China has entered the global chipmaking equipment market with the reported mass production of immersion deep-ultraviolet lithography (DUV) machines, a technology long dominated by ASML. Information from The Information, an unnamed Chinese manufacturer has begun delivering the tools to major domestic chipmakers, including Semiconductor Manufacturing International Corp. (SMIC) and ChangXin Memory Technologies (CXMT). Reuters reporting has identified Shanghai Aishengna Electronic Technology Group, a state-owned company that reportedly brought together development teams from Shanghai Micro Electronics Equipment (SMEE) and Yuliangsheng, as the center of the domestic effort. The machines are intended for fabs including SMIC and Hua Hong Semiconductor. CXMT is also among the planned recipients, with initial deliveries scheduled for 2026. The move comes amid a sharp sell-off in global semiconductor stocks, including ASML, as investors weigh potential shifts in the sector.
Industry analysts remain cautious about the development’s impact. The basic questions are whether Chinese DUV machines can match ASML’s performance and whether production can scale to meet broader demand. Yield, the proportion of usable chips produced, is a critical metric for chip manufacturers. Fabs also track overlay accuracy and defect control; uptime and maintenance matter across production runs. The reported plans mark a step toward domestic equipment supply, but they do not show that the machines can deliver yields or reliability comparable to ASML systems. Qualification in commercial fabs will depend on sustained performance across production runs, not just nominal resolution.
Production capacity is another impressive hurdle. The Chinese firm reportedly aims to produce about five immersion DUV units in 2026 and 20 in 2027. By contrast, ASML plans to manufacture around 130 DUV immersion machines in 2026 and increase output by 30% the following year. Industry reporting also put ASML’s 2025 shipments of comparable DUV systems at 131. These figures cover different years and measures, but they show the gap in manufacturing scale. Scaling output while maintaining consistent reliability across a fleet of machines is complex and typically takes years of refinement, an area where ASML has a large head start.
For ASML, the immediate financial impact appears limited. The Netherlands introduced licensing requirements for specified lithography equipment in 2023. In September 2024, it expanded controls to cover additional advanced DUV immersion systems, then broadened restrictions again in January 2025 to cover more semiconductor-manufacturing equipment. China has been unable to buy ASML’s EUV systems, and sales of the company’s most advanced DUV immersion tools to Chinese customers are restricted. Older DUV systems and servicing of installed equipment fall under different rules. Domestic Chinese production so targets equipment needs that foreign suppliers cannot freely meet, rather than immediately replacing ASML across the global market. China accounted for 14% of ASML’s net system sales in the second quarter, but analysts say the new competition is unlikely to erode the company’s global position in the short term.
China has also been testing ways to extend DUV lithography to more advanced chips. Nikkei Asia reported that SMIC began testing an immersion DUV machine from Yuliangsheng in September 2025. The tool was described as suitable for 28-nanometer mass production, while multiple-patterning techniques were used in attempts to make 7nm and 5nm pilot wafers. Multiple patterning uses successive exposures to form finer features than a single DUV exposure can produce. It adds process steps and makes overlay and yield harder to control. A U.S. Senate Banking Committee summary likewise described efforts to use DUV for chips at smaller nodes, including 5nm, while noting efficiency and yield trade-offs. Such trials show process experimentation, not production parity with ASML.
Attention has also turned to whether China could replicate this progress with more advanced chipmaking tools. Last year, Reuters reported that China had developed a prototype extreme ultraviolet (EUV) lithography machine, a technology that remains exclusive to ASML in commercial production. Advances in DUV do not automatically translate into success in EUV. ASML and its partners took decades and billions of euros to commercialize the technology. The technical barriers to EUV remain significantly higher, and most analysts believe China is still far from matching ASML’s capabilities in this area.
DUV lithography is impressive for producing mature chips and is also used for some advanced process layers. EUV is used for the most advanced semiconductors, including chips designed by companies such as Apple and Nvidia. ASML’s position across both segments has made it a linchpin of the global semiconductor supply chain. China was a major market for ASML’s DUV equipment before restrictions tightened: a U.S. Senate Banking Committee summary put China at roughly 70% of ASML’s DUV sales in 2024, while separate industry commentary estimated that the country imported about 90 immersion systems annually in 2024 and 2025. The emergence of domestic Chinese tools could reshape supply options for Chinese fabs, but their scale and reliability remain basic measures of their significance. Their economic viability matters, too.
The semiconductor industry is changing rapidly, driven by geopolitical tensions and supply-chain disruptions. Investment in domestic manufacturing has also increased. The European Union and the United States have both launched major initiatives to boost local chip production and reduce reliance on foreign suppliers. For Spain and other EU countries, developments in chipmaking technology and market competition could affect access to advanced semiconductors. They could also influence pricing and the pace of digital change across industries. The ability of new entrants to match established players such as ASML will remain a basic factor shaping the sector.
