China has started manufacturing domestic immersion deep ultraviolet lithography machines, a key chipmaking technology previously dominated by Dutch giant ASML. The systems are reportedly slated for delivery to major Chinese chipmakers like SMIC and Hua Hong by the end of the year. However, initial production remains highly limited and the technology still lags in performance compared to foreign alternatives.
Following the report by The Information on Monday, shares of ASML fell over 7% during trading. The decline triggered a broader selloff across the global semiconductor equipment supply chain. The stock tumbled. BE Semiconductor Industries fell 8.5% and Soitec dropped 5%. ASML declined to comment on the development, which represents the first domestic alternative for Chinese buyers facing tight export restrictions.
The state backed manufacturer behind the breakthrough has not been named due to the sensitive nature of the technology. While the achievement marks a step forward for Chinese semiconductor independence, the new lithography tools still require extensive testing before mass production. Initial manufacturing runs will be small, with only 5 machines scheduled for delivery this year and roughly 20 planned for 2027.
Immersion deep ultraviolet systems are currently the most advanced tools available to Chinese fabs after international sanctions blocked access to extreme ultraviolet machines. China is working on a domestic extreme ultraviolet prototype, but that project remains far from completion. This new equipment provides local chipmakers with a fallback option as foreign governments consider even tighter restrictions on tool exports and maintenance.
