China Starts Producing DUV Lithography Equipment, Sending ASML Shares in the Netherlands Tumbling More Than 8%

A report that a Chinese state-owned company has begun mass production of deep ultraviolet (DUV) lithography equipment for semiconductor manufacturing sent global chip equipment stocks, including ASML in the Netherlands, sharply lower.
U.S. media reported on the 27th local time, citing the tech outlet The Information, that "a Shanghai-based state-owned company has started producing immersion DUV lithography equipment and has drawn research and development talent from other Chinese companies, including semiconductor equipment startup Yuliangsheng." ASML shares fell 8.4% on the news. European and U.S. chip equipment stocks also declined, including ASM International (-7.3%), BE Semiconductor (-9.9%), Applied Materials (-6.7%) and Lam Research (-7.9%).
According to The Information, the state-owned company aims to produce five DUV units this year and 20 next year, but the effort is still in its early stages. Chinese media outlet Sina Finance reported that the equipment produced this year will be delivered to Chinese chipmakers such as Semiconductor Manufacturing International Corporation (SMIC), Huahong Semiconductor and ChangXin Memory Technologies (CXMT).
ASML supplied 131 immersion DUV systems last year alone, so China's domestic production scale remains modest by comparison. Moreover, Chinese-made DUV equipment is still said to lag behind ASML's products in performance and manufacturing quality, and some key components reportedly still depend on Japanese suppliers.
Even so, the report is being read as a sign that China is making progress toward semiconductor self-sufficiency despite U.S. export controls. Under those restrictions, ASML is barred from shipping its most advanced extreme ultraviolet (EUV) lithography equipment to China, and sales of its top-tier immersion DUV systems are also limited. As a result, the equipment it can supply to China is eight generations behind its latest models. Even so, China was ASML's third-largest market in the second quarter.
[email protected] Hong Chaewan Reporter