Shares of major semiconductor equipment makers and chip producers fell sharply after a report indicated that China has begun manufacturing homegrown deep ultraviolet (DUV) lithography tools, a development that could reshape the global chipmaking supply chain.
The decline hit Dutch equipment giant ASML Holding NV, which dominates the market for advanced lithography machines, alongside U.S. chip stocks including memory maker Micron Technology. The sell-off reflects investor concern that China is narrowing its dependence on foreign suppliers for critical manufacturing equipment.
DUV lithography systems are used to etch circuit patterns onto silicon wafers and represent a foundational technology in semiconductor fabrication. While less advanced than the extreme ultraviolet (EUV) machines used for cutting-edge chips, DUV tools remain essential for producing a wide range of processors and memory chips.
According to a report by The Information, Chinese firms have started producing domestically made DUV chipmaking equipment, marking a step toward self-sufficiency in a sector long constrained by export restrictions. The report drove the market reaction across the semiconductor sector.
The news comes amid a broader push by China to build out its domestic technology base in response to tightening trade controls. Washington and its allies have moved in recent years to limit Beijing’s access to advanced chipmaking gear, prompting the Dutch government to expand export controls on ASML’s equipment under U.S. pressure.
Adding to the momentum, Chinese memory maker ChangXin Memory Technologies (CXMT) staged a strong public debut in Shanghai, signaling growing investor appetite for the country’s homegrown chip champions. The combination of a manufacturing breakthrough and a successful listing has intensified scrutiny of how competitive China’s chip industry could become.
For ASML, the potential emergence of a domestic Chinese DUV supplier poses a longer-term risk to a market it has largely controlled. China has been one of the company’s largest customers, purchasing DUV systems that remain permitted under current export rules.
Analysts have cautioned that replicating the precision and reliability of established equipment makers is a formidable challenge, and that early domestic tools may lag on performance and yield. Still, the direction of travel has unsettled investors betting on continued Western dominance of the equipment market.
The market reaction underscores how sensitive semiconductor valuations have become to shifts in the technology rivalry between China and the United States. Export curbs, tariffs, and supply-chain concerns have repeatedly triggered volatility across the sector.
The extent and sophistication of China’s new DUV tools remain unclear, and independent verification of their capabilities has yet to emerge. While specific details are still developing, the reported progress adds a new dimension to a global contest over control of the technologies that underpin modern computing.