A Shanghai-based state-backed Chinese company has begun mass production of immersion deep ultraviolet (DUV) lithography machines, aiming to supply domestic chipmakers with these tools for semiconductor manufacturing [1, 2, 3, 4].

The company assembled development teams from several Chinese firms, including Shanghai Yuliangsheng Technology, to accelerate its progress in DUV lithography technology [1, 2]. It plans to produce about five DUV lithography units in 2026 and increase output to around 20 units in 2027 [2, 3].

The first systems are expected to be delivered to Chinese semiconductor manufacturers, including Semiconductor Manufacturing International Corporation (SMIC), Hua Hong Semiconductor, and ChangXin Memory Technologies (CXMT) [3, 4]. CXMT recently had a high-profile initial public offering on the Shanghai Star Market, where its stock surged over 500% intraday [5].

China faces restrictions on importing the most advanced lithography machines. It is prohibited from importing ASML’s extreme ultraviolet (EUV) lithography tools and faces limits on access to advanced DUV machines [2, 4]. The production of home-grown DUV tools is seen as an effort to reduce dependency on foreign suppliers.

Following reports of China’s mass production of DUV lithography machines, ASML’s stock fell sharply, dropping about 8% intraday on July 27 to its lowest since early June [1, 2, 3]. Analysts expressed skepticism about whether China’s tools can match ASML’s machines for continuous commercial production and chip yield. Paul Triolo, partner at DGA-Albright Stonebridge Group, said, “Producing machines of the complexity of DUV immersion lithography that are commercially viable and running 24 hours, seven days a week, for an entire year is very difficult” [3]. Stephane Houri, head of equity research at ODDO BHF, added, “I would take this with a pinch of salt as what [China does] could be limited to the very low end” [4].

Reports highlight that China’s advances in DUV lithography contribute to growing concerns about competition and market share shifts in the semiconductor industry [5].

The company’s next milestone is delivering its initial DUV lithography systems to key Chinese chip manufacturers during 2026 as planned, followed by ramping up production in 2027 [2, 3].