ASML raises EUV Low-NA prices: TSMC faces millions in extra costs

ASML, the Dutch lithography manufacturer, is considering raising the prices of its EUV Low-NA (NXE) machines in a move that would directly affect its largest customer, TSMC. According to The Information, cited by Tom's Hardware, the company plans to increase the price of its NXE systems by 10% to 20%, which could cost TSMC billions of dollars in additional expenses over the coming years.

What happened?

During the latest quarterly earnings call, ASML CFO Roger Dassen confirmed that the company is evaluating price adjustments for its Low-NA EUV machines. Dassen noted that the increased productivity of these tools — which now process up to 260 wafers per hour on the NXE:3800F model — justifies a higher price under its 'value-based pricing' model. However, he clarified that changes will not be immediate due to long lead times.

Currently, NXE machine prices range from €140 million to €170 million for models like the NXE:3600D, while the newer NXE:3800E exceeds €200 million. A 20% increase would raise the unit price to over €240 million.

Why is this important?

TSMC is ASML's largest customer, accounting for approximately 30% of its revenue. The Taiwanese company uses Low-NA EUV machines to manufacture 5nm and 3nm chips and plans to use them for the 2nm node as well. If ASML implements the increases, TSMC could see its capital costs rise by billions, which would be passed on to its clients — Apple, NVIDIA, AMD — and ultimately to the end consumer.

Moreover, the move reinforces ASML's market power. With a de facto monopoly in EUV lithography, the company has a unique ability to set prices. The increase will also pressure other manufacturers like Samsung and Intel, which already face tight margins in their advanced processes.

Consequences for the industry

ASML's price increase comes at a time when demand for cutting-edge chips continues to rise, driven by artificial intelligence and high-performance computing. However, chipmakers are investing heavily in new fabs, reducing their ability to absorb additional costs.

For TSMC, the increase could accelerate its transition to High-NA EUV machines (EXE), which already cost over €350 million but offer higher resolution for sub-2nm nodes. However, that investment is even larger. Alternatively, TSMC could try to renegotiate contracts or pressure its suppliers to share the cost.

In the long term, the price increase could slow the adoption of advanced nodes, as TSMC's customers may opt to keep designs on more mature nodes to avoid rising costs.

What should readers know?

• Not an immediate increase: ASML has indicated that changes will not be abrupt due to multi-year contracts and lead times of 12-18 months.
• TSMC has limited options: Although it can pressure ASML, there are no viable alternatives to the Dutch company's EUV machines for advanced chip manufacturing.
• Impact on consumers: Next-generation smartphones, GPUs, and processors could become more expensive if manufacturers pass on the costs.
• Possible acceleration of High-NA: The increase could incentivize TSMC and others to adopt High-NA machines sooner, which offer better cost-benefit in the long run.

"When it comes to Low-NA pricing, we keep on increasing the productivity of the Low-NA tool, which gives us a pretty strong runway for potential price improvements going forward." — Roger Dassen, CFO of ASML.

In summary, ASML's decision reflects its confidence in the market and its dominant position. For TSMC and the rest of the industry, it represents a new challenge in an already competitive environment with tight margins.