On October 15, 2026, TSMC said its assessment still put demand above supply and outlined fab and process-node expansion plans. A day earlier, ASML said its planned lithography-system supply for 2027 and 2028 would not meet all customer demand. Their plans address different stages of chip production.
ASML supplies equipment; TSMC manufactures chips
ASML supplies lithography systems, software and services to chipmakers. Lithography uses patterns to form circuit layers on a chip. TSMC operates foundries, manufacturing chips designed by its customers rather than selling its own chip designs. One company supplies production equipment; the other runs the manufacturing process.
That difference matters when reading capacity figures. A count of lithography systems sold is not a count of wafers a foundry can process, and neither measure gives the number of finished AI chips delivered.
TSMC plans more capacity across nodes and fabs
TSMC reported third-quarter 2026 revenue of $46.72 billion and a gross margin of 66.4%. High-performance computing, or HPC, accounted for 68% of revenue, while its 2-nanometer N2 process accounted for 8% of wafer revenue. TSMC said N2 entered high-volume manufacturing in the fourth quarter of 2025.
TSMC CEO C.C. Wei said the company assesses demand using customer and customers’ customer roadmaps, data-center construction, U.S. power supply, financing and other factors. He said demand remained above supply. TSMC also described a modest back-end supply shortage. Back-end packaging prepares chips after wafer fabrication; TSMC said it was working with GlobalFoundries on interposers, components used to connect chip elements in advanced packages.
The company said it was building 13 leading-edge and advanced-packaging fabs in Taiwan and five to six fabs overseas. It also described shifting N5 tools to support N3 production and managing capacity flexibly across N7, N5 and N3. TSMC’s 2026 capital budget was $60 billion to $64 billion.
ASML is examining more equipment capacity
ASML reported third-quarter net sales of €11.662 billion and a gross margin of 57.5%. Its Installed Base Management sales, which ASML defines as service and field-option sales, were €3.289 billion. The company said productivity upgrades can provide customers with additional wafer capacity.
ASML’s existing plan called for a 30% increase in low-NA EUV and DUV immersion capacity in 2027, with a further 30% increase in 2028 under investigation. On October 14, ASML said it was examining ways to add capacity beyond that 2028 increase because planned supply for both 2027 and 2028 would fall short of customer demand. Some customers had expressed interest in placing equipment orders for 2029 and 2030.
NeoTeo covered the October 14 results and supply outlook in its earlier report on ASML.
The companies’ plans and timelines
| Company | Supply-chain role | Capacity plans | Timing stated by the company |
| ASML | Supplies lithography systems and related services to chipmakers. | Productivity upgrades; a planned 30% increase in low-NA EUV and DUV immersion capacity, with a further 2028 increase under investigation. | Planned supply was expected to fall short of customer demand in 2027 and 2028. Some customers expressed interest in orders for 2029 and 2030. |
| TSMC | Manufactures customer-designed chips in its foundries. | Ramping N2; adding N3 fabs; converting N5 tools to N3; adjusting capacity across N7, N5 and N3. | N2-family annual capacity was expected to more than double in 2027. Tainan N3 production was planned for the first half of 2027 and first half of 2028; TSMC’s second Arizona fab for the third quarter of 2027; and Japan’s second JASM fab for 2028. |
TSMC’s N2 capacity forecast and ASML’s equipment-supply outlook use different measures. Neither is a count of AI chips delivered, so the plans do not provide a common output figure for ranking which company will meet demand faster. For scale, ASML reported 535 system sales in 2025, while TSMC reported annual capacity above 17 million 12-inch-equivalent wafers at facilities it and its subsidiaries managed. The first is a sales count; the second is wafer capacity.
