China makes big chip-making machine breakthrough, puts ASML monopoly on notice

China has just started making DUV machines, marking a big breakthrough when it comes to chips. This could allow China to reduce dependence on ASML when it comes to advanced chipmaking equipment.China is now making DUV machines domestically, as per a report. (Representational image made with AI)If you want to make an advanced chip today, you need advanced DUV and EUV lithography machines. And one company dominates in this field, the Netherlands’ ASML. But this posed a problem for China, as it faced restrictions from the West when it came to such advanced equipment. And now, China may have its own ASML in the making, with a state-backed Shanghai company reportedly starting production of its DUV machines domestically.As per a report from the Information, this Shanghai-based company has begun production of DUV lithography machines that are used for building processors. It is believed that the company plans to build five domestic DUV systems this year, with the number going up to twenty next year.These machines are expected to be delivered this year to major Chinese chipmakers including Semiconductor Manufacturing International Corp (SMIC), Hua Hong Semiconductor and ChangXin Memory Technologies, the report said.Why China needs domestic DUV machinesYou see, any chip or processor is made via a process called lithography, where ultraviolet (UV) light is directed on silicon wafers via photomasks – a stencil of the chip design. To do this, you need advanced DUV (Deep Ultraviolet) and EUV (Extreme Ultraviolet) machines. Be it any chipmaker – TSMC, Samsung, or Intel, they need to buy machines from ASML to make chips. And since these machines used components from the US, the White House could put export controls to China. But now, with domestic production, China can reduce its dependence on such devices from the West.But there is a catch. China has reportedly begun production of DUV machines, and not the more advanced EUV. DUV machines usually can only produce chips up to 7nm mode, that too with a complex process called multi-patterning. To give you some context, the chip in the latest iPhone is built on a 3nm node. Previous reports claim that China’s most advanced domestically produced DUV lithography system, from Yuliangsheng, is technically comparable to ASML’s Twinscan NXT:1950i, a machine ASML originally designed for 32nm-class processes in 2008.This means that while the domestic DUV machines can make processors, it won’t allow China to produce the bleeding edge of chips just yet. The report adds that China is also developing a domestic EUV machine, though that effort remains at the prototype stage.This could also be detrimental to ASML’s business in China. As per reports, 30 per cent of ASML’s revenue last year came from customers in China. Following the report, ASML shares fell sharply, slipping more than 7 per cent at one stage.Do note that China also faces restrictions when it comes to imports of advanced GPUs from companies like Nvidia. These chips are essential for training and running advanced AI models. Though Chinese AI labs like DeepSeek have been working with domestic players like Huawei to improve domestic chips.- EndsPublished By: Armaan AgarwalPublished On: Jul 28, 2026 10:56 IST