TSMC says it will hold off on using ASML's most advanced high-NA EUV machines, costing upwards of €350M apiece, for chip production through 2029 to save money
Context & Ripple Effects
TSMC had flagged in 2024 that its A16 process would not require ASML’s new high-NA tools because of their cost, even as ASML expected TSMC, Intel, and Samsung to receive the systems. The current decision extends that cost discipline from one node to a multiyear production posture.
The move comes alongside TSMC raising its 2026 capital-spending and revenue-growth outlooks on AI demand, showing that elevated chip investment does not automatically translate into adoption of every leading-edge manufacturing tool.
First-order effects
- TSMC can continue relying on its existing lithography approach for leading-edge production through 2029, avoiding the immediate production cost of deploying high-NA EUV systems.
- ASML faces a delayed production-use case at its largest advanced-foundry customer and added pressure around the pricing of machines that cost more than €350M each.
Second-order effects
- Intel’s reported plan to use high-NA EUV for some Panther Lake chips creates a split adoption path: Intel can seek a manufacturing differentiation while TSMC prioritizes tool economics.
- ASML’s near-term high-NA manufacturing traction becomes more dependent on customers willing to absorb the cost, strengthening buyers’ leverage in negotiations over pricing and deployment terms.
Third-order effects
- If leading foundries can extend existing EUV processes without sacrificing competitive node roadmaps, lithography capability alone will not determine upgrade cycles; the return on each tool will matter more.
- The pattern points to a more selective leading-edge capex cycle: AI-driven spending can remain high while individual equipment categories face longer qualification and payback hurdles.
The trend: Advanced chipmaking is shifting from a race to install the newest tools first toward a race to deploy them only when their manufacturing economics justify the premium.