in CPI). Investors may also have expected a concrete decision on 2028 capacity rather than a review of possibilities. The supply caution strengthens the case that lithography is a limiting factor in the AI expansion, giving ASML pricing power while capping how quickly revenue can grow. With buyers looking to reserve machines for as late as 2030, equipment availability across the chip supply chain looks tight, although some of those requests may be tentative rather than firm commitments.

ASML's challenge now is less about attracting buyers than producing machines quickly enough, and the market is waiting to learn how the company will bridge that gap.

The main figures:

• A record €11.7bn in Q3 total net sales compared with €9.3bn in Q2; gross margin reached 57.5% and net income came to €5.0bn.
• The Installed Base Management unit brought in €3.3bn, topping guidance and powering the improved margin.
• ASML's fourth-quarter outlook calls for revenue of €14.2bn-€15.2bn and a gross margin of roughly 57%. For 2026, the sales forecast stands at €44bn-€45bn, with gross margin around 56%.
• The company does not expect its planned 2027-2028 supply to fully satisfy customer demand and is examining ways to push 2028 capacity past the 30% growth it has already flagged.
• Orders for 2029 and 2030 are being requested by some customers.
• Amsterdam trading put the shares about 2% higher at around €1,534, while the Nasdaq-listed shares fell roughly 3.9% to approximately $1,650.

On Wednesday, ASML Holding announced record Q3 sales and warned that the production capacity it has planned for 2027 and 2028 will not keep up with customer demand, as AI-related outlays by chipmakers keep growing.

The Dutch lithography equipment group said net sales reached €11.7bn in the July-September quarter, near the upper limit of the €11bn-€12bn range it had guided to and higher than the €9.3bn it booked in Q2. Gross margin improved to 57.5% from 54.0%, above its forecast, and net income climbed to €5.0bn from €2.9bn. During the quarter, it sold 113 new lithography systems, against 86 in the previous three months.

In the results release, chief executive Christophe Fouquet said Installed Base Management, ASML's service and upgrade arm, drove the stronger gross margin. The division generated €3.3bn, helped by customers looking for productivity gains from machines they already had.

Fourth-quarter revenue is expected by ASML to come in at €14.2bn-€15.2bn, with gross margin near 57%. The 2026 sales forecast has been lifted to €44bn-€45bn, with gross margin around 56%, lifting the lower end from the €43bn-€45bn range announced in July.

Supply was the more important takeaway. Fouquet said customers were continually lifting their near-term and medium-term equipment forecasts, reflecting their assumptions about the scale and length of AI spending. He also said some customers had expressed interest in placing orders for 2029 and even 2030. In that context, ASML now believes its present plans for 2027 and 2028 will not be enough to satisfy demand. It is considering steps to raise 2028 capacity above the 30% expansion it previously described.

The company also repurchased about €4.1bn of its own shares in the quarter and declared an interim dividend of €1.88 a share, with payment scheduled for November 4.

Around €1,534, the shares were up roughly 2% in Amsterdam morning trade. On Nasdaq, however, the stock shed about 3.9% on Wednesday, leaving it near $1,650.

The next question is whether ASML will firm up its 2028 expansion plans. Results from big customers like TSMC should give another indication of how much longer the current equipment spending cycle can continue.

What company is ASML?

ASML is a Dutch company from Veldhoven in the Netherlands that builds lithography machines. Chipmakers use them to print circuit designs onto silicon wafers, the process that decides how compact, fast and energy-efficient a chip can be.

Its importance hinges on one product family. ASML alone builds extreme ultraviolet (EUV) lithography systems, using very short-wavelength light to create the smallest structures on the most advanced chips available today. That makes it key to premier chipmakers such as TSMC, which make the processors used in AI data centres. Each of its newest High-NA EUV tools costs around $400 million.

ASML also sells earlier deep ultraviolet (DUV) systems, as well as a growing service and upgrade operation that keeps installed tools running and raises their output.

That central position also gives ASML a geopolitical role. Export controls restrict which of its systems can be sold to China, and its comments about the regulations are followed closely in Europe and Washington.

ASML has a workforce of more than 45,500 and its shares are traded in Amsterdam and on Nasdaq under the symbol ASML.