ASML (ASML) and Chip Giants like TSMC Plot a Bigger Canvas for Building AI Chips

ASML (ASML) and Chip Giants like TSMC Plot a Bigger Canvas for Building AI Chips

Fatima Gulzar

Mon, September 21, 2026 at 12:41 AM GMT+3 4 min read

• ASML +3.08%
• TSM +1.02%

On September 8, 2026, Reuters reported that ASML Holding N.V. (NASDAQ:ASML) plans to work with major customers. It includes Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Nvidia, Intel, Samsung, and SK Hynix to adapt its next-generation "High NA" extreme ultraviolet lithography tools so they can print larger data-center chips. It addresses a current limitation where the newer machines use a smaller mask than ASML's widely deployed standard EUV tools.

ASML targets a pilot production line using the larger masks by 2031 and high-volume manufacturing readiness by 2033. Chief technology officer Marco Pieters said these changes could lift the productivity of these systems by roughly 40%.

Bull Case

The larger-mask project could create a new growth opportunity for ASML Holding N.V. (NASDAQ:ASML) while helping TSMC manufacture larger AI chips more efficiently. ASML plans to use its High NA EUV tools to handle chips as large as today's biggest data-center processors. The business expects the larger masks to increase system productivity by 40%. It could scale up demand for its next-generation equipment and help TSMC improve the economics of producing increasingly large and complex chips.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)'s planned use gives ASML a clear path toward commercializing the technology. TSMC plans to introduce High NA EUV into advanced-node high-volume production from 2030. ASML aims to show its larger-mask technology through a pilot line in 2031. TSMC's commitment could give ASML greater visibility into future equipment demand. Early use could help TSMC maintain its advanced-chip manufacturing advantage.

The collaboration could solidify both companies' positions as chipmakers develop larger and more powerful processors. ASML can extend its High NA roadmap beyond its current chip-size limitation. TSMC can prepare its manufacturing processes for the next generation of AI chips. The partnership gives ASML an opportunity to deepen its relationship with one of its largest customers and gives TSMC access to a technology that could support future advanced-chip production.

Bear Case

The larger-chip opportunity remains years away from contributing to either company's financial results. TSMC plans to begin high-volume High NA production in 2030. ASML Holding N.V. (NASDAQ:ASML) targets a larger-mask pilot line in 2031 and high-volume production in 2033. So investors cannot expect the new initiative to drive near-term revenue for either company.

The larger-mask transition could create execution risks for both ASML and TSMC. ASML must develop and qualify larger masks for its High NA systems, while TSMC must combine the technology into high-volume manufacturing. Any delays or technical problems could postpone the productivity gains and revenue opportunities that the companies expect from the new technology.

Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) and ASML still need to prove that the productivity gains justify the industry's transition costs. The larger-mask approach requires changes beyond ASML's lithography tools. It includes new mask infrastructure and production processes. If chipmakers decide that the costs of adopting the technology outweigh the expected productivity benefits, ASML could face slower High NA use while TSMC could delay its planned rollout.

Hedge Fund Sentiment

ASML Holding N.V. (NASDAQ:ASML)'s hedge fund following grew to 140 funds in the second quarter from 133 in the first, with combined position value rising to $21.77 billion from $16.38 billion, according to Insider Monkey's database. Hedge fund ownership of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) grew in the second quarter of 2026, with 249 funds holding a stake compared to 234 in the first quarter. Applied Materials, a fellow semiconductor equipment maker, saw its own hedge fund position value grow even faster in percentage terms, to $16.71 billion from $10.33 billion, though holder count was roughly flat at 137 versus 138.

Conclusion

ASML's move toward larger masks could expand the commercial potential of its High-NA EUV technology. Meanwhile, TSMC's planned adoption could help the chipmaker produce larger, more advanced data-center chips at higher productivity. However, the benefits remain several years away, with TSMC targeting high-volume use from 2030 and ASML targeting larger-mask high-volume production from 2033. The companies need to execute the technology transition successfully before investors can see real financial benefits from the initiative.

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