TSMC's stock reached an all-time high on Wednesday, buoyed by strategic maneuvers in its dealings with ASML and potential price increases for AI chip manufacturing.
ASML, the Dutch maker of advanced lithography equipment, announced it will deliver its latest high numerical aperture extreme ultraviolet (EUV) machines to TSMC and Intel later this year. However, TSMC has voiced concerns about the steep price of these new machines. Simultaneously, TSMC hinted at potential price hikes for its AI chip fabrication services.
ASML's CFO Roger Dassen disclosed during a recent call with analysts that TSMC and Intel, two of ASML's major customers, would receive the new EUV machines by the end of the year. Intel has already received its first unit, while the exact delivery schedule for TSMC, ASML's largest EUV customer, remains unclear. A TSMC representative confirmed ongoing collaboration with suppliers but declined to provide further details.
The new lithography machines from ASML can etch semiconductor lines just 8 nanometers thick, significantly smaller than those produced by the previous generation. These machines are crucial for manufacturing chips used in AI applications and advanced consumer electronics. Each machine costs approximately €350 million ($380 million) and weighs as much as two Airbus A320 planes. ASML remains the sole producer of such advanced EUV technology, making its products a key indicator of the semiconductor industry's growth trajectory.
Despite the advanced capabilities, TSMC's Senior Vice President J.K. Chang expressed reservations about the price. At a conference in Amsterdam in May, he stated, "I like the functionality of the high-NA EUV, but I don't like the price." He noted that TSMC's A16 process technology, slated for release by the end of 2026, could still rely on older EUV models rather than the latest high-NA EUV.
Nevertheless, TSMC remains an active participant in ASML's high-NA EUV project. Analysts predict that TSMC will adopt the new technology for its A14 node process, expected in 2028. Post-discussion with Dassen, analysts reported that ASML expects its 2025 revenues to hit the higher end of its guidance range, with average order values for the remaining three quarters of the year anticipated to be around €5.7 billion ($6.16 billion). This could drive ASML's sales to €40 billion ($43.2 billion) by 2025.
TSMC's shares surged at the market opening on Wednesday, briefly touching $163.25, an all-time high, with intra-day gains exceeding 7%. The stock has risen by 60% year-to-date.
Additionally, at TSMC's annual shareholders' meeting on Tuesday, the company expressed optimism about AI demand. Chairman Mark Liu stated that the growing applications of AI and the increasing demands on chip performance bode well for TSMC's future growth.
Following the meeting, newly appointed Chairman C.C. Wei hinted at a potential increase in prices for TSMC's AI chip fabrication services. Wei disclosed that he had discussed this issue with Nvidia CEO Jensen Huang. "I did complain to Nvidia's CEO about the high cost of their products," Wei said. "I think these products are indeed very valuable, but I am also considering showcasing our value."
Currently, TSMC is Nvidia's exclusive production partner for its most advanced AI training chips, including the latest Blackwell series. Given Nvidia's chip prices and TSMC's pivotal role in their production, Wei stated that raising production fees is a logical strategy. "Anyone sitting at home could come up with this strategy," he remarked.
