On July 27-28, 2026, The Information and then Reuters confirmed the start of volume production of domestic Chinese deep ultraviolet (DUV) immersion lithography tools by Shanghai Aishengna Electronic Technology Group (a state-owned entity created in 2023, with a capital of approximately 7 billion CNY, integrating teams from Yuliangsheng/SiCarrier-Huawei and SMEE). Target: approximately 5 machines in 2026, approximately 20 in 2027, with initial shipments to SMIC, Hua Hong, and CXMT. reuters.com This is not a node leap (no commercial EUV). It is a break in supply dependency for mature/mid-range nodes (28 nm single-exposure; 7 nm multi-patterning with lower yields). ASML retains its near-global monopoly (131 immersion DUV systems shipped in 2025; target ~130 in 2026). China remains dependent on critical Japanese components, and fab qualification (24/7 uptime, overlay, yields) has not yet been demonstrated at scale. techtimes.com Immediate market reaction (quantitative finance): ASML: -5.8% to -10% (market value loss of approximately €44-60 billion). NVIDIA and AI peers: -4 to -6%. South Korea: KOSPI circuit breaker, -10.8% on July 28 (Samsung/SK Hynix -12 to -14%), amplified by CXMT listing (+466%) and fears of a memory cycle.
Real progress and ahead of the 2030 consensus, but negligible volume (3-4% of ASML immersion production).
It accelerates the dualization of the supply chain (mature nodes China-sovereign vs leading-edge EUV Western).
Material impact horizon on ASML margins: 2028-2030.
The production of 5 machines does not change the technological ceiling. SMIC is already producing 7nm on imported ASML DUV equipment (Lithography Loophole). True sovereignty requires: yields >70-80%, uptime, a 100% domestic supply chain, and most importantly, EUV. Chinese investments remain massive (hundreds of billions of CNY). Xi’s strategy: gradual node-by-node independence.
The risks of exporting components currently represent the main structural vulnerability of Chinese DUV production. They do not completely block the start-up (5 machines in 2026), but they significantly limit scalability, yields, and the credibility of medium-term independence. Residual Japanese dependence transforms a technological breakthrough into a conditional and geopolitically fragile advancement.
