A Chinese state-backed company is reportedly mass-producing deep ultraviolet (DUV) lithography machines, a significant development that could bolster the country's self-sufficiency in semiconductor manufacturing. The machines are said to be on track for delivery to domestic chipmakers, including Semiconductor Manufacturing International Corp. (SMIC), Hua Hong Semiconductor, and ChangXin Memory Technologies (CXMT), within the current year.
These DUV immersion machines, while an older technology compared to extreme ultraviolet (EUV) lithography, are still crucial for producing modern computer chips. Dutch company ASML currently dominates the global market for these machines, having succeeded Japanese manufacturers. The DUV machines reportedly being produced in China are capable of manufacturing chips down to the 7-nanometer process node through techniques like multi-patterning, which is roughly equivalent to the technology used in processors like AMD's Ryzen 5000 series.
This domestic production effort comes at a time when the U.S. has been seeking to restrict the sale and servicing of DUV machines to China, with sales of more advanced EUV machines already blocked since 2019. The reported breakthrough in China's DUV machine capabilities directly challenges ASML's market position within China. News of this development reportedly caused ASML's share price to drop by 12% in late July.
ASML's Chief Financial Officer Roger Dassen previously indicated that the company expected to ship approximately 130 immersion DUV machines in the current year, a figure similar to its projected output for 2025. The company had been working to reaccelerate its output with supply chain partners. ASML also anticipates selling around 65 Low NA EUV systems and is planning to increase production capacity for both EUV and DUV machines by 2027.
Despite the reported progress, analysts suggest that the newly developed Chinese DUV machines may lag behind in performance and reliability compared to ASML's offerings. Achieving high yields, meaning a large number of functional chips per wafer, is a significant challenge for any chip manufacturing process. While the machines may represent a technical achievement, their immediate impact on the global market and their ability to compete at scale remain to be seen.
However, China's ongoing pursuit of self-reliance in critical technologies, particularly in the face of international export controls, suggests that domestic development will continue. The success of these new DUV machines in achieving high-volume, high-yield production will be a key factor in determining their long-term significance.