China's push for semiconductor self-sufficiency reaches a milestone as a little-known state-owned company begins mass producing immersion DUV lithography machines.
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Shanghai Aishengna to produce 5 domestic DUV chip tools in 2026
China's push for semiconductor self-sufficiency reaches a milestone as a little-known state-owned company begins mass producing immersion DUV lithography machines.
Shanghai Aishengna Electronic Technology Group has started mass producing domestically developed immersion deep-ultraviolet lithography machines, a milestone in China's drive to reduce reliance on Dutch supplier ASML.
"Producing a handful of immersion DUV tools is not the same as producing tools that can be used for high-volume manufacturing, where yield, overlay, throughput and reliability over thousands of wafer runs are what matter," JP Morgan Chase analysts wrote in a note Tuesday.
Aishengna, established in August 2023 with 7 billion yuan ($1 billion) in registered capital, plans to produce about five machines this year and roughly 20 in 2027, according to a person familiar with the matter. The tools are expected to be delivered to Semiconductor Manufacturing International Corp, Hua Hong Semiconductor and ChangXin Memory Technologies, The Information reported. ASML shares fell 4.6% on the initial report Monday and were down 1.6% at 0906 GMT Tuesday.
While the Chinese-made DUV machines remain far from matching ASML's competing models and require further testing, successful deployment would give Chinese chipmakers an alternative source of equipment if Western governments further restrict exports or servicing of foreign lithography tools.
Aishengna was established with registered capital of 7 billion yuan ($1 billion), backed by Shanghai Electric Holding and a subsidiary of Shanghai International Trust, according to corporate records. The company has incorporated teams from lithography startups Yuliangsheng, which had begun testing a DUV prototype last year, and Shanghai Micro Electronics Equipment, the person said. Yuliangsheng is an affiliate of Huawei-backed equipment maker SiCarrier. Corporate and recruitment records show Aishengna and Yuliangsheng share an address in Shanghai.
Immersion DUV machines use a layer of water between the projection lens and a silicon wafer to print smaller circuit patterns than conventional dry systems. They are used to produce a broad range of chips and can also be pushed to manufacture more advanced semiconductors through multiple patterning, which requires repeated exposures of the same layer.
The ASML Shadow: 16% Revenue at Risk
China remains a crucial revenue pillar for ASML, accounting for roughly 16% of the Dutch giant's net sales in the first half of 2026. While barred from buying ASML's most advanced extreme-ultraviolet systems, Chinese chipmakers continue to heavily procure less advanced DUV tools.
The U.S. has barred China from purchasing ASML's EUV systems, while Dutch export controls have also restricted access to some advanced DUV machines. Reuters reported in December, citing sources, that China had succeeded in building a prototype of an EUV system, though it remains years from production.
For investors, the near-term earnings impact on ASML appears limited. ASML shares, which have gained 12% year-to-date, trade at 28x forward earnings. The Chinese machines, even if successfully deployed, would take years to meaningfully erode ASML's market share in the $80 billion lithography equipment market.
This article is for informational purposes only and does not constitute investment advice.
