ASML Explores Higher 2028 EUV Production Amid Strong AI Demand, JPMorgan Reports

ASML is exploring ways to increase its 2028 production capacity for Extreme Ultraviolet (EUV) lithography systems beyond 110 units to meet surging, AI-driven demand, according to a JPMorgan analyst note published Monday. The note follows a meeting between the bank's analysts and ASML's Chief Financial Officer.

Demand Outstrips Capacity

JPMorgan reported that ASML management described demand for its cutting-edge chipmaking equipment as "very very strong," with the company nearly sold out for 2027 deliveries. Most new orders are now being placed for 2028.

ASML has previously stated it can produce at least 80 EUV systems in 2027 and was targeting a 30% increase for 2028. The potential to exceed 110 units in 2028 suggests the company is looking to ramp up production more aggressively than previously guided to satisfy the robust order book from major chipmakers.

Production and Customer Landscape

According to the analysts, ASML's primary production constraint is the speed of its EUV assembly process, rather than supply chain bottlenecks. The report also highlighted several key customer dynamics:

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• Intel is expected to become a "meaningful customer again" in 2027.
• New customers, including Elon Musk's Terafab, are noted as "developing."
• Sales to Chinese memory chip manufacturers are anticipated to be stronger in 2027.

JPMorgan also noted that the "intensity," or the usage of EUV technology per chip, is increasing in the current semiconductor cycle, further fueling demand for ASML's machines.

Technology Outlook

The adoption of ASML's next-generation High-Numerical Aperture (High-NA) EUV tools is expected to begin in 2028, with more significant adoption occurring over the next decade.

Additionally, the note stated that ASML sees no need to pursue an alternative Free-Electron Laser (FEL) light source, a technology favored by some industry figures like Musk. ASML reportedly believes that ongoing advancements in its current laser technology are sufficient for future needs.