ASML raises 2026 forecast, expands capacity on AI chip demand

By Toby Sterling and Nathan Vifflin

July 15 (Reuters) - ASML, the world's biggest supplier of computer chip manufacturing equipment, raised its 2026 financial forecasts on Wednesday and will expand capacity after AI demand drove better-than-expected second-quarter earnings.

Europe's largest company by market capitalisation said it now expects full-year 2026 net revenue of €43 billion to €45 billion ($49 billion to $51 billion), an increase of 16% at the midpoint from its earlier forecast range of €36 billion to €40 billion.

Revenue for the three months ended June 30 was €9.33 billion, topping analysts' estimates of €8.80 billion, while net income was €2.92 billion, above expectations of €2.62 billion, according to LSEG data.

"Blowout results across the board, I wonder where they found this much new capacity," said Michael Roeg, senior equity analyst at Degroof Petercam.

Shares rose 5.7% in early trading in Amsterdam.

ASML PLANS 30% CAPACITY EXPANSION IN EACH OF NEXT TWO YEARS

The Dutch company is the world's only maker of extreme ultraviolet lithography (EUV) tools, which are essential for making cutting-edge chips. Its customers including TSMC, Samsung, SK Hynix and Micron are racing to add capacity for AI-related demand.

Chief Executive Christophe Fouquet flagged "extremely strong" order intake due to demand for AI chips.

"Our customers in turn continue to accelerate their capacity expansion plans ... providing ASML with increased visibility into longer-term demand," he said in a statement.

ASML said it intended to expand capacity by 30% in each of the next two years for its flagship EUV tools, as well as for deep ultraviolet (DUV) tools needed for less advanced chips and by customers in China.

Analysts from JPMorgan said they believed Wednesday's results would help ASML close a valuation gap with U.S. peers.

"The message from bears has been that they are capacity-limited or that they don't grow ... (but) the company is virtually guiding 30% growth in the next two years," they said.

Separately, Fouquet said Intel will use ASML's new High-NA tool to make some of its most advanced "Panther Lake" chips, marking a first for the technology.

CHINESE DEMAND STRONG DESPITE U.S.-LED EXPORT RESTRICTIONS

CFO Roger Dassen reiterated ASML's estimate that Chinese customers will account for about 20% of sales this year — less in percentage terms than in the past several years, but increasing in absolute terms as ASML's sales rise.

"The Chinese market is moving in sync with the overall behaviour that we see globally," he said in a video statement.

ASML is barred from selling EUV tools and its best DUV tools in China due to U.S.-led export restrictions, but it does sell less-capable DUV machines to customers there that are capable of making relatively advanced chips.

Dassen said demand is strong from Chinese makers of logic chips, which are used in AI, computers and smartphones for the Chinese domestic market.

U.S. lawmakers have proposed a law that could further restrict the company's China sales, a continuing business risk for ASML.

($1 = 0.8742 euros)

(Reporting by Toby Sterling in Amsterdam, Nathan Vifflin in Gdansk; Editing by Matt Scuffham and Joe Bavier)