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Supply Chain

China’s Chip Factories Just Hit a Milestone That Should Have the West Paying Attention

By Stefano September 27, 2026 5 min read

China’s Chip Factories Just Hit a Milestone That Should Have the West Paying Attention

For years, China’s chipmaking ambitions have been met with raised eyebrows and export bans. Now, the eyebrows might need to come down a notch.

China has started mass-producing immersion deep ultraviolet (DUV) lithography machines — the equipment at the heart of semiconductor manufacturing. Leading the charge is Shanghai Aishengna Electronic Technology Group, a state-owned company that the Chinese government has quietly been funneling talent into from other semiconductor startups. Think of it as a chip-making Avengers assembly, government-edition.

Why this matters:

  • DUV machines can produce chips at seven nanometers or smaller — not cutting-edge by ASML standards, but more than capable for a wide range of applications.
  • China plans to build 5 machines in 2026 and 20 by 2027, a pace that signals serious intent.
  • The country has already designed a prototype EUV machine — the more advanced type used to make the world’s most powerful chips. ASML currently holds a 90% share of the global lithography market and is the only company making EUV machines.
  • China is also experimenting with photonic chips — using light instead of electricity — which are faster, more efficient, and run cooler.

Some context: The Dutch government, under pressure from the US, restricted ASML from exporting to China in 2023, with further curbs in 2025. A US congressional investigation also flagged ASML equipment sales to Chinese companies tied to military programs. These restrictions lit the fire under Beijing’s push for domestic alternatives.

The gap is real — but narrowing: DUV is still a step behind EUV when it comes to efficiency in modern chip production. China isn’t threatening ASML’s market share tomorrow. But it’s no longer a question of if China builds a domestic chip supply chain — it’s a question of when.

If China cracks EUV at scale, the semiconductor map gets redrawn.

S
Author
Stefano