China has started mass production of domestically developed immersion deep-ultraviolet (DUV) lithography machines, a critical technology for advanced semiconductor manufacturing, according to a person familiar with the matter. This development marks a significant step in Beijing's drive to reduce dependence on foreign technology.

The production effort is led by Shanghai Aishengna Electronic Technology Group, a lesser-known Chinese state-owned company formed in August 2023 with a registered capital of 7 billion yuan (US$1 billion). The company incorporates teams from top Chinese lithography startups and is backed by two state-owned shareholders: Shanghai Electric Holding and a subsidiary of Shanghai International Trust.

The Information, a tech industry news outlet, first reported on July 27 that an unidentified state-backed company in Shanghai had begun manufacturing these machines, planning to produce about five units in 2026 and roughly 20 in 2027. The Chinese-made DUV machines are expected to be delivered this year to leading Chinese chipmakers including Semiconductor Manufacturing International Corp (SMIC), Hua Hong Semiconductor, and memory-chip maker ChangXin Memory Technologies (CXMT).

However, a source noted that Aishengna's DUV machines require further testing and currently lag behind the competing models produced by the Dutch supplier ASML. Producing a limited number of immersion DUV tools differs from manufacturing equipment suitable for high-volume production, where factors like yield, overlay, throughput, and reliability over thousands of wafer runs are crucial.

Despite these limitations, the development is viewed as a win for China's nationwide semiconductor self-sufficiency initiative, a top priority for President Xi Jinping. The move does not pose an immediate commercial threat to ASML, whose shares dropped 8% following the initial report but later stabilized.

Chinese flag next to semiconductor chips
Image: Reuters/Florence Lo

Sources