China has begun manufacturing its own immersion deep ultraviolet (DUV) lithography machines, striking at the heart of Dutch firm ASML's near-monopoly over critical chipmaking technology, The Information reported on Monday.
The news triggered a sharp sell-off across global chip equipment stocks, with ASML shares sinking more than 7% — its worst day since June 8.
Why Does Lithography Matter?
Chipmaking relies on lithography machines that use precisely focused light to etch microscopic circuits onto silicon wafers.
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.
How Is DUV Different From EUV?
Lithography tools fall into two categories: DUV and the more advanced Extreme Ultraviolet (EUV), which ASML alone supplies and which China has been barred from accessing under Western export curbs. Immersion DUV uses a thin liquid layer to sharpen light, etching finer patterns than standard DUV, making it the most advanced tool.
Who's Involved?
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.
ALSO READ: Nvidia, AMD, SK Hynix, Micron Shares Plunge Up To 9% After China Cracks DUV Lithography
Why Are Western Chipmakers Rattled?
Beyond ASML, BE Semiconductor Industries fell 8.5%, Soitec dropped 5%, and Infineon Technologies slipped nearly 3%. Investors fear a viable Chinese alternative could reduce reliance on ASML and other Western suppliers, denting future sales and weakening the impact of US-led export restrictions.
Nvidia, AMD, SK Hynix and Micron plunged up to 9% during the trading hours at Wall Street.
Can China Match ASML Yet?
Not yet. The domestic system reportedly still lags 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 Bigger Picture
The development comes as Washington reportedly considers tighter restrictions on foreign lithography exports and servicing in China.
A domestic DUV industry won't dislodge ASML overnight, but it signals Beijing's push toward an independent chip supply chain — one that could gradually reshape the landscape for ASML, Micron, AMD, Nvidia and others exposed to China.
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