ASML Falls 7% After Report a Chinese State-Backed Firm Began Making DUV Chip Machines
The Information says an unnamed Shanghai company has started manufacturing immersion DUV lithography tools, dragging Applied Materials and Lam Research down with the Dutch giant.
In Brief
- ASML shares fell more than 7% to their lowest since early June after The Information reported a Chinese state-backed company has begun manufacturing immersion DUV lithography tools
- The unnamed Shanghai-based company assembled development teams from other Chinese firms including Shanghai Yuliangsheng Technology, per the report
- The selloff spread across chip-equipment stocks, with Applied Materials down more than 6.5% and Lam Research off more than 7%
ASML Holding NV shares slid more than 7% on Monday to their lowest level since early June after The Information reported that a Chinese state-backed company has begun manufacturing deep ultraviolet lithography machines — a potential threat to the Dutch firm’s sales and a milestone in Beijing’s drive to cut its reliance on foreign chipmaking technology. The report, cited by Bloomberg, sent tremors through the entire semiconductor-equipment sector: Applied Materials fell more than 6.5% and Lam Research dropped more than 7%, per Techmeme.
A Shanghai-based company has started making immersion deep ultraviolet lithography tools, The Information reported, citing unidentified people familiar with the matter. The report did not name the company, but said it has assembled development teams drawn from other Chinese companies, including Shanghai Yuliangsheng Technology.
According to The Information’s account, this is the first time a Chinese company has manufactured this class of chipmaking equipment — one of the key pieces of the semiconductor supply chain that export controls have long kept out of Beijing’s reach.
Why DUV lithography is ASML’s protected turf
Lithography machines project circuit patterns onto silicon wafers, and ASML holds a near-monopoly at the leading edge. Its most advanced extreme ultraviolet (EUV) systems have never been sold to China, and since 2023 Dutch export restrictions coordinated with Washington have progressively squeezed shipments of immersion DUV — the workhorse tier below EUV that Chinese fabs like SMIC rely on to produce 7nm-class chips through multi-patterning techniques.
China has responded by pouring state resources into domestic lithography alternatives for years. A Shanghai-based manufacturer actually producing immersion DUV machines — if the report holds — would mark the first crack in a monopoly that export policy assumed was safe for years, though analysts caution that early domestic tools typically trail ASML’s throughput and yield by wide margins.
China remains one of ASML’s largest markets, historically accounting for a quarter or more of system sales in recent years, so a viable domestic substitute threatens revenue from both directions: lost Chinese orders, and eventual competition in trailing-edge markets.
A selloff primed by AI jitters
The timing amplified the damage. Chip-equipment stocks were already wobbly after last week’s rout — Thursday’s selloff erased $797 billion from the largest U.S. technology stocks amid mounting AI-spending skepticism — and Monday brought the added spectacle of Nvidia falling almost 5%, enough to hand Apple the most-valuable-company crown.
The report also lands amid escalating technology decoupling: Washington is reportedly weighing restrictions on Chinese open-source AI models, while Beijing accelerates self-sufficiency campaigns across chips, tooling and software. Every export control creates a domestic-substitution bounty, and DUV lithography carried one of the largest.
The Information’s report is based on unidentified sources, and the unnamed company’s production scale is unknown. But markets didn’t wait for confirmation: for a sector priced on the assumption that China cannot build these machines, even a credible report that it might is worth billions in market cap.
FAQ
Why did ASML stock fall on Monday?
The Information reported that a Chinese state-backed company has begun manufacturing immersion DUV lithography tools, threatening ASML’s sales in one of its largest markets, and shares fell more than 7%.
Which Chinese company is making the DUV machines?
The Information did not name the Shanghai-based manufacturer, saying only that it assembled development teams from other Chinese companies including Shanghai Yuliangsheng Technology.
Does this mean China no longer needs ASML?
No. Early domestic lithography tools typically trail ASML’s throughput and yield significantly, and the report’s production scale is unconfirmed — but it signals progress in Beijing’s chip self-sufficiency push.
