ASML Holding N.V. (NASDAQ:ASML) has secured higher prices for its most critical chipmaking equipment as the artificial intelligence boom strengthens its bargaining power with semiconductor manufacturers.
The Dutch company confirmed Wednesday that negotiations with customers have concluded, with the increases expected to boost revenue and profit margins starting in 2027.
“We thought that we were entitled to a higher percentage,” CFO Roger Dassen said during the company’s third-quarter earnings call.
“There was a clear acceptance that maybe the overall value in the ecosystem is shifting,” CEO Christophe Fouquet said, linking the change partly to AI.
Fouquet said it was one of the first times in many years ASML had held such pricing discussions with customers.
AI Boom Strengthens ASML’s Hand
ASML is the only commercial supplier of extreme ultraviolet lithography machines, which chipmakers need to manufacture the most advanced semiconductors.
In July, The Information reported that Taiwan Semiconductor Manufacturing Co. (NYSE:TSM), ASML’s largest customer, was resisting proposed increases.
ASML has now completed negotiations, although it hasn’t identified which customers agreed to higher prices or disclosed the size of the increases.
Its bargaining position has strengthened as manufacturers race to expand production.
ASML said its planned output for 2027 and 2028 won’t fully meet customer demand, even as it expands capacity. Some customers are already seeking equipment for 2029 and 2030.
Beyond today’s equipment shortages, ASML’s next growth cycle may depend on when chipmakers adopt its more advanced High-NA EUV machines at scale, with Samsung targeting 2028 and TSMC 2030.
Higher Prices to Boost Margins From 2027
The increases cover ASML’s most critical manufacturing equipment, with prices for productivity upgrades to existing machines expected to follow.
They should begin lifting revenue and margins in 2027, with the full impact arriving in 2028.
Asked by JPMorgan analyst Sandeep Deshpande how much of the increase would become profit, Dassen said some would cover manufacturing expansion costs, but a significant portion would boost gross margins.
ASML reported a 57.5% gross margin in the third quarter but expects around 57% in the fourth quarter, mainly because of production expansion costs. The new price increases have yet to take effect.
Asked by Berenberg analyst Tammy Qiu whether ASML could repeat the increases annually, management said that wasn’t the plan.
“We don’t want to be in a position that as the market goes down that we’re actually having discussions with customers on price decreases,” Dassen said.
AI Stocks Slide Despite Strong Demand
The upbeat outlook contrasted with Wednesday morning’s sharp selloff in AI stocks.
Advanced Micro Devices Inc. (NASDAQ:AMD) fell 5%, Nvidia Corp. (NASDAQ:NVDA) lost 3% and TSMC dropped 3%. CoreWeave Inc. (NASDAQ:CRWV) plunged about 11%.
D.A. Davidson analyst Gil Luria warned CoreWeave shareholders could lose everything if AI spending weakens, citing expensive borrowing and insufficient investment returns.
On Polymarket, traders assigned a 6% chance of a qualifying AI-industry downturn by December 31, rising to 19% by June 2027.
ASML’s U.S.-listed shares fell 1% Wednesday despite its stronger pricing outlook.
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