China develops alternative to foreign chip-making machinery, report says

China is making strides in its quest for semiconductor self-sufficiency with a domestic company reportedly beginning production of immersion DUV lithography machines. These machines are vital for manufacturing advanced chips and were previously supplied by a limited number of foreign companies, most notably the Dutch firm ASML.

According to The Information, citing anonymous sources, a Shanghai-based manufacturer with state backing has started producing these machines and plans to deliver them to major Chinese chipmakers like SMIC, Hua Hong, and CXMT this year. The news has reportedly impacted the stock prices of foreign competitors, with ASML falling over 7% and U.S. manufacturers Applied Materials, Lam Research, and KLA Corporation also experiencing declines.

While this development marks a significant advancement for China's capabilities in a strategically crucial sector, ASML still maintains advantages. The new local rival is said to lag behind in terms of reliability and performance, requiring further testing for large-scale production. Furthermore, China is still barred from accessing the more advanced EUV (extreme ultraviolet) lithography machinery, which remains a monopoly of ASML.

However, reports suggest China is developing its own EUV alternative, potentially with the help of former ASML engineers. This push for domestic alternatives is largely driven by restrictions imposed by the U.S. and its allies on China's access to advanced technologies. Chinese state media has hailed the news as a sign that China's chip manufacturing self-sufficiency plans are yielding results, causing an "immediate reversal of confidence on Wall Street."