ASML, the world's largest maker of semiconductor lithography systems, is moving to raise prices on both EUV (extreme ultraviolet) and DUV (deep ultraviolet) tools, and key customer TSMC is resisting. The Information reported this on July 15, 2026, citing four people familiar with the matter. On the same day, ASML CFO Roger Dassen acknowledged during the earnings call that pricing power has improved amid strong demand. As capital spending accelerates for AI-driven leading-edge logic and DRAM, equipment shortages have begun shifting into price negotiations.
The issue at stake is broader than the reported 10% figure. DUV is not simply a tool left over for legacy chips—it is also used extensively in leading-edge chips. The standoff between ASML and TSMC reflects a larger question: who captures the scarcity profits created by AI demand—the equipment maker, the foundry, or the chip design companies?
The Scope of the Confirmed 10% Figure
According to The Information, ASML discussed a price increase for EUV systems with TSMC, and in recent weeks has also communicated plans to raise DUV prices by 10% to some customers, including Chinese semiconductor makers. TSMC is reportedly refusing to accept increases on both EUV and DUV. Neither ASML nor TSMC has commented on the report.
Reuters further reported that some customers in China agreed to a 10% increase on relatively older DUV product lines. However, it remains unclear which specific models and how many customers are affected, and no regional terms or effective dates have been disclosed. It would be premature to conclude that "all of ASML's DUV lineup is rising 10% uniformly."
This is not the first time ASML has adjusted prices. In its 2022 annual report, the company indicated it would share the burden of extraordinary cost increases from supply chains and inflation with customers, expecting to receive commensurate compensation in 2023. Even today, order backlogs include inflation adjustments that customers have agreed to in writing.
What's different this time is that strong demand—rather than cost compensation—is now front and center. In the analyst call, Dassen said pricing is easier to pass through now than before, and that there remains ample room to raise prices going forward. Negotiations with customers are ongoing, and the 10% figure has not become a contractually fixed standard price. Still, the environment has clearly shifted to one where ASML can openly signal price increases.
DUV Is Not Just for Mature Nodes
Treating DUV as a single legacy technology misses the true scope of the price increase. ASML's DUV lineup includes ArF immersion systems used in mass production of leading-edge logic and DRAM, as well as dry systems—ArF dry, KrF, and i-line. Even in chips where EUV handles the finest interconnect layers, DUV is used for the remaining layers. Lithography tools are not fully replaced with each generational shift; rather, they are used together depending on the difficulty of each layer.
| Lithography Type | Primary Role | Where Price Increases Hit First |
|---|---|---|
| EUV | Critical layers for leading-edge logic and DRAM | New fabs for N2, N3, etc.; leading-edge DRAM |
| DUV Immersion | High-precision layers and multi-patterning for leading-edge logic/memory | Capex and per-wafer process costs at leading-edge fabs |
| DUV Dry | Non-critical layers in leading-edge chips; mature and specialty processes | 200mm/300mm fabs for automotive, industrial, and IoT |
The revenue scale is not a minor sideshow to EUV, either. In 2025, ASML's DUV system sales totaled €12 billion across 279 units, with 47% being immersion systems. EUV, by comparison, generated €11.6 billion across 48 units. While differing product mixes make simple per-unit price comparisons difficult, it's clear that DUV underpins ASML's high-volume business.
The impact on mature processes is likely to show up first through dry DUV systems. ASML supplies tools for both 200mm and 300mm wafers, citing demand from IoT, automotive, and industrial applications, as well as replacement of aging installed equipment. Meanwhile, if immersion DUV prices rise, N2, N3, and leading-edge DRAM fabs won't be immune either—new and expanded leading-edge fabs also require immersion DUV alongside EUV.
Orders Piling Up Toward 2027
Behind ASML's push for price increases lies a rapidly strengthening order book combined with constrained supply capacity. Q2 2026 revenue came in at €9.3265 billion, with a gross margin of 54.0% and net income of €2.9176 billion. Full-year revenue guidance was raised from the April range of €36–40 billion to €43–45 billion. Gross margin guidance also rose, from 51–53% to 54–56%.
Of the quarter's €6.5648 billion in system sales, EUV accounted for €3.8 billion and non-EUV for €2.8 billion. Installed Base Management, which includes maintenance and feature upgrades for existing tools, generated an additional €2.7617 billion. Notably, the main driver behind the quarter's gross margin outperformance was high-margin parts for installed equipment—not the reported price increases.
ASML's supply plans reveal just how strong its negotiating position is. The company expects to ship roughly 65 Low-NA EUV units and about 130 DUV immersion systems in 2026. It is investigating whether it can expand capacity for both by roughly 30% in 2027 and by another 30% in 2028. Nearly all of the 2027 Low-NA EUV capacity is already booked, and a substantial portion of 2028 capacity has been ordered as well.
The DUV side isn't loosening up either. ASML expects non-EUV system sales to grow roughly 25% year-over-year in 2026, with Installed Base Management revenue growing over 30%. When new tool supply falls short, customers turn to upgrades that boost the productivity of existing machines. ASML notes that 95% of the tools it has sold over the past 30 years remain operational today, allowing it to generate revenue from both new systems and equipment longevity.
Why TSMC Is Resisting: The Economics of Up to $56 Billion in Investment
For TSMC, equipment prices aren't just a matter of what it spends in 2026—they carry consequences for years. The company expects 2026 capital expenditure to be near the upper end of a $52–56 billion range, with 70–80% allocated to leading-edge processes. That's a substantial jump from $40.9 billion in 2025, and TSMC has explained that building 1,000 wafers/month of capacity at N2 costs significantly more than at N3, with A14 costing even more.
Purchased lithography tools are capitalized and depreciated over multiple years. TSMC expects 2026 depreciation expense to rise by high-teens percentage year-over-year, driven mainly by the N2 ramp. Overseas fab ramps in the U.S. and Japan are also expected to weigh on gross margin—by 2–3 percentage points initially and 3–4 points later on. If ASML's prices rise, TSMC will be carrying that burden for a long time.
At the same time, ASML cannot afford to ignore its largest customers. In 2025, ASML's biggest customer accounted for 23.9% of total revenue, or €7.7967 billion. While ASML does not disclose customer names, Reuters Breakviews analysis suggests this customer is likely TSMC. Even though there's no direct mass-production substitute for EUV, because buyers are concentrated among a small number of massive companies, ASML cannot impose unilateral pricing the way a true monopolist might.
DUV offers slightly more negotiating leverage. Nikon offers products ranging from ArF immersion to KrF and i-line systems, and in May 2026 stated it was receiving concrete inquiries for new ArF systems from multiple major semiconductor manufacturers. However, lithography tools cannot be chosen on price alone. What matters first is whether a new tool can be precisely overlaid with existing equipment and whether it can deliver the required throughput. Total cost of ownership—including maintenance networks and upgrade paths—ultimately determines whether a switch makes sense. TSMC's resistance is more plausibly a negotiating tactic leveraging long-term contracts and order volume, rather than an immediate move to switch to alternative equipment.
What Follows a Price Increase: Equipment Longevity and Wafer Pricing
Even if equipment prices rise 10%, GPUs or smartphones won't necessarily rise by the same percentage. Lithography tool costs are spread across multiple years, a large number of wafers, and the many chips that can be diced from a single wafer. Yield rates, fab utilization, and the cost of materials and electricity also drive wafer costs. The mix of overseas production and product portfolio matter too. What changes first is equipment operations—whether to choose new tools or upgrades, and how many years to keep older tools in service.
Even so, cost pressure does trickle down the supply chain. Culpium reported in June 2026 that TSMC communicated price increases to customers on leading-edge processes at 7nm and below, generally in the range of 5–10% depending on the customer and product. TSMC told the outlet that its pricing strategy is long-term rather than opportunistic, and that it sells its value to customers. TSMC's resistance to ASML and its own price increases to customers aren't contradictory—they're two sides of the same negotiation, with each company trying to retain as much of the AI-driven profit pool for itself as possible.
A different dynamic is at play in the China market. ASML expects China to account for roughly 20% of total company revenue in 2026, but export restrictions prevent it from selling EUV and the most advanced DUV systems there. If the Reuters report is accurate that Chinese customers needing relatively older DUV tools accepted the 10% increase, it's possible that the narrowed options created by export controls are also bolstering ASML's negotiating leverage in that market. That leverage, however, may not last if Chinese manufacturers accelerate their shift to domestic equipment.
The outcome of these negotiations won't be settled until ASML specifies which models and new prices apply, or until TSMC adjusts its order timing or equipment mix. Key indicators to watch include: whether orders remain fully booked even after the 30% capacity expansion in 2027; whether ASML's gross margin exceeds its 54–56% guidance; and whether TSMC can absorb rising depreciation costs through wafer pricing and productivity gains. If the 10% DUV increase spreads from select Chinese customers to the global market, it would confirm that AI-driven price inflation has taken hold beyond leading-edge EUV alone.