China Produces Homegrown DUV Lithography Machines Challenging ASML

A state-backed company in Shanghai has begun mass producing domestically developed immersion deep ultraviolet (DUV) lithography machines to reduce China's reliance on foreign semiconductor technology. The production effort utilized development teams from various firms, including Shanghai Yuliangsheng Technology. These homegrown tools are expected to be delivered this year to leading Chinese chipmakers such as Semiconductor Manufacturing International Corp, Hua Hong Semiconductor, and ChangXin Memory Technologies.

Initial production is limited, with approximately five machines planned for 2026 and 20 for 2027. While the breakthrough provides an alternative to foreign equipment as the United States considers tighter export restrictions and the proposed MATCH Act, the systems currently lag in performance and reliability compared to those from the Dutch supplier ASML Holding.

Following the reports, ASML shares fell 4.6%, wiping over €8bn from its market value. The news triggered a broader sell-off among semiconductor equipment peers, including BE Semiconductor Industries, Applied Materials, and Lam Research. Bank of America analyst Didier Scemama characterized the threat as modest because domestic alternatives face high productivity hurdles, although China accounted for 44% of ASML's DUV revenue in 2026.