China's reverse-engineered Frankenstein EUV chipmaking tool hasn't produced a single chip
China is currently drafting its 15th Five-Year Plan, which is set to be revealed to the National People’s Congress within the next week and covers 2026 to 2030. It’s widely expected that this iteration of the plan will prioritize lithography breakthroughs and EDA tool development as national targets. Big Fund III, a state-backed vehicle with roughly $47.5 billion earmarked for semiconductors, has already redirected fresh capital toward lithography and EDA as substitutes for ASML and Synopsys tools, respectively.
The sheer candor about fragmentation from this collection of executives is difficult to ignore, however, given just how often we see big, bold tech claims coming from Chinese media, but it aligns with an increasingly obvious challenge. China's most advanced domestically produced DUV lithography system, from Yuliangsheng, is technically comparable to ASML's Twinscan NXT:1950i — a machine ASML originally designed for 32nm-class processes back in 2008.
Even if SMIC manages to integrate that tool into a 28nm process by 2027, reaching sub-10nm would require redesigned scanners and several additional years of development. A prototype EUV machine has reportedly been completed in a Shenzhen lab, but EUV's commercial viability requires solving yield challenges that took ASML nearly two decades to overcome after its own prototype.
That’s all before we’ve even considered ASML’s accumulated know-how as, in Yangyuan’s words, “merely the integrator.” The company’s EUV dominance rests on a supply chain of more than 5,000 subcontractors, along with decades of high-volume manufacturing data. No amount of reverse engineering can quickly replicate that. While it’s true that Chinese firms have made real gains in adjacent equipment categories — Naura, for example, is one of the world’s top ten semi equipment vendors by revenue — lithography remains well out of reach.
Get Tom's Hardware's best news and in-depth reviews, straight to your inbox.
Key considerations
- Investor positioning can change fast
- Volatility remains possible near catalysts
- Macro rates and liquidity can dominate flows
Reference reading
- https://www.tomshardware.com/tech-industry/semiconductors/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/semiconductors/chinas-top-chip-execs-admit-fragmentation-is-undermining-the-countrys-asml-alternative#main
- https://www.tomshardware.com
- AI creates jobs, data from bank survey shows — companies with wide AI deployments and investments are more likely to be hiring than those that don't
- NVIDIA DGX Spark Powers Big Projects in Higher Education
- Orico IG740-Pro 1TB SSD Review: A small budget sleeper
- Go beyond the review with Bench, the deepest consumer hardware benchmarking database on the internet — compare hundreds of products across a range of categories
- As Frank Yeary retires from Intel, the company picks an engineer to chair its board — Intel Foundry governance issues to be resolved, and looking back at the Ye
Informational only. No financial advice. Do your own research.