AI Chip Demand Ignites Growth, ASML Second-Quarter Results Beat Expectations Across the Board, Intel Decides to Adopt Cutting-Edge Lithography Equipment

ASML's second-quarter performance was exceptional, with core financial metrics beating market expectations across the board and all business segments showing robust growth.

Specifically, net sales increased 6.4% quarter-on-quarter from 8.77 billion euros in the first quarter to 9.33 billion euros (approximately $10.9 billion), while service and field option sales reached 2.76 billion euros, beating the estimated 2.49 billion euros, demonstrating the company's continuously rising competitiveness in equipment maintenance and upgrades.

Gross margin rose further to 54% from 53% in the previous quarter, exceeding market expectations by 2 percentage points, which reflects the company's pricing power and cost-control capabilities in the high-end equipment field.

ASML CEO Christophe Fouquet stated in the earnings release: "Our total net sales and gross margin for the second quarter were both above expectations, a result primarily driven by better-than-expected sales performance in our Installed Base Management business."

He also noted that the company's bookings remained "extremely strong" in the first half of the year, and customers are accelerating their capacity expansion plans, which provides the company with "clearer visibility into long-term demand."

On the back of strong performance momentum, ASML significantly raised its full-year 2026 outlook, lifting its expected net sales range to between €43 billion and €45 billion from the previous €36 billion to €40 billion, and upgrading its gross margin guidance to between 54% and 56% from 51% to 53%.

For the third quarter, the company expects net sales of €11 billion to €12 billion, with the midpoint significantly higher than the Bloomberg analyst consensus estimate of €10.27 billion, and a gross margin guidance range of 55% to 57%.

The scale of this upward revision has garnered widespread attention within the industry, reflecting ASML's high optimism regarding future market demand.

Fouquet stated, 'Ongoing investments in artificial intelligence infrastructure, along with continuous advancements in AI technology, are driving demand for advanced logic and memory chips. Our customers are accelerating their capacity expansion plans, which translates into order commitments across our entire product line, giving ASML clearer visibility into long-term demand.'

Alongside strong earnings growth, ASML has also continued to return value to shareholders. The earnings report showed that in the second quarter, the company repurchased approximately €1.1 billion worth of shares under its 2026–2028 share buyback program. Meanwhile, the company announced an interim dividend of €1.88 per ordinary share, which will be paid on August 5, 2026.

In response to growing market demand, ASML simultaneously announced its capacity expansion plans for the coming years. The company stated that, based on a capacity of approximately 65 low-NA EUV systems in 2026, it plans to increase this by about 30% in 2027, and is studying the possibility of an additional 30% increase in 2028.

Meanwhile, ASML also plans to increase its capacity for deep ultraviolet (DUV) immersion lithography systems by 30% in 2027 from approximately 130 systems in 2026, with further expansion plans for 2028 currently under evaluation.

This capacity expansion path indicates that ASML remains optimistic about the sustainability of semiconductor equipment demand, and is reserving supply headroom for technology iteration cycles that could further accelerate in the coming years.

Furthermore, ASML plans to break ground on a new campus in Eindhoven this quarter. The facility will ultimately have the capacity to accommodate 20,000 employees, further boosting the company's R&D and production capabilities.

Behind ASML's strong financial performance is the explosive growth in global demand for AI chips.

As tech companies like Microsoft and Alphabet compete to invest hundreds of billions of dollars in building advanced AI infrastructure, chipmakers are expanding capacity to meet demand. As the world's only producer of extreme ultraviolet (EUV) lithography machines, ASML has become the biggest beneficiary of this wave.

Earlier this week, TSMC, one of ASML's largest customers, released its sales data for June, showing a 68% year-over-year surge in sales driven by strong chip demand.

According to Reuters, TSMC also plans to add two new advanced packaging plants in the Chiayi Science Park in southern Taiwan. UBS analysts noted in a research report on July 10 that semiconductor fab capacity expansion, along with AI-driven demand for advanced-process chips, is expected to drive continued strong performance for ASML in the second half of the year.

Despite the semiconductor sector facing investor skepticism over the sustainability of massive AI-driven capital expenditures, along with increasingly tight export controls, ASML continues to maintain strong growth momentum, leveraging its monopoly in high-end lithography equipment.

Fouquet stated that the company will update its long-term forecasts based on market and technological developments at its next Capital Markets Day on June 10, 2027.

In addition to its financial performance, ASML also announced a major development of industry significance.

The company and Intel ( INTC) jointly announced that Intel has used ASML's EXE High-NA EUV equipment at its Oregon facility to manufacture a portion of its Ultra 3 (Panther Lake) laptop processors.

High-NA EUV is considered an important direction for next-generation advanced lithography, with its further increased numerical aperture supporting the manufacturing of smaller transistors.

With a unit price of approximately $400 million, about twice that of standard EUV systems, and high technical adoption barriers, there were prior market doubts regarding its commercialization prospects.

In fact, Intel received the world's first High-NA EUV system as early as 2024 and was the first to complete its R&D installation; this milestone further advances the technology to actual mass production applications.

Naga Chandrasekaran, executive vice president and general manager of Intel Foundry, said in a joint statement: "This milestone reflects the close technical collaboration between Intel and ASML, demonstrating how High-NA EUV can achieve integration at scale in advanced semiconductor manufacturing."

Intel's adoption of High-NA EUV technology not only helps ease market doubts over its commercialization prospects but also provides a positive demonstration effect for ASML to promote this product line.

Previously, TSMC had publicly stated that the cost of ASML's latest-generation equipment was too high for high-volume manufacturing and that it would delay its transition to the technology.

Meanwhile, Intel's move to pioneer the application of High-NA EUV technology to mass production demonstrates its determination and technical prowess in advanced chip manufacturing, while opening up market opportunities for ASML's High-NA EUV systems.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.