Chip stocks have been under pressure since China began manufacturing its own immersion deep ultraviolet (DUV) lithography machines. The breakthrough directly impacts Dutch firm ASML's near-monopoly over critical chipmaking technology.
Additionally, the impact has rippled through to major US semiconductor companies like Advanced Micro Devices Inc., Nvidia Corp., among others.
Futures tied Micron Technology Inc. traded over 5% lower at $853.88. Nvidia traded 1.05% lower at $194.45, AMD was down 4% to $475.40, and ASML Holding slid 3.65% to $1,593.17 during pre-market trade. Further, futurs of Korean giant SK Hynix traded 4.63% lower at $136.29
The news of China's breakthrough was another blow to semis and chip makers, who have been hit by investor dumping amid high valuation concerns, despite exceeding wall street expectations with their financial performances.
Chipmaking relies on lithography machines that use precisely focused light to etch microscopic circuits onto silicon wafers. Therefore, China's announcement triggered a sharp selloff of semis across global chip equipment stocks with ASML shares sinking more than 7% — its worst day since June 8.
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The finer the etching, the more powerful the chip. ASML has long dominated the most advanced versions of this technology, making it an unavoidable chokepoint for global chipmakers.
Who Is China's Manufacturer?
The manufacturer remains unnamed, given the sensitivity of the matter, people familiar with the development told Reuters. Machines are expected to reach major chipmakers this year, including SMIC, Hua Hong Semiconductor and ChangXin Memory Technologies. Output will start small — about five units this year, rising to roughly 20 by 2027.
China's domestic system reportedly lags behind ASML on performance and reliability and needs further testing before mass production, leaving ASML's edge intact for now.
China is also developing a homegrown EUV machine, though it remains at the prototype stage. The developments comes as Washington reportedly considers tighter restrictions on foreign lithography exports and servicing in China.
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