Taiwan Semiconductor Manufacturing (TSM.US) has reportedly postponed the procurement of ASML Holding NV's (ASML.US) latest high-numerical aperture extreme ultraviolet lithography systems due to their high cost. Some analysts view the move as a potential boost to TSMC's profit margins, while others suggest it may reflect underlying concerns about the long-term outlook for artificial intelligence demand.
Seeking Alpha analyst Julia Ostian commented on TSMC's strategy, stating, "The company's consistent quarterly performance and strong margins stem from its commitment to operational efficiency. If TSMC opts to maximize returns from its existing EUV equipment while delaying new technology deployment, its profitability could improve further. However, this approach requires multiple patterning—repeating the exposure process for each wafer—which, under high demand, could lead to production redundancies and potential bottlenecks."
ASML's newest EUV lithography machines are priced at approximately $400 million per unit, nearly double the cost of previous models. TSMC plans to delay the purchase of these advanced tools until 2029. Despite this, Ostian believes the decision will not significantly harm ASML, given its near-monopoly in the sector and rising demand from companies like Intel (INTC.US), Samsung, and SK Hynix. She added, "The impact on ASML is limited. However, it may affect Wall Street forecasts. With no immediate plans for A13 or N2U process mass production in the next two years, TSMC has time to reassess the economic implications of this decision. Therefore, it may be premature to price this news negatively into the stock."
Meanwhile, Seeking Alpha analyst Sandeep G. Rao suggested that TSMC's postponement could be linked to uncertainties in the long-term AI growth trajectory. Rao noted, "TSMC is currently operating near full capacity, enjoys a strong market position, and likely has access to favorable financing. Its decision to delay equipment purchases may be influenced more by broader operational conditions than by cost alone. The U.S., as the world's largest AI market, has seen about 45% of data center projects delayed or canceled in 2026 due to public opposition and doubts about AI demand and scalability. If chip demand collapses and supply contracts shrink, the financial impact of investing in new AI-specific equipment could become a long-term burden."
Rao further emphasized, "Overall, this sends a clear signal to investors enthusiastic about AI: proceed with caution and gather more information."
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