China Begins Production of DUV Lithography Machines to Overcome Equipment Bottlenecks?

According to US media outlet The Information on Monday (27th), China has begun production of its self-developed immersion deep ultraviolet (DUV) lithography machines—critical equipment for chip manufacturing long dominated by Dutch supplier ASML.

Reports from The Information and other foreign media indicate that a Shanghai-based, government-supported company has started manufacturing its own DUV lithography systems. The development team includes personnel from startups such as Yuliangsheng Technology.

Sources say the Chinese DUV machines primarily use domestically produced components, though some key parts still come from Japan. Performance and manufacturing quality currently lag behind ASML's products.

The company plans to produce five DUV machines this year and increase output to 20 units next year.

Insiders say these DUV machines are expected to be delivered this year to major Chinese chipmakers, including Semiconductor Manufacturing International Corporation (SMIC; 00981-HK), Hua Hong Semiconductor, and ChangXin Memory Technologies.

Didier Scemama, an analyst at BofA Securities, believes current Chinese domestic equipment poses limited threat to ASML. Even if China successfully produces 20 domestic DUV machines next year, the impact on ASML's sales would be about 1.4 billion euros—only 2.4% of ASML's projected total revenue.

JPMorgan analyst Sandeep Deshpande stated that China's ability to produce a small number of DUV machines is fundamentally different from supporting large-scale mass production in wafer fabs. Whether Chinese equipment can become a real competitor depends on yield, overlay accuracy, production efficiency, and reliability after thousands of wafer batches.

The US has already banned ASML from selling EUV lithography machines to China. As a result, Chinese fabs can only purchase older DUV machines to maintain production.

Now, the US Congress is reviewing the 'Matching Act,' which aims to tighten DUV equipment export controls further—potentially banning ASML from providing repair services and spare parts to Chinese factories. This puts Chinese production lines at risk of equipment shutdowns.