- China has begun manufacturing domestically developed immersion deep ultraviolet lithography machines, a key chipmaking tool long dominated by Dutch supplier ASML, The Information reported on Monday.
- The machines are expected to be delivered this year to leading Chinese chipmakers, including Semiconductor Manufacturing International Corp, Hua Hong Semiconductor, and ChangXin Memory Technologies.
- Nvidia, AMD, SK Hynix, and Micron shares dropped up to 9% on Wall Street following the news of China's DUV lithography advancements.
- Market participants worry that if Chinese chipmakers increasingly adopt domestically produced lithography machines, demand for equipment supplied by ASML and other Western manufacturers could weaken over time.
- Production will be limited initially, with about five DUV machines this year and roughly 20 in 2027.
- Immersion DUV machines, which print circuit patterns onto silicon wafers, are the most advanced lithography tools available to Chinese chipmakers after restrictions cut off access to extreme ultraviolet lithography (EUV) systems.
- This technology could give Chinese chipmakers an alternative source of critical equipment as the U.S. considers tighter restrictions on foreign lithography tool exports and servicing in China.
- A report that a Chinese state-backed firm has started mass-producing domestic DUV lithography machines rattled semiconductor stocks, fuelling concerns over future demand for Western chip equipment.
- China's progress may reduce reliance on Dutch ASML and U.S. suppliers long term.
China has begun manufacturing domestically developed immersion deep ultraviolet (DUV) lithography machines, a significant advancement in chipmaking technology previously dominated by ASML. This move is expected to impact major players in the semiconductor industry, including Nvidia, AMD, SK Hynix, and Micron, whose shares fell sharply following the announcement.1
The machines are set to be delivered this year to leading Chinese chipmakers such as Semiconductor Manufacturing International Corp, Hua Hong Semiconductor, and ChangXin Memory Technologies. However, initial production will be limited, with only about five DUV machines expected this year and roughly 20 by 2027.
These immersion DUV machines are crucial for printing circuit patterns onto silicon wafers, representing the most advanced lithography tools available to Chinese manufacturers after restrictions on extreme ultraviolet lithography (EUV) systems. The technology could provide an alternative source of critical equipment as the U.S. considers tighter restrictions on foreign lithography tool exports and servicing in China.6
Market participants are increasingly concerned that if Chinese chipmakers adopt domestically produced lithography machines, demand for equipment from ASML and other Western manufacturers could weaken over time. This development comes amid China's ongoing efforts to build a self-sufficient semiconductor ecosystem, particularly in light of escalating technology tensions with the U.S. and its allies.
As a result, Micron Technology Inc. fell 4.11% to $883.10, while SK Hynix ADR tumbled 8.82% to $140.94, marking them as some of the biggest losers among major semiconductor stocks.
“China's domestic DUV lithography machines are expected to be delivered this year to major chipmakers like Semiconductor Manufacturing International Corp and Hua Hong Semiconductor. This development raises concerns about future demand for Western chip equipment, as market participants fear a shift towards reliance on Chinese technology.”
