The CHIPS Act turned two years old in August 2024. Since then, the U.S. government has announced over $50 billion in semiconductor manufacturing incentives. Twenty new fab projects have broken ground. Yet procurement teams across automotive, defense, and industrial sectors still struggle to secure the chips they need.
The bottleneck is not capital. It is not demand. It is equipment.
ASML, the Dutch company that holds a monopoly on extreme ultraviolet lithography, ended 2025 with a record order backlog of €38.8 billion ($46.3 billion) and shipped only 48 EUV systems all year. Applied Materials raised its 2026 semiconductor equipment growth outlook to over 30% and still says it cannot meet demand. Lam Research and KLA are expanding factories, but the tools those plants will build are already spoken for.
This article breaks down why equipment lead times remain year-long, how CHIPS Act construction delays compound the problem, and what procurement professionals can do about it in 2026.
The ASML Gating Factor
Every leading-edge fab needs ASML lithography systems. There is no alternative supplier for EUV or High-NA EUV. This monopoly gives ASML enormous pricing power but also makes it the single largest gating factor for global semiconductor capacity expansion.
ASML shipped 300 new lithography systems in 2025: 48 EUV, 131 immersion DUV, and the rest dry DUV and older models. EUV tools accounted for 48% of ASML's system revenue and 65% of its backlog by value. In Q1 2026, the EUV backlog hit a record 45 systems, driven by simultaneous orders from TSMC, Samsung Foundry, and Intel Foundry for 2nm and below process nodes.
The constraint on ASML is no longer laser sources — that was the binding limitation from 2021 through 2024. Today, the bottlenecks are metrology systems, optical column components, and precision-machined vacuum chamber assemblies that make up the rest of the machine. These subsystems require specialized manufacturing capacity that cannot be scaled quickly.
High-NA EUV systems are even tighter. ASML can produce fewer than 20 per year at current capacity, and the backlog already extends to late 2027. For procurement teams, this means that any fab relying on ASML equipment for 2026-2027 production faces a de facto capacity ceiling.
Process Tools: Applied Materials, Lam Research, KLA
Beyond lithography, the rest of the semiconductor equipment ecosystem is strained.
Applied Materials is the number one process equipment supplier in leading-edge logic and memory. The company holds leadership positions across materials deposition, conductor etch, and e-beam technologies. In Q1 2026, Applied reported revenue of $7.91 billion, up 11.4% year over year, and raised its calendar 2026 semiconductor equipment growth outlook from over 20% to more than 30%. CEO Gary Dickerson told Jim Cramer that "you're nowhere near able to meet the demand" even after the company doubled operational capacity.
— Gary Dickerson, CEO, Applied Materials, Q2 2026 earnings call
Applied is planning to launch more than a dozen new products in 2026, including three for advanced logic and DRAM. The Viva radical treatment system delivers angstrom-level precision engineering of nanosheet surfaces for gate-all-around transistors. The Sym3 Z Magnum enables angstrom-level precision for critical etch steps. But new products do not solve the capacity problem — they add to the complexity that fab construction must accommodate.
Lam Research controls a dominant share of the etch and deposition market alongside Applied Materials and Tokyo Electron. The three companies collectively held roughly 75% of global etch revenue in 2025. Lam's Flex series secured 42% of GAA-related etch wins in 2025. The company expanded its Tualatin, Oregon factory by 120,000 square feet in January 2026 to boost Flex-series output 25%, preparing for CHIPS Act demand.
KLA, the dominant provider of wafer inspection and metrology, has seen its backlog shrink from $9.83 billion in June 2024 to $7.86 billion in June 2025 — not because demand fell, but because KLA's suppliers added capacity and reduced the company's own tool lead times. Management noted that prior constraints in optics and subsystems had extended lead times, but by fiscal 2025, suppliers had "made new investments to meet our growing needs, enabling us to deliver products more quickly than in the pandemic and early post-pandemic periods."
KLA remains essential for 2nm and HBM4 production, and its business tracks wafer fab equipment spending. But metrology and inspection are now less gated by lead times than during 2021-2023. The net takeaway: lithography (EUV, High-NA, DUV immersion) and certain deposition/etch clusters remain the primary gating items for CHIPS-driven fab ramps.
CHIPS Act Construction Delays
Even if every tool were available today, U.S. fabs are not ready to receive them. Multiple sources confirm that CHIPS-linked U.S. fabs are behind original schedules due to labor, permitting, and funding timing.
Micron's $100 billion New York megafab in Clay has a two-year delay on Fab 1 start-up. The company cited tight labor markets and longer-than-expected greenfield build timelines, even after eligibility for up to $6.2 billion in CHIPS incentives. TSMC's Arizona first fab slipped from 2024 to 2025 operation because of insufficient local workers for equipment installation; the second fab slipped to 2027-2028. Intel's Ohio and Arizona campuses face similar challenges.
— TrendForce Semiconductor Analysis, 2026
TrendForce reports that more than 70 fab projects are in various stages of planning or construction in the United States. The sheer volume of simultaneous builds has overwhelmed the domestic skilled construction labor pool. Electricians, pipefitters, cleanroom specialists, and equipment installation engineers are in short supply across the industry.
Equipment vendors feel the delay too. Mordor Intelligence reports that vendors booked $7.9 billion in CHIPS-tied etch orders during 2025, but milestone payments expose them to construction delays, prompting longer receivable cycles. When a fab construction slips by six months, the equipment supplier carries inventory and work-in-progress for that much longer.
The Mature-Node Paradox
The CHIPS Act focuses heavily on leading-edge logic and memory. But the majority of semiconductor demand from automotive, defense, and industrial buyers sits on mature nodes: 90nm to 28nm. These nodes attract less capital expenditure than advanced nodes, creating a structural supply gap that federal funding does not fully address.
Procurement Risk Areas for 2026-2027
- Mature-node MCUs and analog ICs: 90-40nm capacity constrained as foundries prioritize AI and leading-edge logic. Extended lead times and allocation pressure expected through at least 2026.
- Power discretes and PMICs: AI data center demand competes for backend and packaging capacity. Automotive and industrial buyers face tighter allocation and higher pricing.
- Automotive-grade memory: DRAM and NAND for automotive applications see allocation priority given to hyperscaler AI customers.
- Defense and ITAR-constrained components: Rad-hard, high-reliability, and ITAR-controlled parts rely on limited domestic mature-node capacity that lags demand.
- Backend and packaging: Assembly and test capacity, not wafer starts, is the binding constraint for many analog, power, and mixed-signal components.
The Semiconductor Industry Association projects global semiconductor sales pushing toward $1 trillion by 2026-2027. S&P Global Mobility notes that many automotive chips remain on mature nodes that attract less capex than leading-edge AI logic, creating recurring risk of shortages in low-end MCUs and analog ICs through 2031.
Sector-Specific Procurement Implications
Automotive
Automotive semiconductor lead times rose in Q3 2025 while non-auto lead times fell — a divergence that signals structural tightness for auto-grade components. AI data-center customers now receive allocation priority across foundries and IDMs, leaving automotive buyers to face tighter allocation, longer lead times, and higher pricing pressure in memory and power components through 2026.
Key risks: mature-node MCUs, analog, power discretes, PMICs, and niche FPGAs. Supply chain providers recommend multi-sourcing, earlier forecasts, strategic inventory buffers, and advance or lifetime buys for safety-critical components.
Defense and Critical Infrastructure
U.S. defense remains heavily reliant on chips fabricated overseas. Many defense chips use specialized or older processes that do not translate easily into large commercial fabs. The CHIPS Act directs $2 billion specifically for mature-node chips used in military, automotive, and industrial sectors, but capacity additions at mature nodes lag demand and focus on a limited set of U.S. and allied fabs.
Defense programs should map multi-tier supply chains down to fab and packaging sites, lock longer-term volume agreements at trusted domestic or allied fabs, and budget for higher component and assurance costs as domestic capacity displaces lower-cost Asian sources.
Industrial IoT and Power
Industrial buyers face similar dynamics with an added complication: many industrial components use 200mm wafer production that is aging out. IGBTs, high-voltage MOSFETs, and industrial MCUs share foundry capacity with automotive. SEMI reports that ICAPS (IoT, communications, automotive, power, and sensor) wafer fab equipment spending is expected to be approximately flat year-on-year in 2026, even as total equipment spending grows 15%.
What Equipment Lead Times Look Like in 2026
These timelines assume the equipment is ordered today. For CHIPS Act fabs, the equipment ordering window has already passed for many 2026-2027 slots. Late orders face even longer wait times as production capacity is committed.
Actionable Strategies for Procurement Teams
The semiconductor equipment bottleneck will not resolve in 2026. SEMI forecasts total equipment spending reaching $145 billion in 2026 and $156 billion in 2027, with wafer fab equipment at approximately $122-123 billion by 2026. Supply is growing, but demand is growing faster.
Procurement teams should take five actions now:
1. Lock multi-year foundry agreements. GlobalFoundries, Texas Instruments, Infineon, Renesas, and ON Semiconductor are expanding mature-node capacity with CHIPS Act support. Multi-year volume agreements secure allocation before the next wave of demand hits.
2. Dual-source mature-node components. Single-source dependencies on 90-28nm MCUs, analog ICs, and power devices carry elevated risk in 2026-2027. Qualify second sources now, before lead times stretch further.
3. Build strategic inventory buffers. For safety-critical automotive components, defense-qualified parts, and long-lifecycle industrial devices, strategic inventory is not a cost — it is insurance against allocation-driven shortages.
4. Map multi-tier supply chains. Know where every critical component is fabricated, assembled, and tested. A chip designed in the U.S. may be fabbed in Taiwan, packaged in Malaysia, and tested in China. Every handoff is a risk point.
5. Plan for 2027-2028 horizon. CHIPS Act fabs coming online in 2027-2028 will add meaningful domestic capacity, but the transition period will be tight. Factor CHIPS Act ramp delays into sourcing timelines and capital planning.
Outlook
The CHIPS Act is working. Capital is flowing. Fabs are being built. But semiconductor equipment supply chains cannot scale at the same speed as government appropriations. ASML's 20 High-NA EUV systems per year, Applied Materials' doubled-but-still-inadequate capacity, and a U.S. construction workforce that cannot keep pace with 70 simultaneous fab projects all add up to the same conclusion: 2026 will be another year of year-long equipment lead times.
The bottleneck is not a policy failure. It is a physics, engineering, and workforce reality that no amount of funding can accelerate overnight. Procurement teams that recognize this and adapt their sourcing strategies now will be the ones that keep production lines running through the transition.
Research conducted via You.com research tool. Sources include ASML annual report 2025, Applied Materials Q2 2026 earnings, Lam Research investor materials, KLA Corporation filings, Mordor Intelligence Semiconductor Etch Market Report 2026, TrendForce semiconductor analysis, SIA/WSTS industry data, SEMI equipment market forecasts, and S&P Global Mobility automotive semiconductor analysis.