China launched domestic chipmaking equipment manufacturing, triggering ASML stock decline.
A Chinese state-backed company has begun mass-producing domestically developed immersion deep ultraviolet (DUV) lithography machines, a chipmaking equipment category that Dutch supplier ASML has dominated for decades. The announcement sent ASML shares down as much as 8% on July 27, marking their sharpest single-day drop since early June.
Shanghai Aishengna Electronic Technology Group, a state-owned firm that incorporated development teams from several Chinese lithography startups including Shanghai Yuliangsheng Technology, is leading the effort. The company plans to deliver machines this year to three of China's largest chipmakers: Semiconductor Manufacturing International Corp (SMIC), Hua Hong Semiconductor, and ChangXin Memory Technologies (CXMT).
Production will start modestly—roughly five machines in 2026, scaling to about 20 in 2027—against ASML's own guidance of approximately 130 immersion systems shipped in 2026 alone, representing a 98.7% global market share.
Analysts cautioned that the domestic tools reportedly lag ASML by roughly a generation on throughput, overlay accuracy, and long-term reliability, and still depend on Japanese suppliers for certain critical components. Critically, SMIC already produces 7-nanometer-class chips today using older ASML DUV tools, meaning this milestone doesn't unlock a new performance tier for Chinese chipmakers. Rather, it provides them with a domestic supply path that cannot be cut off by future U.S. or Dutch export-policy decisions.
The selloff extended beyond ASML. Semiconductor equipment suppliers BE Semiconductor Industries, Soitec, and Infineon all declined alongside it, reflecting broader investor anxiety about China's semiconductor self-sufficiency drive—one of President Xi Jinping's stated top priorities.
On ASML's July earnings call, CEO Christophe Fouquet and CFO Roger Dassen addressed the pressure, guiding to roughly flat 2026 shipment volumes compared to 2025 and planned capacity increases in 2027 and 2028. The company is effectively betting that AI-driven demand growth will outpace whatever market share China's domestic tools eventually capture.