Europe’s most valuable company faces a new threat after China reportedly took a step to match its unique technology that is crucial to the global chip market. Shares of ASML, the only company on the planet capable of mass producing the extreme ultraviolet lithography machines used to build next-generation chips, fell more than 5% in
Europe’s most valuable company faces a new threat after China reportedly took a step to match its unique technology that is crucial to the global chip market.
Shares of ASML, the only company on the planet capable of mass producing the extreme ultraviolet lithography machines used to build next-generation chips, fell more than 5% in early trading Tuesday after reports that a Chinese rival had made a breakthrough.
The Information and Reuters reported on Monday and Tuesday that a Chinese state-backed company had begun manufacturing deep ultraviolet immersion lithography (DUV) machines.
This represents a notable threat to ASML, which dominates the DUV machine market and has seen a surge in orders in recent months as the AI boom has supercharged demand.
ASML did not immediately respond to a request for comment.
ASML shares also closed down nearly 6% on Monday. The DUV machines being built by China are at an early stage and do not yet match ASML’s technology, Reuters and The Information reported, citing sources familiar with the matter.
China reportedly plans to make five DUV machines this year and about 20 next year, far behind the 130 comparable machines ASML expects to ship this year.
However, the development is the latest twist in China’s years-long attempt to match ASML’s technology and catch up with the West’s ability to build advanced chips, which is a critical bottleneck in the race to train and deploy cutting-edge AI models.
The Dutch tech giant has been a target of Chinese espionage in the past, and US and Dutch regulations have banned ASML from sending its most advanced extreme ultraviolet (EUV) lithography machines, which use ultraviolet light to project microscopic patterns onto wafers, to China.
It comes after ASML announced plans to increase its manufacturing capacity for bus-sized EUV machines to meet growing demand.
The company’s chief financial officer told reporters this month that capacity expansion plans include supplying Elon Musk’s Terafab semiconductor lunar launch, in which Tesla and SpaceX will join forces to build a massive $55 billion manufacturing plant.
ASML machines are essential for Terafab to be successful. Business Insider previously reported that Musk took time out of SpaceX’s IPO week to attend an internal ASML meeting last month to present to employees about the project.