CNBC News – July 2nd, 2023 – The dawn of a new era in chipmaking was heralded late last year with the delivery of ASML’s first High-NA EUV lithography machine to Intel. Industry observers widely anticipated that this cutting-edge technology would become indispensable in the development of advanced chips and the production of next-generation processors.
However, a noticeable shift appears to be underway. Leading foundries are reportedly scaling back their reliance on High-NA EUV technology, opting to delay the introduction of this next-generation equipment.
This recalibration has prompted investment institutions to adjust their outlook on ASML. One firm recently lowered its price target for the Dutch chip equipment giant from €795 to €759 per share, a reduction of approximately 5%, while also moderating its earnings expectations for 2026-2027. Despite this adjustment, the firm maintained its “Buy” rating, underscoring its belief that ASML’s long-term growth trajectory remains robust.
The primary driver behind this revised outlook is the softer-than-expected demand for High-NA EUV systems. Bank of America, for instance, now projects ASML’s High-NA EUV shipments for 2026 to be a mere four units, a stark 50% decrease from previous estimates.
Industry analysis points to a fundamental evolution in chip manufacturing techniques. The sector is increasingly embracing novel transistor architectures, such as Gate-All-Around (GAAFET) and Complementary FET (CFET) designs. These advanced structures leverage improved “wrap-around gates” and refined etching processes to enhance performance, thereby lessening the stringent reliance on the absolute precision offered by the latest lithography advancements. Consequently, foundries may be reconsidering the timeline for adopting High-NA EUV, prioritizing the optimization of their existing EUV equipment’s efficiency.
Despite the short-term recalibration in High-NA EUV demand, the sentiment among investors regarding ASML’s long-term prospects remains largely positive. The exponential growth in AI-driven applications, powering GPUs and AI accelerators, continues to fuel the demand for advanced semiconductor processes. Crucially, ASML’s established EUV technology remains the linchpin for manufacturing at the 3nm node and beyond.
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