ASML drops after TSMC delays adoption of its newest chipmaking machines until 2029

The iShares Semiconductor ETF took a brief leg lower after TSMC said that it would not deploy ASML’s most advanced machines for chipmaking through 2029 in a bid to save money.

Per Bloomberg, TSMC co-COO Kevin Zhang told reporters that ASML’s new offerings (high-NA EUV, for short) are “very, very expensive,” costing about $410 million.

Nonetheless, the Philadelphia Semiconductor Index, the basis for SOXX, is still poised to end the day by extending one record (for consecutive record closes) and setting another (for consecutive gains):

TSMC climbed to fresh highs after a brief blip. The foundry giant reported far better-than-expected profitability in its Q1 results last week, and delaying upgrading this equipment may be a sign of continued cost discipline to protect margins over time.

ASML fell as much as 4%, but pared losses to about 1% as of 3:19 p.m. ET.

Given TSMC’s stature in the industry, a couple thoughts:

a) You’d think TSMC would be the best place to absorb any short-term cash flow hits from buying this more expensive equipment.

b) It doesn’t seem like the outputs of ASML’s most advanced technology will be ubiquitous until TSMC adopts its machines, given how prominent the Taiwanese company is in the foundry world.