A state-backed Chinese company has started mass production of domestically developed immersion deep-ultraviolet (DUV) lithography machines, a critical technology for advanced semiconductor manufacturing previously dominated by Dutch firm ASML.
The development, first reported by The Information and later detailed by Reuters, marks progress in Beijing’s push for semiconductor self-reliance amid ongoing Western export restrictions.
Shanghai Aishengna Electronic Technology Group, a relatively obscure state-owned entity established in 2023 with backing from Shanghai Electric Holding and a subsidiary of Shanghai International Trust, is leading the effort.
It has incorporated teams from Chinese lithography startups, including Yuliangsheng (linked to Huawei-backed SiCarrier) and Shanghai Micro Electronics Equipment.
Plans call for roughly five machines in 2026 and about 20 in 2027, with initial deliveries expected this year to major domestic chipmakers such as SMIC, Hua Hong Semiconductor, and ChangXin Memory Technologies (CXMT).
Immersion DUV systems use a water layer between the lens and wafer to enable finer circuit patterns than dry tools.
While Chinese chipmakers remain barred from ASML’s most advanced extreme-ultraviolet (EUV) systems and face limits on certain high-end DUV equipment, the new domestic tools could serve as a fallback if further restrictions on exports or servicing take effect.
Analysts note, however, that the machines still require extensive testing, lag ASML models in performance, yield, overlay accuracy, throughput, and long-term reliability, and will not pose an immediate commercial threat.
News of the breakthrough rattled global financial markets.
AI and semiconductor stocks declined sharply, with ASML shares dropping as much as 8% initially before partially recovering. Selling pressure extended to broader indices, including the S&P 500.
Cryptocurrencies, which have shown strong correlation with risk assets, also experienced downward pressure: Bitcoin slipped below $64,600 and XRP moved under $1.10, though Solana posted a modest gain.
Ethereum stood out for its relative resilience.
It advanced about 2.3% over 24 hours—the strongest performance among major tokens—while the ETH/BTC ratio has trended higher for a full month. This suggests ongoing capital rotation toward Ethereum within the crypto market.
Decentralized finance tokens also showed comparative stability, benefiting Ethereum as the primary base layer for most DeFi activity. Bitcoin, by contrast, managed only marginal gains.
The episode highlights how semiconductor geopolitics now influence risk appetite across equities and digital assets.
While a handful of early-stage Chinese DUV tools will not upend ASML’s dominance in the near term, the development underscores limits to export-control strategies and keeps markets sensitive to further advances in China’s domestic chip equipment capabilities. Investors continue to monitor whether Ethereum’s relative strength persists amid broader macroeconomic uncertainty.