Why ASML the monopolist doesn’t act like one

Taiwan Semiconductor Manufacturing Co

21/05/2026 09:32

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Jennifer Johnson

LONDON, May 21 (Reuters Breakingviews) - Virtually every advanced chip in the world has its circuitry printed inside an ASML ASML.AS machine. The silicon patterns are atoms wide. Placing them precisely involves shooting lasers at microscopic tin droplets 50,000 times per second, which only ASML can do. In theory, that might give the $600 billion Dutch group license to charge whatever it likes. The reality is more complicated.

Economic logic suggests monopolists like ASML command immense pricing power, especially given surging demand. It’s not as if chipmaking customers like Intel INTC.O, Samsung Electronics 005930.KS and TSMC 2330.TW can go elsewhere for similar kit amid the AI semiconductor boom. ASML boss Christophe Fouquet indeed charges a lot: hundreds of millions of dollars per machine in some cases, with an expected 2026 gross margin exceeding 50%.

Yet that margin is small compared with other AI supply-chain titans. TSMC, which builds chips using ASML kit, is on track for 65% this calendar year, Visible Alpha data shows. Semiconductor designers Nvidia NVDA.O and Broadcom AVGO.O should hit 75% and 76% gross margins respectively. Memory chip groups like Micron Technology MU.O and SK Hynix 000660.KS are higher still. In other words, ASML is basically charging twice what it costs to build its products, while other indispensable AI suppliers are charging three or four times. Strikingly, its gross margin may even trail those peers' operating margins. Little wonder that one of the most common investor questions, according to analysts, is why the Dutch company doesn’t charge more.

One answer is its concentrated customer base, which reduces CEO Fouquet's negotiating power. In 2025 the single largest purchaser, likely TSMC, accounted for almost a quarter of net sales. It's true that buyers can't get the cutting-edge kit elsewhere. But ASML's powerful customers are secure enough in their own market positions to slow-walk orders if they don't like the price on offer. It's arguably happening already with ASML's next-generation of products, called High-NA EUV machines, which can cost $400 million. TSMC recently said it could make do without the expensive new gear for now. Finally, hiking prices on older products would damage ASML's relationship with these same customers, potentially delaying purchases of cutting-edge stuff even further.

The Dutch company has long concluded, therefore, that it can only charge more when it demonstrates a step-up in performance. This is the logic behind what ASML and analysts call a "value-based" price framework, which effectively ties the cost of the kit to its productivity. There is, at least, some good news on that front. ASML researchers in February said they had found a breakthrough method of boosting the power of a light source in its current generation of machines, improving performance. Bernstein analysts reckon this could allow the Dutch group to raise the average selling price of this key product by 60% come 2030, relative to 2025 levels.

So ASML can jack up the cost of its products after all. But, unlike monopolists in the economics textbook, it has to earn the right to do so.

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CONTEXT NEWS

On May 19, ASML CEO Christophe Fouquet told a semiconductor industry conference in Antwerp that the first chips made with its next-generation "High-NA EUV" machines would be delivered within months. The new technology refers to high numerical aperture extreme ultraviolet lithography kit, which uses laser-generated light to print microscopic patterns onto silicon. The machines can cost up to $400 million each.

ASML has much lower margins than other AI chip bottlenecks https://www.reuters.com/graphics/BRV-BRV/movaoaorava/chart.png

(Editing by Liam Proud; Production by Streisand Neto)

((For previous columns by the author, Reuters customers can click on JOHNSON/Jennifer.Johnson@thomsonreuters.com))