Securing equipment emerges as new variable for Korea's chip expansion plans
ASML’s EXE:5000 in the High NA Lab in Veldhoven, the Netherlands / Courtesy of ASML
ASML not accepting orders for 2029, 2030
Securing equipment for manufacturing advanced memory chips is emerging as a new variable in Korea's plans to expand semiconductor production capacity through large-scale industrial clusters, after ASML, the dominant supplier of advanced chipmaking equipment, warned that its current production plans may not be sufficient to meet demand in 2027 and 2028.
During its earnings call Wednesday, ASML CEO Christophe Fouquet said the company's plans to increase its production capacity for advanced chipmaking equipment by 30 percent in 2027 and another 30 percent in 2028 would likely not be enough to meet customer demand.
“Last quarter, we talked about 30 percent more capacity next year, and also the aspiration to have another 30 percent increase in 2028,” Fouquet said. “But to be honest, it's becoming very clear that 30 percent in 2027, 30 percent in 2028 will not allow us to meet our customer demand.”
According to the company, the planned capacity increases cover both low-numerical-aperture extreme ultraviolet (low-NA EUV) lithography equipment and deep ultraviolet (DUV) immersion systems.
An SK hynix semiconductor fab under construction in Yongin, Gyeonggi Province, Aug. 11 / Joint Press Corps
EUV equipment is used to produce extremely fine circuit patterns for advanced semiconductor chips, while DUV immersion systems are used for a broader range of patterning processes. Both are critical to manufacturing high-performance memory chips produced by companies such as Samsung Electronics and SK hynix.
“So a lot of our discussions with our customers now are shifting in fact beyond 2027,” Fouquet said. “A lot of order intake for 2028. But also some strong interest to already place orders for 2029 and sometimes even 2030."
The supply bottleneck anticipated by ASML could become a major variable in Korea's ongoing plans to build large-scale semiconductor industrial complexes in Yongin, Gyeonggi Province, and Jeonnam-Gwangju Special Metropolitan City.
In Yongin, two separate semiconductor clusters are planned, each housing fabrication facilities of SK hynix and Samsung Electronics. SK hynix has already begun construction of its fabrication facilities, while Samsung is scheduled to break ground later this month. Separately, the two companies plan to build large-scale semiconductor manufacturing sites in Jeonnam-Gwangju, upon the government’s push.
The two companies declined to confirm the status of their equipment orders, but industry officials said a supply bottleneck could materialize if strong demand persists beyond 2030.
“It is difficult to describe the current situation as a bottleneck. Given that ASML is expanding its production capacity, it is hard to expect that orders placed now would face delays significant enough to call it a bottleneck,” an industry official said. “However, if the current strong demand persists over the long term, supply bottlenecks could emerge.”
In the semiconductor industry, the lead time for equipment orders — the period between placing an order and receiving the equipment — typically ranges from 18 months to two years. This suggests that the current supply situation largely reflects orders placed around 2025.
The concern is that supply bottlenecks could materialize if demand remains strong or continues to grow through 2028, 2029 and 2030, coinciding with Korea's planned fab expansions.
In Yongin, SK hynix is targeting October next year for the start of production at its first fab, with equipment deliveries expected to accelerate as construction of additional fabs pick up speed. Samsung Electronics is also planning to begin operations at its first Yongin fab in 2029.
President Lee Jae Myung shakes hands with SK Group Chairman Chey Tae-won, left, and Samsung Electronics Executive Chairman Lee Jae-yong during an event at Cheong Wa Dae in Seoul, June 29, after announcing Korea's plan to establish large-scale semiconductor cluster in Jeonnam-Gwangju Special Metropolitan City. Newsis
The outlook is more uncertain for the cluster in Jeonnam-Gwangju Special Metropolitan City.
Although neither company has officially announced a construction or operation schedule for their planned fabs in the region, local authorities are targeting the start of construction next year and mass production in 2030. This means that if demand remains strong in the coming years, equipment deliveries to the planned facilities could face bottlenecks.
Against the backdrop, ASML Chief Financial Officer Roger Dassen told analysts that ASML is holding off on accepting orders for 2029 and 2030 while it assesses both customers' readiness and its own ability to meet future demand.
"We don't want now to accept orders from customer A, B and C and then to tell customer D, who hasn't given orders yet for 2029 and 2030, 'Sorry, we're sold out,'" Dassen told analysts on the post-earnings call.
“While policy support for the Jeonnam-Gwangju clusters has largely focused on speeding up land development and power supply, securing equipment could emerge as a new variable in how quickly the fabs come online,” another industry official said.