Author: Junxi
On October 21, Canon disclosed its capacity expansion plan, with the production volume of semiconductor lithography equipment next year expected to reach nearly double this year's level at most. Just a day prior, Nikon announced the initiation of R&D for higher-precision digital lithography equipment, continuing its layout in the Advanced Packaging market.
A week ago, global lithography equipment leader ASML disclosed in its third-quarter earnings report that customer demand for equipment in 2027 and 2028 has already exceeded existing capacity expansion plans, with inquiries even extending to supply in 2029 and 2030. The company plans to increase the capacity of low-NA EUV and immersion DUV by 30% each next year, and is exploring ways to push the growth rate beyond 30% the following year. Meanwhile, pricing negotiations with major customers have been concluded, and prices for some key products will be raised.
Upstream in the supply chain, TRUMPF expects both orders and revenue for its EUV business to achieve double-digit growth in the new fiscal year; additionally, JSR's South Korean plant for the final production process of metal oxide resist (MOR) was completed at the end of September.
As capacity expansion and price hikes follow in quick succession, where will the new wave of investment in the lithography industry extend to?
01. Capacity Expansion Is Not Limited to EUV
Canon will utilize facilities such as its new Utsunomiya plant built last year to implement next year's production increase plan. Hiroaki Takeishi, head of the industrial equipment business, stated in an interview on October 21 that semiconductor manufacturers not only in Taiwan, China, South Korea, and mainland China but also in many other regions globally are advancing investments, and the related demand may continue until 2028. Canon's i-line lithography equipment is used in some manufacturing processes for memory and power devices, and capacity expansion in these markets is also increasing equipment demand.
In the field of advanced back-end lithography, inquiries for Canon's equipment have surged since mid-2025. The company recently disclosed plans to increase the capacity of such equipment by 50% by 2029 compared to 2026, and to continue developing large-size substrate products. As packaging areas expand, the interconnect lines between chips must also be manufactured over a larger area. While improving its supply capacity, Canon needs to enable its equipment to handle larger substrates to meet customers' subsequent capacity expansion.
On the wafer fabrication front, Micron announced its next-step DRAM process schedule on October 21: the 1γ process incorporating EUV has entered mass production, and the next-generation 1δ process is planned to ramp up in the second half of 2027. ASML expects that equipment sales to memory customers will grow by approximately 75% this year, while the increase for logic customers will be around 10%. When explaining the growth in the memory business, the company explicitly cited two drivers: customer capacity expansion and the increased use of EUV in advanced DRAM processes.
ASML expects to produce about 65 low-NA EUV systems this year; immersion DUV, which was originally planned for production cuts, will now have its delivery target adjusted to a level comparable to last year. To continue expanding supply, the company still needs to adjust existing factory space and shorten assembly and testing times. The first phase of its new Eindhoven campus is expected to be operational in 2029, so near-term production increases will still rely primarily on existing facilities.
In terms of order intake, ASML has successively received orders for 2028, but has not yet accepted formal orders for procurement intentions in 2029 and 2030. The company needs to first aggregate the demands of various customers and then allocate them against its own capacity arrangements available at that time, avoiding premature supply commitments to certain customers that would crowd out the share of other long-term customers.
In the third quarter, ASML's installed base management revenue, including services and field options, reached approximately EUR 3.3 billion, about EUR 400 million above guidance, with the excess primarily driven by upgrade demand. By upgrading installed equipment to improve processing capabilities, customers can gain new wafer capacity without first adding factory space of an equivalent scale.
In early 2027, ASML also plans to roll out a small number of NXE:3800F systems, increasing the wafer throughput per hour from 230 wafers in the previous generation to 260 wafers; the next-generation critical layer immersion DUV equipment will also raise this metric to 330 wafers. For customers, buying more machines and having each machine process more wafers are becoming capacity expansion strategies pursued simultaneously.
These new machines and upgraded products have also been incorporated into ASML's new round of pricing arrangements. The company has concluded negotiations with major customers, stating that this price increase mainly targets high-end volume production products, and the prices of upgraded products will be adjusted accordingly. The impact will be partially reflected in 2027 and fully realized in 2028, with no uniform increase rate disclosed. Customers need to compare delivery times, upgrade expenditures, and new wafer output, with the unit price of the equipment being just one factor.
02. Nikon and Canon Seek New Breakthroughs
On October 13, Nikon unveiled the digital lithography equipment DSP-110, planned for release in April 2027. In July last year, the company began accepting orders for the DSP-100, combining semiconductor exposure technology with multi-lens technology used for flat panel displays to enter the back-end lithography equipment market.
Such equipment targets large interposers and multi-layer packaging substrates. After multiple chips are placed in the same package, denser interconnect lines are required between the chips, and the packaging area is also expanding. Exposure equipment must balance routing precision and large-area processing. Nikon is applying its existing capabilities in precision exposure and large-area exposure to this market, aiming to capture investments from packaging plants without first competing with EUV for front-end nanometer-scale transistor manufacturing processes.
The DSP-110 uses maskless digital lithography, eliminating the need to produce physical photomasks for each set of circuit patterns. It can handle large-size square substrates while also supporting 300 mm wafers. When packaging plants adjust circuit designs, they can reduce the preparation steps for making new masks; the equipment's support for different substrate specifications also leaves room for customers to adjust their packaging production plans subsequently.
The new machine has a line width and pitch resolution of 1.5 μm. Under the condition of a 510 mm × 515 mm substrate, it can process 72 pieces per hour, an increase of about 40% over the previous generation. Notably, the previous generation had a resolution of 1.0 μm. This time, Nikon redesigned the optical system, prioritizing increased production speed and expanding the allowable focus shift range, making it easier for the equipment to adapt to the surface conditions of different substrates.
If the routing requirements of current products can be met, increasing hourly output will help reduce processing costs. When finer lines are needed in the future, the DSP-110 can also have its optical system replaced to upgrade to 1.0 μm.
On October 20, Nikon further announced the initiation of R&D for a 0.5 μm digital lithography system, receiving project support from the New Energy and Industrial Technology Development Organization (NEDO) of Japan. The new project targets the large-area, high-precision exposure needs of Advanced Packaging, aiming to control the alignment error of lines in different layers within ±0.15 μm, which is half the specification of existing products. Nikon has not yet provided a time-to-market schedule for this project. While increasing the production speed of existing equipment, the company is also developing products for the next step of denser packaging routing.
In addition to expanding the supply of existing lithography equipment, Canon is also advancing nanoimprint lithography (NIL) technology for wafer fabrication. On October 1, the company disclosed that since the introduction of NIL equipment in 2023, customers adopting the equipment are making final adjustments to optimize their mass production lines. Engineers introduced the specific issues that need to be addressed after the equipment enters customer sites during this interview.
Nanoimprint lithography directly presses a template with circuit patterns onto the resin on the wafer surface to transfer the required patterns. While eliminating complex projection exposure, the contact process brings issues such as particle contamination and template damage. Chips are built by stacking multi-layer structures, and the patterns in each layer must be accurately aligned. A single imprint to form fine lines is not sufficient to complete mass production.
Canon engineers mentioned that when a square template processes the edge of a circular wafer, the contact tends to be unstable. The team not only needs to adjust the imprinting process but also consider the impact of subsequent steps such as etching on the patterns. An engineer in charge of system control introduced that, to achieve the pattern transfer precision required for mass production, the team analyzed data for over a month, found the root cause of the minute errors, and then resolved it through hardware improvements.
Canon also needs to work with companies within the group to improve supporting equipment such as template cleaning, extend template life, and incorporate maintenance costs into customers' cost accounting. The advancement of nanoimprint lithography has gone beyond single-machine performance demonstrations and entered the stage of whole-line coordination. However, the company has not yet disclosed the mass production scale, yield, and official production start time of these customers, and subsequent equipment purchases will still depend on the actual operational results after customer adoption.
03. Upstream Supporting Industries Accelerate Layout
On October 15, Germany's TRUMPF announced its fiscal year results ending at the end of June this year, with EUV business revenue reaching EUR 791 million, a year-on-year growth of 9.2%, higher than the company's overall growth of 0.2%. TRUMPF supplies high-power drive lasers to ASML; the laser hits tin droplets to form plasma, which in turn generates the EUV (Extreme Ultraviolet) light required for exposure.
In the latest annual report, TRUMPF introduced the new generation MK5 high-power laser. Besides performance, it emphasizes faster installation and more stable operation: through modular design, more sensors, and diagnostic systems, maintenance personnel can find faults faster and shorten downtime. For a factory increasing wafer output, whether the light source can work continuously is just as important as the nominal processing speed of the lithography equipment.
TRUMPF expects that both orders and revenue for the EUV business will achieve double-digit growth in the 2026/27 fiscal year. As customers increase wafer output, light source suppliers must also keep pace with equipment delivery and on-site maintenance.
JSR's moves, on the other hand, focus on material supply. The Ogaya plant in South Korea, completed on September 30, undertakes the final production process for metal oxide resist, or MOR. The company hopes to strengthen local manufacturing and quality assurance through this, responding faster to the needs of major South Korean customers.
When this construction was announced in 2024, JSR cited the consideration of major South Korean customers to adopt MOR as the investment background and planned to start operations in 2026. Now that the plant construction has advanced to completion, the local supply conditions required for customer adoption have also taken a step forward. Advance layout in the production link enables material companies to prepare supply in line with the new process development of wafer fabs, but the actual nodes and scale of customer adoption remain undisclosed.
Photoresist is responsible for retaining the patterns formed by exposure; material reactions affect whether line edges are smooth and whether adjacent lines will accidentally connect. In the annual report released on the same day, JSR pointed out that the process and equipment conditions of different customers require material suppliers to coordinate separately. Placing production, quality assurance, and technical support near customers aims not only to shorten transportation distances but also to handle on-site issues faster.
JSR plans to expand its electronic materials business revenue to 1.7 times the 2025 level by the 2030 fiscal year, continuing to use lithography materials as the main growth driver. The South Korean plant is a move by the company to strengthen production and customer coordination in Asia. In the process of chip fabs finalizing new processes and preparing for volume production, material companies need to enter development and validation in advance to secure continuous supply from subsequent mass production.
Looking towards longer-term process evolution, researchers from ASML and ZEISS proposed the concept of a Hyper NA system with a numerical aperture of at least 0.75 in a paper published in October, higher than the 0.55 of current high-NA EUV systems. One of the research goals is to reuse existing light source, mask, and equipment manufacturing infrastructure as much as possible. Neither party has committed to putting this solution into production; at this stage, it remains R&D preparation for the next-generation system.
04. Conclusion
Front-end exposure, packaging routing, and material supporting industries are all absorbing customers' new investments. Upgrades to existing equipment have already brought in current revenue, while new machine capacity expansion, product releases, and new process introductions are each progressing at their own pace. The growth space for the lithography industry is expanding, but whether manufacturers can turn investments into continuous revenue still depends on delivery, mass production validation, and stable supply.