ASML stock fell to its lowest level since June after a report said a state-backed Chinese consortium began mass producing its own immersion deep ultraviolet lithography machines. The group is targeting roughly five deliveries in 2026 and 20 in 2027, against the hundreds of systems ASML ships each year. China is projected to supply around 20% of ASML's revenue in 2026.
ASML Holding NV dropped to levels not seen since June after a Chinese consortium reportedly began mass producing its own immersion deep ultraviolet lithography machines. The Dutch company has long held near-monopoly status in the most critical layer of semiconductor manufacturing, so its shares moved even on a distant competitor entering production.
The report surfaced on July 27 and points to a state-backed group involving Shanghai Yuliangsheng, SiCarrier and Huawei behind China's push to build homegrown DUV lithography systems. Those machines are slated for delivery to SMIC, Hua Hong Semiconductor and ChangXin Memory Technologies, among China's biggest chipmakers.
China's volumes stay small next to ASML's
Deliveries start narrow: the consortium is targeting roughly five machines in 2026 and 20 in 2027. ASML, by contrast, ships hundreds of lithography systems per year.
But the Chinese machines are immersion DUV systems, not the extreme ultraviolet systems ASML uses to manufacture the world's most advanced chips. DUV is the previous generation of lithography technology, and EUV remains firmly in ASML's exclusive domain, with no Chinese company remotely close to replicating it.
The Chinese-made systems also lag ASML's offerings in performance and reliability. Extensive testing and validation will be required before they can produce chips competitively at any meaningful volume.
China accounts for about 20% of 2026 revenue
Sales to China are projected to account for around 20% of ASML's revenue in 2026, and that business is under threat from two directions at once. First, US legislative efforts such as the MATCH Act are designed to further restrict DUV exports to China, potentially cutting ASML off from one of its largest customer bases. Second, if China can eventually build its own machines, even inferior ones, demand for ASML's products in the Chinese market could erode over time.
Regulation is the nearer risk
Credible Chinese competition in advanced lithography is unlikely to materialize before 2030 at the earliest, because of technological and supply-chain disparities. The five machines planned for 2026 will go to domestic fabs for testing and integration, a process that typically takes months before any commercial chip production begins.
For ASML investors, therefore, the near-term risk remains regulatory. What matters more now is whether the US and its allies further tighten export controls on DUV equipment, because the MATCH Act and similar legislative proposals could reduce ASML's addressable market well before Chinese competitors become a real factor.
Source: Crypto Briefing
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