ASML & TSMC: The AI Buildout is Getting Expensive

ASML & TSMC: two guidance hikes, one week apart, zero coincidence: When the equipment maker and the foundry raise prices without orders slowing, that's not a hot market. That's buyers with nowhere else to go.

Both companies raised prices and guidance in the same week. ASML raised its 2026 revenue guidance for the second time this year, to €43-45 billion, while separately pushing for higher prices on both its EUV and DUV lithography tools; its CFO said the company sees "considerable room for price increases," and some Chinese customers have already agreed to a 10% increase on its DUV tools. A day later, TSMC raised its 2026 capital budget to $60-64 billion and its revenue growth outlook to above 40%, while reportedly extending its own price increases across its advanced nodes, which make up 74% of its wafer revenue.

Order books are lengthening rather than shrinking. ASML's mainstream EUV capacity is nearly fully booked through the end of 2027, and the company is expanding output by 30% in 2027, with a further 30% expansion for 2028 under consideration. TSMC's CFO, Wendell Huang, said this week that the company still cannot fulfill all existing customer orders despite its own price increases, and that its fresh $100 billion addition to its Arizona plans, taking its total US commitment to $265 billion since 2020, was driven as much by pressure from rivals such as Intel, Samsung and Tesla's new chip venture as by demand itself: "we do not intend to leave any food on the table for anybody else," he said.

The demand behind these price increases spans more than one part of the industry. ASML now expects its memory-related system sales to grow more than 75% this year, alongside the leading-edge logic capacity TSMC and Intel are separately adding. Price increases holding across both logic and memory customers at once point to an industry-wide shortage rather than one customer's spending decision.

TSMC's own numbers suggest its strongest demand is still ahead of it. Its newest 2 nanometer technology contributed just 3% of wafer revenue in the second quarter, and the company guided third-quarter revenue to $44.6-45.8 billion, implying continued growth before that node has even reached meaningful scale.

Ionic View

We read the willingness of AI infrastructure buyers to absorb repeated price increases from ASML and TSMC, with no sign of orders slowing, as the clearest evidence available that current AI capital spending is running into a real capacity ceiling rather than a demand ceiling. Pricing power this broad-based, appearing at the equipment maker and the foundry in the same week, is not something that shows up when a market is merely optimistic; it shows up when buyers have genuinely nowhere else to go.