Chipmakers keep expanding capacity yet remain undersupplied, and demand for lithography tools is so strong that new investment now covers more process steps, from wafer fabrication through advanced packaging.
This article was written by Semiconductor Industry Vertical and is republished by TMTPost under authorization.
On October 21, Canon disclosed plans to expand production, with its semiconductor lithography equipment output next year potentially reaching nearly twice this year's level. The day before, Nikon announced it would begin developing higher-precision digital lithography equipment, continuing its push into the advanced packaging market.
A week earlier, ASML, the global leader in lithography equipment, disclosed in its third-quarter earnings report that customers' demand for equipment in 2027 and 2028 already exceeds its existing expansion plans, and that customers had begun asking about deliveries for 2029 and 2030. The company plans to increase its low-NA EUV and immersion DUV capacity by 30% each next year, and is exploring whether the increase in the year after could exceed 30%. At the same time, pricing negotiations with its major customers have been completed, and some key products will see price increases.
Upstream in the supply chain, Trumpf expects its EUV business to post double-digit growth in both orders and revenue in the new fiscal year. JSR, meanwhile, completed its South Korean plant for the final production stage of metal oxide photoresists (MOR) at the end of September.
Expansion and price increases are arriving together. Where will this new wave of investment in the lithography industry spread?
**Expansion extends beyond EUV**
Canon will use facilities such as its Utsunomiya plant, completed last year, to carry out next year's production increase. In an interview on October 21, Takeishi Hiroaki, who oversees the company's industrial equipment business, said that semiconductor manufacturers across Taiwan, South Korea and mainland China, as well as in many other parts of the world, are advancing investments, and that related demand may continue through 2028. Parts of Canon's i-line lithography equipment are used in manufacturing steps for memory and power devices, and expansion in those markets is also adding to equipment demand.
In advanced back-end lithography, Canon's equipment inquiries have surged since mid-2025. The company recently disclosed plans to raise capacity for this type of equipment by 50% by 2029 compared with 2026, and to continue developing products for large-format substrates. As package areas grow, the connecting wiring between chips must be fabricated over a wider area. Canon must therefore improve supply capacity while also enabling its equipment to handle larger substrates if it is to meet customers' follow-on expansion.
On the wafer fabrication side, Micron announced its next DRAM process roadmap on October 21. Its 1γ process, which introduces EUV, has entered mass production, and the next-generation 1δ process is scheduled to ramp up in the second half of 2027. ASML expects its equipment sales to memory customers to grow about 75% this year, and to logic customers by about 10%. In explaining the growth in its memory business, the company specifically cited two drivers: customer capacity expansion and increased EUV usage in advanced DRAM processes.
ASML expects to ship about 65 low-NA EUV systems this year. Its immersion DUV shipments, which had been planned to decline, have now been adjusted to a delivery target level comparable to last year. To continue expanding supply, the company must adjust space in its existing facilities and shorten assembly and testing times. The first phase of its new campus in Eindhoven is expected to come into use in 2029, so near-term capacity increases will still rely mainly on existing facilities.
On orders, ASML has already received orders for 2028, but it has not yet accepted formal orders for 2029 and 2030, despite purchase intentions from customers. The company needs to aggregate demand from each customer first, then match it against the capacity it will be able to provide at that time. This avoids committing supply too early to some customers at the expense of other long-term customers.
In the third quarter, ASML's installed-base business, which includes services and on-site options, generated about €3.3 billion in revenue, roughly €400 million above guidance, with the excess mainly coming from upgrade demand. By upgrading installed equipment to raise throughput, customers can gain additional wafer capacity without first adding the same amount of cleanroom space.
Early in 2027, ASML also plans to introduce the NXE:3800F in small quantities, raising throughput from 230 wafers per hour in the previous generation to 260 wafers per hour. The next generation of immersion DUV equipment for critical layers will raise this figure to 330 wafers per hour. For customers, buying more machines and having each machine process more wafers are becoming parallel paths to expansion.
These new systems and upgrade products are also part of ASML's new pricing arrangements. The company has completed negotiations with its major customers. It said the price increase mainly targets high-end volume production products, and that the prices of upgrade products will be adjusted accordingly. The impact will be partly reflected in 2027 and fully reflected in 2028. ASML has not disclosed a uniform percentage increase. Customers need to compare delivery timelines, upgrade spending and incremental wafer output, of which equipment unit price is only one factor.
**Nikon and Canon look for new growth**
On October 13, Nikon unveiled its DSP-110 digital lithography system, with sales planned to begin in April 2027. Last July, the company had begun accepting orders for the DSP-100, which combines semiconductor exposure technology with multi-lens technology used in flat-panel display manufacturing, entering the back-end lithography equipment market.
This category of equipment targets large interposers and multilayer packaging substrates. When multiple chips are placed in the same package, more dense connecting wiring is required between chips, and package areas are growing. Exposure equipment must therefore balance wiring precision with large-area processing. By applying its existing precision and large-area exposure capabilities to this market, Nikon is seeking investment from packaging manufacturers without first competing with EUV for front-end nanoscale transistor manufacturing steps.
The DSP-110 uses maskless digital lithography, which eliminates the need to create a physical photomask for each circuit pattern. It can process large square substrates and supports 300 mm wafers. When packaging manufacturers adjust circuit designs, they can skip some of the preparation steps required to produce new masks. The equipment's support for different substrate specifications also gives customers more flexibility as they adjust their packaging production plans later.
The new system has a line-and-space resolution of 1.5 μm. On 510 mm × 515 mm substrates, it can process 72 panels per hour, about 40% more than its predecessor. Notably, the predecessor's resolution was 1.0 μm. Nikon redesigned the optical system to prioritize production speed and to widen the permissible focus offset range, making the equipment better able to accommodate varying substrate surface conditions.
If current product wiring requirements can be met, higher hourly throughput helps lower processing costs. When finer circuits are needed in the future, the DSP-110 can switch to a different optical system and be upgraded to 1.0 μm.
On October 20, Nikon further announced that it had begun developing a 0.5 μm digital lithography system, supported by a project grant 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, with the goal of keeping alignment error between circuit layers within ±0.15 μm, half the figure of existing products. Nikon has not yet provided a market launch schedule for this project. While increasing the speed of its existing equipment, the company is also developing products for the denser packaging wiring to come.
Beyond expanding supply of existing lithography equipment, Canon is also advancing nanoimprint lithography for wafer fabrication. On October 1, the company disclosed that since launching its nanoimprint equipment in 2023, customers using the equipment have been making final adjustments to optimize their production lines. In the interview, engineers described the specific problems that arose once the equipment entered customer sites.
Nanoimprint lithography presses a template carrying circuit patterns directly onto resin on the wafer surface to transfer the desired pattern. While it eliminates the need for complex projection exposure, the contact process introduces problems such as particle contamination and template damage. Chips are built from stacked layers, and each layer's pattern must be precisely aligned. Imprinting fine circuits in a single shot is not enough to achieve mass production.
Canon engineers noted that when a square template is used to process the edges of a round wafer, contact can be unstable. The team had to adjust not only the imprinting process but also account for how subsequent steps, such as etching, affect the pattern. An engineer responsible for system control said that to achieve the pattern transfer accuracy required for mass production, the team analyzed more than a month of data, identified the root cause of minor errors, and resolved them through hardware improvements.
Canon also needs to work with companies within its group to improve supporting equipment such as template cleaning systems, extend template lifespan, and incorporate maintenance costs into customers' cost calculations. Advancing nanoimprint lithography has moved beyond demonstrating single-machine performance and into the stage of integrating whole production lines. However, the company has not disclosed these customers' mass-production volumes, yields or official start-of-production dates. Future equipment purchases will still depend on actual operating results after customers introduce the technology.
**Upstream suppliers accelerate their moves**
On October 15, Germany's Trumpf reported its results for the fiscal year ending in June. Its EUV business generated revenue of €791 million, up 9.2% year on year, compared with 0.2% growth for the company as a whole. Trumpf supplies high-power drive lasers to ASML, which strike tin droplets to form plasma that then generates the extreme ultraviolet light needed for exposure.
In its latest annual report, Trumpf introduced its next-generation MK5 high-power laser. Beyond performance, the company emphasized faster installation and more stable operation. Through modular design, additional sensors and diagnostic systems, maintenance personnel can locate faults more quickly, reducing downtime. For a fab that is increasing wafer output, whether the light source can operate continuously matters just as much as the nominal processing speed of the lithography tool.
Trumpf expects its EUV business to post double-digit growth in both orders and revenue in fiscal 2026/27. As customers increase wafer output, light source suppliers must keep pace with equipment deliveries and on-site maintenance.
JSR's move concerns materials supply. Its Osan plant in South Korea, completed on September 30, will handle the final production stage of metal oxide photoresists (MOR). The company hopes this will strengthen local manufacturing and quality assurance, and enable faster responses to major South Korean customers.
When the project was announced in 2024, JSR cited the potential adoption of MOR by major South Korean customers as the investment rationale, and planned to begin operations in 2026. With the plant now completed, the local supply conditions needed for customer adoption have moved a step forward. Locating production in advance allows materials companies to prepare supply alongside chipmakers' new process development. However, the nodes and scale at which customers will actually adopt the material have not been disclosed.
Photoresists are responsible for preserving the pattern formed by exposure. Material reactions affect whether circuit edges come out smooth and whether adjacent lines might accidentally bridge together. In its annual report released the same day, JSR noted that different customers' processes and equipment conditions require materials suppliers to adapt individually. Placing production, quality assurance and technical support close to customers aims not only to shorten shipping distances but also to resolve on-site problems more quickly.
JSR plans to expand its electronic materials revenue to 1.7 times its fiscal 2025 level by fiscal 2030, and to continue treating lithography materials as a major growth driver. The South Korean plant is one step in the company's effort to strengthen production and customer collaboration in Asia. As chipmakers finalize new processes and prepare to ramp up volume, materials companies need to engage in development and qualification early in order to win continuing supply contracts from subsequent mass production.
Looking further ahead, in a paper published in October, researchers from ASML and Carl Zeiss proposed a Hyper NA system concept with a numerical aperture of at least 0.75, higher than the 0.55 of current high-NA EUV systems. One of the research goals is to reuse existing light sources, masks and equipment manufacturing infrastructure as much as possible. The two companies have not committed to putting this approach into production; at this stage, it remains part of the preparatory research for next-generation systems.
**Conclusion**
Front-end exposure, packaging wiring and materials supply are all responding to customers' new investments. Upgrades to existing equipment are already generating current-period revenue, while new machine expansion, product launches and new process introductions are each progressing at their own pace. The growth room for the lithography industry is expanding, but whether manufacturers can convert these investments into sustained revenue still depends on delivery, mass-production validation and stable supply.
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