TSMC edges ASML as top AI infrastructure play

TSMC and ASML are among the strongest semiconductor supply chain investments of the past five years, having significantly outpaced the tech-heavy Nasdaq Composite. TSMC, headquartered in Taiwan and the world's largest semiconductor chip manufacturer, has seen its net income surge 251% and revenue climb 165% over that period. The company now controls an estimated 73% of the global foundry market, up from 69% in Q4 2024, and fabricated more than 12,600 different products in 2025 using 305 different process technologies. Its most advanced offering, the 2-nanometer process, delivers higher density and energy efficiency; in the most recent quarter, the 2-nm node contributed 3% of revenue for the first time. The company's 3-nanometer and 5-nanometer technologies have been the backbone of its business, generating more than 60% of revenue in recent quarters. In Q2, TSMC reported revenue of $40.2 billion, up 33.7% from a year earlier, with a net profit margin of 55.6%. To sustain this leadership, TSMC announced a $100 billion expansion of its Arizona factory to support advanced packaging fabs and 2-nanometer processing technology.

ASML, a Dutch company, manufactures the specialized lithography machines that TSMC and other foundries depend on to produce those minuscule circuits. Most chip manufacturing uses deep ultraviolet (DUV) technology with lenses to focus light beams and create microscopic circuit patterns. ASML sells DUV machines but also offers the more advanced extreme ultraviolet (EUV) technology, which uses mirrors instead of lenses and can perform tasks DUV machines cannot. In Q2, ASML sold 86 new lithography units and five used units, up from 67 new machines and 12 used machines a year ago. The company's revenue jumped to €9.32 billion ($10.69 billion), up 11% year-over-year, while net income reached €2.91 billion ($3.16 billion), up 5.8%, with gross margins of 54%. CEO Christophe Fouquet underscored the tailwind: "Ongoing AI-related investments and continued progress in AI technologies are driving demand for advanced logic and memory chips, further strengthening the semiconductor industry's growth outlook. Our customers, in turn, continue to accelerate their capacity expansion plans."

When weighing the two as AI plays, the article's analysis favors TSMC. Although both are quality investments, TSMC's increasing leadership in chip manufacturing, its expansion plans, its command of leading-edge process technologies, and its central role in fabricating the advanced processors powering AI systems give it the edge. ASML remains essential infrastructure, but TSMC sits closer to the core of AI infrastructure buildout.