The Chinese revealed their cards, but perhaps the market is running too fast?
The developments surrounding China's DUV program are now becoming a little clearer.
According to a review by analyst Lee Jong-wook of Samsung Securities, the company behind the local lithography machines is SMEE, and perhaps most importantly, the story itself is not new,
It was already reported in April that the company presented its progress, while the latest news is mainly the transition to the production start phase.
But here are the details that appeared less in the headlines:
Although SMEE already announced in 2023 the development of a lithography system for 28-nanometer chip production, mass production has not yet commenced.
Additionally, while the company claims capabilities in ArF Immersion systems, at the last exhibition it presented a 110-nanometer level system, not a system reflecting the ambitious goals it previously discussed.
That is, progress exists, but even according to available data, the company's timelines continue to be delayed.
What is important to understand is that this does not negate the achievement,
China's ability to develop a local DUV system is a significant technological advancement and strengthens China's aspiration for independence in the chip industry.
In the long term, as China reduces its reliance on Western equipment, pressure on companies like ASML and other equipment manufacturers may increase.
On the other hand, it is important to distinguish between the long-term strategic threat and the current investment cycle in artificial intelligence.
According to estimates, China is expected to produce about 5 advanced DUV systems during 2026 and about 20 systems in 2027.
For comparison, ASML supplied 131 advanced DUV systems in 2025.
Beyond that, there is still no proof that Chinese systems can provide the level of reliability, accuracy, and output required for commercial-scale mass production.
Even if China continues to advance, the current AI cycle still relies on investments from Microsoft, Amazon, Meta, Google, and other hyperscalers building their infrastructure around the ecosystem of Nvidia, AMD, and leading suppliers.
AI components and server memory undergo long certification processes, and due to geopolitical restrictions, it is difficult to see a rapid transition to Chinese components in American data centers.
What have we learned from this whole story?
The company behind the Chinese project is SMEE.
The main innovation is the start of production, not development.
The technological progress is real, but even according to existing data, the company is still behind its self-imposed timelines.
In the long term, this is a development that could change the balance of power in the chip equipment industry.
In the short term, it is difficult to argue that this move changes the growth engine of the AI market.
Incidentally, a small detail also caught the eye:
From the published images, we saw that SMEE's machine looks significantly smaller and simpler than ASML's DUV systems.
Of course, external appearance is not a measure of performance, but it certainly illustrates that the engineering gap still appears significant.
The market loves to turn every headline into drama, but as always, it seems that the Chinese reality is a bit more complex.