“It’s a clear signal that China is stepping up its semiconductor ambitions,” said a market analyst following the sharp drop in ASML’s stock price to its lowest since June. The Dutch chipmaking giant, known for its dominance in advanced lithography tools, saw shares slide after news broke that a Chinese state-backed consortium has begun mass production of deep ultraviolet (DUV) lithography machines domestically.
The group behind this move includes Shanghai Yuliangsheng, SiCarrier, and Huawei, targeting deliveries of around five immersion DUV machines in 2026 and about 20 units in 2027. These tools will support major Chinese fabs such as SMIC, Hua Hong Semiconductor, and ChangXin Memory Technologies. Despite the milestone, these systems are still far behind ASML’s cutting-edge extreme ultraviolet (EUV) machines, which remain unmatched worldwide. Experts note the Chinese versions lag significantly in performance and reliability, requiring extensive testing before they can compete in volume production.
Investors are particularly concerned because China makes up approximately 20% of ASML’s revenue this year. The pressure on this revenue stream is twofold: US export restrictions like the MATCH Act aim to curb sales of DUV equipment to China, while China’s move toward self-sufficiency threatens to reduce future demand for ASML’s products in its largest growth market. This dual challenge is unsettling shareholders who have long relied on ASML’s near-monopoly status in semiconductor lithography.
However, credible competition from China in the high-end lithography field is not expected before 2030 due to technological complexities and supply chain constraints. The initial batch of machines will undergo months of testing and integration at domestic fabs before any commercial chip production can commence. For now, investors remain focused on regulatory developments and how US-led export controls might reshape ASML’s access to the Chinese market.
