China Begins Production of DUV Lithography Machines! ASML Shares Drop 8%, JPMorgan: Yield After Mass Production is Key

Reuters reported on the 28th, citing sources, that China has begun production of its self-developed immersion deep ultraviolet (DUV) lithography machines. This technology is crucial for chip manufacturing and marks a key step in Beijing's efforts to reduce dependence on foreign technology. If U.S. restrictions on ASML lithography tools continue to tighten, China's domestically developed machines could become a vital alternative. Notably, the development of China's domestic DUV lithography machine is led by the obscure Shanghai-based company Aishengna, a mysterious and low-profile firm that doesn't even have an official website. The U.S. currently bans China from purchasing ASML's most advanced extreme ultraviolet (EUV) lithography machines, and Dutch export controls also restrict China's access to certain advanced deep ultraviolet (DUV) machines. Although Beijing is actively pushing for self-sufficiency, China remains a key revenue pillar for ASML, with approximately 16% of its net sales in the first half of this year coming from China. While Chinese chipmakers are prohibited from acquiring advanced EUV systems, they continue to purchase large quantities of less advanced DUV equipment. News of China beginning mass production of domestic DUV lithography machines was first disclosed on the 27th by U.S. information media The Information, which stated that this state-supported manufacturer is conducting small-scale batch production and will deliver the first batch of equipment this year to chipmakers such as SMIC, Hua Hong Semiconductor, and CXMT. The company plans to produce five units this year, with output expected to reach 20 units next year. This Chinese-made lithography machine targets 28-nanometer chip production and can also meet the requirements for manufacturing 7-nanometer-class chips. However, The Information did not report the manufacturer's specific name, only stating that the company has integrated R&D teams from multiple Chinese enterprises. Reuters reported on the 28th that the company manufacturing the domestic lithography machine is Shanghai Aishengna Electronic Technology Group, calling this development a major victory for Beijing's plan to achieve semiconductor self-sufficiency—a goal highly prioritized by Chinese President Xi Jinping—though China's technological level does not yet pose an immediate commercial threat to Dutch supplier ASML. According to anonymous sources, Aishengna's DUV lithography machine still requires further testing and remains significantly behind ASML's competing models. However, after news of China's mass production of lithography machines spread, ASML's stock price briefly dropped by 8%, later narrowing the decline to 1.6%. The Information also noted that if China's DUV mass production plan proceeds smoothly, it could indeed affect ASML's market dominance. However, ASML, SMIC, Hua Hong, and CXMT did not respond to Reuters' requests for comment. JPMorgan Chase analysts stated on the 28th that although the market has made corresponding adjustments, they believe this news is unlikely to affect ASML's long-term profit trajectory: 'Producing a small number of immersion deep ultraviolet (DUV) lithography machines is different from large-scale mass production; the key lies in whether large-scale manufactured machines can maintain stable yields, alignment accuracy, throughput, and reliability.' According to Reuters, Aishengna was established in August 2023 with a registered capital of 7 billion RMB (1 billion USD), supported solely by two state-owned shareholders—Shanghai Electric Holding and a subsidiary under Shanghai International Trust. Information about Aishengna is extremely scarce; it has neither an official website nor any public disclosure of its operations. Sources indicate the company has integrated the team from lithography startup Yuliangsheng (a subsidiary of Huawei-backed equipment manufacturer SiCarrier, which began testing DUV prototypes last year) and the team from Shanghai Micro Electronics Equipment (SMEE). However, company information and recruitment records show that Aishengna and Yuliangsheng share the same address in Shanghai. Reuters previously reported that China had successfully developed a prototype of an extreme ultraviolet (EUV) lithography machine, though mass production remains years away.