China begins producing domestic immersion DUV lithography equipment

A state-backed Chinese manufacturer has entered mass production of domestically developed immersion deep ultraviolet lithography systems, with deliveries expected to reach major Chinese chipmakers before year-end. Immersion DUV machines are the most advanced lithography tools that China can legally obtain given export controls on ASML's more sophisticated EUV technology. A domestically produced alternative, even if requiring further refinement, gives Chinese chipmakers a fallback option that doesn't depend on foreign suppliers as Washington considers tightening restrictions on lithography equipment sales to China. The development triggered sharp declines across the semiconductor sector, with investors concerned that China could expand memory chip production using homegrown equipment rather than rely on imports, potentially accelerating the competitive threat from Chinese manufacturers.

1. The report came from The Information on July 27, 2026, with Reuters confirming delivery expectations.
2. Immersion DUV systems are the most capable lithography tools Chinese manufacturers can still legally obtain after export controls blocked access to ASML's EUV technology.
3. The state-backed manufacturer's identity was not disclosed given the sensitivity of the matter.
4. Immersion DUV is used to manufacture mature-node semiconductors found in automobiles, industrial equipment, smartphones and home appliances.
5. ASML currently expects immersion DUV sales to account for a portion of the company's broader equipment shipments in 2026.
6. The news caused ASML shares to fall over 5% on the day, marking one of the steepest single-day declines since June.
7. Memory chip stocks including SK Hynix and Micron also declined sharply on concerns about Chinese capacity expansion using domestic equipment.