ASML’s €400M Lithography Leap Collides with Huawei’s Untested Blueprint

The next frontier in chipmaking is weeks away from leaving the lab. ASML chief Christophe Fouquet has confirmed that the first commercial products manufactured using the company’s high-NA EUV lithography systems will roll off production lines within months. The EXE-series machines, operating with a numerical aperture of 0.55 versus the standard 0.33, deliver an 8-nanometer resolution that shrinks transistors by roughly 1.7 times — a critical enabler for chips below the 2-nanometer node.

The milestone arrives as Huawei unveils an alternative path. The Chinese telecom giant is promoting a chip-design strategy called LogicFolding, which stacks logic, analog, and memory circuits to shorten signal paths and boost energy efficiency. Dubbed the Tau Scaling Law, the approach aims to compensate for China’s inability to import EUV lithography tools — a restriction imposed in 2019. On the surface, the move threatens ASML’s dominance. But analysts caution that the blueprint remains unverified.

The cost of ASML’s high-NA tool — roughly $400 million per machine — is already driving a wedge among customers. Intel and SK hynix are charging ahead: Intel is deploying the system for its 14A process development, while SK hynix plans mass production for the next generation of DRAM. TSMC, the world’s largest foundry, is holding back, arguing the expense is difficult to justify when conventional EUV with multiple patterning can still serve its needs. Samsung has likewise signaled that concrete plans won’t materialize until at least 2027.

Should investors sell immediately? Or is it worth buying Asml?

Meanwhile, ASML’s stock is trading near its 52-week high of €1,420.80, having closed recently at around €1,387 — up more than 40% since the start of the year. Analyst sentiment is bullish: UBS lifted its price target to €1,900, and Goldman Sachs raised its own to €1,600, both with buy ratings. The buying case rests on sustained demand from AI data centers and high-bandwidth memory, which already accounted for roughly 51% of ASML’s recent shipments to the memory segment.

Huawei’s LogicFolding, however, remains a paper project. Bernstein analysts warn that stacking layers of logic and memory generates higher thermal density, increasing the risk of overheating, while yields and costs are still unknown. Crucially, Huawei has disclosed no production data, cost comparisons, or independently verifiable benchmarks. Omdia analyst Lian Jye Su put it bluntly: there is nothing concrete that can be externally measured or compared to other chips. As a threat to ASML’s technology roadmap, it remains a narrative without evidence.

The Dutch company’s own numbers tell a more tangible story. For the first quarter of 2026, ASML reported revenue of €8.8 billion and a gross margin of 53.0%. It forecast second-quarter revenue between €8.4 billion and €9.0 billion, while the full-year outlook was lifted to €36–40 billion with a gross margin of 51–53%. Management explicitly noted that the annual guidance already incorporates potential effects from ongoing export-control discussions — a clear signal that, for now, the Huawei gambit is not considered a material risk.

The real test for ASML will be the pace at which high-NA adoption accelerates beyond Intel and SK hynix. If TSMC and Samsung eventually fold, the technology could become the new standard for sub-2nm chips far sooner than their current timelines suggest. But with Huawei’s architectural workaround lacking any concrete roadmap, the near-term driver remains the insatiable appetite of AI infrastructure — a theme that will be put to the test when ASML reports second-quarter results in July.

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