ASML, the Veldhoven, Netherlands-based maker of the precision machines that print microscopic circuitry onto silicon, has become a pivotal supplier in the hardware chain that supports the artificial intelligence boom. As AI companies compete for processors that draw on Nvidia designs, chip manufacturers have increased their investment plans, lifting demand for the high-throughput lithography systems that ASML provides.
The company, whose customers include Taiwan Semiconductor Manufacturing Co and Intel, has seen a dramatic rise in investor interest. Its shares have roughly doubled since last April and climbed about 25 percent in the current month, underpinned by signs of higher capital spending among its chipmaker customers and a tightening supply environment that has pushed up chip prices.
Market watchers will be paying close attention to ASML’s upcoming earnings report, when the firm is expected to update whether it will revise its guidance for 2026. Analysts say many forecast upgrades have already outstripped the company’s prior guidance, and investors are watching for any change to the company’s forecast of flat-to-modest sales growth in 2026.
Dominant position in EUV technology
ASML is the only supplier of extreme ultraviolet - EUV - lithography systems, the high-end tools that enable the most advanced microprocessors used in AI applications. Analysts estimate ASML controls around 90 percent of the market for lithography systems, a position supported by its high-throughput machines.
Experts point to the technical uniqueness of EUV to explain ASML’s near-monopoly. EUV uses light with a 13.5 nanometer wavelength to form the tiny features on chips - a scale that is vanishingly small relative to everyday objects, given that a human hair measures roughly 80,000 to 100,000 nanometers across.
The EUV process itself involves vaporizing tiny drops of tin with lasers at very high frequency - roughly 50,000 times a second - to generate the light used for imaging. That combination of optics, laser systems and materials processing is not replicated by other vendors, creating high barriers to entry.
Customers increase capital spending plans
Demand for AI cloud services surged in 2025, contributing to shortages in memory chips and upward pressure on prices for smartphones, computers and gaming consoles. In response, major manufacturers are boosting capital expenditure to expand capacity.
- TSMC, ASML’s largest customer, plans to raise capital spending by 37 percent in 2026 to $56 billion.
- Analysts estimate Samsung is targeting a 24 percent increase to $40 billion.
- SK Hynix is estimated to increase spending by 25 percent to $22 billion.
- U.S. firm Micron plans a 45 percent rise in capital expenditure to $20 billion.
Analysts note that roughly one quarter of chipmaker capital spending is allocated to lithography equipment, with much of that outlay channeled to ASML. They also suggest the lithography share of capex could be even larger for AI-focused processors, as demand from big technology companies helps drive requirements for advanced nodes.
Mizuho analyst Kevin Wang commented that there is potential upside in ASML’s China business in 2026, underscoring one source of investor optimism heading into the firm’s earnings announcement.
Competition and supply-chain dynamics
At the lower end of the lithography market, ASML faces competition from Japanese firms Nikon and Canon and from China’s SMEE in the deep ultraviolet - DUV - segment. However, industry observers say ASML’s lead in the advanced EUV segment is likely to remain intact for years despite efforts in China and the United States to catch up.
Dan Hutcheson, a senior fellow at TechInsights who has monitored ASML since its spin-out from Philips in the 1980s, highlighted the scale of industry investment in future generations of ASML tools. He used a racing analogy to describe the difficulty of switching technologies mid-course, noting that entire supply chains have structured multi-year plans around the availability of specific lithography capabilities.
"You’ve got a whole supply chain that’s betting the farm on what’s going to be there five to seven years from now," he said, adding that companies with hundreds of billions of dollars at stake are unlikely to change vendors and risk choosing the wrong lithography tool.
John West of semiconductor consultancy Yole Group summarized the market position succinctly, calling ASML "the only game in town" with reference to EUV tools.
Production and capacity considerations
ASML has said it will update investors on plans to increase the number of machines it can produce, responding to the elevated demand environment. That operational scaling is central to converting orders into revenue and supporting customers’ capacity expansion plans, and it will be a focal point for analysts concerned with throughput, delivery schedules and backlog conversion.
As ASML reports results, investors and customers will be assessing whether the company can accelerate output while maintaining the precision and reliability required by manufacturers building the next generation of AI-capable chips.
Summary
ASML stands at the center of the AI-driven investment cycle in semiconductors due to its exclusive position in EUV lithography. Strong customer capex plans and a tightening chip supply environment have boosted the company’s share price and market value. Attention ahead of earnings is focused on whether ASML will raise its 2026 sales outlook and how it will increase machine output to meet demand.