State-backed Shanghai firm begins mass-producing DUV immersion lithography machines; first units ship to SMIC, Hua Hong, CXMT in 2026.

A state-backed Shanghai company has begun mass-producing immersion deep ultraviolet lithography machines and will deliver the first units this year to SMIC, Hua Hong Semiconductor, and memory maker ChangXin Memory Technologies, according to The Information, citing two people familiar with the program. Production targets call for approximately five machines in 2026 and roughly 20 in 2027. All three recipients are designated as restricted entities under U.S. House Resolution 8170, a bill now advancing through Congress that would bar them from ASML sales and servicing.

The Information did not name the manufacturer, but sources described the operation as having assembled DUV development teams from several Chinese companies, including the state-backed startup Shanghai Yuliangsheng Technology. SMIC has been testing a Yuliangsheng immersion tool since September 2025. Most components in the new systems are domestically sourced, though some critical parts still source from Japan, and delays at local suppliers have constrained output this year.

The MATCH Act, introduced in April and reported out of the House Foreign Affairs Committee on April 22, designates SMIC, Hua Hong, CXMT, Huawei, and YMTC as restricted entities. Its immersion DUV provisions cover servicing and technical assistance, not merely new exports, extending scope to tools already operating in Chinese fabs—facilities that have spent the past two years maximizing utilization of their installed lithography fleet through secondary-channel upgrades.

ASML expects to ship approximately 130 immersion systems in 2026, matching 2025 output, CFO Roger Dassen told analysts during the company's July earnings call. Dassen added that ASML intends to increase immersion capacity by 30% in 2027 and is investigating another 30% expansion for 2028. China accounted for around 20% of ASML's net sales this year, down from 33% in 2025, driven primarily by mainstream logic demand.

Immersion DUV lithography prints 28-nanometer-class features in a single exposure and reaches 7 nanometers through multipatterning, though at a cost in overlay errors and yield. ASML CEO Christophe Fouquet told the same earnings call that rising DRAM litho intensity partly reflects customers replacing multipatterning with cheaper single-exposure EUV.

Independent analysis from the AI Futures Project in June placed commercial-scale Chinese immersion DUV in the mid-2030s, with ASML holding 98.7% of the immersion market. Qualifying the new Chinese machines for production use could require many months, and they lag ASML tools in performance and build quality. China's domestic EUV effort, first reported as a working prototype in December, remains years from deployment.