As artificial intelligence firms compete for the Nvidia chips that power the AI boom, Dutch company ASML has secured a vital position in the global supply chain by building the machines that make those chips possible.
The company designs and manufactures vast, laser driven systems used to print microscopic circuitry onto silicon wafers. These tools sit at the heart of advanced semiconductor production. ASML counts major chipmakers among its customers, including TSMC and Intel, and it dominates the market for equipment required to produce the most powerful processors used in artificial intelligence.
Based in Veldhoven in the Netherlands, ASML has enjoyed a surge in investor confidence. Its shares have doubled in value since last April and have climbed around 25% this month alone. This rise reflects growing expectations that chipmakers are accelerating investment as tight supply continues to push chip prices higher.
Analysts now focus on whether ASML will raise its outlook for 2026, when it reports earnings on Wednesday. The company has so far forecast flat to modest sales growth for that year. However, several analysts have already upgraded their estimates, placing them well above ASML’s current guidance.
Monopoly power in EUV technology
ASML benefits from a unique advantage. It holds a monopoly on extreme ultraviolet lithography, or EUV, a technology critical to manufacturing cutting edge chips. This position has allowed the firm to ride the surge driven by AI leader Nvidia, as companies worldwide race to build more computing power.
Industry experts describe ASML as irreplaceable. EUV uses beams of light measuring just 13.5 nanometres, far thinner than a human hair. According to semiconductor consultancy Yole Group, no rival can match this capability at scale.
Chipmaker clients ramp up spending
ASML will also provide updates on plans to increase the number of machines it can produce. Demand for its tools has already turned the company into Europe’s most valuable listed firm, with a market value that recently exceeded $500 billion.
Analysts estimate ASML controls about 90% of the global lithography market. It remains the only producer of EUV systems, which generate light by firing lasers at tiny droplets of tin tens of thousands of times each second.
Demand for AI driven cloud services surged in 2025. As a result, shortages of memory chips have begun to push up prices for smartphones, computers and gaming consoles. Manufacturers are responding by expanding capacity.
TSMC plans to lift capital spending by 37% in 2026 to $56 billion. Analysts expect Samsung to target a 24% increase to $40 billion, while SK Hynix could raise spending by 25% to $22 billion. U.S. firm Micron plans a 45% increase to $20 billion.
Roughly a quarter of chipmaker capital expenditure goes on lithography tools, most of it flowing to ASML. This share may rise further for AI chips, driven by demand from companies such as Apple, Google and Qualcomm. Analysts also see potential upside from China in 2026.
Staying ahead of the competition
ASML does face rivals in the lower end deep ultraviolet market. These include Japan’s Nikon and Canon, as well as China’s SMEE. Even so, experts believe ASML’s dominance in advanced chips will endure despite efforts in China and the United States to catch up.
Veteran analyst Dan Hutcheson of TechInsights says the industry is investing billions to adopt future generations of ASML tools. He compares switching suppliers to changing a Formula One engine during a race. With hundreds of billions of dollars committed, chipmakers are unlikely to risk choosing the wrong technology.
Companies across the supply chain, he says, are betting on where lithography will be five to seven years from now.
with inputs from Reuters