TSMC "claims high prices," ASML falls in response, analysts rush to "put out the fire"

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TSMC’s statement that ASML’s latest high-end lithography machine is “too expensive” caused a brief market fluctuation, but several analysts promptly reassured the market, saying this is merely an issue of timing rather than a structural shift in industry demand.

TSMC Deputy Co-Chief Operating Officer Kevin Zhang told reporters Wednesday that the company currently has no plans to purchase ASML’s latest generation High Numerical Aperture Extreme Ultraviolet (High NA EUV) lithography machines, because each unit costs over $400 million.

This statement immediately triggered ASML’s US ADRs to plunge from $1,470 to below $1,400. Although most losses were recovered later, the stock closed down about 1% that day and fell another 2% in pre-market trading the next day.

TSMC establishes a price threshold

Kevin Zhang’s statement was the immediate trigger for this bout of market volatility.

As the main contract manufacturer for the world’s most advanced chips, TSMC is one of ASML’s very limited high-end customers. Its purchasing decisions have a significant impact on ASML’s revenue expectations.

High NA EUV is ASML’s most advanced lithography equipment to date, with each unit selling for over $400 million, far higher than the previous generation of EUV machines. Kevin Zhang made it clear that TSMC currently has no purchasing plans, causing the market to doubt the commercial progression for the product.

Analysts: A matter of timing, not structure

In response to market panic, several institutional analysts spoke quickly in an attempt to calm sentiment.

UBS analyst Francois-Xavier Bouvignies characterized TSMC’s stance as “resistance at a timing point” rather than a structural change. He noted that UBS previously expected High NA EUV to account for 15%–20% of ASML’s total lithography system sales by the end of the decade, emphasizing that ASML still holds a “unique monopoly position,” with its market share in wafer fab equipment continuing to rise.

A Citi analyst team led by Andrew Gardiner pointed out in a report titled “Deja EUV all over again” that Kevin Zhang has been consistently cautious about purchasing this product over the past few years, so this latest stance is not new. The Citi team also said they had not expected High NA EUV shipments to ramp up significantly before 2028, with mass production targets set for 2029 and beyond.

Intel and Samsung have a more proactive attitude

In contrast to TSMC’s conservative position, ASML’s other two major customers, Intel and Samsung, have a visibly more positive attitude toward High NA EUV. Andrew Gardiner noted that both companies expressed optimism about the technology’s capabilities and their procurement prospects, which alleviated concerns over overall demand to some extent.

This means that TSMC’s absence does not equate to a complete shrinking of market demand for High NA EUV. Instead, different customers have different technical routes and cost considerations, so commercialization pace may vary among clients.

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