China has quietly taken a significant step in its bid to challenge Western dominance in advanced semiconductor manufacturing, according to people familiar with the matter. In a tightly secured research facility in Shenzhen, Chinese scientists have developed a prototype of an extreme ultraviolet (EUV) lithography machine—technology considered essential for producing the world’s most advanced chips used in artificial intelligence, smartphones, and modern weapons systems.
The prototype, completed in early 2025 and now undergoing testing, is capable of generating EUV light, a core technical requirement for next-generation chipmaking. However, it has not yet produced functional chips. While Chinese officials are targeting 2028 for initial chip output, sources involved in the project say 2030 is a more realistic timeline.
A Strategic Breakthrough Under Heavy Secrecy
The EUV project is part of a broader, six-year government drive to achieve semiconductor self-sufficiency, a top strategic priority for President Xi Jinping. Although China’s ambitions in chips have long been public, this specific effort was conducted largely in secret and classified as a national security program.
The initiative reportedly falls under China’s central science and technology strategy, overseen by senior party leadership. It brings together state research institutes, universities, and private companies in a coordinated effort involving thousands of engineers nationwide. Insiders describe the scale and secrecy of the program as comparable to a wartime mobilization, aimed at eliminating reliance on foreign technology in critical supply chains.
Former ASML Engineers and Reverse Engineering
At the heart of the project is a team that includes former engineers from ASML, the Dutch company that currently holds a global monopoly on commercial EUV lithography systems. These machines, which can cost around $250 million each, are indispensable for manufacturing the most advanced chips produced by firms such as TSMC, Intel, and Samsung.
Sources say the Chinese team relied heavily on reverse engineering, drawing on expertise from retired or former ASML staff—many of whom possess deep, specialized knowledge of EUV systems. Some recruits reportedly worked under aliases within the secure facility, underscoring the sensitivity of the project.
Technical Hurdles Remain
Despite the progress, China’s prototype still lags behind ASML’s commercial machines in several critical areas. The most significant challenge lies in precision optics, particularly mirrors and optical systems comparable to those supplied by Germany’s Carl Zeiss, a key ASML partner. While Chinese research institutes have made advances in developing domestic alternatives, the optics require further refinement before they can support reliable, high-volume chip production.
The prototype itself is larger and less refined than Western counterparts but is considered functional enough for experimental testing. Analysts note that achieving stable light output, managing contamination, and ensuring long-term reliability are essential milestones China must still meet.
Navigating Export Controls
Western export restrictions have played a central role in shaping China’s approach. Since 2018, the United States and its allies have tightened controls on advanced semiconductor equipment, preventing EUV systems—and later even some older deep ultraviolet tools—from being sold to China.
To work around these limits, Chinese teams have reportedly sourced components from secondary markets, older equipment auctions, and intermediary networks. Parts from legacy systems and suppliers outside the strictest controls have been used to assemble and test the prototype, according to people familiar with the effort.
Huawei’s Coordinating Role
Chinese technology giant Huawei is said to be deeply involved across the semiconductor value chain, from chip design and equipment research to manufacturing and integration into consumer products. Employees assigned to sensitive semiconductor work often operate under strict conditions, with limited outside contact and on-site living arrangements to protect confidentiality.
While Huawei has been under U.S. sanctions since 2019, its technical resources and organizational capacity have made it a key player in coordinating China’s broader chip ambitions.
Global Implications
If China succeeds in producing working chips using domestically developed EUV technology by the end of the decade, it would mark a major shift in the global semiconductor landscape. Such a breakthrough would weaken Western leverage derived from export controls and could accelerate China’s progress in artificial intelligence, high-performance computing, and defense technologies.
For now, experts caution that building a prototype is only the first step. Scaling EUV technology to reliable, commercial-grade production remains one of the most complex engineering challenges in modern industry. Still, the existence of a functioning prototype suggests China may be closer to that goal than many analysts previously believed.