A Chinese state-backed company has begun mass-producing the country’s first homegrown immersion deep-ultraviolet (DUV) lithography machines, Reuters reported, marking a milestone in Beijing’s drive for chipmaking self-sufficiency.
What’s shipping, and to whom
Shanghai Aishengna Electronic Technology Group, a state-owned firm set up in August 2023 with 7 billion yuan (about $1 billion) in registered capital, is leading the effort after absorbing engineering teams from Chinese lithography startups, including Yuliangsheng — a company linked to Huawei’s chip-equipment arm, SiCarrier — and Shanghai Micro Electronics Equipment (SMEE). Sources told Reuters that around five immersion DUV machines are expected to ship this year to three of China’s largest chipmakers: Semiconductor Manufacturing International Corp (SMIC), Hua Hong Semiconductor, and memory maker ChangXin Memory Technologies (CXMT). Output is projected to rise to roughly 20 units in 2027.
Immersion DUV tools place a thin layer of water between the projection lens and the silicon wafer, letting manufacturers print finer circuit patterns than dry lithography allows. The Chinese-made system is designed for 28-nanometer production but, engineers believe, could be pushed toward 7-nanometer or even 5-nanometer chips using multiple-patterning techniques, though at lower yields than the industry standard.
Why it moved markets
The report briefly rattled chip-equipment stocks: shares of Dutch lithography giant ASML fell as much as 7%, while US toolmakers Applied Materials, Lam Research and KLA also declined. Investors are weighing what a viable domestic alternative could mean if Washington tightens export controls further, since China has been stockpiling ASML’s older DUV systems ahead of expected restrictions. ASML drew roughly 16% of its first-half 2026 net sales from China.
Analysts cautioned against reading too much into the milestone. “Producing a handful of immersion DUV tools is not the same as producing tools that can be used for high-volume manufacturing,” JPMorgan Chase analysts wrote, according to Reuters. The system reportedly still relies on some imported components, and engineers say it remains a generation behind ASML’s newest machines in throughput and precision. ASML also remains the sole supplier of extreme-ultraviolet (EUV) equipment needed for the most advanced chips, a lead the new tool does nothing to close.
Still, the milestone underscores how central chipmaking capacity has become to the AI race: the same equipment shortages and export battles that shape wafer-scale designs elsewhere in the industry are now pushing China to build its own supply chain from the lithography step up.