ASML: Making Sense of TSMC's Capex; Reiterate Outperform and Top Pick

Bernstein examines the implications of Taiwan Semiconductor Manufacturing Company's 2026 capital expenditure guidance for ASML Holding. TSMC has guided capex of $52–56 billion for 2026, representing a 32% year-over-year increase at the midpoint, while revenue guidance implies 30% growth. This maintains a high capex intensity of 33%. Although the equipment allocation within advanced logic capex has decreased due to TSMC's accelerated cleanroom construction, advanced logic equipment spending is still growing approximately 30%. ASML stands to benefit significantly from the elevated lithography intensity required for the N3 and N2 nodes. Lithography intensity at N3 is roughly 36%, compared to the overall lithography average of 25%. Consequently, Bernstein estimates ASML's revenue from TSMC will grow 27% year-over-year, far exceeding the market consensus of 10%. Furthermore, TSMC may add 120–130kwpm of N3 and N2 capacity. Since each 10kwpm typically requires 2.5 EUV machines, TSMC could purchase around 30 EUV systems, providing notable upside to ASML's shipment forecast. Bernstein reiterates its Outperform rating and Top Pick status for ASML, setting a target price of €1,300 for the Dutch listing and $1,528 for the US listing. Key risks include higher EUV commercialization costs, potential wafer fabrication equipment weakness, and tightened export controls.