ASML Boosts Outlook as AI Chip Demand Soars

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Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.

Ed Ludlow (0:22)

This is Bloomberg Tech coming up. ASML raises its sales forecast for 2026 and aims to increase production of its chip making machines to keep up with soaring AI spending. Plus, we hear from Nvidia CEO Jensen Huang, fresh on the heels of announcing plans to invest $2 billion in European deals. And we take you inside of the making of Grand Theft Auto VI, expected to be the biggest video game blockbuster of all time.

Okay, welcome to Wednesday. I'm taking a look at shares of ASML.

Up 2.6% at one point in the session, up 3.6% in European, in Sudan, and one point fell 1%. The producer of lithography machines, chip making tools to manufacture cutting edge chips, raised its sales outlook, but said it's struggling to meet demand. Joining us for the deets, Bloomberg's Sarah Jacob, who is in Amsterdam. For ASML, this is all about capacity, right? They had plans to boost capacity. They're saying that they're still in this place where demand is running ahead of their ability to supply. Give us the basics.

Sarah Jacobs (1:22)

Hi, yes, that's right. So ASML again, basically just, you know, like you said, raising the low end of its annual sales forecast for 2026 because it seems soaring, artificial intelligence link demand. The CEO today saying that they're getting, he's getting, you know, customers who are asking for, you know, more tools every day. And it's become the key focus of life of ASML to get that capacity going. Just as a reminder, in July, ASML said that, you know, it expected about 65 units in terms of capacity for 2026, 30% increase on that for 2027 And it was investigating a further 30% increase for 2028

Today, it says that those plans and those current supply patterns would not be enough to fulfill demand from what it's hearing from customers. So now they're investigating going beyond 30% in 2028 So that's kind of interesting, because it's hearing more from its customers in terms of the short-term and the medium-term requirements.

Ed Ludlow (2:23)

Away from the financials, China is the story, right? There is a piece of proposed legislation to deepen restrictions, export restrictions, on DUV, immersion machines to China.

This came up in the call. What did ASML have to say about China, Sarah?

Sarah Jacobs (2:41)

Yes. So China, again, the third largest market for ASML in the third quarter after South Korea and Taiwan, still a significant contributor. And then we spoke to Roger Desen, who is the CFO of ASML in a call with journalists today. And he basically said, according to him, they believe that the match act is unbalanced. And he said that, you know, by introducing such restrictions, essentially you could slow it going to China, but it would sort of increase, but not stop what China can do in developing technology and might actually, you know, sort of help homegrown technology in that regard. And by preventing, you know, ASML's ability to service its own tools in China, there could potentially be, you know, intellectual property leakage or theft.

Ed Ludlow (3:28)

Bloomberg's Sarah Jacobs out in Amsterdam. Very long day for you, ASML, Europe's most valuable company reporting its earnings. Let's hear from ASML CEO, Christophe Fouquet, who said in a video released with the company's results that customers are asking every day for more tools to meet their own needs.

Christophe Fouquet (3:45)

Today, they expect that their supply will not meet the demand at least until 2028 So this is a very, very strong demand on their side. So a lot of our discussion with our customer now are shifting, in fact, beyond 2027

A lot of order intake for 2028, but also some strong interest to already place order for 2029 and sometime even 2030

Ed Ludlow (4:11)

So ASML already talking to its customers about 2029 Let's discuss what that means for ASML, the AI boom with Antonella Frongillo, analyst in Intesa San Paolo. Again, it's about capacity. And I think what the market's really struggling with here is like your customers are asking for more. You're trying to address the capacity issue.

Where can they find more capacity?

Antonella Frongillo (4:35)

Hi, thank you for this opportunity.

This is a key point for them because it's an opportunity to increase their capacity to match the strong orders demand. What can they do? They can optimize their production. They can release a product appraise. They can, they are already receiving a strong demand for productivity for product appraise, which is the reason why in the third quarter, the installed basic management were higher than expected. So they are really pushing their effort to increase the capacity, which remains for them and for the whole value chain, the key constraint to match demand, which remains very strong.