China has quietly built a factory-sized prototype for extreme ultraviolet lithography, or EUV, the most advanced chipmaking process in the world, according to a new Reuters report. If successful, the effort would mark the first real crack in a technological monopoly long held by Dutch chip-equipment giant ASML $ASML ( ▼ 5.63% ) .
EUV lithography is the crown jewel of semiconductor manufacturing. It allows chipmakers to etch incredibly small and complex circuits onto silicon, enabling the most advanced processors used in AI, smartphones, and modern weapons systems. Today, ASML is the only company on Earth capable of producing EUV machines, each costing roughly $250 million and relying on one of the most complex supply chains ever assembled.
A ‘Manhattan Project’ for Chips
Reuters reports that China’s prototype EUV fab was built inside a high-security facility in Shenzhen by a team that included former ASML engineers. The project reportedly relied on older, used ASML components sourced through secondary markets, an approach that underscores both China’s determination and the constraints imposed by US and European export controls.
Sources say the goal is to produce working EUV-class chips by 2028, though most believe China is likely several years behind that timeline. Even so, building a full-scale prototype at all is a major milestone. EUV systems are notoriously difficult to assemble, requiring atomic-level precision, ultra-high-vacuum environments, and some of the most powerful light sources ever created.
Why This Matters Globally
ASML’s EUV tools are essential for manufacturing the most advanced chips made for companies like Nvidia $NVDA ( ▼ 3.82% ) , Advanced Micro Devices $AMD ( ▼ 5.29% ) , and Taiwan Semiconductor Manufacturing $TSM ( ▼ 3.46% ) . That dominance has made ASML a key choke point in the global tech and AI race, and a central player in Western efforts to slow China’s semiconductor ambitions.
If China eventually succeeds in creating a domestic EUV alternative, it would weaken one of the most effective levers used by the US and its allies to constrain Beijing’s access to cutting-edge chips. Even partial success could accelerate China’s push toward semiconductor self-sufficiency and reshape the balance of power in AI and advanced computing.
Investors reacted swiftly to the news, with ASML shares falling roughly 5% on the day. While China’s EUV ambitions remain unproven, the report is a reminder that the semiconductor cold war is far from static, and the world’s most important technology bottleneck may not stay closed forever.