The world's sole supplier of extreme ultraviolet (EUV) lithography machines confirms demand is "significantly higher" than its multi-quarter production visibility, reinforcing the structural supply constraints in the AI buildout.
Back
ASML CEO sees long-term chip shortage as AI demand outpaces supply by 5 quarters
ASML's chief executive officer said strong artificial intelligence demand will keep the semiconductor market "supply-constrained" for a long time, adding that the company has already discussed future needs with Elon Musk for his planned "TeraFab" project.
"Demand for chips is outpacing supply," CEO Christophe Fouquet said in the company's most recent earnings statement. "In the past months, our customers have increased their expected short- and medium-term demand for our products."
The comments add to a growing body of evidence that the AI infrastructure buildout is creating a demand backlog that stretches well into 2026. ASML, which holds a monopoly on the EUV machines required by foundries like TSMC and Samsung to produce sub-3 nanometer chips, reported a year-end backlog of $45.06 billion and recently raised its full-year 2026 sales guidance to between €36 billion and €40 billion.
The bottleneck has significant implications for investors, as every major technology firm building AI models is dependent on ASML's production schedule. While the company's stock has gained 98 percent over the past year, its price-to-earnings ratio of 48.6 times remains below the European semiconductor industry average of 58.2, a valuation gap that recently attracted a $655 million investment from Philippe Laffont's Coatue Management.
The Monopoly at the Center of the AI Universe
ASML occupies a unique position in the global economy as the sole producer of the extreme ultraviolet lithography systems essential for manufacturing the most advanced chips. Without the Dutch company's machines, foundries like Taiwan Semiconductor Manufacturing Co. (TSMC), Samsung, and Intel cannot produce the sub-3 nanometer silicon that powers the latest AI accelerators from Nvidia and others. This gives ASML unparalleled pricing power and visibility. TSMC alone commands over 72 percent of the global foundry market, according to WebSearch data, with the majority of its revenue now driven by AI and high-performance computing demand, all of which relies on ASML's technology.
Demand Visibility vs. Production Reality
The CEO's comments about a prolonged "supply-constrained" market echo warnings from across the supply chain. Seagate's CEO recently noted that while his firm has visibility of four to five quarters for memory chip supply, the actual demand from data center customers is "significantly higher than that." The discussion with Elon Musk regarding a "TeraFab" suggests that demand from new, large-scale AI projects is already being factored into long-term production plans. This structural shortage is why hedge fund Coatue Management initiated its new $655 million position, a conviction call that the most critical chokepoint in the AI supply chain remains undervalued relative to the multi-year demand cycle.
While some funds have recently placed bearish bets on semiconductor ETFs and specific high-flying chip stocks ahead of earnings, ASML's management is signaling confidence through capital returns. The company approved a new 12 billion euro share buyback program to run through December 2028 and raised its 2025 dividend by 17 percent. For investors, the CEO's statements reinforce the thesis that while demand for AI applications may fluctuate, the foundational hardware layer supplied by ASML faces a structural and durable backlog for years to come.
This article is for informational purposes only and does not constitute investment advice.
