China has embarked on the production of deep ultraviolet (DUV) lithography machines, which are essential for chip manufacturing. According to reports, these machines are expected to be delivered within this year, marking a significant step for the Chinese semiconductor industry.

The production process involves collaboration among various development teams from multiple Chinese companies, including the state-backed startup Shanghai Yuliangsheng Technology. The DUV machines being developed are of the immersion type, with a production goal of five units this year and approximately 20 units next year.

The first machines are anticipated to be delivered to major semiconductor firms such as Semiconductor Manufacturing International Corporation (SMIC), Hua Hong Semiconductor, and CXMT. These companies are currently on a list of Chinese enterprises that may face sales restrictions from Dutch company ASML, which is under scrutiny due to a new legislative proposal.

Reports indicate that SMIC has been testing the immersion DUV machines from Shanghai Yuliangsheng Technology since September 2025. While most components are sourced domestically, some critical parts are still imported from Japan. Delays from local suppliers have also impacted the production output for this year.

DUV lithography machines play a vital role in projecting and etching electrical circuits onto silicon wafers, serving as a fundamental technology in chip production. According to Tom's Hardware, immersion DUV technology can print features at 28 nm with a single exposure and achieve 7 nm through multi-patterning techniques. However, this comes with trade-offs, including increased overlay errors and reduced yield rates.

During a recent meeting, ASML's CEO Christophe Fouquet noted that the increasing intensity of DRAM lithography partly reflects customers' shift from multi-patterning techniques to extreme ultraviolet (EUV) lithography, which offers lower costs with single exposure. ASML is the largest global chip equipment manufacturer by market capitalization and the only company that possesses EUV technology, with machines costing up to $250 million, enabling the production of the world's most advanced chips designed by companies like Nvidia and AMD.

The Chinese chip industry faces significant challenges due to U.S. sanctions, which target not only EUV machines but also DUV technology. With restricted access to advanced machinery from ASML, China is striving for complete self-sufficiency in chip manufacturing. Reports from Reuters last year indicated that China had developed a prototype EUV machine, which occupies nearly the entire area of a factory and is currently undergoing testing. While it successfully generates extreme ultraviolet light, it has yet to produce fully operational chips.

Despite these advancements, independent analysis from the AI Futures Project suggests that China is unlikely to achieve commercial-scale production of immersion DUV machines before 2035. The validation of new machinery for production lines may take several months, and Chinese products are expected to remain inferior in quality compared to ASML, which currently holds a staggering 98.7% market share.