ASML says chip equipment supply will fall short through 2028 as Texas Instruments spends less

ASML (Nasdaq: ASML), the Dutch maker of the lithography machines that print circuits onto chips, said on October 14 that its supply for both 2027 and 2028 "will not fully meet the demand of our customers." Five chip-industry releases from October 14 to October 28 show the same demand reaching equipment makers and contract manufacturers, while Texas Instruments reports a sharp fall in its own capital spending.

What happened

The five companies sit at different points in the chain. ASML and Lam Research (Nasdaq: LRCX) sell the machines used to build chip factories. TSMC (NYSE: TSM) and UMC (NYSE: UMC) are contract chipmakers that buy those machines. Texas Instruments (Nasdaq: TXN) designs and makes analog chips in its own factories.

Company	Report date	Latest quarter	Capacity or spending signal
ASML	October 14	Net sales €11.7 billion; fourth-quarter guidance €14.2 billion to €15.2 billion	Supply for 2027 and 2028 will not fully meet demand
TSMC	October 15	Revenue $46.72 billion, up 41.2% from a year earlier	Fourth-quarter revenue guidance $52.3 billion to $54.3 billion
Lam Research	October 21	Revenue $8.22 billion, up 22% from the June quarter	Next-quarter revenue guidance $8.60 billion, plus or minus $400 million
Texas Instruments	October 21	Revenue $6.06 billion, up 28% from a year earlier	Capital expenditures $463 million, against $1,197 million a year earlier
UMC	October 28	Revenue NT$74.24 billion, up 25.6% from a year earlier	Additional capital budget of about US$3.2 billion; utilization 92%

Sources: company releases. Quarters differ in length and currency, so the revenue figures are not comparable across rows.

The equipment makers

ASML reported record third-quarter net sales of €11.7 billion and said it sold 113 new lithography systems, up from 86 in the second quarter, an increase of 31.4% (computed). Chief executive Christophe Fouquet said customers "continue to increase their short- and medium-term equipment demand forecasts with us, driven primarily by their views on the size and duration of AI-related investments." He added that some customers are expressing an interest in placing orders for 2029 and even 2030.

ASML said it is investigating ways to increase capacity for 2028 beyond the 30% increase it had previously communicated. At the midpoint of its fourth-quarter guidance, net sales of €14.7 billion would be 26.1% above the third quarter (computed).

Lam Research reported systems revenue of $5.73 billion, against $3.55 billion a year earlier, an increase of 61.6% (computed). Its capital expenditures and intangible assets rose to $257.7 million from $185.1 million, up 39.2% (computed). Chief executive Tim Archer said Lam's "strategic investments in technology inflections and manufacturing capacity are paying off."

The contract chipmakers

TSMC reported third-quarter revenue of NT$1,494.24 billion, up 50.9% from a year earlier, and said 2-nanometer chips, its newest process, accounted for 8% of wafer revenue. Its chief financial officer, Wendell Huang, pointed to "the steep ramp-up of our 2-nanometer technology" in the fourth quarter. The release does not give a capital spending figure.

UMC, which makes chips on older, cheaper processes, reported fab utilization of 92% and said its board approved an additional capital budget of about US$3.2 billion. UMC's chief executive, Jason Wang, said the company is converting some existing capacity to meet near-term demand in advanced packaging and silicon photonics.

Where the demand sits

The releases describe different parts of the market. TSMC said advanced technologies, meaning 7-nanometer and more advanced processes, accounted for 79% of its wafer revenue. UMC said its 22 and 28 nanometer processes were 35% of revenue, with 22 nanometer alone a record 18.3% of wafer sales. Lam Research reported that China accounted for 35% of its revenue, Korea 20% and Taiwan 18%.

The figures show activity in both leading-edge and older processes, although the releases give no breakdown of which customers or products drive it.

The counter-example

Texas Instruments reported revenue up 28% from a year earlier, with growth in industrial, automotive and data center markets, yet spent less on capital goods. Its capital expenditures were $463 million in the quarter, 61.3% below the $1,197 million of the third quarter of 2025 (computed). Over the trailing 12 months it spent $2,578 million, against $4,817 million in the prior 12-month period, a fall of 46.5% (computed).

TI's chief executive, Haviv Ilan, credited "the benefit of 300mm production" for the strength of its cash flow, and free cash flow for the 12 months was $8.4 billion, up from $2.4 billion. The release does not say whether TI plans further changes to capital spending. FinanceInTime reported on the company's third-quarter results on October 23.

What the filings do not show

The releases show demand for equipment and foundry capacity that ASML links to AI-related investments, but none of the five quantifies how much of its revenue comes from AI. They also do not show whether the spending plans of different customers add up to more capacity than end demand needs. ASML itself notes its forecast rests on its customers' views.

What to watch

Intel (Nasdaq: INTC) said it will report third-quarter results after the market close on Thursday, October 29, with a call at 2 p.m. PDT. Lam's own guidance for the December quarter is $8.60 billion in revenue, 4.6% above its September quarter (computed). TSMC's guidance implies fourth-quarter revenue 14.1% above the third quarter at the $53.3 billion midpoint (computed), and ASML's guidance implies the 26.1% sequential increase noted above. Guidance is the companies' own estimate and can change with orders and exchange rates.