already mass-produces its own UVP lithography machines, according to The Information

A Chinese company backed by the government led by Xi Jinping has broken one of the most resistant barriers in the semiconductor industry. According to The Informationthis company has begun to mass-produce its own immersion deep ultraviolet (UVP) lithography machines, the tool that engraves the geometric pattern of circuits on silicon wafers and that China had never produced on an industrial scale. Its objective is modest: it intends to produce five units this year aimed at SMIC (Semiconductor Manufacturing International Corporation), Hua Hong Semiconductor and CXMT (ChangXin Memory Technologies), and another twenty in 2027.

International media have not yet confirmed the name of this company, although several of them claim that it resides in Shanghai (China), so it is probably Shanghai Yuliangsheng Technology, an emerging company linked to Huawei and YesCarrier. This simply means that the ecosystem of suppliers that China has been weaving around Huawei in recent years is also beginning to bear fruit in photolithography, the link that is taking the longest to master.

The market has reacted immediately. ASML shares have reached drop up to 6.5% in Amsterdam just a few hours ago, and Applied Materials, Lam Research and KLA Corp left between 4% and 7% in that same session. It is no surprise: any significant advance by China in lithography is perceived on Wall Street as a direct threat to ASML’s business in this Asian country, which, surprisingly, continues to be an important source of income for this Dutch company despite the fact that US and Netherlands sanctions They prevent it from selling its most advanced machines there.

China is still a generation behind

SMIC, China’s largest semiconductor manufacturer, has been testing a Yuliangsheng tool since September 2025. That machine has been designed for 28nm integration processes, although with multipatterning advanced could reach 7nm nodes or even more sophisticated. SMIC has set 2027 as the date for mass production of these machines. However, Yuliangsheng is not alone: ​​SMEE (Shanghai Micro Electronics Equipment), another Chinese manufacturer of lithography equipment, has already sold about ten units of its SSA800 series, which is also focused on 28 nm immersion UVP photolithography.

These new machines incorporate mostly Chinese components, although some critical parts still rely on Japanese suppliers, and presumably lag behind ASML equipment in performance and manufacturing quality. On the other hand, we must not overlook that this technical gap can trigger months of qualification tests before the equipment actually enters the large scale production lines. In this context, an independent analysis of AI Futures Project published in June has put Chinese production of commercial-scale UVP dipping machines into the mid-2030s. Meanwhile, ASML continues to control the 98.7% of the market.

This last company, in fact, plans to deliver to its customers about 130 UVP immersion equipment in 2026, a volume similar to that of 2025, as explained its chief financial officer, Roger Dassen, at the July earnings call. This figure makes clear the real magnitude of the distance that separates China and ASML: this Asian country aims to manufacture twenty UVP units in 2027, while the Dutch company will deliver that quantity in just under two months.

The geopolitical context, in any case, does not help reduce tension. The US is considering imposing even stricter restrictions on the export and maintenance of lithography equipment that reaches China through the MATCH lawwhose limitations would reach even machines already installed in Chinese factories. In parallel, the Chinese Government continues to develop its own extreme ultraviolet lithography (UVE), although this project is presumably still in the prototype phase, and, according to analysts, it is still several years of producing a commercial chip.

Image | ASML

More information | The Information

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