ASML, the backbone of advanced chip manufacturing, and TSMC, the largest manufacturer of silicon chips in the world, delivered robust Q2 2025 results as they benefited from strong demand stemming from the “AI revolution,” cloud infrastructure and consumer electronics.
But the uncertainty ahead threw a shade of doubt on 2026 growth prospects, though the industry estimates a high single-digit advance, writes Bogdan Maioreanu of eToro.
ASML (Advanced Semiconductor Materials Lithography) is a Dutch company that designs and manufactures lithography systems, essential for producing microchips. It is the sole provider of EUV (extreme ultraviolet) lithography machines, which are critical for manufacturing the most advanced chips. In the first half of the year, ASML’s revenue rose 33% year-on-year and net profit as much as 66%. The company seems to be scared off by possible import duties, which could throw a spanner in the works. However, developments at NVIDIA and TSMC, among others, bode well for the future, with ASML itself firmly in control through continuous product improvements.
Amid the excitement, ASML followers looked forward to that one figure: the inflow of new orders in the second quarter. At €5.5 billion, the chipmaker came in at about the midpoint of expectations, but that doesn’t tell the whole story. The gross profit margin on sales arrived at 53.7%. That was clearly higher than expected and also directly contributed most to the profit jump at the bottom line. ASML managed to sell more upgrades of existing systems (which yield more in terms of margin than a brand-new device) while booking lower costs. Christophe Fouquet, the company’s CEO, sees the trend of more upgrades continuing in the second half of the year, as the expensive machines for customers could provide a substantial productivity boost.
Despite these strong results, ASML signaled increased caution regarding its 2026 outlook, citing macroeconomic uncertainty and softening DRAM demand, especially within memory-related bookings, which declined 41% year-over-year. While ASML maintained its forecast for approximately 15% total net sales growth for 2025, the company said it cannot confirm continued growth in 2026, reflecting a potentially more volatile demand environment ahead.
Despite the unknowns, continued revenue growth at TSMC and the restart of sales to China at NVIDIA are directly and indirectly good news. Demand for advanced chips is as strong as ever and machine deliveries to Chinese customers, 27% of sales in the second quarter, do not seem to have come to a complete halt for the time being. ASML is on course to reach the mid-point of the issued range of €30 billion to €35 billion with full-year 2025 sales and is sticking to its long-term target of €44 billion to €60 billion a year by 2030. Year to date ASML stock price is still up almost 9% despite the fact that 2026 outlook comments made the stock lose over 8% of value.
TSMC, the world’s largest contract chipmaker and a vital supplier for tech giants like Nvidia and Apple, reported Q2 2025 revenue of $30 billion equivalent, marking a 44.4% year-over-year increase and an almost 18% increase from the last quarter. The company’s gross margin remained healthy, at 58%. In terms of industry needs, In the second quarter, shipments of 3-nanometer accounted for 24% of total wafer revenue, 5-nanometer accounted for 36%, and 7-nanometer accounted for 14%. Advanced technologies, defined as 7-nanometer and more advanced technologies, accounted for 74% of total wafer revenue and this is showing a strong demand. The latest figures from Taiwan Semiconductor Manufacturing Company (TSMC) show that advanced chips are in high demand and this is also positive for ASML, which is the leader in manufacturing the machines capable of producing this type of technology. From the beginning of the year TSMC share price is up over 20%.
The broader semiconductor sector is experiencing a powerful upswing in 2025. The global market is forecast to grow by 11% to around $700 billion, with the Americas and Asia-Pacific regions leading the expansion. World Semiconductor Trade Statistics projects the global semiconductor market to grow by 8.5% in 2026, reaching $760.7 billion. Growth is fueled by unprecedented investment in artificial intelligence, cloud infrastructure, and advanced consumer electronics, particularly in logic and memory chips. Ongoing investment in AI drives demand for GPUs, high-bandwidth memory, and advanced process nodes. The industry is also expected to allocate about $185 billion to capital expenditures to expand manufacturing capacity and this continues to favor companies like ASML. In this context, fabless and foundry models—exemplified by TSMC—are best positioned to benefit from this wave, while integrated device manufacturers face steeper challenges amid rapid technological progress.
Despite global supply chain and geopolitical challenges, the semiconductor sector remains on track for sustained double-digit growth through the remainder of the decade. Investors are taking notice. According to the latest eToro Retail Investor Beat survey, the technology sector that includes semiconductors remains the one with top attention, with 17% of global and 21% of Romanian investors declaring that they will increase investments in it in the next period.
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