Western concerns about a breakthrough in Chinese chipmaking equipment are increasing, but analysts say China’s home-grown deep-ultraviolet (DUV) lithography machines do not pose the greatest threat to industry leader ASML.
Shares of the Dutch firm ASML dropped over 8% at one point on Monday, July 27, 2026, in the US market before closing down 5.8%, following reports by The Information that China had started manufacturing immersion DUV lithography machines through a state-backed company in Shanghai. According to anonymous sources cited by The Information, China plans to produce about five DUV units in 2026 and around 20 in 2027. The first systems are expected to be deployed at Semiconductor Manufacturing International Corporation (SMIC), Hua Hong Semiconductor, and memory-chipmaker ChangXin Memory Technologies (CXMT).
The news triggered a rally in lithography-related shares on mainland Chinese markets on Tuesday, August 1, 2026, with companies like Zhangjiang Hi-Tech, Yongxin Optics, Highly Group, and Wavelength Opto-Electronic hitting their daily trading limits. However, industry observers have urged caution regarding these advances.
Paul Triolo, partner and technology policy lead at DGA-Albright Stonebridge Group, emphasized that "delivering a domestic machine was not the same as qualifying it for continuous commercial production." He added, "Producing machines of the complexity of DUV immersion lithography that are commercially viable and running 24 hours, seven days a week, for an entire year is very difficult."
Jefferies analyst William Beavington noted that previous reports of Chinese progress in immersion DUV had proven false, and it remains uncertain whether the latest claims are valid.
Supporting this cautious view, data from Bank of America showed semiconductor equipment imports into central China’s Anhui province, where CXMT is based, reached US$226 million in March 2026—more than double the monthly average in the latter half of 2025.
Instead of a fully indigenous breakthrough, evidence points to a state-directed systems-integration program. Shanghai Yuliangsheng Technology serves as a visible project vehicle, with SiCarrier providing strategic coordination and links to Huawei Technologies’ ecosystem, while SMIC acts as a qualification platform.
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