Bind Musk "Terafab"! ASML Holding NV ADR (ASML.US) has expanded production by 30% for two consecutive years, but is still facing shortages: EUV production capacity is close to being sold out by 2027.

Global lithography giant ASML Holding NV ADR (ASML.US) stated that its 2027 and 2028 capacity expansion plans, announced along with its second-quarter financial report on Wednesday, have taken into account the demand for its tools from Elon Musk's planned Terafab chip production facility in Texas. Chief Financial Officer Roger Dassen said during a conference call, "We are in discussions with all customers and we understand... what their construction plans are. Terafab is part of those plans." Dassen stated that the number of global shipments of High-NA Extreme Ultraviolet lithography machines is in the low single digits. This refers to the next generation of semiconductor lithography technology. He mentioned that if China cannot expand chip manufacturing capacity, production will shift elsewhere as global demand for chips remains constant. Dassen also noted that ASML is close to fully booking its 2027 EUV capacity and has already secured a significant number of 2028 EUV orders. Based on strong performance, ASML Holding NV ADR has raised its full-year 2026 net sales forecast to 43 billion to 45 billion and gross margin forecast to 54% to 56%. This is the second update in the year after the company raised its full-year forecast from 34 billion to 39 billion to 36 billion to 40 billion in April. Demand for lithography machines remains high, and ASML Holding NV ADR is enhancing delivery efficiency. ASML Holding NV ADR CEO Christophe Foket said, "If we look into 2027 in more detail, we see that we are almost able to secure all the EUV orders that we need for 2027. This is due to a roughly 30% increase in our EUV capacity for 2027 compared to 2026." He added, "Looking into 2028, we already have secured a significant number of customer EUV orders. This is prompting us to seriously consider another 30% increase in EUV capacity for 2028. Of course, as EUV capacity grows, DUV capacity will grow accordingly. Immersion lithography technology will also become crucial. Therefore, we plan to increase capacity by 30% in 2027 and 2028." Foket said, "Based on this momentum, we plan to increase our low-NA EUV capacity by about 30% from approximately 65 units in 2026 to 2027, and we are exploring a further 30% increase in capacity in 2028. Similarly, we plan to increase our DUV immersion capacity by about 30% from around 130 units in 2026 to 2027, and our studies are ongoing to raise this capacity by an additional 30% in 2028. In addition, we continue to significantly expand our upgrade product portfolio." With the surge in demand driven by artificial intelligence, the company is working on reducing the manufacturing and testing time of advanced lithography tools in its factories by about one-third. ASML's cutting-edge Extreme Ultraviolet lithography (EUV) equipment, essential for semiconductor manufacturers to produce advanced chips, is in high demand due to the push for artificial intelligence. It takes over a year from ordering to delivery of EUV equipment, and a few quarters ago, the company's production cycle from manufacturing in its cleanroom to shipment (referred to as lead time) was approximately 22 weeks. CFO Roger Dassen said on Wednesday, "We are now looking at shortening that time to 15 to 16 weeks." The company relies on numerous suppliers to manufacture its modular machines, and in addition to collaborating with the supply chain, the company is optimizing its own processes to achieve higher capacity levels. "We see an opportunity to simplify the testing process while maintaining quality," Dassen said. This means reducing the cycle time in the cleanroom, "so we can produce more tools, which customers are happy to accept," he added. Foket also discussed the growing demand for logic and DRAM chips as seen by their customers, which in turn drives the demand for ASML Holding NV ADR products. He emphasized that ASML Holding NV ADR's customers are signing long-term agreements with their own clients. Foket said, "So, if we look at market demand, which is driving end-market demand, that has already caused our customers to step up capital expenditure, accelerating all their plans. We see this dynamic in both logic and DRAM areas. We also see, in these two areas, our customers signing long-term agreements with their own clients, which really prompts them to make long-term commitments." Foket stated that ASML Holding NV ADR expects its revenue in the field of advanced foundry logic chips to grow by about 25% this year, while revenue in the memory sector is expected to grow by 75%.