ASML’s Pricing Power Flex Meets TSMC’s Resistance as Record Orders Mask Stock Stalemate
Published on 07/16/2026 at 16:28 | Redaktion boerse-global.de
ASML delivered a blockbuster second-quarter earnings report, raising its full-year guidance and prompting a wave of analyst upgrades, but the stock’s inability to hold early gains has exposed a deeper tension: Europe’s most valuable technology company is locked in a pricing battle with its biggest customer, Taiwan Semiconductor Manufacturing Co.
On Thursday, shares of the Dutch lithography giant ended at €1,576.80, down 0.11% on the session after dipping as low as €1,556.00 earlier. The stock remains 9.8% below its all-time high of €1,748 reached on June 30, though the year-to-date rally of 57.44% and a 12-month gain of over 140% underscore just how far the equity has run.
The immediate catalyst for the listless price action lies not in ASML’s own numbers but in a public dispute with TSMC over the cost of its most advanced chipmaking machines. Chief Financial Officer Roger Dassen told analysts during the earnings call that ASML has “better pricing power” in the current environment and sees a “fairly strong perspective for future price improvements,” citing near-full capacity for its latest extreme ultraviolet (EUV) lithography tools through the end of 2027. He confirmed that negotiations with customers are already underway.
The company has separately informed several clients, including Chinese chipmakers, of a planned 10% price increase for its deep ultraviolet (DUV) systems. While some Chinese firms have accepted the higher prices, TSMC has pushed back on increases for both EUV and DUV equipment. TSMC had previously argued that ASML’s newest high-NA EUV machines, priced at over €350 million each, are too expensive for mass production and suitable only for research and development. For ASML, the ability to push through price hikes is strengthened by its near-monopoly position in EUV lithography and the fact that production slots are largely booked out through 2027.
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These pricing dynamics come against the backdrop of robust financial results. For the second quarter, ASML reported revenue of €9.3 billion, a gross margin of 54.0% and net profit of €2.9 billion. Management lifted its 2026 guidance, now targeting full-year revenue between €43 billion and €45 billion with a gross margin of 54% to 56%. Chief Executive Christophe Fouquet described order intake in the first half as “extremely strong,” with customers accelerating their capacity plans.
Analysts have responded enthusiastically. Deutsche Bank raised its price target on ASML from €1,800 to €2,150, maintaining a buy rating, and sees gross margin potential above 60% in the longer term. RBC Capital had already increased its target days earlier, and several other houses reaffirmed their buy recommendations following the earnings release. The optimism, however, has not yet been reflected in the share price.
The pricing dispute also highlights shifts in ASML’s geographic revenue mix. China accounted for 33% of system sales in 2025, but that share is expected to fall to around 20% in 2026 as US export restrictions tighten and local demand softens. In the second quarter alone, China’s contribution dropped from 19% in Q1 to just 14%. South Korea, by contrast, emerged as the largest single market with a 43% share of quarterly system revenue.
Some analysts are sounding a cautionary note on valuation. Javier Correonero of Morningstar described ASML as “slightly overvalued” given its price-to-earnings ratio of roughly 50, a level not seen since the pandemic-era peak. Timm Schulze-Melander of Rothschild & Co Redburn, however, sees the strong numbers and multi-year visibility as confirmation of a durable AI-driven chip cycle.
Asml at a turning point? This analysis reveals what investors need to know now.
On the capital returns front, ASML bought back €1.1 billion worth of shares under its 2026-2028 buyback program during the quarter and will pay an interim dividend of €1.88 per share on August 5. These distributions continue despite a free cash flow of just €1.3 billion in the period.
The next few trading sessions will test whether the wave of analyst upgrades can finally lift the stock from its consolidation phase or whether the market needs more time to digest the extraordinary rally. For ASML, the outcome of the pricing negotiations with TSMC may prove as important to the share price as the underlying demand for chips.
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