ASML sells the equipment and services chipmakers use to manufacture semiconductors; Taiwan Semiconductor Manufacturing Company (TSMC) manufactures chips designed by its customers. ASML is an equipment supplier, not a chipmaker. TSMC is a contract foundry, not a supplier of lithography systems. Both can benefit from semiconductor demand, but their sales, risks and stock performance respond to different decisions in the chip supply chain.
That distinction matters when comparing their financial results or shares. ASML’s reported revenue includes equipment systems and support for its installed base; TSMC earns most of its revenue by fabricating wafers. Their figures are reported in different currencies and reflect different business models, so a larger margin or revenue number alone does not establish which company—or stock—is better.
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Where ASML and TSMC fit in the semiconductor industry
Making a chip involves several steps, including designing it, manufacturing it and using specialized equipment and processes to produce it at scale. ASML and TSMC participate in different parts of that chain:
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- ASML supplies manufacturing technology. Its hardware, software and services help chipmakers create microchips. Its core role is supplying lithography and related semiconductor-manufacturing technology.
- TSMC manufactures chips to customer designs. It is a dedicated foundry: customers provide designs, and TSMC fabricates semiconductors for them. It also offers services such as packaging, testing, computer-aided design and mask manufacturing.
In practical terms, a chipmaker may invest in equipment from ASML and then use manufacturing facilities—including TSMC’s—to produce chips. That relationship does not make the companies direct substitutes. Demand for chips can benefit both, but the path from demand to revenue differs: equipment investment is central to ASML’s system business, while production orders and wafer manufacturing are central to TSMC.
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The distinction also answers a common question: ASML does not design or manufacture the finished chips that go into phones, computers or data centers. It supplies technology used in the manufacturing process. TSMC, by contrast, manufactures semiconductors based on designs supplied by customers. The two companies are connected through the semiconductor supply chain, but they sell different things to different customers and face different immediate purchasing decisions.
How each company makes money
ASML: systems plus an installed-base business
ASML generates revenue by selling semiconductor-manufacturing systems and by servicing and upgrading systems already in use. Its 2025 results included €24.5 billion in net system sales and €8.2 billion in net service and field-option sales, for total net sales of €32.7 billion. The service and field-option stream gives the business revenue beyond sales of new systems, although it remains tied to the systems customers have installed and operate.
New-system demand depends in part on whether chipmakers choose to invest in capacity or technology, and on when those investments happen. Existing systems also create demand for maintenance, upgrades and other support. As a result, ASML’s business is exposed both to customers’ capital-spending decisions and to activity across its installed base. Strong chip demand may support equipment investment, but it does not mean every customer will order equipment at the same time.
That timing can matter when reading a single quarter. A customer’s investment plan and an equipment supplier’s sales do not necessarily move in lockstep with current chip demand. Investment decisions may be affected by how much capacity customers already have, their plans for technology upgrades and their expectations for future demand. Meanwhile, services and field options depend on customers operating installed systems. ASML’s two revenue streams therefore offer different, though related, views of activity: new systems reflect equipment purchases, while installed-base management reflects support and options for systems already in place.
TSMC: wafer fabrication and related foundry services
TSMC’s main business is wafer fabrication: manufacturing semiconductors using customer designs. According to its 2025 Form 20-F, wafer fabrication accounted for approximately 86% of its 2025 net revenue. Packaging, testing, computer-aided design and mask manufacturing are additional activities, not the main source of its revenue.
TSMC’s results therefore depend more directly on demand for wafer production, its manufacturing capacity and utilization, pricing, the mix of technologies it produces and exchange rates. The company reported that its 2025 net revenue grew 31.6% year over year, driven mainly by a higher average selling price associated with a greater share of advanced-technology revenue and increased wafer shipments. It shipped approximately 15 million 12-inch-equivalent wafers in 2025, compared with approximately 13 million in 2024.
Those figures show why revenue growth should not be attributed to one factor alone. TSMC linked its 2025 increase to both a change in average selling price associated with advanced-technology revenue and an increase in wafer shipments. A reader comparing periods should therefore consider both the amount of production and the mix of work, rather than treating shipment volume as the only driver. The company also identifies supply, capacity, pricing and exchange rates among factors that can affect revenue and margins.
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Financial results: compare like periods, not unlike businesses
The figures below are company-reported results, not an apples-to-apples ranking. ASML reports in euros and, for the 2025 annual figures below, uses US GAAP. TSMC reports its accounts in New Taiwan dollars (NT$); its stated US-dollar equivalents are convenience translations, not a guaranteed exchange rate. The companies also earn revenue in different ways, with different cost structures.
Gross margin is the portion of revenue remaining after the costs included in cost of sales; it is not the same as operating margin or net profit margin. Net income is a bottom-line measure, while earnings per share relates net income to shares or depositary shares under the company’s stated convention. Those measures answer different questions. Even when two companies report the same metric, differences in product mix, cost structure, reporting basis and currency can make direct rankings misleading.
Full-year 2025
| Company | Reported net sales or revenue | Gross margin | Net income | Other reported measure |
|---|---|---|---|---|
| ASML | €32.7 billion net sales | 52.8% | €9.6 billion | Basic earnings per share: €24.73 |
| TSMC | NT$3,809.054 billion net revenue | 59.9% | NT$1,697.604 billion attributable to parent shareholders | Approximately 15 million 12-inch-equivalent wafers shipped |
These are 2025 figures from the companies’ annual reporting: ASML’s annual report and TSMC’s Form 20-F. TSMC’s filing also gives a convenience translation of US$121.423 billion for net revenue, but cautions that the conversion does not represent a guaranteed exchange rate. Revenue, income and EPS cannot be meaningfully compared by simply lining up their displayed numbers; currency, accounting presentation and business mix all matter. Gross-margin percentages are also shaped by what each company sells and the costs required to deliver it.
For example, TSMC’s 59.9% full-year gross margin and ASML’s 52.8% do not settle which company is more profitable in an investment sense. The percentages are company-reported measures for businesses with different revenue sources and cost structures. Likewise, comparing TSMC’s NT-dollar net income directly with ASML’s euro net income requires a currency conversion, and even a converted figure would not by itself account for differences in scale, share count, capital needs or valuation.
Q2 2026: the latest common interim period in these results
Both companies reported growth in Q2 2026, but their releases measure different operations and report financial amounts in different currencies. ASML issued its release on July 15, 2026; TSMC reported the quarter ended June 30, 2026, in a release issued July 16.
| Measure | ASML, Q2 2026 | TSMC, Q2 2026 |
|---|---|---|
| Revenue measure | €9.326 billion total net sales | NT$1,270.38 billion consolidated revenue |
| Gross margin | 54.0% | 67.7% |
| Net income | €2.918 billion | NT$706.56 billion |
| Additional reported measure | €2.762 billion in installed-base management sales | NT$27.25 diluted EPS (US$4.31 per ADR unit); 60.3% operating margin; 55.6% net profit margin |
TSMC said that advanced technologies—7-nanometer and more advanced—accounted for 77% of wafer revenue in Q2 2026. This is a share of wafer revenue, not a share of all semiconductor sales across the industry. TSMC CFO Wendell Huang said in the company’s Q2 release that business was supported by strong demand for its leading-edge process technologies.
The nominal revenue amounts in this table are not directly comparable: one is in euros, the other in New Taiwan dollars, and one company sells manufacturing systems and services while the other primarily sells wafer-fabrication output. The gross-margin figures likewise describe businesses with different products and cost structures. A comparison can help explain each company’s reported performance; it cannot, on its own, identify the stronger operation or the more attractive stock.
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Quarterly data can also be useful for checking whether the business mix is changing. TSMC’s 77% figure describes advanced technologies’ share of its wafer revenue in Q2 2026; it does not mean that 77% of total company revenue, or 77% of all chips made worldwide, came from those technologies. ASML’s €2.762 billion in installed-base management sales is a separate quarterly measure and should not be added to or confused with its total net sales without checking how the company presents the figures.
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Guidance is forward-looking—and covers different periods
Management guidance is a forecast, not a reported result or a guarantee. The two ranges below also cover different periods, so they should not be read as competing estimates of the same thing.
| Company and release date | Period covered | Revenue outlook | Gross-margin outlook | Other outlook |
|---|---|---|---|---|
| ASML, July 15, 2026 | Full-year 2026 | €43–45 billion | 54–56% | Q3 2026 revenue: €11–12 billion; Q3 gross margin: 55–57% |
| TSMC, Q2 2026 results page | Q3 2026 | US$44.6–45.8 billion, based on an assumed USD/NTD exchange rate of 32 | 65–67% | Operating margin: 56–58% |
ASML’s €43–45 billion range is for the whole year; TSMC’s US$44.6–45.8 billion range is for one quarter. Comparing those amounts without labeling the periods would give a misleading impression. ASML’s Q3 2026 results announcement was scheduled for October 14, 2026. As of October 13, the Q3 actual results were not yet available in the cited company materials.
Guidance should be read with its assumptions and date attached. TSMC’s Q3 revenue range is stated in US dollars using an assumed USD/NTD exchange rate of 32, while its accounts are reported in New Taiwan dollars. ASML’s guidance is stated in euros. The ranges are not a currency-neutral comparison, and the yearly ASML forecast and quarterly TSMC forecast cannot be compared as though they cover equal amounts of time. Subsequent company updates may change an outlook, so a reader using these numbers should verify that the release date still matches the period being discussed.
What can move their results—and what can go wrong
ASML: the timing of equipment investment matters
ASML is exposed to customers’ decisions about whether and when to invest in new capacity and technology. A chipmaker may need equipment to expand or update manufacturing, but the timing and scale of that spending affect when an equipment supplier records system sales. ASML’s revenue from servicing and upgrading its installed base adds a different stream, but does not erase exposure to investment cycles or demand for equipment-related support.
In its 2025 annual-report financial discussion, ASML described uncertainty around customer investment decisions and mixed demand across semiconductor segments during 2025, while also saying AI-related demand continued to surge. Those statements describe the company’s account of conditions at that time, not a guarantee that AI demand will translate into a particular amount of future revenue.
ASML CFO Roger Dassen summarized the company’s 2025 report with the statement, “Results in line with guidance, as AI investment continues to gather momentum.” It is useful as management’s description of the period, but it does not remove the uncertainty around the timing of future customer spending. A favorable demand trend in one area can coexist with different investment patterns among customers or semiconductor segments.
TSMC: production demand, utilization and concentration
TSMC’s revenue and margins are affected by demand, supply, pricing, capacity, technology mix and exchange rates, among other factors identified in its company reporting. Since wafer fabrication makes up most of revenue, demand for production and the ability to use manufacturing capacity are especially relevant to its operating results.
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Concentration means that a meaningful share of revenue comes from a relatively small group of customers. It is a risk to consider, not a prediction that a major customer will leave or reduce orders. TSMC’s filing also identifies factors such as demand, supply, pricing, capacity and foreign exchange as relevant to its revenue and margins. For investors, the practical question is whether production demand and the company’s mix of business can support results over the period being valued.
Different exposures, not opposite exposures
ASML and TSMC face distinct risks, but neither sits outside the semiconductor cycle. Semiconductor demand can affect customers’ decisions to buy equipment and their demand for manufacturing capacity. The lag and transmission differ: equipment spending decisions shape ASML’s system business, while orders, utilization, pricing and product mix have a more direct role in TSMC’s foundry revenue. A reader assessing either company should consider what customers need, what they are willing to spend and how that spending appears in the specific company’s accounts.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to think about ASML vs. TSMC as stocks
Choosing between the companies’ shares is not the same as deciding which business model is easier to understand or which company reported a higher margin. The operating results above describe past periods; a stock’s valuation depends on the price investors pay for expectations about future cash flows, growth, risks and returns.
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The company operating disclosures cited here do not establish a current valuation winner. They do not provide a contemporaneous share price, market capitalization, valuation multiples, dividend yield or analyst consensus. Without dated market data and a stated valuation method, a claim that ASML or TSMC is the “better buy” would go beyond what these operating figures can show.
A useful comparison starts by deciding which business exposure you want to understand, then checks each company’s financials and market valuation on a consistent date:
- Identify the exposure. ASML’s results include sales of systems and services to chipmakers; TSMC’s results are primarily tied to producing wafers and related foundry services. Decide whether you are evaluating equipment spending, manufacturing demand or both.
- Use the same reporting period. Compare full years with full years or quarters with quarters. Keep the company, currency and measure attached to every figure. Do not compare ASML’s full-year guidance with TSMC’s quarterly guidance as if the periods matched.
- Read profit measures in context. Gross margin, operating margin and net income answer different questions. Compare equivalent measures, and account for the different products, cost structures and reporting currencies rather than treating one higher percentage as a stock verdict.
- Test the drivers and risks. For ASML, consider customer equipment-investment timing and the contribution from systems versus its installed base. For TSMC, consider production demand, utilization, pricing, technology mix, exchange rates and disclosed customer concentration.
- Check dated valuation data separately. A stock-price comparison needs a date, a clearly identified trading instrument and comparable valuation measures. Current operating results alone do not tell you whether either share price is attractive.
When choosing valuation measures, compare like with like and make the date explicit. A price-to-earnings ratio, for example, depends on the share price and the earnings measure used; the price and earnings also need to refer to a clearly specified instrument and period. A multiple without those details can obscure rather than clarify the comparison. Business performance, valuation and an individual investor’s circumstances are separate questions.
Shares in TSMC trade on the Taiwan Stock Exchange, and some shares are listed on the New York Stock Exchange as American Depositary Shares (ADSs). Those are different trading instruments and should not be conflated when checking prices or comparing returns. TSMC’s Q2 2026 release states diluted EPS of NT$27.25 and US$4.31 per ADR unit; those figures use different currencies and share conventions. The reviewed company filing does not establish current depositary or brokerage fees; those should be checked with the relevant provider rather than assumed.
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Key differences at a glance
| Comparison point | ASML | TSMC |
|---|---|---|
| Role | Semiconductor-manufacturing equipment, software and services supplier | Dedicated foundry manufacturing semiconductors designed by customers |
| Main revenue activity | System sales plus service and field-option sales | Primarily wafer fabrication; also related foundry services |
| 2025 revenue mix detail | €24.5 billion net system sales and €8.2 billion net service and field-option sales | Wafer fabrication: approximately 86% of 2025 net revenue |
| Important business drivers | Customer investment in manufacturing systems; demand for installed-base service and upgrades | Wafer demand, capacity and utilization, pricing, technology mix and exchange rates |
| Reporting currency in cited results | Euros | New Taiwan dollars; US-dollar convenience translations are also provided |
| Notable disclosed exposure | Customer investment decisions and varying demand across semiconductor segments | Concentrated customer revenue; the ten largest customers represented approximately 78% of 2025 revenue |
Frequently Asked Questions
Is ASML a chipmaker?
No. ASML sells semiconductor-manufacturing systems and provides software, services and field options that support chipmakers. Its systems help customers make chips, but ASML does not manufacture the finished semiconductors described in this comparison.
Does TSMC make chips for other companies?
Yes. TSMC is a dedicated semiconductor foundry that manufactures semiconductors based on customer designs. Wafer fabrication made up approximately 86% of its 2025 net revenue, with packaging, testing, computer-aided design and mask manufacturing among its other activities.
Are ASML and TSMC competitors?
They occupy different parts of the semiconductor value chain rather than selling the same core product. ASML supplies manufacturing equipment and services; TSMC manufactures customer-designed semiconductors. Chip demand can affect both, but ASML is more directly exposed to equipment investment decisions and TSMC to wafer demand, utilization, pricing and mix.
Which stock is better, ASML or TSMC?
The reported operating results do not establish a current valuation winner. A stock comparison needs dated prices, clearly identified trading instruments, comparable valuation measures and a stated method. Business quality and reported margins alone do not show which share price offers better prospective returns.
Why can’t I compare ASML’s and TSMC’s margins or revenue directly?
Their reported figures use different currencies and reflect different businesses and cost structures. ASML’s cited 2025 annual figures are in euros and use US GAAP; TSMC reports in New Taiwan dollars and labels US-dollar conversions as convenience translations. Compare matching periods and measures, then interpret them in each company’s business context.
Where can investors access TSMC shares?
TSMC shares trade on the Taiwan Stock Exchange, and some shares are listed on the New York Stock Exchange as American Depositary Shares. These are distinct instruments. Check the instrument, currency and any applicable depositary or brokerage fees with the relevant provider; current fees are not established by the company disclosures summarized here.
The Bottom Line
Bottom line: ASML sells semiconductor-manufacturing systems and supports the installed base; TSMC primarily manufactures wafers to customer designs. Their results reflect different drivers, currencies and business mixes, so neither a higher reported margin nor a revenue figure alone identifies the better stock. To compare the shares, use current, dated market data and make sure you are comparing equivalent periods, measures and trading instruments.
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