In a progress with significant geopolitical and economic implications, reports indicate China has made substantial progress in its ability to manufacture advanced semiconductors. For decades, access to this critical technology has been largely restricted to Western nations, especially concerning the highly refined extreme ultraviolet (EUV) lithography machines essential for producing leading-edge chips. New reports from WCCFTech and Reuters suggest Chinese engineers have successfully prototyped their own EUV machine,potentially reshaping the global balance of power in the tech industry.
December 26, 2025, 10:34 PM
headlinez.news Editorial
China has made significant strides in electric vehicles, renewable energy technologies, and a wide range of consumer electronics. From smartphones to sophisticated devices, the country has become a global manufacturing hub. However, until recently, a critical component was missing from China’s high-tech equation: the ability to produce advanced semiconductors. Western nations, particularly Europe and the United States, have historically restricted access to this technology, even during periods of amicable relations, preventing the export of advanced semiconductor manufacturing equipment to China. Now, reports from WCCFTech and Reuters indicate that Chinese engineers have successfully studied Western patents and developed their own prototype of a machine capable of manufacturing advanced semiconductors.
The recent semiconductor crisis involving Nexperia highlighted the crucial role these chips play in the global economy and the limited number of suppliers. Nexperia, a Dutch company owned by Chinese interests, produces relatively simple chips essential for basic automotive functions. Even with these less complex chips, the production process was largely based in the Netherlands, with the resulting wafers shipped to China for packaging and then redistributed globally. Despite Chinese ownership, Nexperia’s European division maintained wafer production within Europe. The crisis erupted when Dutch intelligence services discovered that Zhang Xuezheng, the founder of the Chinese parent company and head of Nexperia, intended to relocate wafer production equipment to China, potentially transferring intellectual property as well.
The competition for advanced chip technology is intensifying, particularly with the rise of artificial intelligence. Western countries currently possess the most sophisticated manufacturing equipment for leading-edge chips and have recently imposed restrictions on selling high-performance finished chips to China. Restrictions on the sale of the equipment needed to *produce* these semiconductors have long been in place. Taiwan currently hosts much of this advanced manufacturing capacity, supplied by European equipment, making the region a focal point of geopolitical attention.
To clarify the terminology, semiconductors are the raw materials, while chips, or integrated circuits, are the finished products made *from* those materials. While often used interchangeably in the media, understanding this distinction is crucial for a deeper technical understanding of the industry.
Semiconductors are materials with properties between those of conductors and insulators. Common semiconductor materials include gallium nitride (GaN), silicon (Si), and silicon carbide (SiC). These materials are deposited onto silicon wafers, and through repetitive processes—such as lithography, etching, doping, and controlled deposition—manufacturing equipment forms an integrated circuit pattern with transistors, capacitors, and interconnections on the wafer’s surface. Modern chips can require up to 100 repetitions of this process before the integrated circuit is complete and encapsulated in a plastic structure with connectors, resulting in the final chip. Lithography equipment is essential for producing the most advanced wafers.
The most advanced semiconductors are produced using EUV lithography, which stands for extreme ultraviolet lithography. These machines apply ultra-thin polymer layers and then generate plasma, which in turn generates light with a wavelength of 13.5 nm, known as extreme ultraviolet light, used to pattern the circuits within the semiconductors. This is an exceptionally precise process, made even more challenging by the presence of plasma, which must be achieved and stabilized, and controlled through highly precise optical lenses.
As highlighted in previous reports on Nexperia, only one company in the world, ASML of the Netherlands, can produce these EUV lithography machines. ASML holds a monopoly on EUV lithography, the key to producing the world’s most advanced semiconductors.
The optics for these machines are produced exclusively by Carl Zeiss. A single machine costs between $180 and $400 million, making it one of the most expensive industrial machines in the world. ASML manufactures a maximum of 10-12 of these machines annually, and their distribution is tightly controlled.
None of these machines have ever been exported to China. And China has been unable to replicate the engineering of these machines until now, lacking a unit to disassemble and study. Taiwan has access to these machines at TSMC, but China has not. At least, not until now. As a result, China has largely played a role in “packaging” semiconductor wafers produced in the West into finished chips. Packaging is a less technologically advanced process, and these manufacturing processes have been transferred to China by several European and American private companies seeking cost reductions. China quickly mastered this capability, leading to a decline in European chip production, with only moderate volumes remaining with Nexperia. This occurred despite Europe being the birthplace of these innovations, with companies like Philips and Siemens laying the foundation for these technologies.
Meanwhile, China has also developed the ability to manufacture more basic semiconductors without the need for EUV lithography. Consequently, China can produce semiconductors and chips with elementary and medium performance, but not the top-tier chips. This is why their AI model, DeepSeek, was launched with the announcement that it does not require significant processing power—a necessary workaround given China’s inability to produce or purchase sufficiently powerful semiconductors to compete with Western AI models. These top-tier semiconductors are also used in other high-performance applications.
In search of alternatives, Chinese engineers have also created an analog chip, solving a 100-year-old problem and reducing energy consumption by a factor of 100. Announced nearly two months ago, this chip represents a potential path to overcome the semiconductor shortage.
Now, the report under discussion suggests that Chinese engineers have thoroughly studied all ASML patents from the Netherlands and any other relevant patents to understand how these EUV lithography machines function and how they could be designed and built from scratch in China. And when we say “from scratch,” we mean the physical construction, as the intellectual property used is not entirely original.
The report indicates that large teams of engineers from SMIC (Semiconductor Manufacturing International Corporation) have attempted reverse engineering based on patents and existing experience. The report also shows that Chinese companies have sought to attract European talent with experience in this field to assist with production.
Reuters reports that the scale of this project is comparable to the “Manhattan Project” of the 1940s in the United States. The source mentions that several engineers previously employed by ASML have been recruited, and the first prototypes of the EUV lithography machines were built in the first half of 2025 in large laboratories in Shenzhen.
Key personnel who designed the EUV lithography machine are all former ASML employees, according to the report, and their combined individual experience, along with existing patents and iterative attempts, has allowed them to develop functional prototypes capable of producing these silicon wafers with semiconductors.
The report further indicates that the machine has reached a stage where it can produce and stabilize plasma and generate extreme ultraviolet light, but has not yet achieved the actual etching of semiconductors. This would require greater optical precision and the integration of processes. However, the fact that plasma and extreme ultraviolet light have been successfully replicated represents potentially more than 50% of the technological leap needed to produce functional semiconductors.
The same report suggests that China may have found a loophole to accelerate the development of its machine. Older ASML machines receiving new replacement parts do not have those parts as strictly controlled. China reportedly found ways to purchase these defective or worn parts through third parties, not to use them in its machine, but for reverse engineering.
If this technological progress in China is confirmed in the coming years, the West will lose its monopoly in the production of these ultra-advanced semiconductors, and with it, the last lever to curb China’s overall technological advancement. There is nothing more essential and valuable at the technological level that the West currently possesses and that China now lacks. These EUV lithography machines, about which many of us may not have even heard, represent the key technological advantage the West still holds over China. Once China succeeds in producing its own machines and its own high-performance semiconductors, advancing at its own pace in their development, the West will lose its most valuable technological advantages. This is a huge stake for China, and we can understand why the scale of the project is existential for them. And it is perfectly logical from a Chinese perspective for them to want to make this technological leap.
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