China reportedly achieving domestic production of DUV lithography machines, breaking ASML's monopoly and reducing dependence on export-controlled equipment.

China has commenced domestic production of immersion deep ultraviolet (DUV) lithography machines, marking a significant step toward semiconductor self-sufficiency amid tightening international export controls. These precision tools, essential for etching circuit patterns onto silicon wafers, have historically been supplied almost exclusively by Dutch equipment maker ASML.

The move prompted a 4.6% decline in ASML's share price as investors assessed the potential erosion of the company's near-monopoly on advanced lithography systems. According to recent reports, Chinese manufacturers including Semiconductor Manufacturing International Corp (SMIC), Hua Hong Semiconductor, and ChangXin Memory Technologies are scheduled to receive deliveries of these domestically produced machines within the current calendar year.

The domestic machines remain in early development stages, with performance and reliability not yet matching international standards. Production volumes are expected to be modest initially, with forecasts of approximately five units delivered this year, scaling to around twenty by 2027. Industry observers note that the final market impact will depend on how quickly these tools can be scaled and whether they meet the technical demands of high-volume production.

Access to advanced lithography equipment has become a flashpoint in the global chip industry. While China currently faces restrictions on importing extreme ultraviolet (EUV) lithography systems—required for the most advanced chip processes—the country has intensified efforts to develop indigenous alternatives. Research into domestic EUV technology remains in the prototype phase. The market will be watching closely for performance validation once these initial DUV units enter operational service in Chinese manufacturing facilities.